AFK Economic Concepts and Markets 3

Question 1

The 'velocity of money' refers to:

Accepted Answer

The frequency with which a unit of currency is used to purchase goods and services in a given period

Answer

The speed at which electronic funds transfers are processed

Answer

The rate at which prices change in the economy

Answer

The rate at which the money supply grows over time

Question 2

Which type of unemployment is associated with workers transitioning between jobs or entering the labor market?

Accepted Answer

Frictional unemployment

Answer

Cyclical unemployment

Answer

Structural unemployment

Answer

Seasonal unemployment

Question 3

When a central bank engages in 'quantitative easing,' it is primarily:

Accepted Answer

Purchasing large quantities of financial assets to inject liquidity into the economy

Answer

Raising reserve requirements to tighten bank lending

Answer

Selling government bonds to reduce the money supply

Answer

Lowering tariffs to stimulate international trade

Question 4

The Phillips Curve originally described an inverse relationship between:

Accepted Answer

Unemployment and inflation

Answer

Inflation and economic growth

Answer

Interest rates and bond prices

Answer

Trade deficits and currency value

Question 5

Which of the following would most likely cause the U.S. dollar to appreciate against foreign currencies?

Accepted Answer

A rise in U.S. interest rates relative to other countries

Answer

The Federal Reserve cutting interest rates significantly

Answer

Increased U.S. demand for foreign imports

Answer

A widening U.S. current account deficit

Question 6

A 'recession' is formally defined by the National Bureau of Economic Research (NBER) as:

Accepted Answer

A significant decline in economic activity spread across the economy lasting more than a few months

Answer

Two consecutive quarters of negative GDP growth

Answer

An unemployment rate exceeding 8% for more than six months

Answer

A stock market decline of 20% or more from its peak

Question 7

In the context of supply and demand, a price ceiling set below the market equilibrium price will most likely result in:

Accepted Answer

A shortage of the good

Answer

A surplus of the good

Answer

No change in quantity supplied or demanded

Answer

An increase in the market price