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Macro Economics Test

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Macro Economics Test. This test consists of 10 questions designed to test your understanding of Macro Economics. The links provide you with a choice of answer, along ... – PowerPoint PPT presentation

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Title: Macro Economics Test


1
Macro Economics Test
  • This test consists of 10 questions designed to
    test your understanding of Macro Economics
  • The links provide you with a choice of answer,
    along with explanations.

2
Question 1.
  • Which of the following is a Fiscal Policy?
  • a. Increasing Interest Rates
  • b. Increasing direct taxes
  • c. Introducing Trade Union legislation

3
Correct - Fiscal policy relates to Government
taxation and expenditure
4
An example of monetary policy.
5
An example of Supply Side policies
6
Question 2.
  • Which of the following is a direct tax?
  • A. VAT
  • B. Customs and excise duties
  • C. Higher rate income tax

7
Value added tax is an indirect tax - a tax on
income.
8
Customs and excise duties are indirect taxes - a
tax on expenditure.
9
Correct, direct taxes are taxes on income
10
Question 3.
  • Which of the following policies is likely to
    increase the value of the against the ?
  • A. A reduction in income tax levels
  • B. An increase in interest rates
  • C. Switch from direct to indirect taxation

11
This would probably increase imports therefore
reducing the value of the
12
Correct. Demand for s would increase ( hot
money flows), therefore increasing value of
13
Likely to have no effect on value of
14
Question 4.
  • Which type of unemployment varies with
    fluctuations in economic activity?
  • A. Cyclical
  • B. Frictional
  • C. Structural

15
Frictional unemployment is job search
unemployment.
16
Structural unemployment relates to changes in
technology or patterns of demand
17
Well done! Cyclical unemployment results from
fluctuations in the economic cycle
18
Question 5.
  • Which of the following cause inflation?
  • A. An increase in imports because of the
    increasing value of the on Forex markets.
  • B. An increase in demand levels above the
    capacity of UK industry

19
This is likely to lower the cost of imports and
therefore reduce inflationary pressure.
20
Correct! In these circumstances firms can
increase prices, and maintain demand levels
21
Question 6.
  • A Which of the following is a cause of inflation?
  • A. Fall in consumer confidence
  • B. Increase in investment by firms
  • C. Increase in firms costs

22
Correct.
23
Wrong.
24
Wrong.
25
Question 7.
  • Which of the following defines supply side
    policies?
  • A. The MPCs policy of controlling inflation
    through interest rates.
  • B. Attempts to make the operation of the economy
    more efficient.

26
Wrong, Monetary policy
27
Correct. Supply side policies attempt to increase
aggregate supply in the economy, by making
labour, and all other markets operated more
efficiently
28
Question 8.
  • Which of the following is a government Macro
    economic objective?
  • A. maintaining a stable exchange rate
  • B. maintaining a low rate of crime
  • C. maintaining stable and sustainable growth of
    GDP

29
Wrong.The is allowed to float freely on the
Forex markets.
30
Correct. This is one of the main macro economic
objectives along with, low rates of unemployment
and inflation, as well as balance on the Current
Account of Balance of Payments
31
Wrong. A social objective
32
Question 9.
  • Which of the following are examples of monetary
    policy?
  • 1. Controls on Bank lending
  • 2. Changes in National Insurance rates
  • 3. Controls on consumer credit
  • A. 1 only B. all 3
  • C. 1 and 3

33
Wrong This is an example of monetary policy, but
not the only one given.
34
Wrong. B is an example of Fiscal Policy.
35
Correct. Both of these are examples of monetary
policy, but rarely now used.
36
Question 10.
  • For which of the following can fiscal policy be
    used?
  • 1. Controlling demand in the economy
  • 2. Controlling the budget deficit
  • 3. Adjusting distribution of income and wealth
  • A. 2 only
  • B. 2 and 3
  • C. All of the above

37
True, but it is not the only one listed
.
38
True, but look again
39
Correct. Fiscal policy can and has been be used
for all three purposes.
40
You have now completed the test. For further
more detailed revision please use the case
studies on the web site To exit the test just
use the back button on your browser toolbar
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