Australian Macroeconomics
Test Questions
Course Introduction
Australian Macroeconomics explores the key principles, theories, and frameworks that shape the Australian economy as a whole. The course examines topics such as economic growth, inflation, unemployment, fiscal and monetary policy, and the roles of government and central banking in managing the national economy. By analyzing current and historical data, students learn how domestic and global factors influence the Australian business cycle, external trade, exchange rates, and government policy responses. The course also considers unique issues facing Australia, such as its resource-based economy, international trade partnerships, and challenges related to population, sustainability, and innovation. Throughout, students develop skills to critically evaluate macroeconomic policies and interpret economic events within an Australian context.
Recommended Textbook
Macroeconomics Australia in the Global Environment 1st Australian Edition by Michael Parkin
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17 Chapters
2734 Verified Questions
2734 Flashcards
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Chapter 1: Getting Started
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272 Verified Questions
272 Flashcards
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Sample Questions
Q1) In the above figure,a negative relationship between x and y is shown in Figure A)A.
B)B.
C)C.
D)D.
E)B and Figure C.
Answer: B
Q2) A change in a marginal benefit or cost will
A)change incentives.
B)increase sunk costs.
C)decrease production.
D)increase consumption.
E)cause an individual to make a rational choice.
Answer: A
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Page 3
Chapter 2: The Australian and Global Economies
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171 Verified Questions
171 Flashcards
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Sample Questions
Q1) In the circular flow model,
A)goods and services are sold by households and purchased by firms.
B)the government has no direct interaction with either households or firms.
C)factor markets are where goods rather than services are bought and sold.
D)the government is represented as a separate market.
E)the government buys goods and services from firms.
Answer: E
Q2) In the factor market,firms ________ and households ________.
A)pay rent,wages,interest and profit;earn rent,wages,interest and profit
B)purchase goods and services;supply goods and services
C)supply goods and services;purchase goods and services
D)supply land,labour,capital and entrepreneurship services;hire land,labour,capital and entrepreneurship services
E)hire land,labour,capital and entrepreneurship services;purchase goods and services
Answer: A
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Chapter 3: The Economic Problem
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218 Verified Questions
218 Flashcards
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Sample Questions
Q1) While moving on the production possibilities frontier,if the opportunity cost of producing one good is 1/2,the opportunity cost of producing the other good (in the same range)is
A)1/4.
B)2.
C)4.
D)1/2.
E)An amount that cannot be calculated without more information.
Answer: B
Q2) In a production possibilities frontier graph,the cost of producing more units of a good is measured by the
A)area in the arc between the PPF and a straight line drawn between the starting point and the ending point.
B)amount of the other good or service that must be forgone.
C)dollar value of the resources used to produce the good.
D)dollar value of the additional output.
E)None of the above answers is correct.
Answer: B
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Chapter 4: Demand and Supply
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144 Flashcards
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Sample Questions
Q1) The price of cotton clothing falls.As a result,
A)the demand for cotton clothing increases.
B)the quantity demanded of cotton clothing decreases.
C)the demand for cotton clothing decreases.
D)both the demand for cotton clothing increases and the quantity demanded of cotton clothing increases.
E)the quantity demanded of cotton clothing increases.
Q2) If there is a surplus of a good,the quantity demanded is ________ the quantity supplied and the price will ________.
A)less than;fall
B)less than;rise
C)equal to;fall
D)greater than;rise
E)greater than;fall
Q3) If income increases and the demand for bus rides decreases,then
A)consumers are behaving irrationally.
B)bus rides are an inferior good.
C)bus rides must be a complement good with some other good.
D)bus rides are a normal good.
E)bus rides are a substitute good.
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Chapter 5: Gdp: a Measure of Total Production and Income
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135 Verified Questions
135 Flashcards
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Sample Questions
Q1) Which of the following goods and services are omitted from GDP?
A)Government weather satellites
B)Services such as hair styling
C)Household production
D)Capital goods
E)Expenditure on resources used to protect the environment
Q2) GDP is
A)an imperfect measure of the standard of living.
B)a measure which includes the value of all newly produced goods and services.
C)a perfect measure of the standard of living.
D)the only factor that affects our standard of living.
E)a perfect measure of the value of production.
Q3) Although imperfect,which of the following is used as a measure of the standard of living?
A)Real GDP ÷ population
B)Real GDP × population
C)Nominal GDP × population
D)Nominal GNP × population
E)Nominal GNP ÷ population
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Page 7
Chapter 6: Jobs and Unemployment
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133 Verified Questions
133 Flashcards
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Sample Questions
Q1) If Alice,age 32,worked 12 hours as a paid employee the week before the Labour Force Survey,Alice is classified as ________ when calculating the unemployment rate.
A)a discouraged worker
B)underemployed
C)unemployed
D)employed
E)not in the labour force
Q2) Two of the most important factors that influence the natural unemployment rate are
A)the level of cyclical unemployment and the age distribution of the population.
B)the real wage rate and the pace of structural change.
C)the age distribution of the population and the level of cyclical unemployment.
D)the output gap and the real wage rate.
E)the pace of structural change and the output gap.
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Chapter 7: The Cpi and the Cost of Living
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131 Verified Questions
131 Flashcards
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Sample Questions
Q1) The quality change bias is most likely to put ________ into the CPI and so ________ the inflation rate.
A)a downward bias;overstate
B)a random bias;randomly overstate or understate
C)a downward bias;understate
D)an upward bias;understate
E)an upward bias;overstate
Q2) If the average price of a barrel of oil was $35 in 1990,when the CPI was 114.7 and $55 in 2015 when the CPI was 229.6,then the real cost of a barrel of oil
A)rose by 20 per cent during that period.
B)rose by 57 per cent during that period.
C)rose by 75.7 per cent during that period.
D)fell by 57 per cent during that period.
E)fell by 157 per cent during that period.
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Chapter 8: Economic Growth
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138 Verified Questions
138 Flashcards
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Sample Questions
Q1) According to the Rule of 70,if a country grows at 2.0 per cent per year instead of 1.5 per cent per year,how years less will it take to double its level of real GDP?
A)It will take 35 less years.
B)It will take 58.3 less years.
C)It will take 17.9 less years.
D)It will take 20 less years.
E)It will take 11.6 less years.
Q2) Suppose China wants to measure how much the standard of living has changed over the last decade.Which piece of data should China use?
A)Wages
B)Real GDP
C)Inflation
D)Real GDP per person
E)Population
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Chapter 9: Finance,saving and Investment
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157 Verified Questions
157 Flashcards
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Sample Questions
Q1) The tendency for higher government budget deficits to decrease investment is called the
A)deficit effect.
B)Ricardo-Barro effect.
C)inflation effect.
D)crowding-out effect.
E)wealth effect.
Q2) Economists use the word 'capital' to mean
A)the funds that firms use to buy and operate their businesses.
B)purchases in the market for stocks and bonds.
C)the workers that firms employ to produce goods and services.
D)the tools,instruments and other produced goods used to produce goods and services.
E)people's skills and talents.
Q3) The change in the quantity of capital from one period to the next is equal to A)net investment.
B)gross investment.
C)wealth.
D)financial investment.
E)depreciation.
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Page 11
Chapter 10: Money,the Price Level and Inflation
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213 Verified Questions
213 Flashcards
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Sample Questions
Q1) The quantity of money demanded is proportional to A)the real interest rate.
B)the price level.
C)the inflation rate.
D)the nominal interest rate.
E)real GDP.
Q2) The opportunity cost of holding money is the A)risk of being robbed.
B)the number of trips you make to the bank to manage your money.
C)forgone interest on an alternative asset.
D)higher tax rate you pay.
E)trouble you have balancing your cheque book.
Q3) Actual reserves are equal to
A)desired reserves plus excess reserves.
B)government securities plus cash in the bank's vault.
C)minimum balances plus desired reserves.
D)excess reserves plus liabilities.
E)required reserves plus fractional deposits.
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Chapter 11: Aggregate Supply and Aggregate Demand
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176 Verified Questions
176 Flashcards
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Sample Questions
Q1) If the equilibrium price level is 135 but the actual price level is 120,then
A)the quantity of real GDP demanded is less than the quantity of real GDP supplied.
B)aggregate demand will decrease to restore equilibrium.
C)aggregate demand will increase to restore equilibrium.
D)firms decrease their production because they cannot sell the output they produce.
E)the quantity of real GDP demanded is greater than the quantity of real GDP supplied.
Q2) Moving along the AS curve,when the price level increases,the
A)real wage rate rises,and there is a decrease in the quantity of real GDP supplied.
B)nominal wage rate rises,and there is a decrease in the quantity of real GDP supplied.
C)real wage rate falls,and there is an increase in the quantity of real GDP supplied.
D)real wage rate rises,and there is an increase in the quantity of real GDP supplied.
E)nominal wage rate falls,and there is an increase in the quantity of real GDP supplied.
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Chapter 12: Aggregate Expenditure Multiplier
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189 Flashcards
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Sample Questions
Q1) A movement along the consumption function shows the change in consumption expenditure as a result of a change in A)net taxes.
B)saving.
C)disposable income.
D)the interest rate.
E)the price level.
Q2) The above table gives data for the nation of Mouseville.There are no imports into or exports from Mouseville.Unplanned inventory changes equal $50 billion when real GDP equals
A)$900 billion.
B)$300 billion.
C)$700 billion.
D)$500 billion.
E)$800 billion.
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Chapter 13: The Short-Run Policy Trade Off
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134 Verified Questions
134 Flashcards
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Sample Questions
Q1) Okun's Law says that the difference between the unemployment rate and the natural unemployment rate determines
A)real GDP.
B)the real interest rate.
C)potential GDP.
D)the gap between the inflation rate and the unemployment rate.
E)the gap between potential GDP and real GDP.
Q2) When the natural unemployment rate increases,the short-run Phillips curve ________ and the long-run Phillips curve ________.
A)does not shift;shifts leftward
B)shifts leftward;shifts rightward
C)shifts leftward;does not shift
D)shifts rightward;does not shift
E)shifts rightward;shifts rightward
Q3) In the figure above,the natural unemployment rate is
A)4 per cent.
B)6 per cent.
C)8 per cent.
D)0 per cent.
E)2 per cent.
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Chapter 14: Fiscal Policy
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148 Verified Questions
148 Flashcards
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Sample Questions
Q1) As contrasted to the Keynesian view,mainstream economists believe that ________ than Keynesian economists believe.
A)the effects from fiscal stimulus are weaker
B)the multiplier effect is larger
C)potential GDP is less important
D)any crowding-out effect is smaller
E)the real GDP growth rate is larger
Q2) The structural deficit is the deficit
A)caused by the business cycle.
B)during an expansion.
C)that would occur at full employment.
D)during a recession.
E)that does not increase the national debt.
Q3) The largest source of Commonwealth government revenue in the 2013/14 budget was
A)indirect taxes like the GST.
B)company tax.
C)non-tax revenue.
D)taxes on individuals such as income tax.
E)taxes on the sale of beer and tobacco.
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Chapter 15: Monetary Policy
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108 Verified Questions
108 Flashcards
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Sample Questions
Q1) Suppose the Reserve Bank raises the cash rate.Put the following changes in the order in which they occur,starting with the changes that take place almost immediately and ending with the changes that may occur up to two years afterwards: i.Short-term interest rates rise.
Ii)Long-term interest rate rises.
Iii)Aggregate demand decreases.
Iv)Inflation rate decreases.
A)ii-i-iv-iii
B)i-ii-iii-iv
C)i-iii-ii-iv
D)i-ii-iv-iii
E)ii-i-iii-iv
Q2) If the Reserve Bank wants to raise the cash rate,it
A)instructs large commercial banks to sell government securities in the open market.
B)sells government securities in the open market.
C)buys government securities in the open market.
D)tells large commercial banks to raise their interest rates.
E)sells government securities in the foreign exchange market.
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Chapter 16: International Trade Policy
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122 Verified Questions
122 Flashcards
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Sample Questions
Q1) How can a domestic producer determine whether or not it has a comparative advantage in the production of a good or service?
A)It cannot.
B)By comparing the price it receives to the prices of other domestic producers.
C)By comparing the total domestic quantity to the total world quantity.
D)By comparing the price it receives to the world price.
E)By comparing the quantity it produces to the quantity produced in the world.
Q2) Which of the following chains of events occurs when a tariff is imposed on a good?
A)Domestic prices fall,decreasing the domestic quantity supplied and increasing the quantity demanded.
B)Domestic prices rise,shifting the demand curve leftward and the domestic supply curve rightward.
C)Domestic prices rise,shifting the domestic supply curve rightward.
D)Domestic prices rise,decreasing the quantity demanded and increasing the domestic quantity supplied.
E)Domestic prices fall,shifting the demand curve rightward,and consumers buy more of the good.
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Page 18
Chapter 17: International Finance
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145 Verified Questions
145 Flashcards
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Sample Questions
Q1) Suppose that a currency's value is found to be overvalued by using purchasing power parity.Then
A)the currency will depreciate in the future but we don't know when.
B)we know when and how much the currency will depreciate.
C)the interest rate in the country will change in order to restore purchasing power parity.
D)the currency will appreciate in the future but we don't know when.
E)we know when and how much the currency will appreciate.
Q2) If people expect the future exchange rate for dollars will be lower,then in the foreign exchange market the current
A)supply of dollars decreases.
B)demand for dollars increases.
C)demand for dollars decreases.
D)quantity demanded of dollars increases.
E)quantity demanded of dollars decreases.
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