AQA Economics Year - 1 Macroeconomics

Which one of the following indicates a contractionary monetary policy?

• A fall in the budget deficit

• A rise in the money supply

• An increase in the national debt

• Appreciation of the exchange rate

The following table shows the planned changes to injections into and withdrawals from the circular flow of income for one year. Other things remaining the same, these changes would cause

• consumer expenditure to decrease

• national income to increase

• the balance of trade deficit to decrease.

• the budget deficit to rise

A government wants to increase the economy’s rate of long-run economic growth by implementing a supply-side policy. Which one of the following is a government policy aimed at stimulating the supply side of the economy?

• A new scheme to help young people buy their own homes

• Greater provision of care homes for the elderly

• Measures to promote competition between businesses

• More generous welfare benefits for unemployed workers

A government reduces its budget deficit. Other things remaining the same, the most likely short-run impact of this policy is

• a reduction in the current account deficit.

• a reduction in unemployment

• an increase in the rate of economic growth.

• an increase in the rate of inflation.

Europe and North America enter a period of recovery from a recession. Other things remaining the same, the impact on the UK economy is most likely to be

• an increase in structural unemployment

• an increase in the current account deficit

• a reduction in cyclical unemployment.

• a reduction in UK economic growth.

Which one of the following is most likely to result in a rise in savings by households?

• Higher interest rates and higher income tax

• Lower interest rates and higher income tax

• Higher interest rates and lower income tax

• Lower interest rates and lower income tax

An expansionary monetary policy has been implemented. Which one of the following combinations of macroeconomic changes is most likely to happen?

• A fall in the price of imports and more demand for bank loans

• A rise in consumption and an increase in house prices

• An increase in employment and a rise in government borrowing

• An increase in retail sales and a rise in the savings ratio

If fiscal policy is used to influence the economy, this could involve changing

• the rate of interest

• the amount of money in circulation.

• the budget deficit.

• the balance of payments.

The diagram shows a vertical long-run aggregate supply curve (LRAS). The position of the LRAS curve...

• represents the normal capacity level of output of the economy.

• is drawn at a constant price level, irrespective of output

• indicates that the economy’s growth rate cannot exceed its trend rate of growth.

• is drawn at the level of real output when the rate of unemployment is zero.

In the short run, an increase in a government budget deficit is most likely to reduce

• imports

• unemployment.

• interest rates.

• inflation.