Macroeconomics MCQ


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Do you use facebook?

Photo of a smartphone with the Facebook application open
Economics is greatly impacted by how well information travels through society. Today, social media giants Twitter, Facebook, and Instagram are major forces on the information super highway. (Credit: Johan Larsson/Flickr)

Decisions ... decisions in the social media age

To post or not to post? Every day we are faced with a myriad of decisions, from what to have for breakfast, to which route to take to class, to the more complex—“Should I double major and add possibly another semester of study to my education?” Our response to these choices depends on the information we have available at any given moment; information economists call “imperfect” because we rarely have all the data we need to make perfect decisions. Despite the lack of perfect information, we still make hundreds of decisions a day.

And now, we have another avenue in which to gather information—social media. Outlets like Facebook and Twitter are altering the process by which we make choices, how we spend our time, which movies we see, which products we buy, and more. How many of you chose a university without checking out its Facebook page or Twitter stream first for information and feedback?

As you will see in this course, what happens in economics is affected by how well and how fast information is disseminated through a society, such as how quickly information travels through Facebook. “Economists love nothing better than when deep and liquid markets operate under conditions of perfect information,” says Jessica Irvine, National Economics Editor for News Corp Australia.

This leads us to the topic of this chapter, an introduction to the world of making decisions, processing information, and understanding behavior in markets —the world of economics. Each chapter in this book will start with a discussion about current (or sometimes past) events and revisit it at chapter’s end—to “bring home” the concepts in play.


In this chapter, you will learn about:

  • What Is Economics, and Why Is It Important?
  • Microeconomics and Macroeconomics
  • How Economists Use Theories and Models to Understand Economic Issues
  • How Economies Can Be Organized: An Overview of Economic Systems

What is economics and why should you spend your time learning it? After all, there are other disciplines you could be studying, and other ways you could be spending your time. As the Bring it Home feature just mentioned, making choices is at the heart of what economists study, and your decision to take this course is as much as economic decision as anything else.

Economics is probably not what you think. It is not primarily about money or finance. It is not primarily about business. It is not mathematics. What is it then? It is both a subject area and a way of viewing the world.

Quiz PDF eBook: 
Macroeconomics MCQ
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142 Pages
English US
Educational Materials

Sample Questions from the Macroeconomics MCQ Quiz

Question: Disinflation occurs when the overall price level:


rises at a decreasing rate.

falls at an increasing rate.


rises at an exponential rate.

Question: 1. If a lender expects an inflation rate of 5 percent and asks for a nominal interest rate of 10 percent, then the lender expects to earn a real interest rate of:


15 percent.

10 percent.

5 percent.

2 percent.

Question: When the expected rate of inflation is higher than the actual rate of inflation, wealth is:


not redistributed at all.

redistributed from borrowers to lenders.

redistributed at random.

redistributed from lenders to borrowers.

Question: The average rate of inflation in the United States over the past 10 years has been around 2.6 percent. If this trend continues, how long will it take for prices in the United States to double?


26.9 years

10.5 years

38.5 years

18.4 years

Question: Suppose the nominal interest rate is 4 percent and the inflation rate is 5 percent. The real interest rate is:


0 percent.

9 percent.

–1 percent.

1 percent.

Question: In the long run, the quantity theory of money says that the growth rate of the money supply will be approximately equal to the:


growth rate of real GDP.

velocity of money.

price level.

inflation rate.

Question: According to the quantity theory, what causes inflation in the long run?


aggregate demand shocks

money supply


unexpected inflation

Question: When the government of Zimbabwe ran out of money, President Robert Mugabe:



printed more money.

raised taxes.

slashed spending.

Question: Deflation is a decrease in the:


exchange rate.

average level of prices.

velocity of money.

inflation rate.

Question: If the average price level rises from 120 in year 1 to 130 in year 2, the inflation rate between years 1 and 2 will be:


8.33 percent.

9.23 percent.

7.69 percent.

10 percent.

Question: If a lender expects an inflation rate of 5 percent and asks for a nominal interest rate of 10 percent, then the lender expects to earn a real interest rate of:


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