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Worksheets2 - How the economy works
Total questions: 26
Worksheet time: 15mins
What is inflation?
The rate at which the prices for goods and services increase over time
The cost of borrowing money
Movement of money around the economy is just as important as the amount of money there is
True
False
If everyone saves everything they earn, the economy stops
True
False
If everyone spends everything they have, prices will go up because the supply of goods and services is limited
True
False
If wages don't keep up with inflation, purchasing power and the standard of living falls
True
False
The governments main source of income is...
Tax
Borrowing
Shareholdings
Whose job is it to keep an eye on the rate of inflation, and try to keep it under control?
The Prime Minister
The City of London
The Bank of England
Joe paid £100 per week in fuel costs last year. Inflation is 5%. How much will he pay this year?
£105
£115
£150
£205
Carol saved £100 in the bank last year. Inflation is 5%. In relative terms, what is her £100 worth now?
£95
£100
£105
£115
Inflation is a good indicator of how much money people are spending. Low inflation usually indicates...
low demand for products and services compared to supply
high demand for products and services compared to supply
prices increasing slowly, or not at all
prices increasing rapidly
Inflation is a good indicator of how much money people are spending. High inflation usually indicates...
low demand for products and services compared to supply
high demand for products and services compared to supply
prices increasing slowly, or not at all
prices increasing rapidly
Jean hasn’t had a pay rise in 10 years. Inflation over this time has been 20%. How does this affect her?
This makes no difference at all
Prices relative to her income are lower and she can buy more
Prices relative to her income are higher and she can buy less
The Government of Zimbabwe has been printing money to pay off some of its debts. What effect will this have on the economy of the country?
The will be able to pay all their debts and continue on as normal with all the extra money
They can give money to all the people to ensure they can buy everything they need
More money in circulation increases demand for products and services
Without an adequate supply of goods, prices will skyrocket
Inflation can be controlled by...
Taxation
Legislation
Altering the interest rate
All of these
Reduced consumer spending leads to...
Increased unemployment
Decreased unemployment
Higher company profits
Lower company profits
Lower government tax receipts
Increased consumer spending leads to...
Increased unemployment
Decreased unemployment
Higher company profits
Lower company profits
Higher government tax receipts
Inflation can be controlled by increasing or decreasing the amount of money in circulation
True
False
Changing the interest rate is the main way the government encourages you to spend or save, leading to a change in inflation
True
False
Who benefits from low interest rates...
People wishing to borrow money
People with savings
Who benefits from high interest rates...
People wishing to borrow money
People with savings
Higher interest rates lead to...
More saving
More spending & borrowing
Lower interest rates lead to...
More saving
More spending & borrowing
Kathy has £100 saved in her account, it attracts interest of 5% per year. How much will she have after 12 months?
£100.50
£105.00
£115.00
£150.00
Kathy has £100 saved in her account, it attracts interest of 5% per year. She has noticed that inflation was 2.5% last year. How much has the value of her savings actually increased?
0%
2.5%
5%
7.5%
Joe has a bank loan. If interest rates rise, will he...
pay more back to cover his debts
pay less back to cover his debts
Katie has a savings account with £10,000 in it. If interest rates lower, she will...
earn more for saving her money
earn less for saving her money
