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Take this quiz! In the short run, a decrease in aggregate demand is most likely to result in a reduction in An economy is operating …
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Take this quiz! In the short run, a decrease in aggregate demand is most likely to result in a reduction in An economy is operating at full employment. Which one of the following is most likely to
Economics
Take this quiz! In the short run, a decrease in aggregate demand is most likely to result in a reduction in An economy is operating at full employment. Which one of the following is most likely to
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Economics
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1
In the short run, a decrease in aggregate demand is most likely to result in a reduction in
government spending on welfare benefits.
the unemployment rate.
the budget deficit.
the balance of payments deficit on the current account.
2
An economy is operating at full employment. Which one of the following is most likely to lead to an increase in real national output without an increase in the rate of inflation in the short term?
An increase in exports
A reduction in interest rates
An increase in manufacturing productivity
An increase in government expenditure
3
Which one of the following is most likely to lead to a fall in aggregate investment?
A reduction in the level of unemployment
An increase in spare capacity in the economy
A reduction in the average level of interest rates
An increase in aggregate demand
4
A rise in the exchange rate of the pound sterling is likely to assist UK government policies aimed at reducing the
rate of inflation.
level of unemployment.
level of imports.
balance of payments deficit.
5
The Consumer Prices Index (CPI) rises from 100 to 105. This shows that
the inflation rate has increased by 5%.
the average price level has increased by 5%.
the price of every good has increased by 5%.
inflation in the economy is rising at a constant 5% per annum.
6
The underlying trend rate of growth in an economy is declining and the economy is also experiencing an increase in its rate of unemployment. Which one of the following is likely to be most effective i
An expansionary fiscal policy and a restrictive monetary policy
A restrictive monetary and fiscal policy
An expansionary monetary policy and supply-side policies
A restrictive fiscal policy and supply-side policies
7
Which one of the following is most likely to be classified as a supply-side policy?
An increase in subsidies on essential goods
An increase in the government budget deficit
A reduction in the exchange rate
A reduction in the tax on company profits
8
An economy is experiencing a balance of payments deficit and inflation. All other things being equal, which policy is most likely to reduce both the balance of payments deficit on current account and
A fall in government spending
A cut in interest rates
A decrease in the rate of income tax
A reduction in the exchange rate
9
A fall in the value of the pound relative to the euro would be expected to affect the UK economy because it is likely to lead to
an increase in aggregate demand.
a fall in raw material prices.
a rise in the euro price of UK exports.
a reduction in the rate of interest.
10
A cut in the central bankís lending rate is an example of
monetary policy.
supply-side policy.
fiscal policy.
deflationary policy.
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