A2 macroeconomic W21

Which statement about economic growth is not correct?

• Economic growth creates costs as well as benefits.

• Long-term economic growth is measured by calculating the percentage increase in GDP for one year

• Short-term economic growth can be represented by a shift from a point within a production

  possibility curve to a point on the curve.

• Sustainable economic growth is growth that does not reduce the resources available to

  future generations.

Why is real GDP per head thought to be an imperfect measure of welfare in developed economies?

• frequent government manipulation and misuse of data

• no account is taken of inflation

• the restricted scope of the data’s content and coverage

• the shadow economy is greater than the official economy

What changes are most likely to reduce the level of income inequality in an economy?

• additional government regulation of product and factor markets

• increased progressive direct taxation and decreased indirect taxation

• increased trade union power and reduced labour market flexibility

• reduced welfare benefits and increased rate of interest

The table gives labour market statistics for Malaysia for January to March 2019.

What is the size of Malaysia’s labour force?

• 15m

• 15.5m

• 22m

• 22.5m

What would encourage industrial expansion in a region of high unemployment?

• a rationing system for building development in that region

• an increase in taxes on investment

• a requirement that only local labour may be employed

• an end to nationally negotiated wage rates

An island economy has a small manufacturing base, limited mineral resources and limited agricultural land.

Which development is most likely to lead to sustainable growth?

• building larger fishing boats to allow fishermen to enjoy economies of scale

• clearing rainforest to create agricultural land for the production of much needed foodstuffs

• training farmers and agricultural workers in new production methods to increase crop yields

• using its domestic mineral resources to give a rapid increase to manufacturing output

The information in the table is taken from a country’s national income account

What is the value of national income in millions of dollars?

• 17 000

• 19 000

• 20 000

• 21 000

In a closed economy with no government sector the marginal propensity to consume is 0.6 at all levels of income. There is an increase in private sector investment of $100 million.

What will be the increase in national income?

• $60 million

• $100 million

• $166 million

• $250 million

According to liquidity preference theory, which money balances are responsive to a change in the interest rate?

• active balances：no

  idle balances：yes

• active balances：no

  idle balances：no

• active balances：yes

  idle balances：yes

• active balances：yes

  idle balances：no

The bank cash deposit ratio changed from 5% to 10%.

What will be the result?

• Bank deposits will fall by 10%.

• Banks deposits will rise by 5%.

• The credit multiplier will fall by 50%.

• The credit multiplier will increase by 5%.