Government Macroeconomic Policy Quiz

Test your knowledge of Government Macroeconomic Policy with these A-Level Economics questions.

This quiz consists of 14 questions. Scroll down to start the quiz!

Questions

What is fiscal policy?

It looks at how governments spend their money and control taxes

Describe expansionary fiscal policy

This is where the government cuts taxes or increases government spending

What is covered by government expenditure?

It covers all spending in the public sector

What does the public sector net cash requirement measure?

The annual borrowing requirement of the government in an economy

What are direct taxes?

They are taxes on incomes and expenditure

What is the impact of taxation on consumption?

An increase in taxation decreases consumption, a decrease in taxation increases consumption

How can fiscal policy be used to increase the productive capacity of the economy?

It can increase level of skills for workers, provides economic incentives for firms, can increase factor mobility

What is monetary policy?

The use of interest rates, exchange rates and control of the money supply to influences economic growth and inflation

How does the Bank of England decide on interest rates?

They analyse macroeconomic trends and risks associated with inflation

What is the impact of a rise in interest rates on investment?

Likely to decrease the level of investment

How do interest rates help control inflation?

Interest rates help control inflation as they decrease the level of spending in the economy

If interest rates increase what happens to the value of the Pound?

The Pound will appreciate in value

Why do supply side policies cause economic growth?

As they cause the LRAS to shift outwards increasing the potential output of the economy

To what extent do you think controlling inflation through interest rates is good for the UK economy? (15 Marks)

Level 1
Doesn’t identify any issues. Shows little understanding of economics. Lacks evaluation and analysis. Question not answered adequately. Few, if any, relevant issues are recognised. Economic concepts and principles are
0 to 3 marks

Level 2
Identifies at least one issues. Uses basic economics to answer the question. Some identification of different points of view but evaluation is lacking or very basic. Answer lacks clear structure and fails to fully understand the question. or more relevant issues are recognised. Basic terminology may be used.
4 to 6 marks

Level 3
At least two issues identified. Economic concept and ideas are applied and understanding is demonstrated. Looks at alternative viewpoints and evaluates key issues / arguments. Uses key economic terms.
7 to 10 marks

Level 4
Shows a good understanding of economic concepts and models which are used to help answer the question. Demonstrates an understanding of different view points which enables evaluation of the issues and arguments. Conclusions are drawn.
11 to 13 marks

Level 5
Identifies at least three issues. Demonstrates a good understanding of economic models and concepts which are applied to help answer the question. Looks at alternative points of view. Uses theory to help evaluate key issues and support conclusions. 

14 to 15 marks

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