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Question Bank - Economics

Introduction to Macroeconomics

Q1. Stagflation occurs when the economy experiences

(Select one answer)

(a) * rising prices and rising output.
(b) * rising prices and falling output.
(c) * falling prices and falling output.
(d) * falling prices and rising output.

Source: Mankiw logo

Q2. For an economy as a whole, income equals expenditure because the income of the seller must be equal to the expenditure of the buyer.

(Select one answer)

(a) * True.
(b) * False.

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Q3. The production of an apple contributes more to GDP than the production of a gold ring because food is necessary for life itself.

(Select one answer)

(a) * True.
(b) * False.

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Q4. An example of a transfer payment is

(Select one answer)

(a) * profit.
(b) * rent.
(c) *unemployment benefits.
(d) * government purchases.
(e) * wages.

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Q5. Gross Domestic Product can be measured as the sum of

(Select one answer)

(a) * final goods and services, intermediate goods, transfer payments, and rent.
(b) * consumption, investment, government purchases, and net exports.
(c) * consumption, transfer payments, wages, and profits.
(d) * Net National Product, Gross National Product, and Disposable personal income.
(e) * investment, wages, profits, and intermediate production.

Source: Mankiw logo

Q6. A recession occurs when real GDP declines.

(Select one answer)

(a) * True
(b) * False

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Q7. A recession is defined as

(Select one answer)

(a) * a fall in real GNP over two consecutive time periods
(b) * an increase in real GNP from one period to the next
(c) * nominal GNP declines from one period to the next
(d) * no change in real GNP from one period to the next

Source: Mankiw logo

Q8. Gross Domestic Product is the sum of the market value of the

(Select one answer)

(a) * intermediate goods.
(b) * final goods and services.
(c) * manufactured goods.
(d) * inferior goods and services.
(e) * normal goods and services.

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Q9. If your grandparents buy a newly built retirement home, this transaction would affect

(Select one answer)

(a) * investment.
(b) * net exports.
(c) * government purchases.
(d) * consumption.

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Q10. If a cobbler buys leather for €100 and thread for €50 and uses them to produce and sell €500 worth of shoes to consumers, the contribution to GDP is

(Select one answer)

(a) * €50.
(b) * €100.
(c) * €650.
(d) * €500.
(e) * €600.

Source: Mankiw logo

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