Tag: A-Level

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.

What will cause interest rates to rise?

Select ONE answer:

1. an unexpected increase in the prices of bonds
2. an increase in the nominal money supply
3. an increase in the volume of output
4. a reduction in the price level

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.

A closed economy is initially in equilibrium with a national income of £100 million, and a capital stock of £25 million.

Aggregate demand increases by £10million.

According to the accelerator principle, by how much will net investment increase?

Select ONE answer:

1. £10m
2. £5m
3. £2.5m
4. £2m

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.