Macro 2

Changes in real GDP are used to measure

• inflation

• unemployment

• economic growth

• distribution of income

Which of the following would cause a shift right in AD. An increase in

• exports

• rate of inflation

• interest rates

• budget deficit

All other things being equal, the long-run aggregate supply curve of an economy is likely to shift to the right if there is an increase in

• factor mobility

• raw material prices

• indirect taxation

• wage rates

A country has a slow rate of growth of productivity and rising cyclical unemployment. All other things being equal, which measures are most likely to increase the rate of growth of productivity and reduce cyclical unemployment?

• Increased investment and increased saving

• More government spending on training and a higher exchange rate

• Lower taxation on firms and lower interest rates

• Decreased benefit payments and a lower budget deficit

Which of the following would cause a right shift in AD

• Decrease in imports

• Increase in savings

• Decrease in money supply

• Increase in productivity

Structural unemployment is most likely to occur because of

• Labour being temporarily unemployed when moving jobs

• fluctuations in levels of AD

• Seasonal nature of certain occupations

• long term changes in the pattern of demand for products of particular industries

An economy is in macroeconomic equilibrium, producing at its normal capacity level of output. Without long-run economic growth, a persistent increase in aggregate demand is likely to lead to an increase in the level of

• real GDP

• Employement

• prices

• productivity

Which one of the following is an example of contractionary fiscal policy?

• Decreasing the supply of credit

• Increasing spending on welfare benefits

• Reducing progressive taxation

• Increasing the size of the budget surplus

All other things being equal, an increase in the exchange rate of the pound against other currencies due to a rise in interest rates is most likely to cause an increase in the UK’s

• surplus on the current account of the balance of payments.

• price of imported goods.

• level of unemployment.

• rate of economic growth

A budget deficit is most likely to occur when

• A the value of imports exceeds the value of exports.

• B government spending exceeds tax revenue.

• C the volume of imports exceeds the volume of exports.

• D direct and indirect taxes are reduced.