AS Economics: Economic Growth and the Economic Cycle

Economic growth can be best described as the
1. continuous outward shift of aggregate demand
2. an increase in aggregate demand which causes a movement along the short-run aggregate supply curve
3. a long term expansion of a country's potential GDP
4. the avoidance of a negative output gap
If aggregate demand is constant, a leftward (inward) shift in the LRAS curve will
1. affect only the level of real GDP
2. increase real GDP and also lower the price level
3. reduce real GDP and also raise the price level
4. affect only the general level of prices
Which one of the following would best indicate economic growth? An index of
1. manufacturing output
2. share prices
3. export volumes
4. real national output
Economic growth occurs when there is an increase in
1. aggregate demand
2. the inflation rate
3. wage rates
4. 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
1. minus the money national income of the base year
2. times the price index in the base year divided by the price index in the current year
3. times the price index in the current year divided by the price index in the base year
4. divided by the working population
Which one of the following is one of the determinants of long run aggregate supply?
1. the exchange rate
2. the accumulated skills of the labour force
3. government spending
4. 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?
1. an increase in exports
2. a reduction in interest rates
3. an increase in manufacturing and service sector investment
4. 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?
1. exchange rate policy
2. supply side policy
3. fiscal policy
4. monetary policy
A 'supply-side' economist is likely to support a policy of
1. lower company taxes to encourage business investment
2. higher government spending to boost aggregate demand
3. higher rates of interest to control the risk of demand pull inflation
4. 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
1. an increase in the natural rate of unemployment
2. an increase in the supply of money and credit
3. a fall in the general price level
4. 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
1. will rise in real terms
2. remains constant because of full employment
3. will fall in real terms because of demand pull inflation
4. 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
1. a decrease in national output
2. an increase in unemployment
3. an increase in the rate of inflation
4. a decrease in the demand for imports
Investment may be defined as
1. spending on goods and services by consumers
2. that part of household income which is saved rather than spent
3. spending which adds to the capital stock of a country
4. 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?
1. the rate of economic growth
2. the rate of interest
3. the exchange rate
4. 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
1. The UK economy avoided a recession during the 1990s
2. The rate of economic growth has averaged 3% per year during the period 1982-2001
3. There was a slowdown in the UK economy in 1995
4. 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
1. The rate of growth of the economy has more stable than the rate of growth of investment
2. The rate of growth of the economy has more volatile than the rate of growth of investment
3. Real spending on capital investment fell in 1999
4. 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
1. The United States had the highest level of output in 2001
2. The Japanese economy was in recession in 2001
3. Germany had a higher level of labour productivity than the UK in 2001
4. 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
1. Manufacturing industry experienced a recession in 1994
2. The service industry has grown faster than manufacturing industry over the period from 1988 - 2001
3. Service sector industries now employ more workers than manufacturing industry
4. 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?
1. a rise in interest rates
2. a fall in aggregate demand
3. a rise in the exchange rate
4. 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
1. extra investment in labour training schemes
2. the introduction of a national minimum wage
3. the opening up of markets to increased competition
4. reductions in the rate of income tax to boost the labour supply
Fluctuations in economic activity can be caused by
1. an increase in aggregate demand
2. a decrease in aggregate demand
3. a decrease in short run aggregate supply
4. all of the above
Which one of the following is most likely to cause firms to decrease the amount of investment they undertake?
1. A fall in company taxation
2. A fall in business confidence
3. A rise in expected consumer demand
4. A fall in interest rates

AS Economics: Economic Growth and the Economic Cycle

Economics Multiple-choice Quiz