MCQ 5

All other things being equal, which one of the following is most likely to lead to an increase in both saving and investment? An increase in:

A) The exchange rate.

B) Unemployment.

C) The interest rate.

D) Incomes.

When an economy is operating inside its production possibility frontier, it must have a

A) low underlying trend rate of growth.

B) Negative output gap.

C) Declining labour force.

D) Negative rate of economic growth.

All other things being equal, a rise in the exchange rate is likely to

A) Reduce the price of exports

B) Increase import prices.

C) Increase domestic demand.

D) Reduce domestic employment.

Which one of the following is most likely to lead to an increase in structural unemployment in the UK?

A) An increase in the size of the UK government's budget deficit.

B) A decision by the Monetary Policy Committee of the Bank of England to increase interest rates.

C) Improving international competitiveness of the Chinese and Indian economies.

D) A fall in consumer confidence which leads to a recession in the UK.

In the circular flow of income model, which one of the following equations is correct?

A) Income = Output = Expenditure.

B) Income = Output = Injections.

C) Output = Expenditure = Withdrawals.

D) Expenditure = Income = Injections = Withdrawals.

A) An improvement in labour productivity in the domestic economy relative to labour productivity abroad.

B) A rise in inflation in the domestic economy relative to inflation abroad.

C) A fall in domestic incomes.

D) A fall in the external exchange rate of the domestic currency.

A) Real National Income rose.

B) Money national income rose by 10%.

C) Population grew at a faster percentage rate than prices.

D) Real national income per head fell.

An economy, operating at full capacity, exports and imports final goods and services. It also imports a large proportion of the raw materials and components used for its domestic manufacturing production. All other things being equal, a depreciaiton of the exchange rate is likely to

A) Increase both demand-pull and cost-push inflationary pressures.

B) Increase demand-pull inflationary pressures but reduce cost-push inflationary pressures.

C) reduce demand-pull inflationary pressures but increase cost-push inflationary pressures.

D) reduce both demand-pull and cost-push inflationary pressures.

Which of the following would categorize ‘VAT’?

A) Direct and Progressive.

B) Indirect and Regressive.

C) Direct and Regressive.

D) Indirect and Progressive.

MCQ 5

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