EXERCISE TOPIC 7

MULTIPLE CHOICE QUESTIONS

1. Which of the following is not related to macroeconomics issues?

A. The inflation rate
B. The price of a new house
C. The economy’s growth rate
D. Forecasts on the rate of unemployment for next year

2. The branch of economics that focuses on economics variables, like inflation and unemployment
is called
A. Macroeconomics
B. Microeconomics
C. Labour economics
D. Economic forecasting

3. Macroeconomics deals with the analysis of the following, except

A. Why does the national income increase?
B. What determines a country’s saving and investment?
C. How can financial institutions influence the rate of inflation in the country?
D. How does the price of Perodua cars influence the demand for cars among Malaysians?

4. One of the macroeconomics objectives is to

A. achieve full employment
B. overcome shortages of goods and services
C. increase personal disposable income
D. All of the above

5. Macroeconomics is concerned with

A. some specific markets in the economy
B. the entire economy
C. increasing the individual income
D. how to solve the basic economic problems

6. Inflation is
A. an increase in the general price level
B. an increase in the relative price level
C. due to high unemployment
D. due to lack spending in the economy
7. The goal of macroeconomics is
A. to explain the economics changes that affect a particular household, firm or market.
B. to explain the economics changes that affect many households firms and markets at once.
C. to devise policies to deal with market failure, such as monopoly, externalities, common
resources and public goods.
D. All of the above.

8. Macroeconomics is concerned with the study of

A. how Malaysians respond to oil price changes
B. production methods and costs
C. the effects of wage reduction on agricultural products.
D. the general price level.

9. The value of money

A. is dependent on consumer income.
B. falls when price level falls.
C. increases as price level falls.
D. is independent of the inflation rate.

10. Unemployment means that

A. at the going wage rate, there are people who want to work but cannot find work.
B. people are not willing to work at the going wage rate.
C. there are some people who will not work at the going wage rate.
D. there is excess demand in the labour market.
COMPLETION QUESTIONS

1. ________________ is the branch of economics that focuses on economy-wide variables.

2. People living on fixed income are generally _________________ by inflation.

3. People are classified as ______________________ if they chooses to exit the labour force
because they cannot find a job.

4. Government efforts to increase economic growth could sometimes reduce the quality of life
because there would be more negative externalities such as ____________.

5. _________________ differs from the standard of living which is evaluated based primarily on
income.

6. The report which says that there is a higher unemployment rate among graduates in Malaysia
would be of particular interest to a ___________ economist.

7. The _____________________ rate measures the percentage of people in the labour force who
are without job and actively seeking job.

8. Economic growth is desired because it helps achieving the objective of _______________.

9. The term use to describe the situation, where there are more cash inflows from other countries
than cash outflows to other countries is _________________’

10. Unemployment is not desired because it ____________ the potential output of a country.
TRUE/FALSE QUESTIONS

1. Policies to increase the supply of money in the economy are mainly related to macroeconomics.
TRUR/FALSE

2. Macroeconomics is concerned with the issues of inflation and unemployment. TRUE/FALSE

3. Macroeconomics deals with the economy as a whole. TRUE/FALSE

4. The macroeconomics objectives are, to achieve price stability, equitable income distribution,
external balance and full employment. TRUE/FALSE

5. A macroeconomic analysis links the economy of a country to the rest of the world. TRUE/FALSE

6. Unemployment reduces both economic growth and national output. TRUE/FLASE

7. During high rates of inflations, the cost of living and the standard of living increase. TRUE/FALSE

8. A deficit in the balance of payment is desired to as it means more job to people. TRUE/FALSE

9. Full employment means zero unemployment rate. TRUE/FALSE

10. Two macroeconomics are in conflict if efforts made to achieve one fails to achieve the other.
TRUE/FALSE

END OF QUESTIONS