Gov & Macroeconomic Aims

What does a consumer prices index show?

• How the price of domestically produced products has changed over time

• How the price of a representative basket of goods and services has changed over time

• How the wages if consumers have changed relative to the change in the price level

• How the wages of consumers have changed relative to the costs of production

A country is experiencing a high rate of inflation. Which item would be the least desirable store of wealth?

• Money

• Property

• Land

• Shares

In which circumstance would an increase in aggregate demand be most likely to cause inflation?

• It is caused by an increase in investment undertaken by expanding industries.

• It is the result of higher government spending on training which raises labour productivity.

• It occurs where there is a low level of spare capacity in the economy.

• It takes place when these is net immigration occurring.

Define deregulation.

Differentiate money GDP and real GDP

the formula of real GDP per head

What is a cause of cost-push inflation?

• A reduction in indirect taxes

• A reduction in the rate of interest

• An increase in bank lending

• An increase in the price of raw material

What is a cause of demand-pull inflation?

• A fall in labour productivity

• A fall in investment

• A rise in the budget deficit

• A rise in the current account deficit

Which of the following group is considered economically active?

• Full time studensts

• Those who are too sick to work

• Those who are officially classified as unemployed

• Those who have retired early

What is the cause of frictional unemployment?

• A lack of aggregate demand

• The introduction of new technology

• A lack of information about job vacancies

• Domestic consumers buying more imports