CAIE A-Level Economics 10.2 Macroeconomic Problem Interrelationships Question Bank

Practise tracing links among inflation, unemployment, growth, currency values and current-account balances and evaluating whether objectives conflict or reinforce one another in…

Exam points

trace inflation through competitiveness, exchange rates and the current-account balance
link growth to employment, imports, inflation and government finances using causal chains
evaluate the more serious problem by cause, duration, stakeholders and available policy

Covered syllabus points

10.2.1—Internal and external money value 10.2.2—Balance of payments and inflation 10.2.3—Growth and inflation 10.2.4—Growth and balance of payments 10.2.5—Inflation and unemployment

[Maximum number: 1]

An economy imports a large proportion of its raw materials. Its exchange rate depreciates.

What is the impact on the external and internal value of money?

external value

of money

internal value

of money

rises

falls

rises

falls

[Maximum number: 1]

The inflation rate in a country increased.
Which effect would this most likely have on the country's balance of payments?

an improvement in the current account balance

an increase in price competitiveness

an increase in export revenue

an increase in import expenditure

[Maximum number: 1]

When will government success in achieving economic growth be most likely to conflict with a desire to reduce a surplus in the balance of payments?

when growth depends upon the import of capital equipment

when growth increases foreign investors' confidence in the country

when growth requires a reduction in the level of its tariffs

when growth results from the removal of restrictions on capital outflows

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Covered syllabus points

10.2 Links between macroeconomic problems and their interrelatedness question 1

10.2 Links between macroeconomic problems and their interrelatedness question 2

10.2 Links between macroeconomic problems and their interrelatedness question 3