Edexcel A-level Economics A – Theme 2 Multiple Choice Questions

What is meant by the term ‘economic growth’?

• An increase in government spending

• A sustained increase in a country's productive capacity

• A reduction in unemployment

• A fall in inflation

Which of the following is included in the calculation of GDP?

• Unpaid household work

• Transfer payments

• Final goods and services

• Intermediate goods

If nominal GDP rises by 5% and inflation is 3%, then real GDP has:

• Risen by 8%

• Risen by 2%

• Fallen by 2%

• Remained unchanged

What is meant by the term ‘unemployment’?

• People who choose not to work

• People without a job who are not seeking work

• People of working age actively seeking work but unable to find a job

• People in full-time education

A fall in the rate of inflation means that:

• Prices are falling

• Prices are rising more quickly

• Prices are rising more slowly

• The value of money is increasing

What is the likely effect of an increase in interest rates on consumption?

• Consumption rises

• Consumption falls

• Consumption stays the same

• Consumption becomes more volatile

Which of the following is a component of aggregate demand (AD)?

If the MPC (Marginal Propensity to Consume) is 0.75, the multiplier is:

• 2

• 3

• 4

• 5

Which of the following is most likely to increase productivity?

• A decrease in wages

• An increase in working hours

• Investment in training and technology

• A reduction in output

A reduction in corporation tax is likely to:

• Decrease investment

• Increase imports

• Increase investment

• Decrease aggregate demand