$$\text{Debt-to-GDP Ratio} = \frac{\text{Total Public Debt}}{\text{Gross Domestic Product}}$$

Question 1

Which of the following best describes the main macroeconomic impact of the COVID-19 pandemic in 2020?

Accepted Answer

An atypical crisis where both supply and demand collapsed rapidly due to public health lockdowns.

Question 2

After the COVID-19 pandemic, inflation in the United States peaked at what rate in mid-2022?

Accepted Answer

$$9.9\%$$

Question 3

Which policy response did central banks initially take in response to post-pandemic inflation, and why was this problematic?

Accepted Answer

They kept policy rates near zero, believing inflation was transitory, which delayed the response to rising prices.

Question 4

Which of the following equations correctly represents the debt-to-GDP ratio?

Accepted Answer

$$	ext{Debt-to-GDP Ratio} = \frac{	ext{Total Public Debt}}{	ext{Gross Domestic Product}}$$

Question 5

Japan’s public debt as a percentage of GDP increased from $$74\% in 2001 to $$what value in 2023?

Accepted Answer

$$161\%$$

Question 6

Which of the following best explains why China’s per capita output remains much lower than that of the United States, despite rapid GDP growth?

Accepted Answer

China’s population is much larger, so output per person is lower.

Question 7

Which of the following factors contributed most to China’s rapid economic growth since 1998?

Accepted Answer

High investment in physical and human capital, and market-oriented reforms.

Question 8

Which of the following statements about global and local inequality is correct?

Accepted Answer

Inequality across countries has generally decreased, but inequality within many rich countries has increased.

Question 9

The combined effect of the OBBB Act and 2025 tariffs on US income distribution, as shown in the provided chart, is best described as:

Accepted Answer

The lowest income deciles experience a decrease in resources, while the highest deciles see an increase.

Question 10

Which of the following is a recommended economic policy to address climate change, according to most economists?

Accepted Answer

Implementing a carbon tax proportional to CO$$_2$$ emissions.

Question 11

If a country’s GDP falls by $$10\%$$ during a recession, and its public debt remains constant, what happens to its debt-to-GDP ratio?

Accepted Answer

It increases.

Question 12

Which of the following best describes the 'polluter pays principle' as applied to climate policy?

Accepted Answer

Firms that emit CO$$_2$$ are taxed in proportion to their emissions.

Question 13

Which of the following is NOT a reason why inflation increased after the COVID-19 pandemic?

Accepted Answer

Central banks immediately raised interest rates.

Question 14

Which of the following best explains why central banks began raising interest rates in 2022?

Accepted Answer

To lower growth and inflation as inflation exceeded targets.

Question 15

If a government runs a fiscal deficit, what is the most likely immediate effect on public debt?

Accepted Answer

Public debt increases.

Question 16

Which of the following is a likely consequence of governments focusing on subsidies for green energy rather than carbon taxes?

Accepted Answer

Slower reduction in CO$$_2$$ emissions due to less direct price signals.

Question 17

Which of the following best describes the relationship between CO$$_2$$ emissions and global temperature, according to the IPCC?

Accepted Answer

There is a strong link, with rising CO$$_2$$ emissions causing higher global temperatures.

Question 18

Which of the following is a key goal for students in this macroeconomics course?

Accepted Answer

To be able to read economic news more incisively and make wiser decisions.

Macroeconomics for Business Decision: A World Tour of Key Issues

Study Guide - Practice Questions