Economic Growth and Sustainability
107 questions· page 1 of 11
The diagram shows an economy’s production possibility curve.
What causes a movement from point X to point Y?
Options
A a positive output gap
B a recession
C actual economic growth
D potential economic growth
Which policy may increase economic growth without causing inflation?
Options
A giving subsidies to producers
B increasing government spending
C lowering direct taxes
D lowering interest rates
An economy has a positive output gap.
What is happening to economic growth and the general price level?
Options
| economic growth | general price level | |
|---|---|---|
| A | above trend growth rate | falling |
| B | above trend growth rate | rising |
| C | below trend growth rate | falling |
| D | below trend growth rate | rising |
Which combination of income tax and government benefit payment systems will produce automatic stabilisation?
Options
| income tax | benefit payments system | |
|---|---|---|
| A | progressive | means tested |
| B | progressive | universal |
| C | regressive | means tested |
| D | regressive | universal |
The diagram shows the actual and forecast changes in GDP for a country between 2020 and 2040.
What is the longest period over which this country is expected to experience a recession?
Options
A 2025 to 2030
B 2025 to 2035
C 2030 to 2035
D 2030 to 2040
An economy has a positive output gap.
What is happening to economic growth and the general price level?
Options
| economic growth | general price level | |
|---|---|---|
| A | above trend growth rate | falling |
| B | above trend growth rate | rising |
| C | below trend growth rate | falling |
| D | below trend growth rate | rising |
What is the best description of sustainable economic development?
Options
A a long-term increase in the actual output of an economy
B a long-term increase in living standards without damage to the environment
C a long-term increase in the productive potential of an economy
D a long-term increase in the living standards of every member of society
What may prevent a government achieving a faster rate of growth of real GDP?
Options
A The multiplier has a small value.
B The consumer price index is below its target set by the central bank.
C The economy is operating on the vertical section of the long-run aggregate supply curve.
D There is a large negative output gap in the economy.
What is most likely to increase if an economy enters a negative output gap?
Options
A business confidence
B economic growth rate
C inflation rate
D unemployment rate
Which stage of the business (trade) cycle is most likely to be characterised by an increasing negative output gap?
Options
A boom
B recession
C recovery
D trough