Session:3 Economic Foundations: Money and Rates
Multiple Choice
Principles of Finance | Leadership Development – Micro-Learning Session
Rice University 2020 | Michael Laverty, Colorado State University Global Chris Littel, North Carolina State University| https://openstax.org/details/books/principles-finance
1. Demand is the _______________.
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amount of a good or service that consumers need
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amount of a good or service that consumers want to purchase at the equilibrium price
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quantity of a good or service that consumers want to purchase minus the amount that producers are currently supplying
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quantity of a good or service that consumers are willing to purchase at various prices over a given time period, ceteris paribus
2. An increase in supply will lead to _______________.
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a lower equilibrium price and a lower equilibrium quantity
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a higher equilibrium price and a lower equilibrium quantity
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a higher equilibrium price and a higher equilibrium quantity
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a lower equilibrium price and a higher equilibrium quantity
3. An increase in the price of a basket of goods is known as _______________.
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inflation
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falling GDP
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rising GDP
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a change in quantity demanded
4. The unemployment rate equals _______________.
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the number of people unemployed divided by the labor force
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the number of people seeking work divided by the adult population
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the number of people unemployed divided by the number of people employed
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the number of people unemployed plus the number of people working part-time divided by the adult population
5. To be considered unemployed, an individual must be _______________.
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out of work
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actively seeking a job
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able to work
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All of the above
6. When measuring GDP, purchases are divided into the four broad categories of _______________.
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interest rates, inflation, unemployment, and investment
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demand, inflation, interest rates, and government spending
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imports, exports, loanable funds, and government spending
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consumer spending, investment, government spending, and net exports
7. A business cycle is measured from _______________.
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one peak to the next trough
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one trough to the next trough
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one trough to the next peak
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the time of the highest unemployment rate to the time of the lowest unemployment rate
8. Which of the following economic environments would most likely be associated with a recession?
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Unemployment falling to 30-year low
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GDP growing at an annual rate of 4.2%
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Unemployment increasing from 5% to 9% during the year
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New businesses opening in record numbers while new housing starts reach a 10-year high
9. The interest rate is the _______________.
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rental cost of money
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increase in the price of a market basket of goods
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measure of economic activity
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speed at which the money supply is increasing
10. If the nominal interest rate is 9% and the rate of inflation is 2%, the real rate of interest is approximately _______________.
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29%
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7%
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11%
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18%
11. A foreign exchange rate is _______________.
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the rate of inflation in a foreign country
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the amount of imports a country has relative to its exports
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the price of one currency in terms of another currency
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the rate of unemployment in one country compared to the rate in another country
12. In 2020, the CPI in a country is 120. In 2021, the CPI in the same country is 126. This would mean that inflation is _______________.
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5%
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6%
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26%
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46%