The macroeconomy — AS & A Level Economics (9708) questions by topic

What is an example of a transfer payment? A a household moving savings from one bank account to another B a monthly repayment on a loan used to buy a new cooker C the amount paid…

Which statement correctly describes an increase in real GDP? A Nominal GDP rising faster than nominal income. B Nominal GDP rising faster than the rate of inflation. C The rate of…

An open economy with a government sector is in equilibrium. Households in this economy save $100 million and firms spend $150 million on investment. Which combination of the…

An economy's manufacturing share of real GDP fell from 30% in 1990 to 12% in 2023. Which type of unemployment would have resulted from this? A cyclical B frictional C structural D…

Which statement is not correct? A The long-run aggregate supply curve can be downward sloping. B The long-run aggregate supply curve can be horizontal. C The long-run aggregate…

The price of a pack of six eggs rises from $1.00 to $1.32 over a year. Consumer prices, as measured by the consumer price index, rise by 10% over the same period. What is the real…

Price stability can be said to occur if the measured value of the consumer prices index (CPI) is unchanged during the year. Which statement is correct? A For price stability to…

Based on the circular flow of income, which condition is necessary for an open economy to be in equilibrium? A Government investment is equal to private investment. B Planned…

The aggregate demand curve is typically downward sloping. What is one possible explanation for this? A A fall in the price level will lead to a rise in demand for imports. B As…

What is most likely to cause an unemployed worker to be classified as frictionally unemployed? A lack of relevant skills for vacant jobs B lack of up-to-date job vacancy…

The table shows figures estimated at the end of a train drivers' strike. item $ (000s) --- --- loss of ticket revenue for train companies 600 value placed on extra leisure time by…

The diagram shows aggregate demand (AD) and aggregate supply (AS) curves. The initial equilibrium is at X. A government decides to invest in an increase in infrastructure,…

Which source of income is not included in measuring real GDP? A pension paid to retired people B profits made by firms C rent paid to landlords D wages paid to nurses

The table shows some labour market statistics. million --- --- number of people of working age 45 number of people unemployed 2 number of people in the labour force 40 number of…

The diagram shows aggregate demand (AD) and aggregate supply (AS) where the initial equilibrium is at point X. The central bank forecasts a rise in raw material costs. The…

An economy is experiencing a period of deflation. What must be happening? A The average price level is falling. B The output of the economy is falling. C The rate of inflation is…

What is the most likely consequence of economic growth? A a fall in the price of raw materials B a rise in youth unemployment C a worsening current account balance D reduced…

Using the data in Table 1.1, compare changes in the inflation rate and changes in the interest rate in the US.

Explain how the circular flow of income in an economy changes when that economy moves from a closed to an open economy and consider what determines the extent of the change.

With the help of an AD/AS diagram(s), explain one demand-side and one supply-side cause of deflation and consider which is likely to be more damaging to an economy. Candidates are…

Explain two causes of economic growth and consider the extent to which their impact can be measured. [8]

Using the data in Fig. 1.1, describe the trend shown in the annual rate of economic growth in Malaysia over the period January 2019 to January 2022.

The diagrams show the demand for and supply of labour. [Three diagrams, each with axes 'wage rate' (vertical) and 'quantity of labour' (horizontal). Diagram 1 (left): an…

In an economy with no government sector or foreign trade, the marginal propensity to consume is 0.6. If the equilibrium level of national income is $10 000 million and the full…

What is a definition of hysteresis unemployment? A people who become temporarily unemployed because it takes a short period of time to find a job after they leave school B people…

An economy has a positive output gap. What is happening to economic growth and the general price level? economic growth general price level --- --- --- A above trend growth rate…

What is a factor affecting the occupational mobility of labour? A education and training B immigration controls C price of housing D transport infrastructure

According to the quantity theory of money, which combination would result in the general level of prices remaining unchanged? money supply total number of transactions velocity of…

An economy is at its natural rate of unemployment. Under which circumstances will an increase in government spending aimed at reducing unemployment be most likely to conflict with…

An initial injection into the circular flow of income causes a much larger increase in GDP. What does this define? A autonomous investment B demand-pull inflation C the…

An increase in a country's inflation rate causes real incomes to decline, but consumers decide to maintain their living standards. What has increased? A autonomous consumer…

The diagram shows the actual and forecast changes in GDP for a country between 2020 and 2040. [Diagram: vertical axis 'GDP $', horizontal axis 'year' marked 2020, 2025, 2030,…

A government decreases interest rates to reduce unemployment but finds this has little effect due to hysteresis. What causes this hysteresis? A capital investment increases B…

A government sets a target for the annual rate of inflation to be no more than 3%. Which circumstances would make it difficult to achieve the target? A if devaluation of the…

Which policy will help to reduce income inequality? A to increase indirect taxes B to increase trade union power C to increase the rate of interest D to reduce welfare payments

The table shows possible changes in population, the rate of inflation and the number of years of education. Which combination would lead to an increase in both real GDP per capita…

In an economy with no government sector or foreign trade, the marginal propensity to consume is 0.6. If the equilibrium level of national income is $10 000 million and the full…

What is a definition of hysteresis unemployment? A people who become temporarily unemployed because it takes a short period of time to find a job after they leave school B people…

An economy has a positive output gap. What is happening to economic growth and the general price level? economic growth general price level --- --- --- A above trend growth rate…

According to the quantity theory of money, which combination would result in the general level of prices remaining unchanged? money supply total number of transactions velocity of…

In a closed economy with no government, the level of consumption spending is determined by the equation C = a + bY. What does b represent in this equation? A autonomous…

The diagram shows an economy's aggregate monetary demand curve, AMD₁. Which level of income will produce the greatest difference between autonomous and induced expenditure?…

According to the accelerator theory, what would cause investment in an economy to be lower than in the previous year? A a lower marginal propensity to consume than in the previous…

What is the best description of sustainable economic development? A a long-term increase in the actual output of an economy B a long-term increase in living standards without…

What is least likely to increase the natural rate of unemployment? A a decrease in information about vacancies B a decrease in trade union power C an increase in unemployment…

In Keynesian economic theory, what is the purpose of interest? A to bring national income and expenditure into line B to control the level of economic growth C to create a balance…

The quantity theory of money is sometimes represented by the equation MV = PT. Which statement is not correct? A M is a measure of the total value of notes and coins in…

The table gives an economy's unemployment rate and inflation rate for a five-year period. year unemployment rate % inflation rate % --- --- --- 1 7.6 2.6 2 6.2 1.6 3 5.8 1.8 4 5.9…

Which combination of characteristics is usually associated with a low-income country? A high death rate and low levels of productivity B high gross domestic product and low infant…

What is least likely to improve as a result of the decision by high-income countries to increase their aid to low-income countries? A exchange rate of low-income countries B…

The article refers to structural unemployment. Explain what this means and whether it is the same as the natural rate of unemployment.

With the help of a diagram, assess whether the impact of an increase in labour productivity on the wages and employment of a firm is likely to be greater in a perfectly…

The table illustrates macroeconomic data for an economy. All figures are in $ billions. What is the equilibrium real output? consumption expenditure investment government…

A country's net national income (NNI) is less than its gross national income (GNI). What does this mean? A incomes earned overseas were less than incomes sent overseas B inflation…

Asha is currently unemployed. She has been offered a job but has decided to decline the offer and search for a better paid job. Which type of unemployment is this? A cyclical B…

A major trading nation, country X, is in equilibrium at the full employment level of real output. There is then a recession in its main international markets. What are the most…

Why would a fall in a country's average price level cause its aggregate demand curve to slope downwards? A It leads to an increase in interest rates. B It reduces the real value…

Which government policy will increase aggregate demand? A raising indirect taxation B reducing the budget surplus C removing domestic subsidies D removing import quotas

The table gives the value of the price index of an economy in two years. year price index --- --- 1 60 2 120 What can be concluded about the period? A Nominal income doubled. B…

What causes a rise in cost-push inflation? A a fall in the rate of income tax B a rise in the rate of income tax C a depreciation of the exchange rate D an appreciation of the…

Which change affecting an economy's labour force will cause an increase in economic growth in the short run? A an increase in students entering university B an increase in the…

Which factor explains the difference between GDP and GNI? A foreign investment in the domestic automobile industry B revenues received from exporting capital goods C revenues…

What is true about a government's macroeconomic objectives? A Economic growth ensures a more even distribution of income. B Increasing output ensures that more workers are…

The original equilibrium in the economy is represented by point X, the intersection of AD₁ and AS₁, on the AD/AS diagram shown. The government decreases the money supply. What is…

The diagrams show a country’s aggregate demand (AD₁) and aggregate supply (AS₁) curves. Since the world economic downturn (2007–2008), some governments have reduced labour costs…

The diagram shows the effect on the average price level when aggregate demand (AD) increases from AD₁ to AD₂. Which statement relating to this change in aggregate demand is…

The table lists the values of the components of an economy’s circular flow of income. component value $m --- --- government spending 6 exports 8 investment 9 imports 7 saving 10…

What is a cost of negative economic growth? A deteriorating balance of payments B higher inflation C higher unemployment D increased pollution

A government statistical office measured changes in income from employment, pensions and benefits, then subtracted income tax and welfare contributions and adjusted for inflation.…

When can a policy be classified as macroeconomic? A when it focuses on the level of individual welfare B when it involves economy-wide institutions and behaviour C when it is…

Describe what has happened to consumer prices in the Eurozone between March 2021 and February 2022.

With the help of a diagram, explain what is meant by the circular flow of income in an open economy and consider the extent to which it can explain economic growth in such an…

Use the information provided to calculate the real interest rate for Turkey in January 2022.

With the help of a diagram, explain how increases in aggregate demand affect the level of real output and the price level in an economy and consider when such increases may become…

A world financial crisis was partly linked to the actions of commercial banks. Which actions of the commercial banks could have led to the financial crisis? A being subject to…

What is most likely to result from a decrease in the natural rate of unemployment? A a decrease in government expenditure on goods and services B a decrease in the level of…

The table gives the percentage (%) rates of youth unemployment and total unemployment in France and the UK in 2001 and 2005. France: youth unemployment (%) France: total…

What is a necessary assumption of the Keynesian multiplier model? A increasing average propensity to save B flexible costs and prices C full employment of resources D open…

The table shows the relationship between inflation and unemployment in Germany from 2019 to 2022. 2019 2020 2021 2022 --- --- --- --- --- inflation: annual variation (%) −1.9 −1.6…

The diagram represents the short-run Phillips curves SRPC₁ and SRPC₂ and the long-run Phillips curve in an economy, where NRU is the natural rate of unemployment. The economy is…

The table shows the GDP and population of four countries. Which country is most likely to have the lowest standard of living? country GDP US$ billion population million --- ---…

What is not a function of a commercial bank? A to help firms raise finance B to hold cash on deposit for firms C to lend money to households D to provide savings accounts

In 2020 in a country, the unemployment rate of the 16–64 age group seeking work was 4.0%. The employment rate for this group in the same period was 76.6%. What can be concluded…

Which statement relating to unemployment benefits provided by a government is not valid? A They allow firms to dismiss workers as unemployment benefits provide support to…

Country X has a marginal propensity to consume (MPC) of 0.7. Its marginal propensity to save (MPS), marginal rate of taxation (MRT) and marginal propensity to import (MPM) are…

The diagrams show the performance of an economy using different measures. [Diagrams: three separate diagrams. (1) A production possibility curve with ‘goods’ on the vertical axis…

Which combination of policies would be most likely to bring a country out of recession? A expansionary fiscal and monetary policy as well as supply-side policies B expansionary…

The table shows indicators for the macroeconomies of two South American countries over one year. During this year, both governments attempted to reduce unemployment by expanding…

A world financial crisis was partly linked to the actions of commercial banks. Which actions of the commercial banks could have led to the financial crisis? A being subject to…

What is most likely to result from a decrease in the natural rate of unemployment? A a decrease in government expenditure on goods and services B a decrease in the level of…

The table gives the percentage (%) rates of youth unemployment and total unemployment in France and the UK in 2001 and 2005. France youth unemployment (%) France total…

What is a necessary assumption of the Keynesian multiplier model? A increasing average propensity to save B flexible costs and prices C full employment of resources D open…

The table shows the GDP and population of four countries. Which country is most likely to have the lowest standard of living? country GDP US$ billion population million --- ---…

What will increase the size of a country's optimum population? A a rise in the birth rate B a lowering of the age of retirement C a rise in the stock of capital available in the…

Describe what is meant by the Gini coefficient and its possible range of values.

In many countries increased government spending is regarded as a cause of economic growth. It is sensible, therefore, for a government to spend more to increase economic growth as…

National income statistics are often used as a measure of the standard of living. Consider to what extent national income statistics can be used to compare the standard of living…

Describe what is meant by the Gini coefficient and its possible range of values.

National income statistics are often used as a measure of the standard of living. Consider to what extent national income statistics can be used to compare the standard of living…

The table shows the Consumer Prices Index (CPI) for a country. year CPI --- --- 2008 100 2009 104 2010 102 2011 105 2012 108 2013 111 Which statement about the period 2008 to 2013…

What is most likely to cause the price level to rise? An increase in A productivity of labour. B raw material prices. C income taxes. D subsidies paid to producers.

What is most likely to increase a country's circular flow of income? A Its budget deficit increases. B Its imports increase. C Its interest rates increase. D Its exchange rate…

A country with a constant population experiences a 5% increase in its nominal GDP during a year. In which situation will average living standards be most likely to have increased…

Which combination correctly identifies the necessary information to construct an accurately labelled graph of a normal short-run aggregate supply curve (SRAS)? gradient of the…

Inequality in an economy can be categorised as either income inequality or wealth inequality. What is most likely to cause greater wealth inequality than income inequality? A an…

The table shows the values of Consumer Prices Index (CPI) and a worker’s salary in 2022 and 2023. CPI 2022 100 --- --- CPI 2023 110 worker’s salary 2022 $20 000 worker’s salary…

An economy experiences rising unemployment due to incomes falling as a result of a virus pandemic. How would this unemployment be classified? A cyclical B frictional C seasonal D…

What is likely to move an economy’s aggregate demand curve to the right? A a fall in income equality B a fall in incomes abroad C a fall in the exchange rate D a fall in the…

Which items have to be added to and subtracted from Gross Domestic Product at market prices to calculate the value of Gross Domestic Product at basic prices? A capital consumption…

In an economy with an interest rate of 4% per annum, the rate of inflation falls from 5% to 3% per annum. What will be a benefit of this fall? A Menu costs will fall to zero. B…

An economy is in equilibrium at point E on the diagram. The government reduces its expenditure on defence. Which point on the diagram shows the new equilibrium? [Diagram: the…

The number of people employed in a country and the level of unemployment both decrease. What could explain this? A net inward immigration B an increase in the level of…

A country experienced an annual deflation rate of 2% for four successive years. Which statement is correct for the four-year period? A The price level fell by 8%. B The price…

In the circular flow of income model of an economy, Y, C, I, G, X, S, T and M represent total income, consumption, investment, government expenditure, exports, saving, taxation…

What leads to a rise in frictional unemployment? A an economy moving into a period of recession B replacement of workers with computers in the service sector C a change from an…

The information shows data from a country's national income accounts. $ million --- --- gross domestic product at market prices 200 000 gross value added at basic prices 180 000…

A government is considering building a large hospital. The impact on the country's price level will depend partly on the amount of expensive raw materials the country imports for…

Using the data in Fig. 1.1, describe the trend shown in the annual inflation rate in Argentina over the period February 2021 to January 2022.

Explain two possible causes of economic growth and consider whether the consequences of economic growth for an economy will always be positive.

Identify two possible reasons why the current account on the balance of payments in Chile is in deficit in the first quarter of 2022 despite the surplus on the balance of trade in…

Explain two methods of measuring unemployment and consider the extent of the possible difficulties in obtaining an accurate measurement of unemployment.

In 2021, year-on-year inflation in many economies increased to a level not experienced for fifty years. With the help of a diagram, explain what is meant by cost-push inflation…

Which statement about money is correct? A It consists solely of deposits held by commercial banks. B It functions as a medium of exchange. C Its monetary value equals its…

In country X, unemployment is rising at the same time as the number of job vacancies is increasing. What is the most likely reason for this? A Economic growth is falling. B…

An increase in which variable affecting labour markets is most likely to reduce the natural rate of unemployment? A the level of unemployment benefit B the militancy of trade…

A consumer has an income of $1000 per week. The consumer spends 80% of this on goods and services. Following an increase in the consumer's income to $1200 per week, consumption…

The table shows data about the population of a country. item value --- --- total population 2 000 000 labour force 1 200 000 number of people employed 900 000 number of people…

The diagram shows an increase in aggregate demand (AD) from AD₁ to AD₂. [Diagram 1: vertical axis labelled 'price level', horizontal axis labelled 'real output', origin O. A…

How could high interest rates increase a country's rate of inflation? A by increasing the current borrowing costs of business B by increasing the current borrowing costs of…

What is most likely to influence subsequent increases in national income as a result of a government policy of reduced interest rates? A marginal cost B marginal efficiency of…

It is often argued that the UN Human Development Index (HDI) is a better indicator of economic development than income per capita because it adjusts for A average hours worked by…

Some conditions for providing foreign aid to low-income countries can be restrictive. Which kind of aid fits this description? A food aid in the event of natural catastrophes such…

What is most likely to cause the living standards of a country to rise? A an increase in the number of doctors B an increase in the gold reserves C an increase in the number of…

When is the natural rate of unemployment most likely to fall? A when there is a decline in the education levels of workers B when there is an increase in income tax rates C when…

A country has increasing productivity and falling unemployment. What can be concluded from this information? A Economic efficiency has increased. B Interest rates have increased.…

The diagram shows full employment, national income, and expenditure (AMD). The economy is in equilibrium at J. [Diagram: vertical axis labelled AMD, horizontal axis labelled…

The table shows the percentage of labour force unemployed and the rate of inflation in a country over a five-year period. year unemployment % inflation % --- --- --- 1 3.5 4.0 2…

What indicates that a more equal distribution of income has been achieved? A a faster rate of economic growth B a higher Human Development Index C a lower Gini coefficient D a…

The diagram shows two Lorenz curves. [Diagram: a square with the vertical axis labelled 'percentage of income' (0 to 100) and the horizontal axis labelled 'percentage of…

A website compares the prices of groceries. Which function of money is illustrated by this? A medium of exchange B standard of deferred payment C store of value D unit of account

Two statements about the types of unemployment are shown. 1 You will get unemployment if you pay people not to work, and tax them when they do. 2 An individual is actively seeking…

Households in an economy change their consumption behaviour causing the consumption curve to shift from C₁ to C₂. [Diagram: vertical axis labelled 'consumption spending',…

The diagram shows a curve representing the relationship between a country's unemployment rate and its inflation rate. [Diagram: vertical axis labelled 'inflation rate', horizontal…

What is the most likely result of a period of negative actual growth? A an increase in the surplus of the financial account of the balance of payments B an increase in the deficit…

The optimum level of population is deemed to be that level at which real output per head is maximised. The diagram shows the relationship between population size and output per…

During a year, a country's national income in money terms increased by 5%, prices increased by 4% and the total population increased by 2%. What was the approximate change in real…

What is most likely to result from foreign direct investment in a developing economy? A an improvement in the developing economy's trade balance B an increase in the developing…

The diagram shows an economy's Lorenz curve (VW). [Diagram: a square with vertical axis labelled 'cumulative % of income' (from 0 to 100) and horizontal axis labelled 'cumulative…

The table gives the percentage of employment in the primary, secondary and tertiary sectors in four countries. Which country is most likely to be a high-income country? primary…

The table below contains some key economic data for Mexico in 2020. Gross National Income (GNI) 18.5 billion pesos --- --- nominal wages +2.8% disposable income +1.2% unemployment…

The table shows the income and wealth of Yasmin. items $ --- --- children's welfare benefits 1 000 dividends from shares 1 000 property owned 40 000 savings in bank 1 000 shares 2…

Which group is most likely to suffer during high inflation? A borrowers B importers C producers D fixed wage earners

Which statement explains why the aggregate demand curve is downward sloping? A As prices fall, the demand for exports becomes more elastic. B As prices fall, fewer goods are…

The diagram shows the aggregate demand (AD) and aggregate supply (AS) for an economy. [Diagram: the vertical axis is 'general price level' and the horizontal axis is 'real…

The graph gives the percentage unemployed for all people aged 16 and over, and for young people aged 16-24. [Graph: the vertical axis is 'percentage unemployed' (scaled 0 to 30)…

In the diagram, the intersection of AD and LRAS at point X represents the current macroeconomic equilibrium. [Diagram: the vertical axis is 'general price level' and the…

What is the equivalent of a country's national debt? A the accumulated borrowing of the government B the difference between government spending and taxation C the interest paid by…

Which change is shown directly by the use of aggregate demand and aggregate supply analysis? A the nominal income level B the price level C the unemployment level D the wage level

Why might aggregate demand increase when a country's price level falls? A Domestic interest rates will tend to fall. B Imports become more price competitive. C Real incomes fall.…

What is used to convert nominal GDP to real GDP? A exchange rates B changes in the price level C interest rates D taxation

The diagram shows a basic two-sector circular flow of income. What can be concluded about the direction of flows? A Consumer expenditure flows anticlockwise. B Goods and services…

The table shows the types of unemployment and their possible solutions. Which combination is not correct? type of unemployment possible solution --- --- --- A technological…

If a country is experiencing a period of high inflation, which groups will benefit the most from this? companies that export the majority of their output fixed income earners…

The world consists of two countries, M and N. The graphs show their production possibilities for wheat and rice. Countries M and N operate on their production possibility curves…

Economic growth leads to increased levels of income and consumption per capita for the adult population. Which circumstances are needed for this to happen in an economy? A a…

The table gives data for an economy. 2010 2011 2012 2013 2014 --- --- --- --- --- --- Gross Domestic Product (GDP) at current prices ($ billion) 200 220 240 300 320 GDP deflator…

In year 1, a country's real GDP was $500 billion. In year 2, nominal GDP rose to $577.5 billion and the prices increased by 5%. What is the real GDP in year 2? A $4.76 billion B…

The table gives details of national income statistics for an economy. US$bn --- --- consumption 2000 investment 500 government expenditure 600 net exports −100 net foreign factor…

Country X and country Y each allocate half of their resources towards the manufacturing of shoes, and the other half towards the manufacturing of t-shirts. Resources can be used…

Which government action is least likely to prevent a fall in economic growth? A additional controls on commercial banks' lending B relaxation of rules for immigration of adult…

What is the most likely cause of an outward shift of a country's aggregate demand curve? A a decrease in the competitiveness of domestically produced products B a decrease in the…

The diagram shows the macroeconomic equilibrium output and price level changing from Y and P to Y₁ and P₁. [Diagram: 'price level' on the vertical axis and 'real output' on the…

The diagram shows aggregate demand (AD) and aggregate supply in the short run (SRAS) and the long run (LRAS). [Diagram: 'price level' on the vertical axis and 'real GDP' on the…

Which approach would a government be most likely to use to eliminate deflation? A an increase in direct taxes B an increase in interest rates C a reduction in indirect taxes D a…

Using the data in Fig. 1.1, calculate the change in India's unemployment rate between July 2020 and May 2021.

With the help of an AD/AS diagram(s), explain cost-push inflation and demand-pull inflation in an economy and consider in what circumstances one may be more damaging than the…

Compare the government budget balance of Nigeria in 2016 with the government budget balance in 2020.

Explain the difference between cost-push and demand-pull inflation and consider which is more likely to occur if there is a depreciation in the exchange rate of a country with few…

With the help of a circular flow of income diagram, explain how equilibrium is determined in an open economy and consider whether a budget deficit or a trade deficit is more…

The diagram shows the Lorenz curves for Norway (N) and India (I). [Diagram: vertical axis labelled 'cumulative percentage of income' (0 to 100), horizontal axis labelled…

Four citizens have each been unemployed for the past six months. Which citizen would not be characterised as being structurally unemployed? A worked as a coal miner but coal-fired…

In the diagram, OP is the equilibrium level of income and OQ is the full employment level of income in a closed economy. [Diagram: vertical axis labelled 'expenditure', horizontal…

In a closed economy with no government sector, when will an increase in investment spending generate the largest increase in equilibrium national income? A when households have a…

To indicate the changing income distribution, the Kuznets curve plots gross domestic product per capita against an economic variable X. What is variable X? A the exchange rate B…

Economists define the unemployed as being those who are not in work but are actively seeking work. Other groups of people in the population of working age include those classed as…

The diagram shows a Lorenz curve with two areas, X and Y, identified. [Diagram: vertical axis labelled 'cumulative % of income' (0 to 100), horizontal axis labelled 'cumulative %…

Immigrants are awarded entry points according to their ability to fulfil criteria set by the Canadian Government. A new Express Entry system for the immigration of skilled workers…

Which statement best describes demand-induced investment? A It is spending on capital goods by firms because the rate of growth in demand for final goods and services increases. B…

Middle Eastern countries earn foreign exchange from exports of oil and natural gas. The World Economic Forum has encouraged oil producers to assist low-income countries in…

An open economy has injections, J, into the circular flow of income and withdrawals, W. [Diagram: vertical axis 'injections and withdrawals', horizontal axis 'national income',…

Which condition will produce the highest value of the national income multiplier in an open economy with a government sector? A high average and marginal tax rates B high marginal…

Which type of unemployment can be classified as voluntary? A cyclical B frictional C structural D technological

The table shows the Human Development Index (HDI) values for India in 2014 and 2020. HDI value --- --- 2014 0.60 2020 0.64 Which conclusion is most likely to be drawn from the…

Which country is likely to be the most highly developed? Gini coefficient death rate relative size of tertiary sector --- --- --- --- A high high high B low low low C low low high…

What is central to economic growth but not necessarily to economic development? A an expansion of the range of economic choices available to individuals B an increase in Gross…

The diagram shows the Lorenz curves for Norway (N) and India (I). [Diagram: axes of 'cumulative percentage of income' (vertical, 0 to 100) and 'cumulative percentage of…

Four citizens have each been unemployed for the past six months. Which citizen would not be characterised as being structurally unemployed? A worked as a coal miner but coal-fired…

In the diagram, OP is the equilibrium level of income and OQ is the full employment level of income in a closed economy. [Diagram: axes of 'expenditure' (vertical) and 'income'…

In a closed economy with no government sector, when will an increase in investment spending generate the largest increase in equilibrium national income? A when households have a…

A country is a net importer of oil. World oil prices have risen over the year. Assuming that all other factors remain the same, how is this likely to affect inflation, trade…

Economists define the unemployed as being those who are not in work but are actively seeking work. Other groups of people in the population of working age include those classed as…

The diagram shows a Lorenz curve with two areas, X and Y, identified. [Diagram: axes of 'cumulative % of income' (vertical, 0 to 100) and 'cumulative % of households' (horizontal,…

To what extent do you agree that an increase in productivity will lead to a higher standard of living in low-income countries?

To what extent do you agree that an increase in productivity will lead to a higher standard of living in low-income countries? [20]

A government has increased output with no effect on the price level. [Diagram: axes 'price level' (vertical) and 'output' (horizontal), origin O. An aggregate supply curve AS is…

What is not included in the measurement of national income? A benefits paid to the unemployed B dividends paid to shareholders C profits retained by companies D rent paid to…

Four students have to fill in the gaps in the sentence shown. 'A person is defined as unemployed if they are ......1...... to work at ......2...... wage rate, but cannot find a…

Which statement best describes the consumer prices index (CPI)? A It is a measure of changes in the spending patterns of the average household. B It is a measure of changes in the…

Why is increased government provision of education most likely to shift the aggregate demand curve to the right? A It will increase aggregate supply. B More schools will be built.…

Under which conditions will nominal GDP and real GDP increase at the same rate in an economy? rate of change of national output (% per annum) rate of change of general price level…

General equilibrium in the macroeconomy is achieved when total injections are equal to total leakages. What is most likely to cause disequilibrium in the macroeconomy in the short…

What would be the most likely reason for a decrease in frictional unemployment? A more capital-intensive manufacturing B more demand for public sector workers C more government…

Over a period of a year, the annual rate of inflation becomes negative. Which statement must be correct? A The cost of living has fallen. B The purchasing power of money has…

An economy is experiencing accelerating cost-push inflation. Which group is likely to be least concerned by this? A borrowers B consumers C creditors D exporters

What is necessary for an action to be classed as a transfer payment? A It must include a cash payment. B It must involve a banking transaction. C It must originate from government…

Which term relates to a fall in the domestic real value of a currency? A deflation B depreciation C appreciation D inflation

For a given year, economy X publishes the following. $bn --- --- Gross Domestic Product (GDP) 100 factor income earned by residents of economy X working in foreign countries 10…

Which combination is possible for an economy experiencing zero inflation? average nominal wages average real wages --- --- --- A falling falling B falling rising C rising falling…

The graph shows the rate of inflation in Japan from April 2020 to February 2021. Over which period did disinflation occur in Japan? A July 2020 to February 2021 B July 2020 to…

Which changes will increase the circular flow of income? higher imports higher investment higher taxation --- --- --- --- A yes no no B yes yes no C no yes yes D no yes no

An economy in equilibrium has a trade deficit of $20bn and a budget surplus of $20bn. Investment spending is $50bn. What is the total saving? A $5bn B $10bn C $15bn D $20bn

A finance company incurs heavy losses and makes an accountant redundant. The accountant seeks a new job through an employment agency which specialises in jobs in accounting. What…

An aggregate demand curve slopes downwards from left to right. One reason for this is that a reduction in the average price level will lead to A a decline in the country’s…

What is not included in the measurement of national income? A dividends paid to shareholders B overtime payments C rents from government-owned houses D welfare benefit payments

The graph shows the rate of inflation for seven countries for 2015 and 2016. The bar chart shows, for each country, a light-grey bar for 2015 and a dark-grey bar for 2016 (see…

Using the data in Table 1.1, calculate the expected growth in Taiwan's real GDP in 2021, based on the latest forecast.

With the help of a diagram(s), explain one reason for an increase in aggregate demand and one reason for an increase in aggregate supply and consider whether an increase in…

Explain the meaning of 'negative economic growth'.

With reference to a country that is known to you, explain the main causes of unemployment and consider which of these causes is most significant.

What might decrease if a closed economy with a government sector decides to allow international trade? A components of aggregate expenditure B number of injections into the…

The diagram shows a closed economy in which the full employment level of income is YF. [Diagram: the vertical axis is labelled aggregate demand, consumption and the horizontal…

Which cause of economic growth is most likely to ensure that the growth is sustainable? A deregulation of industrial production that uses mineral resources and fossil fuel B…

In all major towns in a country, a government adopts a policy of opening centres where job vacancies are advertised. Which type of unemployment is the government aiming to reduce…

What is the basic assumption underlying the accelerator theory? A Investment depends on the level of business confidence. B Investment depends on the level of savings. C…

The table shows data on the unemployment and inflation rates for four countries in 2010 and 2014. country unemployment rate (% of workforce), 2010 unemployment rate (% of…

Which adjustment is made to gross domestic product (GDP) to calculate a measure of economic welfare (MEW)? environmental costs and benefits the value of leisure activity the value…

Purchasing power parity (PPP) allows a comparison of the purchasing power in two countries. What is a definition of PPP? A the amount of the domestic currency needed to purchase a…

A Lorenz curve measures the income distribution in a country. The further the Lorenz curve is from the line of absolute equality, the greater the level of inequality. [Diagram:…

The turning point on the Kuznets curve for income inequality has been estimated to be in the region of US$10 500. For a country that has a GDP per capita of $8000, what is most…

What is most likely to lead to an increase in the size of the national income? A a fall in interest rates on savings accounts B a fall in the prices of imported goods C a decrease…

The table shows the marginal propensity to consume (MPC), marginal propensity to save (MPS), marginal rate of taxation (MRT) and marginal propensity to import (MPM) for a…

What is likely to happen when the productive capacity of a free enterprise economy increases over a long period of time? A Future generations will be less well-off than present…

The accelerator principle refers to a relationship between investment and A the level of GDP. B changes in GDP. C the level of interest rates. D changes in interest rates.

The table gives details of the inflation and unemployment rates for different countries in 2008 and 2011. country inflation rate (% per annum) 2008 inflation rate (% per annum)…

Which government policy would boost economic growth but not necessarily promote economic development? A creating a more equal distribution of income and wealth B diverting…

Which characteristics are most commonly found in low-income countries? saving ratio capital-output ratio --- --- --- A low low B high low C low high D high high

What has not accompanied global economic growth over the last 25 years? A a depletion of non-renewable resources B decreased international trade C growing urbanisation D increased…

The table shows data for Namibia and Spain from 2014 to 2017. Namibia 2014 Namibia 2017 Spain 2014 Spain 2017 --- --- --- --- --- real GDP per capita ($) 6113 6013 29 399 32 283…

The graphs show the Human Development Index (HDI) and its component parts for Zimbabwe. [Graphs: four line graphs, each plotted against 'year' from 0 to 7. (1) 'Human Development…

Which policies might a government introduce to increase the marginal productivity of labour? better education tax allowances for capital goods --- --- --- A no no B no yes C yes…

When is an increase in national income most likely to induce an increase in investment spending? A when firms have spare production capacity B when firms use labour-intensive…

What is a function of money? A It can be divided into small units. B It can be easily carried. C It is a standard of deferred payment. D It is widely accepted.

A pandemic encourages many workers in developed countries to work from home, leading to a closure of city centre businesses such as coffee shops and retailers. If this way of…

In its 2020 population census, China reported that the total population was just below 1.4 billion. The birth rate had continued to decline, the number of those reaching…

Other things remaining equal, what will reduce the level of national income in an economy? A a fall in planned savings B a fall in the marginal propensity to import C an increase…

What, according to the accelerator principle, will cause the level of investment to fall? A a decrease in confidence B a decrease in the rate of growth of national income C an…

What is measured on the vertical axis of the Phillips curve? A the rate of change of real wages B the rate of change of take-home pay C the rate of inflation D the rate of interest

South Africa has attempted to improve the level of economic growth by attracting foreign direct investment (FDI). [Two line charts for the years 2008 to about 2019. Left chart,…

Which change would be most likely to indicate that a country has experienced economic development? A an appreciation in the country's currency B an improvement in the average…

The table gives some economic indicators for four countries. Which country is closest to achieving the principal aims of government economic policy? change in GDP (%) rate of…

Which row correctly identifies the characteristics of a low-income economy? dependency on the primary sector Gini coefficient value per capita real income --- --- --- --- A high…

What is the role of the International Monetary Fund (IMF)? A to advise countries that are experiencing trade disagreements B to help charities providing emergency assistance to…

Under which circumstances will low wages and low-cost land in a low-income country not attract foreign investment in manufacturing? A if the country creates genuine independence…

With reference to Table 1.1, what indicates that Japan's government had borrowed substantially?

Describe what is meant by economic equality and distinguish it from equity.

Assess the impact of international aid on the standard of living in low-income countries. [20]