Macro Y1 revision 1

What is meant by the term "aggregate demand"?

• The total supply of goods and services in an economy at a given price level

• The total spending on goods and services in an economy at a given price level

• The total income earned by households in an economy

• The value of all imports and exports in an economy

Which of the following is an example of an injection into the circular flow of income?

• Government spending on infrastructure projects
• Increased household savings
• Tax cuts for individuals
• Decreased exports to foreign markets

Which component is NOT included in the calculation of aggregate demand?

• Government spending
• Net exports
• Welfare benefits

• Investment

A fall in interest rates is most likely to lead to:

• A decrease in consumer spending.

• An increase in the exchange rate.

• An increase in investment spending.

• A rise in unemployment.

What is the main objective of supply-side policies?

• To reduce government spending and lower taxes
• To increase unemployment rates
• To limit competition in the market
• To increase economic growth by improving the productive capacity of the economy.

Which of the following is most likely to cause cost-push inflation?

• A cut in income tax

• A rise in oil prices

• An increase in consumer confidence

• A fall in interest rates

Unemployment caused by a mismatch of skills and job vacancies is known as:

• cyclical unemployment
• frictional unemployment
• structural unemployment
• seasonal unemployment

Which policy tool would a government most likely use to reduce inflation?

• Increase government spending

• Cut interest rates

• Raise income tax

• Increase the money supply

Which of the following is a possible negative effect of economic growth?

• Lower tax revenues
  

• Higher unemployment
  

• Increased pollution
  

• Lower average incomes

Which of the following is a leakage from the circular flow of income?

• Exports
• Savings
• Government spending
• Investment