Unit 3 - Government and the economy

The value of GDP for a country in 2015 was US$980,000m. In 2016, the value was US$1,020,000m. What is the rate of economic growth over these two years?

• 40.8%

• US$1,020,000m

• US$408,000m

• 4.08%

Which of the following is a benefit of economic growth?

• Higher costs of living

• Higher levels of employment

• Higher levels of taxation

• Lower government spending

Inflation caused by firms raising prices owing to increased wages, for example, is called?

• Demand-pull inflation

• Hyperinflation

• Deflation

• Cost-push inflation

Which of the following is likely to cause demand-pull inflation?

• Falling consumer spending fuelled by higher taxes

• A substantial fall in exports

• Rapid increases in government spending

• A rise in interest rates

Which of the following refers to people out of work when moving between jobs?

• Seasonal unemployment

• Frictional unemployment

• Voluntary unamployment

• Structural unemployment

The diagram shows four positions, W, X, Y & Z, on and around a production possibility curve for a country. Which of the positions illustrates that the country has unemployment?

• W

• X

• Y

• Z

Which of the following is an example of an invisible item of trade?

• Machinery

• Cars

• Insurance

• Confectionery

The sale of Renault cars from the Morocco factory to Spain, France and Germany result in which?

• Increase imports

• Reduce exports

• Improve the current account

• Improve the invisible balance

Which of the following tax changes is most likely to help protect the environment?

• Decrease in income tax

• Increase in income tax

• Increase in carbon tax

• Decrease in excise duty on petrol

Which of the following might be an example of visual pollution caused by a business?

• Wind farm

• Cattle grazing

• Rain forest

• Coastal mist