Chapter MCQ Test 2 — Introduction to Macroeconomics
10 Questions • 12 min • Chapter MCQ
12:00
Question 1 of 10
Why could mass unemployment in the 1930s NOT be explained by microeconomics alone?
The whole economy can behave differently from a single market
Microeconomics studies the whole economy
There were no firms
Prices never changed
Explanation: Economy-wide problems like mass unemployment needed a new whole-economy (macro) analysis, which Keynes provided.
Question 2 of 10
In the circular flow, the income firms pay out equals the spending households return, which shows that:
One sector's expenditure is another sector's income
Money disappears
Households produce goods
Firms own the factors
Explanation: The flow is continuous because every payment is simultaneously someone's income — the basis of national-income accounting.
Question 3 of 10
Wealth is a stock but income is a flow. A person can therefore have high wealth and yet a low:
Income (flow) in a given year
Stock of money
Population
Capital
Explanation: Stock and flow are distinct: large accumulated wealth does not guarantee a large current-period income.
Question 4 of 10
A leak from the circular flow (like saving or taxes) would, other things equal, make the flow of income:
Smaller in the next round
Larger
Unchanged forever
Circular only
Explanation: Withdrawals reduce the income passed on, shrinking the flow — a key idea behind the later multiplier.
Question 5 of 10
Comparing 'the unemployment rate of the country' with 'the wage of one worker', the first is macro because it is:
An economy-wide aggregate
About one person
A single price
A single firm
Explanation: Aggregates covering the whole economy (total unemployment) are macroeconomic, unlike a single worker's wage.
Question 6 of 10
The tertiary sector (services) has grown to dominate India's output. Banking and IT belong to which sector?
Tertiary
Primary
Secondary
External
Explanation: Services such as banking and IT are tertiary-sector activities.
Question 7 of 10
Building up from a two-sector to a four-sector model adds, in order, the:
Government and then the external sector
External and then households
Firms and then households
Banks only
Explanation: Two-sector (households + firms) → add government (three-sector) → add the external sector (four-sector open economy).
Question 8 of 10
Investment of ₹500 crore 'during the year' is a flow, while the factory it builds is part of the country's:
Capital stock
Income flow
Consumption
Exports
Explanation: Investment (a flow over a period) adds to the capital stock (measured at a point of time).
Question 9 of 10
Macroeconomic policy tries to manage aggregates such as total output, employment and the:
General price level
Price of one good
Cost of one firm
Utility of one consumer
Explanation: Macro policy targets economy-wide variables like output, employment and the general price level.
Question 10 of 10
The circular flow is the foundation of national income because it shows production, income and expenditure as:
Three equal views of the same flow
Unrelated totals
Always different
Stocks, not flows
Explanation: Output generates income which is spent — the three are equal, which is why all three measurement methods agree.