Multiple Choice Flashcards
All other things being equal, a signif cut in rate of tax on companys profit is most likely to afffect on ad and lras
Increaase both ad and lras
The annual rate of inflation in an economy falls from 5% to 2% but the annual rate of inflation of its main trading partners remains at 5%. As a result, all other things being equal, it is likely that in the lt for this econ
Impact on exports and imports
Exports increase
Starting from an initial point of equilibrium on a verticle lras a reduction in ad will lead to a new lr equilibrium position with a lower
Price level
The current account of the balance of payments comprises
Trade in goods and services, investment income and transfers
What would result in a demand side shock to uk econ- large rise in
Uk wages due to wave of strikes
All things being equal, in the lr a fall in the exchange rate is likely to
Increase ad because it can reduce the foriegn currency price of exports
How to calculate percentage increase in the oevrall price index
X weighting by price index
Which one of the following is a reason why the supply of cars is likely to be price elastci in sr when price of cars increases
There is considerable spare capacity in the car industry
Another term for welfare losss
Deadweight loss of consumer
There is a reduction in the market demand for product supplied by firms operating in a perfect comp indsutry
What will happen to firm av and marginal rev as a result of this change
Av rev and marginal rev both fall
When marginal utility=0
Total utility is max
In an econ experinceing an econ boom what is likely to happen to job vacancies
Increasing
In a monopolistic comp in sr at profit max price output firm will
Make supernormal profits
What count as liquid assets
Cash
Balancaes at central bank
Other liqid assets
Not retained profit- as likelyt to. Be used already
Summer holidays at uk seaside towns have become less popular
Uk seaside holldiay towns are affected by seasonal unemployment and increasing structural unemployment
What is momst likely consewudne
Cost of living for people who live in uk seaside towns fall
Real gorwth
Nomainal-inflation
Each of top five decile groups has expeiernes a fall in tyehir share of total inocme
In ocntrast bottom five decile groups have experinced a sbstanntila increase in their share of total iocme
Thus distrubution of income most likely to hav ebecome
Mroe equal
Essentail characterisistc sof customs union
Internal trade barriers
Common external tariffs
Common currency
All other things being euqal in which one of the following circumstances is the boe most likely to raise bank rate to maintain fnancal stability
Fall in bank liquidity and capital ratios following several years of rapid growth in bank lending and a boom in house prices
Upwards unitary totla rev curve
How will firm ave rev and marginal rev change as firm expands it s output
Constant av rev and constant marginal rev
According to the hypothesis of diminishing marginal utility
When marginal utility is zero
The total utility from consuming the good is max
Increased output results from specialisation and the divion of lab becuase they enable
More efficient use of the available resources
Lr philips curve shows that
There is no trade off between reducing inflation and lower unemployment in long run
The bahavour of a consumer buiing a 75 inch large screen tv is biased due to bounded rationality and the anchoring effect
Implies that the choice of which tv to buy is based on the price of
The first tv seen and imperfect info about availiable alternatives
Rightwards shift in supply for exchange rate bewteen sterling and eros
Due to an increase in eurozone
Compansies buing factories in uk
Immobility of lab may lead to a missallocation of resources and market failure
A change in pattern of demand results in strutcural unemp
As gini coefficient decreasese percentage
More equal society
Primary measure of unemp in uk is based on the
Number of people actively seeking work and avaailble to star work
A firm benefits from signif and persistent econ of scale as increase output
Most likely consequence as it grows in size
Firms ability to set its own prices will increase
Currency is undervalued by less signif diff
Purchasing power parity is closer to
Rightwards shift in lras and sras is caused by
A large increase in teh availbaility of renewable energy within the econ
A statemnet associated with behavoural econ theory
An individ econ decisions may be biased
A reason for gov intervention in a markwet
Firms in an oligopolistic market may limit price comp
A monopolistically comp firms demand curve is
The firms av rev curve
A left wards shift of sras is likely to be caused by
A decrease in level of tarrifs on imports
The existence of neg externalities in consumption results in a misallocation of resources. This is because at the free makret level of output the
Msb is less than msc
An increase abouve trend level of real gdp (recooving from being below trend level) is likely tol lead to
An increase in investment due to accelerator process
A kinked demand curve provides an explanation of why the
Firms price changes deend on competitors pricing behaviour
Despute qe several years, econ has rising unemployment and rate of inflation signif below target rate, all other things being equal, which one of the following actions is the central bank most liekly to take in order to meet the targte for inflation
Provide forward guidnece indicating that the bank will continue with its programme of qe
All other things beinng equal , which one of the following is most likely to cause the marginal rev product of lab curve in shoe manufacturing industry shift right
Increase in market demand for shoes
A country experiences a large net capital outflow, the most likley consequence of this n the sr will be a decrease in
Its exchange rate
A fall in price and increase in the quantity demanded of lemons could have been caused by
Favourable weather leading to a record harvest
No shift seen
Following flooding described by environ agency as a ‘once in a century event’ there is a sharp increase in the number of residents of a large town who buy additional flood insurance
Biases in decisions seen
Availablillity bias and social norms
Atc above mr=ar- what changes can be expected as the market moves into lr
Some firms will leave the market and the price will rise
When trying to calculate diminishing marginal returns to labobur
Calculate diff in total output
A firm faces a downward sloping demand crve. Firm discovers that any increase or decrease from its current level of output leads to a fall in total rev
This means that at its current output marginal rev is
Zero
Which one of teh following is the most likely result of a divorfce of ownership from control inan organisation
Adopting of satisficing behavour
Gov moves from srpc to lrpc as unemployment rate increases- why
Econ agets have higher inflation expectations due to intervetion- money illusion
Which one of the following is a role of the uks ovr
Eval gov performance agianst own fiscal targets
Which one of the following would be classified as sa debit item in seocndary income section of current account bop
Emergency aid provided to another country following a natural disaster
How to calculate comparative advantage
Divide by each other comes ot with decimal- to calauclate opp cost
Rightwards shift lras leads to
An improveenyt in bop on current acccount
Cause of globalisation
Containerisation
Cost of internat trade
Less domestic jobs available
Main feature of single european market
The free moement of capital and labour betwene memebr countries
Portfoio investment
Any investment in securities intended only for financial gain which does not create a lasting interest
Fdi
Investment made by a company or individ from one country in business interests in anotehr country
One disadv of a fixed exchange rate system is that
It can lead to current account imbalances
A country experiences a large net caiptal outflow
All other tings beng equal the most likely consequence of this in sr is decrease in
Er
In highly contestable makret, lr firm most likely to set price at
Ar=ac
A monopolistically comp fimrs demand crve is
Firms av rev curve
