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14 questions
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- Q1A sustained rise in the exchange rate is most likely to increaseinflation.economic growthunemployment.international competitiveness.45s4.1.8c
- Q2Which one of the following would be least likely to reduce a current account deficit?A rise in income tax ratesA rise in aggregate supplyA rise in the exchange rateA rise in productivity45s4.1.8c
- Q3The likely consequence of the change shown would bethere was a growth in employment in the manufacturing industry.inflationary pressures eased.the balance of payments on current account improved.the price of imports increased.45s4.1.8c
- Q4A current account deficit on the balance of payments means thatgovernment expenditure exceeds government revenuethe value of exported services is less than the value of imported servicestotal value of imports exceeded the total value of exportsthe volume of imported goods and services exceeded the volume exported45s2.1.4
- Q5A rise in the value of the £ will make it easier for the government toreduce the level of unemploymentreduce the balance of payments deficitreduce the rate of inflationreduce the level of imports45s4.1.8c
- Q6Which policy might reduce a balance of payments deficit and inflation?reduced government spendinga cut in interest ratesa reduction in the exchange ratea reduction in the rate of income tax45s2.4.3
- Q7A fall in the pound relative to the Euro would be expected to lead toa fall in raw material pricesan increase in ADa rise in the Euro price of exportsa reduction in the rate of interest45s4.1.8c
- Q8All other things being equal, a fall in the exchange rate is likely toincrease the price of exports.increase domestic employment.reduce domestic demandreduce import prices.45s4.1.8c
- Q9In the short run, an increase in a budget deficit is most likely to reduceinflation.imports.interest rates.unemployment.45s2.6.2b
- Q10Which one of the following is most likely to reduce a balance of payments deficit on current account? An increase inproductivitythe money supplythe price levelconsumption45s2.1.4
- Q11The current account of the balance of payments comprisesmoney that may be withdrawn at any time.trade in goods and services, investment income and transfers.all government income and expenditure in a financial yearall transactions involving money leaving or entering the country.45s4.1.7
- Q12The exchange rate of a country has fallen. All other things being equal, which one of the following is most likely to occur as a result of this?A fall in aggregate demand and an increase in outputA fall in aggregate demand and a deterioration in the balance of payments on current accountA rise in aggregate demand and an improvement in the balance of payments on current accountA rise in aggregate demand and a fall in the inflation rate45s4.1.8c
- Q13All other things being equal, in the long run a fall in the exchange rate is likely toincrease aggregate demand because it can reduce the foreign currency price of exportsreduce aggregate demand because it increases the domestic currency price of imports.increase unemployment because it makes domestic products less competitive abroad.increase unemployment because it makes foreign products more competitive in the home market.45s4.1.8c
- Q14Which of the following will lead to a deterioration in the UK’s balance of payments on current account? A fall inthe exchange rate of the poundUK inflation relative to the rest of the worldUK labour productivity relative to the rest of the worldincomes in the UK45s4.1.9
