Macroeconomics January 2013

Please choose one of the following options for each question:

1. Which one of the following is an example of fiscal policy?

A decision by the government to





2. ‘Economists predict that the negative output gap in the economy is likely to grow over the next couple of years.’

In the short run, which one of the following policies is most likely to help to prevent this negative output gap increasing?





3. All other things being equal, which one of the following is most likely to lead to an increase in both saving and investment?

An increase in





4. Which one of the following combination of policies, A, B, C or D, is most likely to reduce inflation?





5. When an economy is operating inside its production possibility frontier, it must have a





6. All other things being equal, a rise in the exchange rate is likely to





7. Which one of the following is most likely to lead to an increase in structural unemployment in the UK?





8. The shift is most likely to have been caused by a fall in





9. In the circular flow of income model, which one of the following equations is correct?





10. Which one of the following would be considered to be a supply-side policy?





11. Which one of the following fiscal policy measures would be most likely to reduce aggregate demand?





12. Between 2008 to 2012, there must have been an increase in





13. An economy is in recession, with falling real GDP (Gross Domestic Product). The accelerator theory predicts that





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





15. Which one of the following is most likely to contribute to an increase in inflation in an economy?





16. An expansionary monetary policy designed to increase aggregate demand is less likely to achieve this objective if, at the same time, the government





17. The economy is operating with





18. An economy is most likely to be in the boom phase of the economic cycle when there is a rise in





19. Which one of the following statements relating to fiscal policy in the UK is correct?

Fiscal policy





20. The changes shown in the data are most likely to have been caused by





21. All other things being equal, in the short run a decrease in aggregate demand in an economy is most likely to result in a reduction in





22. The country experiences a significant increase in both world commodity prices and exports. As a result of these two events, the equilibrium will





23. All other things being equal, which one of the following is most likely to lead to an increase in the size of the UK’s current account deficit on the balance of payments?

A fall in





24. Which one of the following statements relating to monetary policy is correct?





25. The government reduces its spending. At the same time, the Bank of England increases interest rates. All other things being equal, the most likely outcome is that