Chapter 24-26 Revision

What is the general role of a government?

• to allocate scarce resources
• to improve the general welfare of its people
• to provide infrastructure such as roads
• to provide welfare benefits to low income households

What does the national government not make decisions on?

• fiscal policy measures
• funding of libraries leisure (health) centres
• monetary policy procedures
• level of infrastructure

Which level of government makes decisions about how best to achieve its macroeconomic aims?

• local
• international
• multinational
• national

Which of the following is not a government macroeconomic objective?

• a balance of payments deficit
• economic growth
• full employment
• price stability

Which option is most applicable to the role of international governments?

• financial support for local libraries and health centres
• the formation of a regional trading bloc
• the funding of national defence programmes
• the imposition of tariffs and quotas

Which of the following is a macroeconomic aim of government?

• a fall in national output
• low unemployment
• imports exceeding exports
• high inflation

Which of the following is the correct definition of inflation?

• A rise in the price of some goods and services in an economy over a given period of time
• A general rise in the price of goods and services in an economy over a given period of time
• A rise in the price of all goods and services in an economy over a given period of time
• A general rise in the price of only those goods and services produced within an economy over a given period of time

Which of the following can be used as part of fiscal policy to control inflation in an economy?

• An increase in the money supply
• A substantial increase in government spending
• An increase in the interest rate
• An increase in direct taxation

Which of the following is NOT a method government may use to decrease unemployment?

• increase unemployment benefit
• reduce the rate of interest
• introduce worker training schemes
• reduce corporation tax

Which of the following could increase a country's productive potential?

• an improvement in education
• a reduction in the retirement age
• retention of worn out machinery by firms
• migration of workers to other countries