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- 1. Multiple Choice
A government reduces the interest rate to encourage economic growth.
Which other aim of government policy might now become more difficult to achieve?
reducing a balance of trade in goods surplus
reducing a government budget deficit
reducing the level of unemployment
reducing the rate of inflation
- 2. Multiple Choice
In July 2011 the monthly rate of inflation decreased to 2%. At that time it was expected that it would be 1% in August but would not continue to decline in September. If this occurred, what happened to prices in July, August and September?
A
B
C
D
- 3. Multiple Choice
Which is most likely to lead to a fall in the rate of inflation?
a decrease in import prices
a decrease in income tax
an increase in consumer spending
an increase in unemployment benefits
- 4. Multiple Choice
Consumer spending increased in 2010.
What other economic indicator is most likely to have increased as a result of the rise in consumer spending?
government budget deficit
inflation
terms of trade
unemployment
- 5. Multiple Choice
What is deflation?
a falling general price level
a falling wage level
a rising output level
a rising profit level
- 6. Multiple Choice
In 2013 there was a period of low interest rates and high inflation in an economy.
Who would be most likely to benefit and who most likely to lose during such a period?
A
B
C
D
- 7. Multiple Choice
When might rapid inflation together with low interest rates be a source of concern for a consumer?
when a consumer lives on a pension linked to the consumer price index
when a consumer needs to use savings for regular expenditure
when a consumer pays a fixed rent for their accommodation
when a consumer wishes to buy a good on credit
- 8. Multiple Choice
What is most likely to cause a fall in the rate of inflation?
an increase in consumer spending
an increase in import prices
an increase in income tax
an increase in wage rates
- 9. Multiple Choice
Who is most likely to benefit during a period of inflation?
creditors (lenders)
debtors (borrowers)
fixed income earners
holders of cash
- 10. Multiple Choice
In 2009, a country had an inflation rate of 2%. The table shows the inflation rate in the following years. In which year did deflation start?
2010
2011
2012
2013
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