Economic Growth

How is economic growth measured?

• A. changes in consumer expenditure

• B. changes in living standards

• C. changes in population size

• D. Changes in real GDP

2. a country experiences a 4% rise in real GDP and a 4% rise in nominal GDP. What would explain this combination of changes?

• A. Fallen by 4%- risen by 4%

• B. risen by 4% - fallen by 4%

• C. fallen by 4% - unchanged

• D. unchanged - risen by 4%

3. How would economic growth caused by an increase in aggregate demand and economic growth caused by an increase in productive capacity be shown on a production possibility curve diagram?

• A. caused by AD - movement from a point inside the PPC towards the curve - caused by PC - shift to the right of the PPC

• B. AD- movement from a point outside the PPC to a point - PC -shift to the left of the PPC

• C. Shift to the left of the PPC - movement from a point inside the PPC towards the curve

• D. Shift to the right of the PPC - movement from a point outside the PPC to a point on the curve

4. What may reduce economic growth in the short run but increase it in the long run

• A. a decrease in the government spending on healthcare

• a decrease in the size of the labour force

• an increase in the inflation rate

• an increase in the savings ratio

what is most likely to cause a recession ?

• a decrease in business optimism

• a decrease in unemployment

• an increase in government spending

• an increase in net exports

6. what cause of a fall in price level is unlikely to result in a recession ?

• a) advances in technology

• B) collapse of the banking system

• c) expectations of a fall in the price level

• D) reduction in the international competitiveness

7. A country's economy grows by 2%. The size of its labor force remains unchanged. What would explain a rise in unemployment in these circumstances?

• A) a fall in the capital-intensiveness of firms

• B)a fall in the average hours people work

• C) a rise in the labour productivity

• a rise in the ability of workers to change jobs

8. What must have increased as a result of a rise in real GDP?

• A) income inequality

• B) inflation

• C) output

• c) population

9. What is NOT a possible benefit of economic growth?

• A)lower level of poverty

• B) lower level of unemployment

• C) higher government spending on education without any opportunity cost

• D) higher tax revenue without having to raise tax rates

10. Why may government switch from aiming for a 5% growth rate to a 0% economic growth rate ?

• A) to avoid anyone being without a job

• B) to conserve non-renewable resources

• C) to maintain real GDP per head

• D) to reduce living standards