Month: December 2021

Ruritania’s aggregate demand decreased over the last year.

What might have been the cause of this?

Select ONE answer:

1. a reduction in consumer saving
2. a reduction in direct taxes
3. a reduction in imports
4. a reduction in investment

Show your workings to arrive at your answer, and explain and justify your reasons:

……………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………

This multiple-choice question is suitable for Economics KS4 and KS5 classes.

The answer is 4

1. Not correct
2. Not correct
3. Not correct
4. Correct

This work is licensed under a Creative Commons Attribution 4.0 International License.

The current account of the balance of payments for Ruritania changed from £1,000M in 2019 to £-10,000M in 2020.

Assuming that nothing else changes, what is likely to be the impact in 2020 on GDP and the exchange rate in Ruritania?

Select ONE answer:

1. GDP – falls & Exchange rate – appreciates
2. GDP – falls & Exchange rate – depreciates
3. GDP – rises & Exchange rate – appreciates
4. GDP – rises & Exchange rate – depreciates

Show your workings to arrive at your answer, and explain and justify your reasons:

……………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………

This multiple-choice question is suitable for Economics KS4 and KS5 classes.

The answer is 2

1. Not correct
2. Correct
3. Not correct
4. Not correct

This work is licensed under a Creative Commons Attribution 4.0 International License.

A country devalues its currency in the expectation that a deficit on the current account of the balance of payments will be reduced.

What is necessary to make this happen?

Select ONE answer:

1. any tariff on imports must be matched by a subsidy on goods to be exported
2. the elasticity of demand for imports and the elasticity of demand for exports must both be greater than 1
3. the rate of domestic inflation is equal to the rate of inflation in the foreign market
4. the sum of the elasticities of demand for domestic imports and the foreign demand for exports is greater than 1

Show your workings to arrive at your answer, and explain and justify your reasons:

……………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………

This multiple-choice question is suitable for Economics KS4 and KS5 classes.

The answer is 4

1. Not correct
2. Not correct
3. Not correct
4. Correct

This work is licensed under a Creative Commons Attribution 4.0 International License.

When the rate of inflation is lower than was expected, what is the likely impact on both lenders and borrowers in an economy?

Select ONE answer:

1. effect on lenders – beneficial & effect on borrowers – beneficial
2. effect on lenders – beneficial & effect on borrowers – harmful
3. effect on lenders – harmful & effect on borrowers – beneficial
4. effect on lenders – harmful & effect on borrowers – harmful

Show your workings to arrive at your answer, and explain and justify your reasons:

……………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………

This multiple-choice question is suitable for Economics KS4 and KS5 classes.

The answer is 2

1. Not correct
2. Correct
3. Not correct
4. Not correct

This work is licensed under a Creative Commons Attribution 4.0 International License.

Doctors are concerned about the negative health effects of high-caffeine drinks.

When would a tax on high-caffeine drinks be LEAST effective in improving health?

Select ONE answer:

1. when the demand for high-caffeine drinks is income elastic
2. when the demand for high-caffeine drinks is income inelastic
3. when the demand for high-caffeine drinks is price elastic
4. when the demand for high-caffeine drinks is price inelastic

Show your workings to arrive at your answer, and explain and justify your reasons:

……………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………

This multiple-choice question is suitable for Economics KS4 and KS5 classes.

The answer is 4

1. Not correct
2. Not correct
3. Not correct
4. Correct

This work is licensed under a Creative Commons Attribution 4.0 International License.