Quiz on Statements and Demand Curve

A positive statement

• does not take into account irrational behaviour.

• enables accurate forecasts to be made.

• includes a value judgement.

• may be true or false.

Which one of the following is a nudge technique that could be used to encourage healthy eating?

• Banning supermarkets from selling high-calorie energy drinks

• Increasing taxes on high-fat products to raise their price

• Moving products with a high sugar content away from supermarket checkouts

• Subsidising fruit and vegetables to reduce their prices

All other things being equal, if the velocity of circulation is constant, the quantity theory of money based on Fisher’s equation of exchange, MV=PQ, predicts that an x% increase in the money supply will always cause an x%

• decrease in the rate of interest.

• increase in nominal national income.

• increase in real national income.

• increase in the rate of economic growth.

At the end of the previous financial year, a country had a national debt of £20,000 billion. The government’s planned expenditure for the current year exceeds its projected income by £100 billion. All other things being equal, which one of the following is most likely to enable the government to complete its planned expenditure and reduce the national debt?

• Planned borrowing by more than £100 billion.

• Projected income and borrowing by £100 billion.

• Projected income by £100 billion and reducing new borrowing by £100 billion.

• Projected tax revenue by more than £100 billion.

Unemployment rose in an economy despite overall economic growth. This is most likely to be explained by an increase in

• cyclical unemployment.

• job vacancies.

• structural unemployment.

• the school leaving age.

Which one of the following is most likely to be an objective of government economic policy?

• A low level of employment

• A lower price level

• An equal distribution of income

• An increase in productive potential

A public good always has the characteristic that

• consumption by one person does not reduce availability to others.

• it is provided free of charge by the government to all citizens.

• its consumption gives rise to positive externalities for others.

• the supply is funded from a government’s tax revenue.

Choice is central to the economic problem because

• incomes are unequally distributed.

• most resources are scarce.

• people’s wants are greater than their needs.

• people’s wants are limited.

Which one of the following statements correctly explains the changes shown in Figures X and Y?

• The demand curve for carrots shifts due to the rationing function of prices

• The price of carrots increases because carrots and potatoes are in derived demand

• The price of potatoes increases because potatoes and carrots are in joint supply

• The supply curve for potatoes shifts due to the incentive function of prices

Which one of the following is a role of the UK’s Office for Budget Responsibility?

• Deciding how much public funding is given to each government department

• Enabling the government to run a budget deficit by issuing government bonds

• Evaluating the government’s performance against its own fiscal targets

• Making recommendations to the government on how to reduce its budget deficit