Unit 4 - The Macroeconomic Aims of Government

How is a surplus or deficit in the BoP computed?

• By subtracting imports from exports.
• By adding imports and exports together.
• By dividing imports by exports.
• By subtracting exports from imports.

What is inflation?

• A continuous fall in the average price levels in an economy
• An increase in the gross domestic product (GDP)
• A decrease in the gross domestic product (GDP)
• A continuous rise in the average price levels in an economy

How does inflation affect purchasing power?

• Has no effect on purchasing power
• Increases purchasing power
• Stabilizes purchasing power
• Decreases purchasing power

How does the government help vulnerable groups through income redistribution and welfare schemes?

• By supporting agriculture
• By building infrastructure
• By redistributing income
• By providing public goods

What is the government's role in managing the macroeconomy?

• Providing welfare services
• Controlling prices and employment
• Managing trade with other countries
• Supporting agriculture

What are the consequences of high unemployment?

• Decreased government expenditure
• Public unrest and anger towards the government
• Increased national output
• Improved balance of payments stability

What are the negative effects of inflation on the economy?

• Higher wages
• Increased purchasing power
• Reduced competitiveness in international market
• Decreased business costs

What are examples of welfare services provided by the government?

• Hospitals
• Movie theaters
• Banks
• Supermarkets

What is the definition of Balance of Payments (BoP)?

• The balance between exports and imports.
• The balance between public expenditure and income taxes.
• The balance between income redistribution and economic growth.
• The balance between government spending and revenue.

What are the government's major macroeconomic objectives?

• Price stability, economic recession, income redistribution, managing the microeconomy
• Price stability, economic growth, income redistribution, managing the macroeconomy
• Price stability, economic recession, income redistribution, managing the macroeconomy
• Price stability, economic growth, income redistribution, managing the microeconomy