Introduction to Macroeconomics

1. Who is considered as father of modern macroeconomics?
a. Adam Smith b. Prof. J. M. Keynes
c. Prof. J. N. Keynes d. Alfred Marshall

2. Who wrote the book “General Theory of Employment, Interest and Money”?
a. Adam Smith b. Prof. J. M. Keynes
c. Prof. J. N. Keynes d. Alfred Marshall

3. The term microeconomics and macroeconomics were first given by -----------
a. Adam Smith b. Prof. J. M. Keynes
c. Ragner Frisch d. Alfred Marshall

4. The book “General Theory of Employment, Interest and Money” was published in----------
a. 1836 b. 1936
c. 1963 d. None of these

5. Macroeconomics became popular after-------------
a. Great depression of 1929- 33 b. 1972-73
c. 1996- 97 d. 2006- 07
6. The term ‘macro’ has been derived from--------------
a. Greek word ‘makros’ which means large b. English word ‘makros’ which means large
c. Greek word ‘makros’ which means small d. French word ‘makros’ which means large

7. In macroeconomics, we study about ------------------
a. Theory of National Income & Employment b. Theory of Money Supply & Price Level
c. Theory of International Trade & Eco growth d. All of the above.

8. Which of the following is/are the goals of macroeconomics-----------
a. To Achieve Higher Level of GDP b. To Achieve Higher Level of Employment
c. Stability of Prices d. All of the above.

9. What are the tools of macroeconomics?
a. Monetary Policy b. Fiscal Policy
c. Income Policy d. All of the above.

10. The study of groups and broad aggregates of the economy is known as-----------
a. Microeconomics b. Macroeconomics
c. International Economics d. None of the above.

Ans:
Ques 1 2 3 4 5 6 7 8 9 10
Ans. b  b  c b a a d d d b

Write T for True and F for False against each of the following statements:
1. The term microeconomics and macroeconomics were first given by Ragner Frisch in 1933.
2. Prof. J.M. Keynes is known as father of modern macroeconomics.
3. Macroeconomics became popular after great depression of 1929- 33.
4. Prof. J. N. Keynes wrote the book General Theory of Employment, Interest and Money in
1936.
5. Price is the main determinant of macroeconomics.
6. Income is the main determinant of microeconomics.
7. Partial equilibrium analysis is used in macroeconomics.
8. General equilibrium analysis is applied in microeconomics.
9. Milton Friedman is monetarist.
10. Classical economists and monetarists emphasize that active role should be played by the
government to control business cycles and achieve economic stability.
11. Keynesians believe in free- market economy.
12. Friedman and other monetarists as well as supporters of rational expectations theory are
opposed to the active role by the government.
13. Microeconomics and macroeconomics are independent to each other.
Ans:
Ques 1 2 3 4 5 6 7 8 9 10 11 12 13
Ans. T T T F F F F F T F F T F

Matching Test:

Match- I Match- II
A. Father of Modern Macroeconomics a. Milton Friedman
B. The term macroeconomics is given by b. Prof. J. M. Keynes
C. Monetarist c. Robert Lucas Jr.
D. Supply- side economist d. Ranger Frisch
E. New Classical economist e. Bruce Bartlett
Ans:
Match- I  A B C D E
Match- II b  d a   e c

Short Questions with Answer:

Ques: What is macroeconomics?
Ans: The term macro has been derived from Greek word ‘makros’ which means large. It is the study of aggregates or groups or the entire economy such as gross domestic product, total employment, aggregate demand, aggregate supply, total savings, general price evel, etc.
Ques: What are the scopes of macroeconomics?
Ans: Macroeconomics has a wider scope than microeconomics. The study of macroeconomics extends to the following areas:
 Theory of National Income;
 Theory of Employment;
 Theory of Money Supply;
 Theory of General Price Level;
 Theory of International Trade; and
 Theory of Economic Growth.

Ques: what are the main objectives/goals of macroeconomics?
Ans: Followings are the main objectives or goals of  macroeconomics:
 To Achieve Higher Level of Gross Domestic Product;
 To Achieve Higher Level of Employment;
 Stability of Prices;
 Formulation of Economic Policies; and
 Achievement of Economic Development.

Ques: What are the main tools of macroeconomics?
Ans: Fiscal Policy: relates to the management of government revenue, expenditure and debt to
achieve favorable effects and avoid unfavorable effects on income, output and employment. Monetary Policy: relates to the  management of money supply and credit to step up business activities, promote economic growth, stabilize the price level, achievement of full employment and equilibrium in balance of payments. Income Policy: through this policy direct control is exercised over prices and wages.

Ques: What are the major issues and concerns of macroeconomics?
Ans: The major issues and concerns of macroeconomics are as follows
 Employment and Unemployment;
 Determination of National Income (or GNP);
 General Price Level and Inflation;
 Business Cycle;
 Stagflation;
 Economic Growth;
 Balance of Payments and Exchange Rate.