Term 1 Macro Revision - Econ A level

What is the difference between nominal and real national output figures? Why is this important?

• Nominal figures do not include inflation, real figures do. It is important for accurately measuring economic growth.

• Nominal figures are adjusted for inflation, real figures are not. It is important for measuring economic growth.

• Nominal figures are misleading, real figures are accurate. It is important for comparing living standards.

• Nominal figures include inflation, real figures do not. It is important for calculating GDP per capita.

What is meant by purchasing power parity? When is it used? Why is it important?

• Purchasing power parity is the exchange rate between two currencies. It is used for comparing GDP per capita. It is important for measuring inflation.

• Purchasing power parity is the real value of an amount of money in terms of what you can actually buy with it. It is used for comparing living standards between countries. It is important for accurate comparisons.

• Purchasing power parity is the value of goods and services produced in a country. It is used for measuring economic growth. It is important for calculating GDP per capita.

• Purchasing power parity is the value of goods and services produced in a country. It is used for comparing GDP per capita. It is important for measuring inflation.

What can index numbers be used to show?

• Comparisons over a period of time, percentage changes, rise in real GDP, fall in nominal GDP

• Changes in the value of money, purchasing power parity, GDP per capita, GNP

• Comparisons of living standards, economic growth, inflation, unemployment

• Percentage changes in GDP, CPI, RPI, GNI

What are the two main measures of unemployment?

• CPI and Labour Force Survey

• Claimant count and Labour Force Survey

• CPI and RPI

• GDP and GNP

Give a definition of wealth.

• Stockpile of resources in an economy

• Total value of all the assets owned by individuals or firms in an economy

• Value of goods and services produced in an economy

• Flow of money in an economy

Comment on the potential multiplier effect on the circular flow of income of a large increase in government spending on healthcare.

• It will lead to an increase in national income, output, and expenditure

• It will lead to a decrease in national income, output, and expenditure

• It will lead to a decrease in national income but an increase in output and expenditure

• It will have no impact on the circular flow of income

What are the two main components of GDP?

• Consumption and Investment

• Government Spending and Net Exports

• Government Spending and Investment

• Consumption and Net Exports

Explain the concept of frictional unemployment.

• Unemployment caused by changes in the business cycle

• Unemployment caused by mismatch between skills and job requirements

• Unemployment caused by lack of demand in the economy

• Unemployment caused by technological advancements

Discuss the impact of an increase in interest rates on consumer spending.

• It will lead to an increase in consumer spending

• It will lead to a decrease in consumer spending

• It will have no impact on consumer spending

• It will lead to a shift in consumer spending from durable goods to non-durable goods

Explain the concept of structural unemployment.

• Unemployment caused by changes in the business cycle

• Unemployment caused by mismatch between skills and job requirements

• Unemployment caused by lack of demand in the economy

• Unemployment caused by technological advancements