AS Economics: Economic Growth and the Economic Cycle
Economics Multiple-choice Quiz
Choose the correct answer for each question.
Economic growth can be best described as the
continuous outward shift of aggregate demand
an increase in aggregate demand which causes a movement along the short-run aggregate supply curve
a long term expansion of a country's potential GDP
the avoidance of a negative output gap
If aggregate demand is constant, a leftward (inward) shift in the LRAS curve will
affect only the level of real GDP
increase real GDP and also lower the price level
reduce real GDP and also raise the price level
affect only the general level of prices
Which one of the following would best indicate economic growth? An index of
manufacturing output
share prices
export volumes
real national output
Economic growth occurs when there is an increase in
aggregate demand
the inflation rate
wage rates
the economy's productive capacity
The real national income of a country for a particular year is equal to its money national income in the current year
minus the money national income of the base year
times the price index in the base year divided by the price index in the current year
times the price index in the current year divided by the price index in the base year
divided by the working population
Which one of the following is one of the determinants of long run aggregate supply?
the exchange rate
the accumulated skills of the labour force
government spending
the level of unemployment
Which one of the following is most likely to lead to an increase in national income without an increase in the rate of inflation?
an increase in exports
a reduction in interest rates
an increase in manufacturing and service sector investment
an increase in consumer spending
Which one of the following policies is most likely to be effective in improving the trend rate of growth for an economy?
exchange rate policy
supply side policy
fiscal policy
monetary policy
A 'supply-side' economist is likely to support a policy of
lower company taxes to encourage business investment
higher government spending to boost aggregate demand
higher rates of interest to control the risk of demand pull inflation
higher wage rates to increase demand
The diagram shows the long run aggregate supply curves for a country over a period of time The shift in the long run aggregate supply curve from LRAS1 to LRAS2 and to LRAS3 is most likely to have resulted from
an increase in the natural rate of unemployment
an increase in the supply of money and credit
a fall in the general price level
increased investment in human and fixed capital
If an economy is operating at the full employment level of national output and achieves a more efficient allocation of resources, national income per head
will rise in real terms
remains constant because of full employment
will fall in real terms because of demand pull inflation
will be redistributed more equitably
If the rate of growth of aggregate demand becomes greater than the trend rate of economic growth of output then in the short run the economy is likely to experience
a decrease in national output
an increase in unemployment
an increase in the rate of inflation
a decrease in the demand for imports
Investment may be defined as
spending on goods and services by consumers
that part of household income which is saved rather than spent
spending which adds to the capital stock of a country
all types of spending by the government sector
If an economist wishes to make a distinction between real and money national income, which one of the following would have to be considered?
the rate of economic growth
the rate of interest
the exchange rate
the rate of inflation
The chart shows the rate of economic growth for the UK in each year since 1982 From the data in the chart we can deduce that
The UK economy avoided a recession during the 1990s
The rate of economic growth has averaged 3% per year during the period 1982-2001
There was a slowdown in the UK economy in 1995
There was a recession in the UK economy in 1992
The chart below shows the annual change in real national output and real investment spending in the British economy during the period 1981-2001 From the data we can deduce that
The rate of growth of the economy has more stable than the rate of growth of investment
The rate of growth of the economy has more volatile than the rate of growth of investment
Real spending on capital investment fell in 1999
Real spending on capital investment increased in 1992
The chart shows GDP per worker employed for four countries in 2001 From the chart, it may be deduced that
The United States had the highest level of output in 2001
The Japanese economy was in recession in 2001
Germany had a higher level of labour productivity than the UK in 2001
The French economy was bigger than the German economy in 2001
The chart shows an index of output for the UK manufacturing and service industries for the period from 1988 - 2001 From the data shown in the chart, we can deduce that
Manufacturing industry experienced a recession in 1994
The service industry has grown faster than manufacturing industry over the period from 1988 - 2001
Service sector industries now employ more workers than manufacturing industry
Service sector industries experienced a recession in 1990-92
Which one of the following in most likely to cause an increase in aggregate capital investment spending?
a rise in interest rates
a fall in aggregate demand
a rise in the exchange rate
a rise in business confidence
All of the following are examples of government policies aimed at improving 'supply-side' economic performance and increasing the trend rate of economic growth except
extra investment in labour training schemes
the introduction of a national minimum wage
the opening up of markets to increased competition
reductions in the rate of income tax to boost the labour supply
Fluctuations in economic activity can be caused by
an increase in aggregate demand
a decrease in aggregate demand
a decrease in short run aggregate supply
all of the above
Which one of the following is most likely to cause firms to decrease the amount of investment they undertake?