A-Level - Government Macroeconomic Policy Objectives

Which government macroeconomic policy objectives are most likely to benefit from an increase in aggregate demand?

• A

• B

• C

• D

What is a motive for a government to aim for low unemployment?

• A. to maintain price stability

• B. to ensure output does not change

• C. to avoid a decline in human capital

• D. to reduce upward pressure on wages

The diagram shows an economy is producing at an output of Y.

Which is least likely to be its government’s main macroeconomic policy objective?

• A. economic growth

• B. higher national income

• C. low unemployment

• D. price stability

Why may price stability increase a country’s economic growth rate?

• A. It may cause leakages from the circular flow to exceed injections.

• B. It may make planning easier and so encourage investment.

• C. It may result in deflation and so encourage higher consumer expenditure.

• D. It may stimulate a rise in imports.

Country Y has a lower unemployment rate than Country Z.

What must this mean?

• A. Country Y has fewer unemployed people than Country Z.

• B. Country Y has more people employed than Country Z.

• C. Country Z has a higher proportion of economically inactive people.

• D. Country Z has a higher proportion of its labour force unemployed.