Syllabus Edition
First teaching 2018
Last exams 2026
Exam code: 0455 & 0987
What is an example of a macroeconomic aim?
to create and maintain full employment
to improve efficiency in the manufacturing sector of the economy
to provide consumers with greater information when buying goods and services
to encourage greater occupational mobility of labour
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What is an aim of government policy?
income tax
interest rates
stable prices
unemployment
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What does the term inflation mean?
A decrease in the general price level of goods and services
The steady state of prices without any changes over time
An increase in the general price level of goods and services
A sudden collapse of the financial market
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What is a positive impact of economic growth?
Economic growth leads to higher unemployment rates
Economic growth reduces job opportunities
Economic growth creates new jobs and lowers unemployment
Economic growth has no effect on employment
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What is absolute poverty?
Occurs when household income is a certain % below median incomes e.g. 65% below
A record of all the financial transactions that occur between it and the rest of the world
Someone who does not have a job & are actively seeking one
When household income is below a level that would allow the consumption of the basic necessities for life e.g. food, shelter
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What are two aims that a government normally pursues when managing the performance of the whole economy?
to encourage an increase in production and to prevent high inflation
to ensure no one is unemployed and to reduce exports
to give everyone equal incomes and to increase government revenue
to protect the environment and to reduce interest rates
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What is most likely to cause a more even distribution of income?
an increase in indirect taxation
an increase in inflation
an increase in managers’ salaries
an increase in progressive taxation
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A government increases the rate of income tax in order to pay for extra transfer payments, including cash benefits to the poor.
What must occur as a result of this?
It changes the distribution of income.
It ensures the equality of incomes.
It leads to more people paying income taxes.
It reduces the level of unemployment.
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Policy decisions by governments often create a trade-off in the macroeconomic objectives.
Which of the following does not show a macroeconomic conflict?
A | Increasing economic growth | Higher inflation inflation |
B | Increasing economic growth | Increased pollution |
C | Low unemployment | Low inflation |
D | Low unemployment | Increased imports |
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What is a trade-off between economic growth and environmental sustainability?
Economic growth doesn't impact environmental sustainability
Economic growth can harm the environment but improve social well-being
Economic growth has no impact on social well-being
Economic growth can always coexist with perfect environmental sustainability
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A government lowers interest rates to encourage more borrowing and spending by households to increase economic growth.
Why could this lead to a conflict with other government aims?
It could cause uncertainty and lead to lower demand.
It could encourage more savings and lead to higher unemployment.
It could lead to lower prices of consumer goods and result in deflation.
It could stimulate consumer demand and lead to inflation.
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In which case is success for the government in achieving the first aim likely to cause problems in achieving the second?
| first aim | second aim |
A B C D | full employment high economic growth price stability stable balance of payments | price stability full employment stable balance of payments more even distribution of income |
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Which scenario below shows a current account surplus?
Imports > exports
Imports = Exports
Exports - Imports
Exports > imports
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Which supply side policy response below would help to ease cost push inflation?
Increase in business taxes
Policies to open a market to more competition
Higher interest rates
Reduction in welfare payments
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How can we best describe the relationship between unemployment and real GDP growth?
Unemployment tends to be inversely proportional to real GDP growth
Unemployment tends to have no correlation real GDP growth
Unemployment tends to be directly proportional to real GDP growth
Unemployment tends to be always higher than real GDP growth
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