Macroeconomics Specimen 2

Please choose one of the following options for each question:

1. Economic growth is usually measured by the annual change in





2. 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





3. A negative output gap necessarily means that the economy





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





5. The table below shows the index of Gross Domestic Product (GDP) measured at current prices and the associated price index for an economy. aggregate supply (SRAS) curve for an economy

The table shows that between 2007 and 2013





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





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





8. The diagrams below show aggregate demand (AD) and short-run aggregate supply (SRAS) curves for an economy. AD1 and SRAS1 represent the initial position of the curves. AD2 and SRAS2 represent shifts in the position of the curves.

Which one of the following diagrams, A, B, C or D, indicates the effect on the economy of a general rise in wage costs and a rise in investment?





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





10. It follows that the balance of payments on current account for 2014 is





11. Which one of the following best illustrates the accelerator process?





12. All other things being equal, which one of the following is most likely to move the economy from point Y to point X within its production possibility frontier? A decrease in





13. Deflation is





14. A government wishing to reduce the level of unemployment through the use of fiscal policy would be most likely to





15. All other things being equal, a fall in the value of the pound against the euro would be expected to affect the UK economy because it is likely to lead to





16. The Bank of England raises interest rates to reduce aggregate demand. Which one of the following combinations, A, B, C or D, is most likely to reduce the effectiveness of such a policy?





17. Which one of the following is most likely to shift the short-run aggregate supply curve to the left?

A rise in





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





19. All other things being equal, what would be the new equilibrium position following a rise in productivity and an increase in imports into the country?





20. Which one of the following would be an example of a loosening of fiscal policy?