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The Big View on Economics Trivia Quiz

Macroeconomics deals with how the economy affects individuals. Take this quiz that's based off of the AP class I took in high school to see how much you know.

A multiple-choice quiz by dijonmustard. Estimated time: 6 mins.

Author
dijonmustard

Time
6 mins

Type
Multiple Choice

Quiz #
257,924

Updated
May 15 22

# Qns
10

Difficulty
Difficult

Avg Score
5 / 10

Plays
1964

One at a Time - Single Page - Timed Game

Question 1 of 10

1. The Federal Reserve is responsible for maintaining the United States money supply so that they can control inflation in the long and unemployment in the short run. What is usually the first thing the Fed would do in order to decrease the money supply? Hint

sell government bonds to the public

buy government bonds from the public

raise federal reserve ratios

lower required reserve ratios

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Question 2 of 10

2. Which of the following concepts is not an explanation to why the aggregate demand curve is downward sloping? Hint

Production Effect

Interest Rate Effect

Wealth Effect

Exchange Rate Effect

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Question 3 of 10

3. In the factors for the production market, what do households sell to the firms? Hint

rent

income

labor

goods and services

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Question 4 of 10

4. What can decrease demand in the market for peanut butter? (In other words, make the demand curve shift to the left) Hint

a natural disaster that destroys peanut crops

a new study claims that peanut butter can reduce the risk of cancer

expectations for higher prices in the future for peanut butter

prices for jelly increase

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Question 5 of 10

5. Gross Domestic Product (GDP) is the total market value of all _______ goods and services produced in an economy within a year. What word goes in the blank? Hint

produced

intermediate

final

consumer

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Question 6 of 10

6. Which of the following can shift the Long-Run Aggregate Supply Curve to the right? Hint

increase in the technology

increase in unemployment

decrease in capital

none of them

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Question 7 of 10

7. Two ways to measure inflation within an economy is through the GDP Deflator or the Consumer Price Index (CPI). If the price for Boeing aircraft increase while everything else in the economy remains the same what would happen to GDP Deflator and CPI? Hint

both GDP Deflator and CPI would increase

both the GDP Deflator and CPI would remain the same

CPI would increase, but GDP Deflator would remain the same

GDP Deflator would increase, but CPI would remain the same

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Question 8 of 10

8. If consumers decide to deposit a total of $10,000 into banking deposits, and the required reserve ratio is 10%, what would be the ultimate increase in the money supply from this deposit? Hint

$100,000

$110,000

$10,000

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Question 9 of 10

9. What is considered to be the rate of unemployment when the United States economy is at full employment? Hint

3%-5%

5%-10%

1%-2%

3%-8%

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Question 10 of 10

10. Both Bob and Susie are unemployed. Bob has been unemployed for a long time and has never made any attempt to look for a job; however, he would like to have a job. Susie does not look for a job because in the past there were no jobs that had accept her since she was not skilled enough. She would also like a job though. Who are considered discouraged workers between the two? Hint

Susie only

Both Bob and Susie

Bob only

Neither Bob or Susie

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Quiz Answer Key and Fun Facts

Answer: sell government bonds to the public

The most direct way the Federal Reserve decreases the money supply is through the selling government bonds. Selling the bonds take out money in the economy since people are giving money to the Feds in exchange for a bond.

2. Which of the following concepts is not an explanation to why the aggregate demand curve is downward sloping?

Answer: Production Effect

The wealth effect states that as prices decrease, consumers will buy more goods because they feel wealthier, thus increasing output. As interest rates decrease with price levels, consumers will borrow more money and consume more. And lastly, if price levels drop in one economy, the currency will depreciate, allowing foreign nations to buy more exported goods.

3. In the factors for the production market, what do households sell to the firms?

Answer: labor

The households provide the necessary workers needed by the firms. The factors for production market are part of the circular flow that also includes the markets of goods and services where the firms sell to the households.

4. What can decrease demand in the market for peanut butter? (In other words, make the demand curve shift to the left)

Answer: prices for jelly increase

Jelly and peanut butter are complimentary goods, meaning that consumers usually buy them together. So, if the price of one complimentary good increases, consumers will buy less of that good, and consequently buy less of the compliment.

5. Gross Domestic Product (GDP) is the total market value of all _______ goods and services produced in an economy within a year. What word goes in the blank?

Answer: final

Final goods and services are the actual goods and services that are being sold to the consumers. Intermediate goods are those used in the making of final goods. GDP only counts final goods in order to avoid double counting intermediate goods.

6. Which of the following can shift the Long-Run Aggregate Supply Curve to the right?

Answer: increase in the technology

The Long-Run Aggregate Supply Curve (LRAS) basically is the potential output for an economy. It marks the point of full employment, and one of the ways for an economy to be able to produce beyond its potential is through advances in technology.

Answer: GDP Deflator would increase, but CPI would remain the same

CPI measures only goods and services a typical consumer would buy; Boeing aircrafts are not on an average consumer's shopping list. GDP Deflator measures all good and services in an economy, so it would be affected by the increase in the price of Boeing aircraft.

8. If consumers decide to deposit a total of $10,000 into banking deposits, and the required reserve ratio is 10%, what would be the ultimate increase in the money supply from this deposit?

Answer: $100,000

The deposited money would go through the money multiplier effect because banks can continue to loan out money from the initial deposit. To find the total amount generated from the money multiplier effect, divide the initial deposit by the reserve ratio:

$10,000/.10 = $100,000

The initial $10,000 deposit is not counted again because it was already part of the money supply prior to the money multiplier.

9. What is considered to be the rate of unemployment when the United States economy is at full employment?

Answer: 3%-5%

Of course absolutely full employment is impossible because people will always encounter frictional unemployment or temporary job switches.

Answer: Susie only

Discouraged workers are those who would like to be employed, but cannot find a job and eventually give up searching. Bob would like to have a job, but he's just plain lazy and has never attempted to search for one. Susie had tried to find a job, but could not. She became discouraged and gave up.

Source: Author dijonmustard

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