Multiple choice questions

Question 1

state one example of expansionary monetary policy

Answer 1

decreasing interest rates

Question 2

state one example of expansionary fiscal policy

Answer 2

increasing government spending

Question 3

state one example of supply-side policy

Answer 3

deregulating labour markets

Question 4

which of the following is an example of current government expenditure
a- government spending on building new hospitals
b- government spending on improving broadband provision in rural areas
c- government spending on increasing the number of lanes on a motorway
d- government spending on teacher’s salaries

Answer 4

D

Question 5

which of the following policies is not available to a central bank
a- cutting marginal tax rates
b- exchange rate adjustments 
c- increasing the interest rate
d- quantitative easing

Answer 5

A

Question 6

economic growth is usually measured by the annual change in
a- the retail price index
b- real national income
c- the output of the manufacturing industry
d- consumer expenditure

Answer 6

B

Question 7

which one of the following is most likely to be an example of cyclical unemployment
a- Gill lost her job as a television engineer 2 months ago and is waiting to start a new job next month
b- Brian has not worked for 15 years since losing his job as a coal miner
c- Hitesh lost his job as a construction worker 6 months ago when a recession led to a downturn in the construction industry
d-Faith works in the hotel trade as a casual chef and spends november to april out of work

Answer 7

C

Question 8

all other things being equal, demand- pull inflation is most likely to result from an increase in 
a- the level of interest rates 
b- government spending 
c- the rate of income tax
d- the cost of imported raw materials

Answer 8

B

Question 9

deflation is most likely to
a- cause consumers to delay their purchases
b- lead to a rise in interest rates
c- lead to a rise in imports
d- reduce the real value of any money that has been lent

Answer 9

A

Question 10

difference between saving and investment

Answer 10

saving- income which is not spent

investment- spending by firms on capital goods

Question 11

the consumer price index is a measure of changes in the 
a- pattern of consumer expenditure
b- average standard of living
c- effective demand for consumer goods
d- average cost of living

Answer 11

D