Economic Growth and Employment Quiz

What is the main determinant of a country's possible economic growth rate for the year?

• The difference between the 'actual' level of output at the start of the year, and the actual' output by the end of the year.

• The difference between the 'actual' level of output at the start of the year, and the 'potential' output by the end of the year.

• The difference between the 'potential' level of output at the start of the year, and the 'potential' output by the end of the year.

• The difference between the 'potential' level of output at the start of the year, and the 'actual' output by the end of the year.

If an economy is growing at 1% below its maximum possible output and its productive capacity is expected to increase by 3% this year, what is its possible maximum economic growth rate?

• 1%

• 2%

• 3%

• 4%

What do most governments aim to achieve regarding unemployment?

• High unemployment

• No change in unemployment

• As low a level and rate of unemployment as possible

• 0% unemployment (i.e. no unemployment whatsoever)

What does the term "full employment" mean?

• Everyone in the country has a job

• The lowest level of unemployment possible

• Only adults are employed

• All jobs are filled by skilled workers

Who are considered economically inactive according to the text?

• People who are willing and able to work

• People who are not in the labour force.

• People who are unemployed

• People who work part-time

What does it mean to be "economically active"?

• Being a member of the labour force

• Being unemployed and not seeking work

• Being a student only

• Being retired

There are 60 million people in a country. 20 million of the people are economically inactive. If 5 million people are unemployed (actively seeking work, but without a job), what is the unemployment rate?

• 12.5%

• 8%

• 20%

• 5%

Why do governments aim to avoid high unemployment?

• To reduce waste of resources

• To increase the number of people not working

• To make sure everyone is unemployed

• To avoid disadvantages like low income and reduced tax revenue

Why is it difficult to achieve 0% unemployment, according to most economists?

• Some workers are always changing jobs and being unemployed for short periods

• There are not enough people in the labour force

• Governments do not want anyone to work

• The economy is always in recession

What does "price stability" mean in an economy?

• The price level in the economy is not changing significantly over time

• All prices are always falling

• All prices are always rising

• The price level in the economy is changing rapidly every day