Macroeconomics quiz 2

Which of the following represents a withdrawal from the circular flow of income?

• Private funding for a national arts centre

• The extension, by the government, of the existing highway network

• The commissioning of a domestic firm of consultant engineers by a foreign oil company to investigate suspected structural defects in some pipelines

• The purchase by a domestic department store of designer clothes produced abroad.

The following data is extracted from the National Accounts of a country (in millions of $): Consumer expenditure $10, Depreciation $2, Government spending $3.5, Investment $3, Exports $3, Imports $3.5. What is the GDP of this country?

• $14 million

• $16 million

• $18 million

• $25 million

Which of the following would cause the supply of labour to increase?

• lowering the retirement age

• raising the school leaving age

• better provision of child-care for very young children

• stricter controls on immigration

Which of the following is most likely to cause an increase in both AD and AS?

• A reduction in the money supply

• An increase in government spending

• An increase in capital investment

• A fall in the exchange rate

The rate of inflation will fall if

• aggregate demand stays constant and productivity increases.

• aggregate supply falls.

• aggregate supply is constant.

• aggregate demand is constant and factor costs rise.

A government wishes to reduce aggregate demand by increasing interest rates. This will have the effect of reducing

• industrial costs.

• the external value of the domestic currency.

• disposable income.

• the propensity to save.

A country with a population of 100 million people has a labour force of 50 million people. Of these 45 million are working and 5 million do not have a job. What is the unemployment rate in this country?

• 5 million

• 5%

• 10%

• 11.1%

Which of the following types of unemployment is generally of the shortest duration?

• demand deficient unemployment

• frictional unemployment

• structural unemployment

• seasonal unemployment

A permanent reduction in demand for a single product will cause

• structural unemployment.

• frictional unemployment.

• voluntary unemployment.

• cyclical unemployment

When the labour market is in equilibrium there will be no

• seasonal unemployment

• frictional unemployment

• structural unemployment

• demand deficient unemployment