Macroeconomics quiz 3

The graph above shows the number of households in the UK on low incomes. From the graph, it may be concluded that, over the period shown,

• average incomes rose.

• the population of the UK increased.

• there was an increase in the absolute level of poverty.

• income inequalities increased.

The table below indicates growth in real GDP for selected eastern European economies in transition. From the table it may be deduced that

• Romania experienced negative growth of real GDP in 2000.

• Poland achieved a 28% increase in real GDP as compared to its 1989 level.

• Ukraine had the lowest level of real GDP in 2000.

• Poland had the lowest inflation rate in 2000.

A diagram shows an inward shift in the aggregate demand curve for an economy. A fall in the price level of 0P to 0P1 could be explained by an increase in

• interest rates.

• money wages.

• labour productiivity.

• inward investment.

Which of the following headlines indicates the use of monetary policy?

• "More money in everyone's pockets as taxes are lowered"

• "Government declares its determination to halt the fall in the value of money"

• "Misery for homeowners as interest rates are raised"

• "Big reduction in government borrowing announced in the budget"

All of the following are objectives of macroeconomic management except:

• external stability

• economic growth

• full employment

• high inflation

A boom in the business cycle is best described by a situation when:

• GDP is steady or rising slowly.

• there are generally idle resources and excess capacity exists.

• general prices are rising and there is cyclical unemployment.

• there are widespread shortages of goods and services because national production is stretched beyond the economy's capacity.

A recession is best described as a situation with:

• falling economic activity and rising cyclical unemployment.

• weak employment growth but rises in job vacancies.

• increases in overtime and participation rates.

• rising cost push inflation and a falling GDP.

In conducting open market operations with a view to expansionary monetary policy

• the Reserve bank increases interest rates.

• the Reserve bank sells government securities to the financial sector.

• the financial sector buys government securities from the government.

• the Reserve bank buys government securities from the financial sector.

Aggregate demand is the total spending in the economy, consisting of:

• C+I+G+X

• C+S+T+M+X

• S+T+M=C+I+G

• C+I+G+X-M

Which one of the following is not a limitation of demand-side policies?

• There are time lags.

• There is a reduction in economic efficiency.

• They limit the incentive function of taxation.

• There is a trade off between macroeconomic objectives.