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Economics U2 MC
Economics U2 Multiple choice
| Question | Answer |
|---|---|
| Which one of the following is most likely to shift the short-run aggregate supply curve to the left? A rise in | money wages |
| In the short run, a fall in a budget deficit is most likely to increase | unemployment. |
| The UK economy is in recession. The government increases its budget deficit whilst, at the same time, the exchange rate of the pound falls. These events are most likely to lead to a rise in | the rate of growth of GDP and a fall in unemployment |
| Which one of the following is a correct statement? | Fiscal policy can be used to affect both the level of economic activity and the pattern of economic activity |
| Deflation is | a rise in the real value of money over time |
| The multiplier can refer to the effect of a change in the level of | investment upon national income. |
| A government wishing to reduce the level of unemployment through the use of fiscal policy would be most likely to | decrease the size of the budget surplus |
| One of the main functions of supply-side policies in the UK economy is to | create incentives designed to improve economic performance. |
| The economy is growing below its underlying trend rate and unemployment is rising. Which one of the following policies would be the best course of action to remedy the situation? | government spending to boost aggregate demand |
| Which one of the following types of unemployment is best defined as ‘unemployment for short lengths of time between jobs’? | Frictional |
| If the world economy goes into recession, this is likely to increase unemployment in the UK because | the value of goods and services exported from the UK will fall. |
| All other things being equal, a fall in the value of the pound against the euro would be expected to affect the UK economy because it is likely to lead to | an increase in aggregate demand. |
| Which one of the following is a correct statement about monetary policy in the UK? | Whenever the government uses contractionary fiscal policy, the Bank of England will use expansionary monetary policy to offset the effects. |
| In recent years, the UK has experienced large deficits on its balance of payments on current account. All other things being equal, which one of the following would be most likely to reduce such deficits? A fall in | the exchange rate |
| The long-run trend rate of growth in an economy is declining and the economy is also experiencing an increase in its rate of unemployment. Which one of the following is likely to be most effective in dealing with these problems? | An expansionary monetary policy and additional supply-side measures |
| Which one of the following is an example of fiscal policy? A decision by the government to | increase its budget surplus |
| In the circular flow of income model, which one of the following equations is correct? | Income = Output = Expenditure |
| Which one of the following fiscal policy measures would be most likely to reduce aggregate demand? | Reducing state retirement pensions and leaving taxation unchanged |
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luked30
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