Exam Question Planning

Question 1

Discuss the consequences of high economic growth on the U.K. economy?

Answer 1

• lower unemployment
• improved balance of payments
• improvement in Foreign Direct Investment

Question 2

Assess the impact on the U.K. economy following a period of prolonged inflation?

Answer 2

• fiscal drag effect
• fall in business confidence
• reduces the real burden of debt

Question 3

Examine the effects of deflation for U.K. economy (25 marks)

Answer 3

• reduction in interest rates
• improved current account
• higher unemployment

Question 4

Evaluate the consequences of high unemployment for the performance of an economy (25 marks)

Answer 4

• fall in tax revenue
• deflation
• fall in economic growth

Question 5

Evaluate the view that “macroeconomic” conflicts are inevitable (25 marks)

Answer 5

• economic growth vs inflation
• unemployment vs inflation
• economic growth vs environment

Question 6

Discuss how an increase in the base rate of interest can affect the U.K. economy (25 marks)

Answer 6

• reduce the rate of inflation, disinflation
• economic growth
• hot money flows

Question 7

Discuss how effective lower interest rates are in stimulating a recovery (25 marks)

Answer 7

• inflation
• asset prices
• economic growth

Question 8

Discuss how an increase in the exchange rate affect the U.K. economy (25 marks)

Answer 8

• reduction in the rate of inflation
• unemployment
• economic growth

Question 9

Discuss how a decrease in the exchange rate can affect the UK economy (25 marks)

Answer 9

• inflation
• balance of payments
• economic growth

Question 10

Discuss the best way to reduce inflation for the U.K. economy (25 marks)

Answer 10

• contractionary monetary policy
• tight fiscal policy
• supply side policies

Question 11

Discuss how an increase in government spending can affect the U.K. economy (25 marks)

Answer 11

• a fall in cyclical unemployment
• economic growth
• inflation
• balance of payments

Question 12

Discuss the consequences of an increase in direct and indirect taxes (25 marks)

Answer 12

• unemployment
• economic growth
• inflation

Question 13

Examine the consequences of budget deficits for an economy (25 marks)

Answer 13

• economic growth
• balance of payments
• crowding out effects

Question 14

Discuss the measures that the government can adopt in order to reduce the budget deficit (25 marks)

Answer 14

• reduce government spending
• higher direct and indirect taxes
• economic growth

Question 15

Discuss how supply side policies can improve the productive capacity of an economy (25 marks)

Answer 15

• education and trancing
• a reduction in direct taxes
• privatisation

Question 16

Examine how supply side policies can improve the current account balance of payments (25 marks)

Answer 16

• education and training
• deregulation
• reduction in direct taxes