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King: Economics

Chapter 26

Instructions

Answer the following questions and then press 'Submit' to get your score.

Question 1

Suppose that aggregate demand has recently increased. This has taken output above the potential level and it has also increased the price level. The government is keen to avoid any further increases in the price level. Which of the following options should it avoid?

Question 2

Which of the following is not a problem with discretionary policies?

Question 3

Suppose that growth and unemployment were at satisfactory levels. What target would be the focus of the Bank of England's monetary policy?

Question 4

Suppose a central bank is concerned about inflation and wishes to raise interest rates. Which of the following instruments would it be inappropriate to use?

Question 5

Suppose the Bank of England wishes to restrain inflation, so it increases Bank Rate. Which of the following events will not be part of the monetary policy transmission process?

Question 6

To secure equity over time, which principle of government finance is generally recommended?

Question 7

Which of the following statements is false?

Question 8

Suppose the government of a country has a high level of debt. Which of the following statements about this debt is false?

Question 9

Which of the following policies would not be used by a government which wished to increase the quantity of labour that will be hired?

Question 10

Which of the following policies would not be used by a government which wished to increase the output per labour hour?