Month: November 2022

The natural rate of unemployment in an economy is 5%.

What will happen if a government persists in trying to achieve a target rate of unemployment of 3% by expansionary monetary policy?

Select ONE answer:

1. an accelerating rate of inflation
2. a diminishing rate of inflation
3. a high but constant rate of inflation
4. a negative rate of inflation

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 1

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

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

Between 2000 and 2002 national output in the UK increased by 2%.

Over the same period the unemployment rate increased from 4% to 6%.

What would explain this?

Select ONE answer:

1. There was a decrease in labour productivity.
2. There was a decrease in the size of the labour force.
3. There was a fall in the rate of inflation.
4. Potential growth in national output was above actual growth.

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.

A closed economy has a banking system consisting of a single bank.

The bank operates with a cash ratio of 10%.

Customers deposit £10,000 in cash.

Assuming no subsequent change in notes and coins in circulation what is the maximum amount of loans that the bank can create?

Select ONE answer:

1. £1,000
2. £9,000
3. £90,000
4. £100,000

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 3

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

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

What is likely to cause a decrease in aggregate supply?

Select ONE answer:

1. a decrease in consumption expenditure
2. an increase in labour productivity
3. a decrease in rates of unemployment benefit
4. an increase in wage costs per unit of output

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.

According to monetarist theory, what will be the short-run effect of an unexpected increase in the money supply?

Select ONE answer:

1. an appreciation of the foreign exchange rate
2. an increase in employment
3. an increase in real wages
4. an increase in the rate of interest

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.