Economics · Unit 13

Macroeconomics

GDP, inflation, unemployment, and policy

Macroeconomics studies the whole economy, and it is not simply microeconomics scaled up - behaviour that is sensible for one household can be damaging if everyone does it at once.

The unit covers GDP, inflation, unemployment, the business cycle, and fiscal and monetary policy.

This unit breaks down into 23 short steps and 116 questions, starting at difficulty 1 and building to 5. Below you can see exactly what it covers, how the path is structured, and worked examples with explanations.

Steps: 23
Questions: 116
Difficulty: 1-5

What this unit covers

Unemployment
The Business Cycle
GDP
Inflation
Fiscal and Monetary Policy

Where this fits

Needs Money, Banking and Credit and Work, Jobs and Wages.

Where people slip

GDP measures output, not wellbeing. It counts activity regardless of whether it is useful, and rebuilding after a disaster raises it.

How the unit is structured

Macroeconomics runs as 23 short steps that unlock in order. 17 are practice rounds and 6 are challenge rounds that pull together everything before them. Questions start at difficulty 1 and climb to 5 as you progress.

Step 1 · easierStep 23 · harder

Challenge rounds

Example questions

30 real questions from this unit, with the answer and the reason behind it, grouped by what they practise. There are 116 in the unit altogether.

Fiscal and Monetary Policy

Multiple choiceLevel 1
1. Fiscal policy is when the government changes its ____ to affect the economy.
- taxes and spendingcorrect
- weather reports
- sports teams
- national anthem
Fiscal policy uses government taxes and spending.
True or falseLevel 1
2. A central bank is in charge of a country's interest rates and money supply.
Answer: True
Managing interest rates and the money supply is the central bank's job.
Type the answerLevel 2
3. What kind of policy uses government taxes and spending? (one word)
Answer: fiscal
Fiscal policy is the government's use of taxes and spending.
Multiple choiceLevel 2
4. Monetary policy is mainly controlled by a country's ____.
- central bankcorrect
- local school
- corner shop
- weather service
The central bank runs monetary policy, like setting interest rates.
Choose all that applyLevel 3
5. Which of these are tools of monetary policy? Pick all that apply.
- Setting interest ratescorrect
- Changing the money supplycorrect
- Buying or selling government bondscorrect
- Deciding school holiday dates
Monetary policy works through interest rates, the money supply, and buying or selling government bonds.
Fill the blankLevel 5
6. The simple spending multiplier equals 1 divided by (1 minus the marginal propensity to ____).
- consumecorrect
- save
- tax
- import
The multiplier is 1 / (1 - MPC); the larger the share of extra income people spend, the bigger the multiplier.

GDP

Fill the blankLevel 1
7. GDP stands for Gross Domestic ____.
- Productcorrect
- Price
- Payment
- Promise
The P in GDP stands for Product.
Odd one outLevel 1
8. Three of these are things GDP measures. Which one is the odd one out?
- The design of the flagcorrect
- Cars produced
- Haircuts provided
- Bread baked and sold
GDP counts goods and services produced, not a flag design.
True or falseLevel 1
9. GDP measures the total value of all the goods and services a country produces.
Answer: True
That is exactly what GDP counts: the value of everything the country makes.
Choose all that applyLevel 2
10. Which of these are counted in a country's GDP? Pick all that apply.
- New goods that are madecorrect
- Services that are providedcorrect
- The country's total land area
- The design of the national flag
GDP adds up goods and services produced, not things like land area or a flag.
Multiple choiceLevel 2
11. GDP is mainly used to measure the size of a country's ____.
- economycorrect
- army
- coastline
- flag
GDP is a way to see how big a country's economy is.
Type the answerLevel 2
12. What three-letter abbreviation names the total value of everything a country makes in a year?
Answer: GDP
GDP, Gross Domestic Product, is that total value.

Inflation

Fill the blankLevel 1
13. A steady rise in the general level of prices over time is called ____.
- inflationcorrect
- deflation
- interest
- profit
That general rise in prices is inflation.
Multiple choiceLevel 1
14. Which of these best describes inflation?
- The general level of prices rising over timecorrect
- The general level of prices falling
- A new type of coin
- A kind of bank account
Inflation means the general level of prices is rising over time.
Odd one outLevel 1
15. Which word does NOT mean roughly the same as inflation?
- deflationcorrect
- rising prices
- higher prices
- prices going up
Deflation is the opposite of inflation, meaning prices are falling.
Choose all that applyLevel 2
16. Which of these are true about inflation? Pick all that apply.
- Prices in general go upcorrect
- Money buys less than beforecorrect
- It is measured across many pricescorrect
- It means prices are falling
With inflation, prices in general go up and money buys less, measured across many prices.
Guess the numberLevel 2
17. Many central banks aim to keep inflation at a low, steady target of about what percent per year?
Answer: 2 %
A common inflation target is around 2 percent per year, low enough to stay stable.
Match the pairsLevel 4
18. Match each inflation term to its meaning.
Answer: Demand-pull = Demand grows faster than supply; Cost-push = Higher production costs raise prices; Deflation = General prices are falling; Disinflation = Inflation is positive but slowing
Disinflation means prices still rise, just more slowly, unlike deflation where they actually fall.

The Business Cycle

Fill the blankLevel 1
19. When the economy starts growing again after a recession, that stage is called the ____.
- recoverycorrect
- shortage
- surplus
- barter
The recovery is when growth returns after a downturn.
Choose all that applyLevel 2
20. Which of these can happen during a recession? Pick all that apply.
- Many people lose their jobscorrect
- Businesses sell lesscorrect
- Unemployment tends to risecorrect
- The economy grows very fast
In a recession people lose jobs, businesses sell less, and unemployment tends to rise.
Match the pairsLevel 2
21. Match each business cycle stage to what it means.
Answer: Expansion = Economy is growing; Peak = Highest point before a slowdown; Recession = Economy is shrinking; Trough = Lowest point before recovery
The cycle rises through expansion to a peak, then falls through recession to a trough.
Multiple choiceLevel 2
22. During a recession, the unemployment rate usually ____.
- goes upcorrect
- falls to zero
- is not measured
- stays frozen forever
As the economy shrinks, more people lose jobs, so unemployment goes up.
Odd one outLevel 2
23. Which of these is NOT a stage of the business cycle?
- Harvestcorrect
- Boom
- Recession
- Recovery
The business cycle has stages like boom, recession, and recovery, not harvest.
Put in orderLevel 2
24. Put these stages of a simple business cycle in order, starting from the top of a boom.
Answer: Boom -> Recession -> Recovery -> New boom
A boom is followed by a recession, then recovery, then a new boom.

Unemployment

Fill the blankLevel 1
25. People who want to work and are looking for a job but cannot find one are called ____.
- unemployedcorrect
- employed
- retired
- wealthy
Those people are the unemployed.
Multiple choiceLevel 1
26. Which person would be counted as unemployed?
- An adult looking for work who has no jobcorrect
- A student not looking for work
- A retired grandparent
- Someone happy in their full-time job
An adult with no job who is actively looking for work counts as unemployed.
Sort into groupsLevel 1
27. Sort each person by their work situation.
Answer: A nurse at her hospital job = Working; A person sending out job applications = Job hunting; A cashier at the shop = Working; A graduate looking for work = Job hunting; A retired grandparent not looking = Not working
People with a job are working, job seekers are job hunting, and some are not working at all.
Choose all that applyLevel 2
28. Which of these describe someone who is counted as unemployed? Pick all that apply.
- They do not have a job right nowcorrect
- They want to workcorrect
- They are looking for a jobcorrect
- They are happily retired and not looking
To be unemployed you have no job now, you want to work, and you are looking for a job.
Match the pairsLevel 2
29. Match each work term to its meaning.
Answer: Employed = Has a job; Unemployed = Wants a job but has none; Labor force = People working or job hunting; Retired = Has stopped working by choice
These are the basic words used to describe people's work situation.
Odd one outLevel 4
30. Three of these types of unemployment can still exist when the economy is at full employment. Which one is the odd one out?
- Cyclicalcorrect
- Frictional
- Structural
- Seasonal
Cyclical unemployment appears only when the economy slows; frictional, structural, and seasonal can persist at full employment.

Where these questions come from. Each unit starts as a plan of the concepts it should cover and the difficulty it should span. Questions are written against that plan with AI assistance, then checked by a validator that rejects anything without a single defensible answer, an explanation, or plausible wrong options. How we write questions sets out the whole process, and corrections are fixed in the bank and reach the site and the app the same day.

How you practise

This unit mixes 10 different question formats, so you are recalling and applying rather than recognising the same layout every time.

Choose all that apply
Fill the blank
Guess the number
Match the pairs
Multiple choice
Odd one out
Put in order
Sort into groups
True or false
Type the answer

Practise Macroeconomics

116 questions across 23 steps. Start with step one and crawl at your own pace.

Play this unit

Read about Macroeconomics

Explainers from our blog on what this unit covers. Each one ends with real questions from the bank.

More units in Economics

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