Transcript Elasticity of Demand Test - Business Studies A Level for WJEC

This test consists of 10 questions designed to
test your understanding of Macro
Economics
The links provide you with a choice of answer,
along with explanations.
Which of the following is a Fiscal Policy?
a. Increasing Interest Rates
b. Increasing direct taxes
c. Introducing Trade Union legislation
Correct - Fiscal policy relates to Government
taxation and expenditure
An example of monetary policy.
An example of Supply Side policies
Which of the following is a direct tax?
A. VAT
B. Customs and excise duties
C. Higher rate income tax
Value added tax is an indirect tax a tax on income.
Customs and excise duties are
indirect taxes a tax on expenditure.
Correct, direct taxes are taxes on
income
Which of the following policies is likely to increase the
value of the £ against the €?
A. A reduction in income tax levels
B. An increase in interest rates
C. Switch from direct to indirect taxation
This would probably increase
imports therefore reducing the
value of the £
Correct. Demand for £’s
would increase ( hot
money flows), therefore
increasing value of £
Likely to have no effect on value of
£
Which type of unemployment varies with fluctuations
in economic activity?
A. Cyclical
B. Frictional
C. Structural
Frictional unemployment is job search
unemployment.
Structural unemployment relates to
changes in technology or patterns
of demand
Well done! Cyclical unemployment
results from fluctuations in the economic
cycle
Which of the following cause inflation?
A. An increase in imports because of the increasing
value of the £ on Forex markets.
B. An increase in demand levels above the capacity of
UK industry
This is likely to lower the cost
of imports and therefore reduce
inflationary pressure.
Correct! In these
circumstances firms can
increase prices, and maintain
demand levels
A Which of the following is a cause of inflation?
A. Fall in consumer confidence
B. Increase in investment by firms
C. Increase in firms costs
Correct.
Wrong.
Wrong.
Which of the following defines supply side policies?
A. The MPC’s policy of controlling inflation through
interest rates.
B. Attempts to make the operation of the economy
more efficient.
Wrong, Monetary policy
Correct. Supply side policies
attempt to increase aggregate
supply in the economy, by
making labour, and all other
markets operated more
efficiently
Which of the following is a government Macro
economic objective?
A. maintaining a stable exchange rate
B. maintaining a low rate of crime
C. maintaining stable and sustainable growth of GDP
Wrong.The £ is allowed to float
freely on the Forex markets.
Correct. This is one of the main
macro economic objectives along
with, low rates of unemployment
and inflation, as well as balance on
the Current Account of Balance of
Payments
Wrong. A social objective
Which of the following are examples of monetary
policy?
1. Controls on Bank lending
2. Changes in National Insurance rates
3. Controls on consumer credit
A. 1 only
B. all 3
C. 1 and 3
Wrong This is an example of
monetary policy, but not the
only one given.
Wrong. B is an example of
Fiscal Policy.
Correct. Both of these are
examples of monetary policy, but
rarely now used.
For which of the following can fiscal policy be
used?
1. Controlling demand in the economy
2. Controlling the budget deficit
3. Adjusting distribution of income and wealth
A. 2 only
B. 2 and 3
C. All of the above
. True, but it is not the only one
listed
True, but look again
Correct. Fiscal policy can and
has been be used for all three
purposes.
You have now completed the test. For
further
more detailed revision please use the
case studies on
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