Macroeconomics

Table of Contents

1. Topic pack - Macroeconomics - introduction
2. 2.1 The level of overall economic activity (notes)
3. 2.1 The level of overall economic activity (questions)
4. Section 2.2 Aggregate demand and supply (notes)
5. Section 2.2 Aggregate demand and supply (simulations and activities)
6. 2.2 Aggregate Demand and Aggregate Supply (questions)
7. 2.3 Macroeconomic objectives (notes)
8. Low Unemployment
9. 2.3 Macroeconomic objectives (questions)
10. 2.4 Fiscal policy (notes)
11. 2.4 Fiscal policy (questions)
    1. Self-test questions
    2. Short questions
    3. Data response (1)
    4. Data response (2)
    5. Long questions
12. 2.5 Monetary policy (notes)
13. 2.5 Monetary Policy (questions)
14. Section 2.6 Supply-side policies (notes)
15. 2.6 Supply-side policies (questions)
16. Print View

Self-test questions

1

Progressive tax A progressive tax is one which: a) falls most heavily on the less well-off members of society b) takes an increasing proportion of income as income rises c) is one which taxes income and wealth d) is one which taxes expenditure Yes, that's correct. Well done. This is the definition of a progressive tax.No, that's not right. The correct answer is B. A is the definition of a regressive tax (e.g. VAT) and C refers to a direct tax. D is what is known as an indirect tax.Your answer has been saved.

2

Reducing unemployment Which of the following might be used by government to lower unemployment? a) Reduce government spending b) Increase taxation c) Increase interest rates d) Lower taxation Yes, that's correct. Well done. This should boost spending and lead to a need to employ more people to meet the increase in demand.No, that's not right. The correct answer is D as this should boost spending and lead to a need to employ more people to meet the increase in demand. A would have the opposite affect and so would B. C, which is monetary policy would also be used to slow an economy and that might increase unemployment.Your answer has been saved.

3

Government policies Match the examples of government policy given to the appropriate type. a) Cutting the rate of income tax Choose... Expansionary fiscal policy Contractionary fiscal policy Expansionary monetary policy Contractionary monetary policy Supply-side policy b) Offering investment allowances to encourage investment Choose... Expansionary fiscal policy Contractionary fiscal policy Expansionary monetary policy Contractionary monetary policy Supply-side policy c) Increasing interest rates Choose... Expansionary fiscal policy Contractionary fiscal policy Expansionary monetary policy Contractionary monetary policy Supply-side policy d) Increasing the rate of indirect tax Choose... Expansionary fiscal policy Contractionary fiscal policy Expansionary monetary policy Contractionary monetary policy Supply-side policy e) Cutting interest rates Choose... Expansionary fiscal policy Contractionary fiscal policy Expansionary monetary policy Contractionary monetary policy Supply-side policy Yes, that's correct well done. Expansionary fiscal policy will boost the level of aggregate demand (e.g. tax cuts) while contractionary fiscal policy will have the opposite effect (e.g. tax increases). Expansionary monetary policy is a reduction in interest rates as this will boost aggregate demand. Contractionary monetary policy is the opposite. Supply-side policies are those that are aimed at boosting aggregate supply.No, that's not right. Try again. Expansionary fiscal policy will boost the level of aggregate demand (e.g. tax cuts) while contractionary fiscal policy will have the opposite effect (e.g. tax increases). Expansionary monetary policy is a reduction in interest rates as this will boost aggregate demand. Contractionary monetary policy is the opposite. Supply-side policies are those that are aimed at boosting aggregate supply.Your answer has been saved.

4

Government policies Match the examples of government policy given to the appropriate type. a) Cutting government expenditure Choose... Expansionary fiscal policy Contractionary fiscal policy Expansionary monetary policy Contractionary monetary policy Supply-side policy b) Increasing tax-free allowances Choose... Expansionary fiscal policy Contractionary fiscal policy Expansionary monetary policy Contractionary monetary policy Supply-side policy c) Cutting interest rates Choose... Expansionary fiscal policy Contractionary fiscal policy Expansionary monetary policy Contractionary monetary policy Supply-side policy d) Boosting tax relief on training schemes Choose... Expansionary fiscal policy Contractionary fiscal policy Expansionary monetary policy Contractionary monetary policy Supply-side policy e) Imposing controls on the amount of credit financial institutions are allowed to create Choose... Expansionary fiscal policy Contractionary fiscal policy Expansionary monetary policy Contractionary monetary policy Supply-side policy Yes, that's correct well done. Expansionary fiscal policy will boost the level of aggregate demand (e.g. tax cuts) while contractionary fiscal policy will have the opposite effect (e.g. tax increases). Expansionary monetary policy is a reduction in interest rates as this will boost aggregate demand. Contractionary monetary policy is the opposite. Supply-side policies are those that are aimed at boosting aggregate supply.No, that's not right. Try again. Expansionary fiscal policy will boost the level of aggregate demand (e.g. tax cuts) while contractionary fiscal policy will have the opposite effect (e.g. tax increases). Expansionary monetary policy is a reduction in interest rates as this will boost aggregate demand. Contractionary monetary policy is the opposite. Supply-side policies are those that are aimed at boosting aggregate supply.Your answer has been saved.