As unemployment rises, it is harder for workers to bargain for higher wages. In which one of the following situations is a government most likely to pursue an expansionary fiscal policy? Students will not be required to calculate the value of the multiplier using the marginal propensity to consume or the propensities to withdraw. Students should appreciate that deflationary policies are policies to reduce aggregate demand and do not necessarily result in deflation. The rate of inflation The balance of payments deficit on current account A Increases Decreases B Decreases Increases C Increases Increases D Decreases Decreases Answer: D- Rate of inflation- decreases and the balance of payments deficit on current account- decreases Q. After a number of years when pay rises have been below inflation, the past few months have seen real wages start to increase. Economic methodology and the economic problem 2.
When applying and evaluating all the macroeconomic models in the specification, such as the circular flow of income and the multiplier process, students should be critically aware of the assumptions upon which these models are based and their limitations when investigating macroeconomic and global issues. Students do not need to know how interest rates and the exchange rate are determined but they do need to know how changes in interest rates and the exchange rate affect macroeconomic performance. No login or registration is required - just supply them with your activation code, which you will find in your management controls, and that's it. Which one of the following best illustrates the accelerator process? Also, there is low confidence in the economy which reduces inflation expectation. Andrea Andrews, The Royal Latin School, 2016 Multiple choice questions represents almost 40% 37. New industries come into existence and demand for labor increases which increase the employment rate or unemployment decreases.
This involves increasing the money supply or to cut interest rates which thus, stimulates economic growth. However, now that unemployment has fallen to levels not seen since 2008, fiscal measures designed to increase incentives and help people to return to work are viewed by some as the only way to reduce unemployment further without an unwelcome rise in inflation. All other things being equal, which one of the following policies is most likely to move the economy to a new long-run equilibrium at point G rather than point F? The diagram below shows an economy operating on its production possibility frontier at point Y. Individual economic decision making 3. Students should appreciate that governments may deliberately run budget deficits and surpluses to try to influence aggregate demand but they are not required to understand the arguments relating to the pros and cons of balancing the budget or attempting to limit the size of the national debt. Answer: Unemployment rate is a measure to calculate the unemployment in the country.
Exports Unemployment Economic Growth A Increase Decrease Increase B Decrease Increase Increase C Increase Decrease Decrease D Decrease Increase Increase Answer: A- Exchange rate increase, unemployment rate decrease and Increase in economic growth Q. Your fellow students know exactly where the pitfalls lie and what the key elements will be to your success in that module. Some economists have warned that the high number of vacancies could signal a mismatch between the type of jobs available and skills of those who are seeking work, with firms struggling to recruit the right workers. The market mechanism, market failure and government intervention in markets The national and international economy: 9. Answer: A- the demand for imports Q. Answer: A- cause consumers to delay their purchases of consumer durables Q.
There are three sections to each guide: Introduction - includes advice on how to use the guide, an explanation of the skills being tested by the assessment objectives, an outline of the unit or module and, depending on the unit, suggestions for how to revise effectively and prepare for the examination questions. Answer: B- a positive output gap. However, they should be able to calculate the value of the multiplier from an initial change in injections and the resulting change in national income. If firms produce more, demand for workers and this lower demand-deficient unemployment. Fiscal policy can be used to affect the pattern of economic activity.
Your fellow students know exactly where the pitfalls lie and what the key elements will be to your success in that module. The government uses fiscal policy to control the exchange rate. Each guide is written by an examiner and explains the unit requirements, summarises the relevant unit content and includes a series of specimen questions and answers. Production, costs and revenue 5. The Bank has also used a number of other monetary policy measures, such as quantitative easing, to encourage banks and other financial institutions to increase their lending to firms and households. Students should be aware that the current account is only one part of the balance of payments but knowledge of the other parts of the account is not expected.
Expansionary monetary policy can take place through various ways like lowering interest rates because it will tend to reduce the incentive to save, making spending more attractive instead. Falling oil and commodity prices have led to a temporary reduction in inflation and should help to boost short-run growth, but these price reductions are unlikely to continue. Answer: Spare capacity is situation where actual production is less than the optimal production of the companies. Perfect competition, imperfectly competitive markets and monopoly 6. The cost of money i. Prices fell between 2012 and 2015 Answer: B- Prices and average earnings were higher in 2015 than in 2012 Q. It helps in restoring consumers and businesses confidence.
Although monetary policy has encouraged spending by the private sector, many believe that cuts in government spending have delayed the recovery in the economy. More recently, it has been believed that the cause was not excessive wage costs but increased costs of imports e. Bank Rate has remained at this record low level ever since. This full colour workbook provides stimulus materials on all the topics, followed by sets of questions designed to develop and test skills in the unit. In March 2009, the Bank of England cut Bank Rate to 0. Buy a copy per student and get them online instantly.