Question 1

Macroeconomics involves the study of:&#10;A) Individual markets&#10;B) Individuals' decisions to work&#10;C) The whole economy&#10;D) The determinants of the price of a particular product

Accepted Answer

Macroeconomics focuses on the behavior of the entire economy, including total income, total output, and overall levels of prices and employment, rather than individual markets or decisions.

Question 2

Which of the following is not likely to be studied in macroeconomics?&#10;A) Unemployment&#10;B) A favourable balance of trade&#10;C) The price of cars&#10;D) The growth of an economy

Accepted Answer

Macroeconomics focuses on the economy as a whole, including topics like unemployment, trade balances, and economic growth. The price of individual goods, such as cars, is typically studied in microeconomics, which looks at individual markets and consumer behavior.

Question 3

Which of the following is the best example of fiscal policy?&#10;A) Interest rates&#10;B) Control of the money supply&#10;C) Changes to the law&#10;D) Changes in taxation rates

Accepted Answer

Fiscal policy involves government decisions related to spending and taxation. Changes in taxation rates directly affect government revenue and spending, which are central to fiscal policy. Interest rates and control of the money supply are tools of monetary policy, not fiscal policy. Changes to the law can be broad and may not directly relate to fiscal policy unless they specifically involve taxation or government spending.

Question 4

Which of the following is the best example of monetary policy?&#10;A) Changes to interest rates&#10;B) A change in income tax&#10;C) A change in government spending&#10;D) A change in the law

Accepted Answer

Monetary policy involves managing the supply of money and interest rates by central banks to control inflation, manage employment levels, and stabilize the currency. Changes to interest rates directly affect the economy's money supply, making it the best example of monetary policy among the options provided.

Question 5

To increase demand in the economy a government might:&#10;A) Increase income tax&#10;B) Reduce government spending&#10;C) Increase tax on company profits&#10;D) Make it cheaper to borrow

Accepted Answer

Making it cheaper to borrow can stimulate economic activity by encouraging both consumers and businesses to spend and invest more, thereby increasing demand in the economy.

Question 6

An example of government policy conflict might be:&#10;A) More spending to increase growth and reduce unemployment&#10;B) Lower interest rates leading to more employment and more growth&#10;C) Lower taxation leading to more growth and lower unemployment&#10;D) An increase in demand leading to less unemployment and higher prices

Accepted Answer

D is an example of government policy conflict because it highlights the potential conflict between reducing unemployment and controlling inflation. Increasing demand can indeed reduce unemployment but may also lead to higher prices, which is an undesirable outcome for inflation control. Choices A, B, and C generally describe scenarios where policy actions are aimed at stimulating economic growth and reducing unemployment without directly addressing the potential for conflicting outcomes like inflation.

Question 7

A policy instrument such as fiscal policy:&#10;A) Is the result of achieving an objective,&#10;B) Is a target,&#10;C) Is a by-product of achieving a target,&#10;D) Is used to achieve an objective,

Accepted Answer

Fiscal policy is a tool used by governments to influence economic conditions through spending and taxation, aiming to achieve objectives like controlling inflation, reducing unemployment, and fostering economic growth.

Question 8

A key issue facing the UK government at the moment is to raise the skills level of younger people.

Accepted Answer

The UK government is indeed focused on raising the skills level of younger people to address skill shortages in various sectors and to improve economic productivity and individual employability.

Question 9

Fiscal policy can affect demand in the economy but not the supply.

Accepted Answer

Fiscal policy, through government spending and taxation, can influence both demand and supply in the economy. For example, tax cuts for businesses can increase their investment in capital, thus affecting the supply side.

Question 10

By controlling the ________ rate the Bank of England can influence the amount of borrowing in the economy.

Accepted Answer

The answer of By controlling the ________ rate the Bank...

Question 11

If the government uses taxation and government spending to shift aggregate demand or supply it is called what?&#10;A) Monetary policy&#10;B) Ecumenical policy&#10;C) Fiscal policy&#10;D) Normative policy

Accepted Answer

The answer of If the government uses taxation and government...

Question 12

If the government uses interest rates to shift aggregate demand or supply it is called what?&#10;A) Monetary policy&#10;B) Ecumenical policy&#10;C) Fiscal policy&#10;D) Normative policy

Accepted Answer

The answer of If the government uses interest rates to...

Question 13

Which of the following would be a macroeconomic topic?&#10;A) The price of books&#10;B) The effect of a change in interest rates on savings&#10;C) The wage rate of footballers compared to retail workers&#10;D) The demand for shoes

Accepted Answer

The answer of Which of the following would be a...

Question 14

Which of the following would not be an example of a macroeconomic topic?&#10;A) The general price level&#10;B) The average wage rate in the economy&#10;C) The price of holidays&#10;D) The effect of a change in government expenditure on GDP

Accepted Answer

The answer of Which of the following would not be...

Question 15

Which of the following is not a government economic objective?&#10;A) Low level of unemployment&#10;B) Volatile prices&#10;C) Favourable balance of trade&#10;D) Economic growth

Accepted Answer

The answer of Which of the following is not a...

Deck 17: Introduction to Macroeconomics