Macroeconomics January 2010

Please choose one of the following options for each question:

1. In economics, investment is best defined as





2. A rise in the exchange rate together with a rise in taxes on household income is most likely to





3. All other things being equal, a large rise in interest rates is most likely to lead to an increase in





4. The shift of the short-run aggregate supply curve from SRAS1 to SRAS2 could have been caused by





5 All other things being equal, a government would be undertaking a contractionary fiscal policy if it reduced





6. Which one of the following policies is most likely to lead to an increase in output and employment without increasing the rate of inflation?





7. Which one of the following is most likely to reduce inflationary pressures in the UK economy?





8. Which one of the following is most likely to occur in the boom phase of an economic cycle?





9. An increase in aggregate demand is most likely to cause inflation when





10. Choosing between faster economic growth and a satisfactory balance of payments best illustrates





11. The shift in the aggregate demand curve from AD1 to AD2 could have been caused by an increase in





12. The underlying long-run trend rate of economic growth can be defined as the





13. All other things being equal, a fall in the exchange rate is likely to





14. If the government is using both fiscal and monetary policies to manage the economy, what combination of policies is it most likely to implement when the economy is operating at point X?





15. The economy is experiencing a balance of payments surplus on current account and high unemployment. Which policy is most likely to reduce both the balance of payments surplus on current account and unemployment?





16. The short-run aggregate supply curve is drawn on the assumption that





17. Which one of the following diagrams indicates the effect on the economy of a general fall in wage costs and a rise in the level of exports?





18. In the short run, an increase in a budget deficit is most likely to reduce





19. All other things being equal, which one of the following is most likely to reduce a balance of payments deficit on current account?

An increase in





20. From the information above, it can be concluded that





21. If an economy is operating on its production possibility frontier, the most likely effect of an increase in the output of capital goods is that its rate of economic growth will





22. All other things being equal, a rise in the value of the pound on foreign exchange markets is most likely to increase





23. A supply-side policy can be used to increase





24. Which one of the following combinations is most likely to increase aggregate demand (AD) in the UK economy?





25. All other things being equal, which one of the following is most likely to cause a simultaneous shift to the right in both an economy’s short-run and long-run aggregate supply curves?

An increase in