4:Macroeconomic and Institutional Context

Which of the following is NOT an objective of macroeconomic policy?

• Economic growth

• Control of Inflation

•   Lower levels of taxation

• A balanced balance of payments

Economic growth always brings benefits to all members of a society.

• TRUE

• FALSE

Inflation does not affect those on fixed incomes as much as those in

employment

• TRUE

• FALSE

Inflation encourages investment in a national economy

• TRUE

• FALSE

Which of the following is least likely to result in a fall in consumption spending in an economy?

• An increase in the rate of income tax

• An increase in interest rates

• An increase in the rate of inflation

• A reduction in the availability of credit

Which of the following is least likely to result in a fall in investment spending in an economy?

• An increase in government expenditure’

• An increase in interest rates

• An increase in the rate of inflation

• A reduction in the availability of credit

In an aggregate demand and supply diagram, if the aggregate supply curve shifted to the left, the consequences would be:

• national income and the price level would both fall

• national income and the price level would both rise

• national income would fall and the price level would rise

• national income would rise and the price level would fall

Which one of the following would cause a fall in the level of aggregate demand in an economy?

• A decrease in government expenditure

• A fall in the propensity to save

• A fall in the level of imports

• A decrease in the level of income tax

Which one of the following would cause the aggregate supply curve of an economy to shift to the right?        

• A decrease in government expenditure

• Increased investment in new technologies in industry

• A fall in interest rates

• Lower unemployment

According to the advocates of supply-side economics, which one of the following measures is most likely to reduce unemployment in an economy?

• Increasing labour retraining schemes

• Increasing public sector investment

• Increasing unemployment benefits

• Decreasing the money supply