Why might a 10% devaluation of country’s currency fail to improve its balance of trade deficit?

Other countries devalue their currencies by 15 %.

When will a reduction in unemployment result in an increase in inflation?

when the economy reaches its production possibility curve

Why would a government introduce tariffs and quotas?

to increase the demand for home-produced goods

Which factor will cause cost-push inflation?

an increase in trade union power

What will cause an immediate rise in the size of a country’s labour force?

an increase in the age of retirement

What will improve Cuba’s current account balance immediately?

Cubans working in the US sending money to friends in Cuba

In what circumstances will money lose its value?

The rate of inflation is positive.

What might explain an increase in the volume of a country’s imports?

an appreciation of the country’s exchange rate

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AS Macro Economics

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AS level Macro economics

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Questions 10

Answers

1
What is most likely to cause demand-pull inflation?
an increase in indirect taxes
a reduction in direct taxes
a reduction in the money supply
an increase in interest rates
2
Why might a 10% devaluation of country’s currency fail to improve its balance of trade deficit?
Other countries revalue their currencies by 15 %.
The supply of the country’s exports is elastic.
The demand for the country’s imports is elastic.
Other countries devalue their currencies by 15 %.
3
When will a reduction in unemployment result in an increase in inflation?
when the economy reaches its production possibility curve
when the jobs created are unskilled
when the newly employed buy mainly imported goods
when a high percentage of the increase in income is saved
4
Both employment and unemployment rose over a ten year period.What must have risen?
working population
life expectancy
unemployment benefits
birth rate
5
Why would a government introduce tariffs and quotas?
to reduce the price of imports
to reduce the price of home-produced goods
to increase the level of international competition
to increase the demand for home-produced goods
6
Which factor will cause cost-push inflation?
an appreciation of the exchange rate
an increase in trade union power
an increase in labour productivity
a higher level of consumption
7
What will cause an immediate rise in the size of a country’s labour force?
an increase in the number of redundancies
an increase in the school leaving age
an increase in the age of retirement
an increase in the birth rate
8
What will improve Cuba’s current account balance immediately?
a Cuban buying sports equipment produced in the US
Cubans working in the US sending money to friends in Cuba
a US multi-national company building a new factory in Cuba
a US resident investing in property in Cuba
9
In what circumstances will money lose its value?
The growth of money supply falls below the growth of output.
The rate of inflation is positive.
The general level of prices is falling.
The economy experiences a period of deflation.
10
What might explain an increase in the volume of a country’s imports?
an appreciation of the country’s exchange rate
an increase in the country’s tariffs
a recession in the country
a rise in the country’s rate of income tax

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