In economics, investment is best defined as?

spending on capital goods in the economy

An increase in aggregate demand is most likely to cause inflation when

actual GDP is above the productive potential of the economy.

The underlying long-run trend rate of economic growth can be defined as the

rate of economic growth that can be maintained in long run

Which one of the following is most likely to occur in the boom phase of an economic cycle?

Rising imports, rising profits and a positive output gap

Choosing between faster economic growth and a satisfactory balance of payments bestillustrates

a possible conflict between competing policy objectives

Which one of the following is most likely to reduce inflationary pressures in the UKeconomy?

An increase in labour productivity

A rise in the exchange rate and a rise in taxes on household income is most likely to cause

rise in imports and a fall in business investment

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Edexcel A Theme 2 Economics Quiz

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Revise key macroeconomic concepts

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Questions 12

Answers

1
Which policy will to lead to an increase in output and employment without increasing inflation?
Expansionary monetary policy
Supply-side policies
Expansionary fiscal policy
Exchange rate policy
2
Ceteris Paribus, a large rise in interest rates is most likely to lead to an increase in
investment
economic growth
aggregate supply
unemployment
3
In economics, investment is best defined as?
the stock of economic resources e.g. factories and machinery
spending on capital goods in the economy
the flow of money into the stock of savings
profit kept by firms to finance expenditure on new machinery
4
An increase in aggregate demand is most likely to cause inflation when
there are substantial unemployed resources in the economy
the government is balancing its budget
actual GDP is above the productive potential of the economy.
the balance of payments is neither in deficit nor in surplus
5
The shift in the aggregate demand curve from AD to AD1 could have been caused by an increase in
labour productivity.
the government budget deficit.
household savings.
imports.
6
The underlying long-run trend rate of economic growth can be defined as the
highest rate of economic growth achieved in the long run
rate of economic growth achieved over two quarters
average rate of economic growth in a boom period
rate of economic growth that can be maintained in long run
7
Which one of the following is most likely to occur in the boom phase of an economic cycle?
Rising imports, rising profits and a positive output gap
national income up, unemployment down, a negative output gap
Consumption and investment spending up,negative output gap
Excess demand, falling employment and a positive output gap
8
The shift of the short-run aggregate supply curve from SRAS1 to SRAS2 could have been caused by
an increase in employment
a decrease in oil prices
a decrease in the availability of credit
an increase in business costs
9
Choosing between faster economic growth and a satisfactory balance of payments bestillustrates
that the short-run aggregate supply curve is vertical
sacrificing future consumption for current consumption
a possible conflict between competing policy objectives
choice between different macroeconomic policy instruments
10
Which one of the following is most likely to reduce inflationary pressures in the UKeconomy?
An increase in labour productivity
The emergence of a positive output gap
A fall in the value of the pound
A reduction in the rate of interest paid on mortgages
11
A rise in the exchange rate and a rise in taxes on household income is most likely to cause
rise in exports and a rise in business investment
fall in exports and a rise in business investment
rise in imports and a fall in business investment
fall in imports and a rise in business investment
12
Ceteris Paribus, a government would be undertaking a contractionary fiscal policy if it reduced
government expenditure
interest rates
taxation
the exchange rate.

Edexcel A Theme 2 Economics Quiz Flashcards | StudBud