Economics- Macroeconomics

A government decides to boost the economy through the use of a budget deficit. Which target should it adopt to achieve this aim?

• Direct taxation should exceed indirect taxation.

• Export earnings should exceed import expenditure.

• Government savings should exceed government investment.

• Government spending should exceed government revenue.

A government decides to use a fiscal policy measure. What is an example of this?

• increasing the exchange rate

• reducing the power of trade unions

• reducing the rate of corporation tax

• setting a low interest rate

What would the government reduce to decrease inflation?

• income tax

• its foreign exchange rate

• the money supply

• the rate of interest

A country wishes to encourage economic growth. Which policy measure is most likely to achieve this aim?

• increasing interest rates

• increasing spending on education

• reducing the maximum permitted hours of work

• reducing spending on infrastructure

How does a country usually measure its Gross Domestic Product?

• by calculating the total value of all goods and services produced within the economy

• by measuring the average prices of a basket of goods and services throughout the country

• by subtracting government expenditure from government revenue

• by surveying the number of people who are out of work but willing and able to work

What is the most likely consequence of increased unemployment?

• higher output

• higher government budget deficit

• higher self-esteem

• higher inflation

Why is deflation undesirable for an economy?

• It reduces business confidence.

• It reduces export competitiveness.

• It reduces purchasing power.

• It reduces real incomes.

Why does a government provide public goods?

• Public goods are always used by everyone.

• Public goods are not profitable for private firms.

• Public goods can only be provided by monopolies.

• Public goods create large external costs.

The table shows the percentage changes in earnings and consumer prices for four countries in one year. Which country is likely to have experienced the greatest increase in real income during the year

• France

• Germany

• Japan

• UK

What is the definition of the unemployment rate?

• the benefits and allowances paid by the government to people without a job

• the number of people without a job but seeking a job as a percentage of the labour force

• the rate of change in the number of people who have not worked over the last year

• the total number of people not working when the data was calculated