Economic Growth
20 questions· page 1 of 2
High economic growth is often accompanied by a worsening of the current account of the balance of payments.
Which reason for this trend is not valid?
Options
A Economic growth raises domestic consumption, leaving very little to sell to overseas consumers.
B Economic growth raises domestic output, leading to lower prices and more price-competitive goods both at home and abroad.
C Economic growth raises incomes and leads to rising demand for foreign goods.
D Economic growth results in rising requirements of inputs from other countries.
Which statement correctly describes an increase in real GDP?
Options
A Nominal GDP rising faster than nominal income.
B Nominal GDP rising faster than the rate of inflation.
C The rate of inflation rising faster than aggregate demand.
D The rate of inflation rising faster than nominal income.
What is the most likely consequence of economic growth?
Options
A a fall in the price of raw materials
B a rise in youth unemployment
C a worsening current account balance
D reduced demand-pull inflationary pressures
A government believes its current account deficit will be beneficial in the long run.
What is the most likely reason for this?
Options
A Immigration has increased.
B It imports capital goods.
C It exports raw materials.
D It reduces unemployment.
What is the least likely consequence of rapid economic growth?
Options
A high levels of pollution
B large deficit on the current account of the balance of payments
C large deficit in the government’s budget balance
D more congestion on the roads
Under which conditions will real Gross Domestic Product (GDP) grow the fastest?
Options
| rate of change in nominal GDP (% per year) | rate of change in general price level (% per year) | |
|---|---|---|
| A | 0 | -2 |
| B | 0 | +2 |
| C | +2 | -2 |
| D | +2 | +2 |
The table shows real GDP expressed as an index number in each quarter of 2021.
| 2021 | index of GDP in real terms (2020 = 100) |
|---|---|
| Q1 | 99.4 |
| Q2 | 99.3 |
| Q3 | 100.1 |
| Q4 | 100.4 |
What can be concluded from the table?
Options
A Inflation reduced the real value of GDP in the first six months of 2021.
B Real GDP was lower at the end of 2021 than 2020.
C The economy was in recession at the end of the first six months of 2021.
D The standard of living was higher at the end of 2021 than in 2020.
The diagram shows the effect on the average price level when aggregate demand (AD) increases from AD1 to AD2.
Which statement relating to this change in aggregate demand is correct?
Options
A Nominal GDP has increased.
B Nominal GDP is unchanged.
C Real GDP has increased.
D Real GDP has fallen.
What is a cost of negative economic growth?
Options
A deteriorating balance of payments
B higher inflation
C higher unemployment
D increased pollution
A country with a constant population experiences a 5% increase in its nominal GDP during a year.
In which situation will average living standards be most likely to have increased during the year?
Options
A if government takes action to ensure there is no increase in unemployment
B if inflation during the year is 3%
C if there is no increase in real national income
D if there is no redistribution of income