Choose the correct answer for each question.

1. The chart below shocks the annual rate of growth of real national output in the UK economy for each year since 1981.
   
   

   
   From the chart we can deduce that
   1.   ?    The rate of economic growth was fastest in 1994
   2.   ?    The UK economy has expanded in each year since 1981
   3.   ?    The volatility of economic growth was greater from 1981-1991 than from 1992-2001
   4.   ?    The UK economy experienced a recession in 2001

2. The chart below shows the annual rate of consumer price inflation for the UK as measured by the Retail Price Index. RPIX inflation excludes the effects of changes in mortgage interest costs
   
   

   
   From the information contained in the chart we can deduce that
   1.   ?    There has been a continuous fall in the rate of inflation in the UK since 1990
   2.   ?    Prices in 1989 were higher than they were in 1993
   3.   ?    The value of money has increased over the period 1988-2001
   4.   ?    The UK economy has become less inflation-prone over the last eight years

3. The chart below shows the annual percentage change in consumer spending and real national output (GDP) since 1985.
   
   

   
   From the chart we can deduce that
   1.   ?    Consumer spending has grown more quickly than real GDP throughout the entire period from 1985-2001
   2.   ?    A growing percentage of consumer spending went on imported goods and services during this period
   3.   ?    The share of consumer spending in total GDP has increased during the period
   4.   ?    Exporters of goods and service from the UK experienced a slowdown in demand from 1994 onwards

4. Which one of the following would best indicate economic growth?
   An index of

   1.   ?    Share prices
   2.   ?    Retail prices
   3.   ?    Export volumes
   4.   ?    gross domestic product

5. The table below shows the index of gross domestic product and gross domestic product per head measured at constant prices.
   
   

   
   The table above shows that
   1.   ?    Real GDP grew more quickly than Real GDP per head between 1980 and 2000
   2.   ?    The level of productivity in the UK economy fell over the period 1980 and 2000
   3.   ?    Average living standards more than doubled between 1970 and 2000
   4.   ?    Unemployment fell between 1990 and 2000

6. Which one of the following is most likely to lead to a rise in a country's potential growth of real GDP in the long term?

   1.   ?    An increase in capital investment
   2.   ?    An increase in consumer spending
   3.   ?    An increase in imports of consumer goods
   4.   ?    An increase in government spending

7. The chart below shows measurements of productivity for four countries relative to productivity in the UK economy.
   
   

   
   The information in the chart suggests that
   1.   ?    Japan has a higher level of productivity than the UK
   2.   ?    Output per worker in the United States is nearly 40% higher than in the UK
   3.   ?    The UK economy has been growing more slowly than our major international competitors
   4.   ?    Output per hour worked

8. Other things being equal, a fall in interest rates will

   1.   ?    Increase exports
   2.   ?    Increase consumer spending
   3.   ?    Increase unemployment
   4.   ?    Increase the external value of the exchange rate

9. Which one of the following can lead to a rise in inflation? An increase in

   1.   ?    Unemployment
   2.   ?    The exchange rate
   3.   ?    Interest rates
   4.   ?    Costs of production

10. If an economy operating at full-employment of available factor resources experiences a more efficient allocation of resources because of technological progress, then national income per head

    1.   ?    Will rise in real terms
    2.   ?    Will fall in real terms because of higher inflation
    3.   ?    Will be distributed more equally among the population
    4.   ?    Will remain the same because the economy is already operating at full-employment