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- AS Macro-economics
1) Aggregate demand will increase if:
a) Savings rise
b) Exports fall
c) Imports rise
d) Investment rises
2) Aggregate demand will fall if:
a) Savings rise
b) Interest rates fall
c) Investment rises
d) Imports fall
3) If growth in AD is greater than the underlying trend rate of growth, this is likely to lead to:
a) A fall in AS
b) Inflationary pressure
c) A balance of payments surplus
d) Rising unemployment
4) A rise in investment is likely to cause:
a) A movement along the AS curve
b) A rise in tax rates
c) A shift to the right in the AS curve, and a movement along the AD curve
d) A shift to the right in both the AD and AS curve
5) Cost push inflation is most likely to occur if:
a) Exchanges rates rise
b) Exchange rates fall
c) Income tax rates fall
d) Interest rates fall
6) A shift to the left in the AD curve is most likely to be caused by falling:
a) Imports
b) Exports
c) Tax rates
d) Savings
7) If a small fall in investment leads to a larger fall in national income, there is a:
a) Downward multiplier effect
b) Rising savings ratio
c) Downward accelerator effect
d) Upward multiplier effect
8) The long run aggregate supply curve is affected by:
a) Prices
b) Wages
c) Exchange rates
d) Technology
9) A rise in investment could be triggered by all of the following, except:
a) Falling interest rates
b) Rising incomes
c) Falling business confidence
d) Rising profits
10) If real income per head rises in one country, the most likely result is:
a) Rising imports
b) Falling investment
c) Rising exports
d) Falling aggregate demand
11) A fall in national income is most likely to cause:
a) An improving budget surplus
b) A rising inflation rate
c) Worsening of the balance of payments
d) Rising unemployment rate
12) If AD falls and there is a negative output gap, it is most likely that there will be a rise in:
a) Unemployment
b) Imports
c) Investment
d) Business confidence
13) The accelerator effect relates to:
a) Changes in investment causing changes in income
b) Changes in government spending leading to falling unemployment
c) Changes in supply side policy
d) Changes in income causing changes in investment
14) A falling savings ratio is most likely to be caused by falling:
a) Consumer confidence
b) Imports
c) Interest rates
d) Exports
15) If AD is £500b, C is £400b, I is £50b, G is £40b and X is £50b, M must be:
a) + £40b
b) - £40b
c) + £60b
d) - £80b
16) Fiscal policy is associated with:
a) Changing interest rates
b) Changes in government borrowing
c) Reducing the money supply
d) Lowering exchange rates
17) An example of supply-side policy is the reduction of:
a) Marginal tax rates
b) Interest rates
c) The money supply
d) The exchange rate
18) Structural unemployment could be worsened by:
a) A fall in tax rates
b) Immobility of labour
c) A rise in the money supply
d) Improved labour productivity
19) The Phillips curve directly shows the relationship between:
a) Inflation and economic growth
b) Unemployment and the balance of payments
c) Interest rates and tax rates
d) Inflation and unemployment rates
20) If the economy is at full employment, the most likely effect of an increase in the money supply is:
a) A fall in exports
b) A rise in unemployment
c) A rise in imports
d) A fall in investment