Inflation & Unemployment Quiz

Test your knowledge of Inflation and Unemployment with these A-Level Economics questions.

This quiz consists of 12 questions. Scroll down to start the quiz!

Questions

What type of unemployment is caused by the business cycle?

Cyclical unemployment

If unemployment is high where will an economy be operating on its PPF?

Outside the perimeters

When AD increases what happens to unemployment?

It decreases

Employment subsidies are an example of a demand or a supply side policy to reduce the level of unemployment in the economy?

Demand side

What is the impact of an increase in unemployment on government spending?

It will increase as more benefits will need to be paid

Describe the natural rate of unemployment hypothesis

It recognises that there will always be a level of unemployment and at the natural rate this will all be voluntary. Its where the economy is operating at full employment.

State three factors which influence the natural rate of unemployment

Value of welfare benefits,

trade unions,

taxation system,

labour migration,

social factors

When unemployment is at its natural rate what is inflation like?

Stable

When inflation is high why is it difficult for businesses to plan for the future?

As there is uncertainty regarding costs of raw materials

Describe demand pull inflation

Where more output is being demanded than is available to purchase in the economy. The extra output can’t be produced by the economy so the demand effectively pulls the prices up.

What happens to the aggregate supply curve with cost push inflation?

It moves inwards so less is supplied at each price level

Explain the causes of inflation and the methods that can be used to reduce the impact of these causes (20 marks)

Level 1 – candidate identifies few issues. Doesn’t apply economic concepts well. Lacks analysis and evaluation. Fails to link issues. Limited understanding of inflation and its causes. 0-6 marks

Level 2 – candidate recognises a few issues and has a limited application of economic concepts. Basic links between issues. Good understanding of inflation and its causes. 7-12 marks

Level 3 – Identifies a few issues. Applies economic concepts and ideas to the question. Limited evaluation. Links issues and concepts. 13-20 marks