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This set of Macro Economics 2 Multiple Choice Questions & Answers (MCQs) focuses on Macro Economics 2 Set 4
Q1 | Stagflation means:
- inflation with stagnation
- recession with stagnation
- inflation galloping like stage
- inflation & increasing output
Q2 | Which is the most effective quantitative method to control inflation in the economy?
- bank rate policy
- selective credit control
- cash reserve ratio
- both (a) and (b)
Q3 | Which measures are followed by the government for handling inflation?
- monetary measures
- fiscal measures
- controlling investments
- all of these
Q4 | Inflation is measured on the basis of:
- wholesale price index
- consumer price index
- marshall’s index
- all of these
Q5 | When price increases due to increase in factor prices it is .
- demand pull inflation
- cost pull inflation
- stagflation
- none of the above.
Q6 | According to the Phillips curve unemployment will return to the natural rate when ?
- nominal wages are equal to expected wages
- real wages are back at equilibrium level
- nominal wages are growing faster than inflation
- inflation is higher than the growth of nominal wages
Q7 | Demand pull inflation may be caused by ?
- an increase in costs
- a reduction in interest rate
- a reduction in government spending
- an outward shift in aggregate supply
Q8 | The economist who proposed that, “Inflation is always and everywhere a monetary phenomenon” was
- john maynard keynes.
- john r. hicks.
- milton friedman.
- franco modigliani.
Q9 | Inflation occurs whenever
- the price level rises.
- the money supply increases.
- the price level rises continuously over a period of time.
- the price level falls continuously over a period of time.
Q10 | An unrealistically low unemployment target will most likely result in
- inflation.
- an unemployment rate falling below the natural rate.
- excessive monetary growth.
- all of the above.
Q11 | Governments may pursue inflationary monetary policies
- to promote high employment.
- to accommodate demands of workers for higher wages.
- to finance a persistent budget deficit.
- for all the above reasons.
Q12 | Which of the following is least likely to lead to inflationary monetary policy?
- rising unemployment
- expanding federal budget deficits
- declining oil prices
- conflict in the middle east
Q13 | Economists from which of the following schools of thought are most likely to favor activistgovernment policies?
- keynesian
- monetarist
- classical
- all of the above
Q14 | According to the monetarists, inflation is caused by
- supply shocks.
- expansionary fiscal policies.
- expansionary monetary policies.
- rising prices.