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Q 1 An increase in imports of consumer goods is most likely to be caused by a A rise in household income. B fall in the exchange rate. C rise in household saving. D fall in employment. 40 drop

Q 2 Which one of the following is most likely to lead to a fall in aggregate investment? A A reduction in the level of unemployment B An increase in spare capacity in the economy C A reduction in the average level of interest rates D An increase in aggregate demand 40 drop

Q 3 The underlying trend rate of growth in an economy is declining and the economy is also experiencing an increase in its rate of unemployment. Which one of the following is likely to be most effective in dealing with these problems? A An expansionary fiscal policy and a restrictive monetary policy B A restrictive fiscal policy and supply-side policies C A restrictive monetary and fiscal policy D An expansionary monetary policy and supply-side policies 40 drop

Q 4 Other things being equal, increased innovation in an economy is likely to lead to a A fall in the equilibrium level of output. B fall in the size of the labour force. C leftward shift of the aggregate demand curve D rightward shift of the long-run aggregate supply curve. 40 drop

Q 5 An economy is currently operating inside its production possibility frontier. In the short run, if the rate of growth of aggregate demand is less than the rate of growth of productive capacity, then the economy is most likely to experience A an increase in unemployment. B a decrease in its trend rate of growth. C a decrease in imports. D a decrease in output. 40 drop

Q 6 40 drop A B C D Expansionary monetary policy is most likely to result from a reduction in taxation. B shift the long run aggregate supply curve to the left. C shift the aggregate demand curve to the right. D cause a surplus on the current account of the balance of payments. 40 drop

Q 7 A rise in the level of domestic investment will most likely result from a rise in A the current account deficit. B interest rates. C company profits. D the exchange rate. 40 drop

Q 8 A sustained rise in the exchange rate is most likely to increase A inflation. B unemployment. C international competitiveness. 40 drop

Q 9 In recent years, the UK has experienced large deficits on the balance of payments on current account. Which one of the following would be least likely to reduce such deficits? A A rise in the exchange rate B A rise in productivity C A rise in income tax rates 40 drop

Q 10 The government wishes to increase the trend rate of growth of national output through the use of supply-side policies. To achieve its objective, the government would most likely increase its spending on A education and training. B subsidies to failing firms. 40 drop