Question 1

Raising the tax threshold serves to

Accepted Answer

A)  Increase the gap between welfare payments and potential earnings. 
B)  Makes those on benefits less fussy about which job to go for. 
C)  Reduces those who are voluntarily unemployed. 
D)  All of the above. 
A)  Increase the gap between welfare payments and potential earnings. 
B)  Makes those on benefits less fussy about which job to go for. 
C)  Reduces those who are voluntarily unemployed. 
D)  All of the above. D

Question 2

Higher tax rates:

Accepted Answer

A)  Reduce the opportunity cost of leisure. 
B)  Increase the opportunity cost of leisure. 
C)  Has no impact on the opportunity cost of leisure. 
D)  Incentivize people to work harder. 
A)  Reduce the opportunity cost of leisure. 
B)  Increase the opportunity cost of leisure. 
C)  Has no impact on the opportunity cost of leisure. 
D)  Incentivize people to work harder. A

Question 3

Why do governments accept a target inflation rate of around 2 per cent?

Accepted Answer

Many economists would argue that a little inflation in an economy is a good thing as it acts as an incentive to firms to produce and expand. Deflation on the other hand would put of investment as firms fear that consumers will put off some of their spending knowing that prices will be cheaper in the future.

Question 4

An example of deregulation is:

Accepted Answer

A)  Allowing different bus companies to compete with each other in the same city. 
B)  Making sure health and safety is maintained. 
C)  Reducing competition to encourage economies of scale. 
D)  Protecting workers rights. 
A)  Allowing different bus companies to compete with each other in the same city. 
B)  Making sure health and safety is maintained. 
C)  Reducing competition to encourage economies of scale. 
D)  Protecting workers rights.

Question 5

Which term describes the selling off of public assets to the business sector?

Accepted Answer

A)  Deregulation. 
B)  Relocation of government activities. 
C)  Privatization. 
D)  Regional policy 
A)  Deregulation. 
B)  Relocation of government activities. 
C)  Privatization. 
D)  Regional policy

Question 6

Shifting the aggregate demand curve to the right can lead to sustained growth.

Accepted Answer

A) True 
 B)False

Question 7

Bottlenecks will occur when:

Accepted Answer

A)  The output gap is large and the aggregate supply curve is horizontal. 
B)  The output gap is small and the aggregate supply curve is vertical. 
C)  The output gap is small and the aggregate supply curve is horizontal. 
D)  The output gap is large and there is a decrease in aggregate demand. 
A)  The output gap is large and the aggregate supply curve is horizontal. 
B)  The output gap is small and the aggregate supply curve is vertical. 
C)  The output gap is small and the aggregate supply curve is horizontal. 
D)  The output gap is large and there is a decrease in aggregate demand.

Question 8

Market orientated supply policies aim to improve price signals by rolling back the influence of the state.

Accepted Answer

A) True 
 B)False

Question 9

The aggregate supply curve can shift because of any of the following except:

Accepted Answer

A)  Changes in labour. 
B)  Changes in technology. 
C)  Increases in income tax. 
D)  The availability of natural resources. 
A)  Changes in labour. 
B)  Changes in technology. 
C)  Increases in income tax. 
D)  The availability of natural resources.

Question 10

The trade-off between an increase in both national income and price levels depends on how large the output gap is.

Accepted Answer

A) True 
 B)False

Question 11

Which is not an example of a flexible labour market?

Accepted Answer

A)  The government tightens regulations on zero hour contracts. 
B)  Firms have greater rights to make redundancies. 
C)  The government passes a law reducing minimum redundancy payments 
D)  More recruitment websites. 
A)  The government tightens regulations on zero hour contracts. 
B)  Firms have greater rights to make redundancies. 
C)  The government passes a law reducing minimum redundancy payments 
D)  More recruitment websites.

Question 12

Supply-side policies became a focus of many governments in:

Accepted Answer

A)  After the 1930s Great Depression 
B)  The 1960s and into the 1970s 
C)  The 1980s and into the 1990s 
D)  After to 2008 economic crises 
A)  After the 1930s Great Depression 
B)  The 1960s and into the 1970s 
C)  The 1980s and into the 1990s 
D)  After to 2008 economic crises

Question 13

How can a government reduce the numbers of people who are voluntarily unemployed?

Accepted Answer

Some people on welfare benefits may be v

Question 14

Higher tax rates reduce the opportunity cost of leisure.

Accepted Answer

A) True 
 B)False

Question 15

A cut in higher rate taxes has two effects. Which statement is correct?

Accepted Answer

A)  The substitution and income effect work in the same direction. 
B)  The substitution effect increases the opportunity cost of leisure. 
C)  The income effect increases the opportunity cost of leisure. 
D)  The substitution effect will decrease the opportunity cost of leisure 
A)  The substitution and income effect work in the same direction. 
B)  The substitution effect increases the opportunity cost of leisure. 
C)  The income effect increases the opportunity cost of leisure. 
D)  The substitution effect will decrease the opportunity cost of leisure

Question 16

The new Keynesian short-run aggregate supply is horizontal as it approaches full employment.

Accepted Answer

A) True 
 B)False

Question 17

When the output gap is large then the aggregate supply curve will tend to be close to:

Accepted Answer

A)  Horizontal 
B)  45 degrees 
C)  Vertical 
D)  Full employment 
A)  Horizontal 
B)  45 degrees 
C)  Vertical 
D)  Full employment

Question 18

Which of the following reduces labour flexibility?

Accepted Answer

A)  Setting up more government run job centres. 
B)  Forcing firms to cut back on 'zero hours' contracts. 
C)  Legislating against trade unions. 
D)  Encouraging local labour agreements. 
A)  Setting up more government run job centres. 
B)  Forcing firms to cut back on 'zero hours' contracts. 
C)  Legislating against trade unions. 
D)  Encouraging local labour agreements.

Question 19

The aggregate supply curve shifts to the right when:

Accepted Answer

A)  The labour force declines. 
B)  Technology improves. 
C)  There is a substantial decline in the numbers attending university. 
D)  There is a decrease in net immigration. 
A)  The labour force declines. 
B)  Technology improves. 
C)  There is a substantial decline in the numbers attending university. 
D)  There is a decrease in net immigration.

Question 20

The actual output gap is difficult to determine.

Accepted Answer

A) True 
 B)False

Exam 36: Supply-Side Policies

Raising the tax threshold serves to

Higher tax rates:

Why do governments accept a target inflation rate of around 2 per cent?

An example of deregulation is:

Which term describes the selling off of public assets to the business sector?

Shifting the aggregate demand curve to the right can lead to sustained growth.

Bottlenecks will occur when:

Market orientated supply policies aim to improve price signals by rolling back the influence of the state.

The aggregate supply curve can shift because of any of the following except:

The trade-off between an increase in both national income and price levels depends on how large the output gap is.

Which is not an example of a flexible labour market?

Supply-side policies became a focus of many governments in:

How can a government reduce the numbers of people who are voluntarily unemployed?

Higher tax rates reduce the opportunity cost of leisure.

A cut in higher rate taxes has two effects. Which statement is correct?

The new Keynesian short-run aggregate supply is horizontal as it approaches full employment.

When the output gap is large then the aggregate supply curve will tend to be close to:

Which of the following reduces labour flexibility?

The aggregate supply curve shifts to the right when:

The actual output gap is difficult to determine.

What Is Economics

Thinking Like an Economist

The Market Forces of Supply and Demand

Elasticity and Its Applications

Background to Demand: Consumer Choices

Background to Supply: Firms in Competitive Markets

Consumers, Producers and the Efficiency of Markets

Supply, Demand and Government Policies

The Tax System

Public Goods, Common Resources and Merit Goods

Market Failure and Externalities

Information and Behavioural Economics

Firms Production Decisions

Market Structures I: Monopoly

Market Structures Ii: Monopolistic Competition

Market Structures Iii: Oligopoly

The Economics of Factor Markets

Income Inequality and Poverty

Interdependence and the Gains From Trade

Measuring a Nations Well-Being

Measuring the Cost of Living

Production and Growth

Unemployment

Saving, Investment and the Financial System

The Basic Tools of Finance

Issues in Financial Markets

The Monetary System

Money Growth and Inflation

Open-Economy Macroeconomics: Basic Concepts

A Macroeconomic Theory of the Open Economy

Business Cycles

Keynesian Economics and the Is-Lm Analysis

Aggregate Demand and Aggregate Supply

The Influence of Monetary and Fiscal Policy on Aggregate Demand

The Short-Run Trade-Off Between Inflation and Unemployment

Common Currency Areas and European Monetary Union

The Financial Crisis and Sovereign Debt

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