Question 1

Diagram 1
  
-Refer to Diagram 1 above.A shift in aggregate demand would lead to only modest inflation in the case of

Accepted Answer

A) AD₁ to AD₂. 
B) AD₂ to AD₁. 
C) AD₄ to AD₅. 
D) AD₅ to AD₄. 
A) AD₁ to AD₂. 
B) AD₂ to AD₁. 
C) AD₄ to AD₅. 
D) AD₅ to AD₄.

Question 2

Which is illegal?

Accepted Answer

A) Tax avoidance. 
B) Tax evasion. 
C) Both tax avoidance and tax evasion. 
D) Tax avoidance and tax evasion are both legal but are forms of evasion. 
A) Tax avoidance. 
B) Tax evasion. 
C) Both tax avoidance and tax evasion. 
D) Tax avoidance and tax evasion are both legal but are forms of evasion.

Question 3

Which can be considered a supply side policy?

Accepted Answer

A) Increasing the minimum wage. 
B) Increase in government spending on welfare. 
C) Provision of free university places. 
D) Greater regulation of markets. 
A) Increasing the minimum wage. 
B) Increase in government spending on welfare. 
C) Provision of free university places. 
D) Greater regulation of markets.

Question 4

Deregulation is when

Accepted Answer

A) the government sub-contracts with private businesses. 
B) reduces the amount of government controls on business. 
C) there is a transfer of public ownership of assets to the private sector. 
D) All of the above. 
A) the government sub-contracts with private businesses. 
B) reduces the amount of government controls on business. 
C) there is a transfer of public ownership of assets to the private sector. 
D) All of the above.

Question 5

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 6

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 7

Financial deregulation can lead to

Accepted Answer

A) an explosion of new financial products. 
B) greater freedom to access credit. 
C) the global financial crises in 2007-09. 
D) All of the above. 
A) an explosion of new financial products. 
B) greater freedom to access credit. 
C) the global financial crises in 2007-09. 
D) All of the above.

Question 8

The actual output gap is difficult to determine.

Accepted Answer

A) True 
 B)False

Question 9

Diagram 1
  
-Refer to Diagram 2 above.Shifting the aggregate supply curve to the right

Accepted Answer

A) makes no change to the full employment level of output. 
B) increases the full employment level of output. 
C) decreases the full employment level of output. 
D) leads to a change in aggregate demand. 
A) makes no change to the full employment level of output. 
B) increases the full employment level of output. 
C) decreases the full employment level of output. 
D) leads to a change in aggregate demand.

Question 10

Diagram 1
  
-Refer to Diagram 2 above.The effect of deregulation should result in

Accepted Answer

A) a shift to the right of the aggregate demand curve. 
B) a shift to the left of the aggregate demand curve. 
C) a shift to the right of the aggregate supply curve. 
D) a shift to the left of the aggregate supply curve. 
A) a shift to the right of the aggregate demand curve. 
B) a shift to the left of the aggregate demand curve. 
C) a shift to the right of the aggregate supply curve. 
D) a shift to the left of the aggregate supply curve.

Question 11

Which best describes an example of a regional industrial policy?

Accepted Answer

A) Building new roads. 
B) Investment in Education and Training. 
C) Relocate some government activities. 
D) Providing grants for research and development. 
A) Building new roads. 
B) Investment in Education and Training. 
C) Relocate some government activities. 
D) Providing grants for research and development.

Question 12

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 13

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 14

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 15

With deregulated markets the government should

Accepted Answer

A) ensure that it has checks and balances in place to monitor the market. 
B) leave the market completely alone as free markets are best. 
C) get rid of the competition commission. 
D) ensure it owns at least one company in each industrial sector as a control. 
A) ensure that it has checks and balances in place to monitor the market. 
B) leave the market completely alone as free markets are best. 
C) get rid of the competition commission. 
D) ensure it owns at least one company in each industrial sector as a control.

Question 16

If AD shifts to the right when the output gap is small then both national income and prices will rise quickly.

Accepted Answer

A) True 
 B)False

Question 17

Diagram 1
  
-Refer to Diagram 1 above.A shift in aggregate demand would lead to a substantial drop in inflation and for a moderate decline in national income in the case of

Accepted Answer

A) AD₄ to AD₃. 
B) AD₂ to AD₃. 
C) AD₄ to AD₅. 
D) AD₅ to AD₄. 
A) AD₄ to AD₃. 
B) AD₂ to AD₃. 
C) AD₄ to AD₅. 
D) AD₅ to AD₄.

Question 18

Diagram 1
  
-Refer to Diagram 2 above.All other things being equal, the aggregate demand curve will shift to the right

Accepted Answer

A) if the government decreases taxation. 
B) if technology improves. 
C) if the government raises taxation. 
D) if exports fall. 
A) if the government decreases taxation. 
B) if technology improves. 
C) if the government raises taxation. 
D) if exports fall.

Question 19

Explain what is meant by the free rider problem arising from firms investing too much in training.

Accepted Answer

Consider an employment sector the govern

Question 20

Which is an interventionist supply side policy?

Accepted Answer

A) The government encouraging research and development. 
B) The government investing in training and education. 
C) The government providing funds to Improve the infrastructure. 
D) All of the above. 
A) The government encouraging research and development. 
B) The government investing in training and education. 
C) The government providing funds to Improve the infrastructure. 
D) All of the above.

Diagram 1 -Refer to Diagram 1 above.A shift in aggregate demand would lead to only modest inflation in the case of

Which is illegal?

Which can be considered a supply side policy?

Deregulation is when

Bottlenecks will occur when

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

Financial deregulation can lead to

The actual output gap is difficult to determine.

Diagram 1 -Refer to Diagram 2 above.Shifting the aggregate supply curve to the right

Diagram 1 -Refer to Diagram 2 above.The effect of deregulation should result in

Which best describes an example of a regional industrial policy?

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

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

Which of the following reduces labour flexibility?

With deregulated markets the government should

If AD shifts to the right when the output gap is small then both national income and prices will rise quickly.

Diagram 1 -Refer to Diagram 1 above.A shift in aggregate demand would lead to a substantial drop in inflation and for a moderate decline in national income in the case of

Diagram 1 -Refer to Diagram 2 above.All other things being equal, the aggregate demand curve will shift to the right

Explain what is meant by the free rider problem arising from firms investing too much in training.

Which is an interventionist supply side policy?

What Is Economics

Thinking Like an Economist

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

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

The Financial Crisis and Sovereign Debt

Common Currency Areas and European Monetary Union

Filters

Exam 18: Supply Side Policies

Diagram 1 -Refer to Diagram 1 above.A shift in aggregate demand would lead to only modest inflation in the case of

Which is illegal?

Which can be considered a supply side policy?

Deregulation is when

Bottlenecks will occur when

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

Financial deregulation can lead to

The actual output gap is difficult to determine.

Diagram 1 -Refer to Diagram 2 above.Shifting the aggregate supply curve to the right

Diagram 1 -Refer to Diagram 2 above.The effect of deregulation should result in

Which best describes an example of a regional industrial policy?

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

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

Which of the following reduces labour flexibility?

With deregulated markets the government should

If AD shifts to the right when the output gap is small then both national income and prices will rise quickly.

Diagram 1 -Refer to Diagram 1 above.A shift in aggregate demand would lead to a substantial drop in inflation and for a moderate decline in national income in the case of

Diagram 1 -Refer to Diagram 2 above.All other things being equal, the aggregate demand curve will shift to the right

Explain what is meant by the free rider problem arising from firms investing too much in training.

Which is an interventionist supply side policy?

What Is Economics

Thinking Like an Economist

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

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

The Financial Crisis and Sovereign Debt

Common Currency Areas and European Monetary Union

Filters