Practise evaluating government macroeconomic intervention for inflation, unemployment, growth, external balance, sustainability and distribution through policy conflicts and…
The US government has been using a policy of quantitative easing to increase economic growth.
What is the most likely effect of this policy on the internal and external value of the US dollar?
internal value
external value
decrease
decrease
decrease
increase
increase
increase
increase
decrease
A
An economy has a sudden increase in inflation caused by a large rise in energy prices. It also enters a recession with rising unemployment.
A decrease in which policy variable is most likely to reduce the impact of the recession without increasing the price level further?
direct taxation
government spending
indirect taxation
interest rate
C
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
D
Increased borrowing by the government results in higher interest charges and this leads to less private investment expenditure.
Of what is this an example?
an automatic stabiliser
crowding out
the accelerator
the substitution effect
B