Macroeconomics: Introduction

Topics in this chapter

• Macroeconomics Scope and Methods
• Macroeconomic Aggregates and Variables
• National Income Accounting
• Circular Flow and Interdependence
• Aggregate Demand and Equilibrium
• Macroeconomic Objectives and Policies

Cheat sheet

Practice questions

1. Question 1Q-B257BA

   Which of the following is a macroeconomic question?

   1. A.How does a consumer decide how much of a good to buy?
   2. B.What determines the price of one firm's product?
   3. C.Why is the overall unemployment rate rising in an economy?
   4. D.How does a firm choose the least-cost combination of inputs?
   See the answer and solution
2. Question 2Q-38D712

   Which statement best explains the scope of macroeconomics?

   1. A.It studies only the behaviour of individual consumers.
   2. B.It studies the behaviour and performance of the economy as a whole.
   3. C.It studies only the accounting records of business firms.
   4. D.It studies only the exchange of goods in foreign markets.
   See the answer and solution
3. Question 3Q-D713E1

   A government studies the causes of inflation, unemployment and fluctuations in national income together. Which feature of macroeconomic analysis is reflected in this approach?

   1. A.It examines isolated decisions of individual economic units.
   2. B.It focuses on relationships among major economy-wide aggregates.
   3. C.It assumes that individual markets have no connection with one another.
   4. D.It considers only the distribution of income among consumers.
   See the answer and solution
4. Question 4Q-C48458

   Distinguish between microeconomics and macroeconomics, giving one example of each.

   See the answer and solution
5. Question 5Q-6C4407

   In macroeconomics, national income is classified as which type of economic variable?

   1. A.A stock variable measured at a particular point of time
   2. B.A flow variable measured over a period of time
   3. C.A variable that cannot be measured
   4. D.A purely individual-level variable
   See the answer and solution