Managing the National Economy Quiz
Test your knowledge of Managing the National Economy with these A-Level Economics questions.
This quiz consists of 20 questions. Scroll down to start the quiz!
Questions
Describe expansionary fiscal policy
Where the government cuts taxes or increases government spending
What is the monetarist view on conflicts between governmental objectives?
That all objectives are compatible in the long run
Why are growth and inflation in conflict?
If economy grows too fast than supply can’t keep up with the increase in demand and demand pull inflation occurs.
What is the impact on a reduction in the level of public expenditure?
May lead to job cuts in the public sector, reduction in services and wage increases below the level of inflation
What is a flat rate tax?
The idea of one tax rate for all with a tax free bonus
State two disadvantages of direct taxation
May not be progressive enough,
aren't effected by levels of consumption,
can be a disincentive to work,
can be exploited by high earners,
system not understood by all
What does the term budgetary balance mean?
It is where government expenditure and taxation are equal
State three things that the government spend their money on
Education, defence, infrastructure, healthcare, police
How does taxation influence peoples incentives to work?
If taxation levels increase people have to work harder for the same money and if it decreases work less hard for the same money
What is monetary policy?
The use of interest rates, exchange rates and the money supply to influence economic growth and inflation
What type of exchange rate does the UK have?
A free floating exchange rate
What is a fully fixed exchange rate?
Where the exchange rate is pegged at a certain level
When is it most likely that the balance of payments will be in surplus – when there is a strong Pound or when there is weak Pound?
When there is a Weak Pound
What is the impact of an appreciating exchange rate on economic growth?
If the exchange rate appreciates economic growth tends to be slower.
State three costs of international trade
Can lead to diseconomies of scale,
transport costs are not included in comparative advantage model,
can damage infant industries,
countries can become dependent on one industry therefore increasing their vulnerability to changes in global markets
What is the impact of a decrease in interest rates on credit demand?
A decrease in the level of interest rates will increase the level of credit demand as it will become cheaper to obtain credit.
How are changes in Interest Rates transmitted to the economy?
Bank’s rate is transmitted to consumers through market rate of interest which impacts costs of borrowing, price of assets, expectations and exchange rates these then transmit the information through aggregate demand which leads to a inflationary / deflationary response.
How do the bank of England decide on the rate of interest?
They analyse macroeconomic trends and risks associated with inflation
How do interest rates impact the disposable income of house owners?
If they rise they reduce disposable income of house owners who have variable rate mortgages
What are the consequences of a high and sustainable level of economic growth on the economy? (30 marks)
Level 1 – candidate identifies few issues. Doesn’t apply economic concepts well. Lacks analysis and evaluation. Fails to link issues. Limited understanding of economic growth. 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 economic growth. 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
Level 4 – Identify several issues. Inter relates issues economic issues. Talks in economic language and shows a good level of evaluation as to why some workers are paid more than others. 21-26 marks
Level 5 – Shows extensive use of economic vocabulary and thought. Arguments are well formed and information is synthesised. Excellent evaluation of the question with thorough and valid arguments -presented and analysed. 27-30 marks
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