Questions and Answers
What is the most likely effect on an economy of a successful supply-side policy?
What are the most likely effects on inflation and unemployment due to high economic growth caused by an increase in consumer spending?
Which pair is most likely to be provided by the private sector in a mixed economy?
What term is used to describe a sustained fall in the general price level?
Signup and view all the answers
What is most likely to cause an increase in relative poverty?
Signup and view all the answers
Which factor is likely to contribute to high population growth in developing countries?
Signup and view all the answers
What is the most probable relationship between inflation and unemployment in a booming economy?
Signup and view all the answers
What economic condition is likely indicated by persistent inflation coupled with a stagnant economy?
Signup and view all the answers
What is a significant reason why even high GDP per capita does not eliminate economic problems for Swiss citizens?
Signup and view all the answers
Which of the following factors is likely to lead to inflation in a mixed economy?
Signup and view all the answers
What is one possible consequence of deflation in an economy?
Signup and view all the answers
What relationship exists between unemployment and economic recession?
Signup and view all the answers
Which of the following is a likely characteristic of a mixed economy regarding public services?
Signup and view all the answers
Which statement best describes the effects of poverty on economic factors?
Signup and view all the answers
What role does inflation play in purchasing power?
Signup and view all the answers
How could a government stimulate economic growth in a context of high unemployment?
Signup and view all the answers
In a mixed economy, which of the following statements about market regulation is true?
Signup and view all the answers
What could have caused the production possibility curve to shift from PPC1 to PPC2?
Signup and view all the answers
Which factor is most likely to increase the geographical mobility of labour?
Signup and view all the answers
Which of the following actions is considered a microeconomic decision?
Signup and view all the answers
What is a characteristic feature of a market in equilibrium?
Signup and view all the answers
What is the impact of a fall in the birth rate on the economy?
Signup and view all the answers
Which scenario could lead to deflation in an economy?
Signup and view all the answers
What role does improved education play in an economy?
Signup and view all the answers
Which of the following factors does NOT influence poverty levels in an economy?
Signup and view all the answers
Study Notes
Economic Policies and Effects
- Decreasing government investment may lead to reduced public services and infrastructure, impacting economic growth.
- Decreasing income tax can increase disposable income for consumers, potentially boosting consumer spending.
- Increasing indirect taxation often raises the cost of goods and services, influencing consumer behavior and potentially reducing demand.
- Rising interest rates can restrict borrowing, dampening investment and consumer spending, thus slowing economic growth.
Successful Supply-Side Policy
- A successful supply-side policy is likely to result in an increase in potential GDP, enhancing the economy's capacity to produce goods and services.
Economic Growth and Consumer Spending
- High economic growth driven by increased consumer spending typically results in rising inflation and declining unemployment, creating a dynamic labor market.
Private Sector Contributions in a Mixed Economy
- In a mixed economy, insurance and banks are primarily provided by the private sector, emphasizing the role of private entities in financial services.
Economic Terminology
- A sustained fall in the general price level is referred to as deflation, indicating adverse economic conditions if prolonged.
Relative Poverty Factors
- An increase in relative poverty may occur due to pension increases that do not keep pace with inflation, reducing the purchasing power of the elderly.
Population Growth in Developing Countries
- High population growth in some developing nations can be attributed to factors such as limited access to education and healthcare, influencing fertility rates.
Wealth Disparity in Switzerland
- Despite a high GDP per capita, Switzerland faces basic economic problems due to uneven income distribution among citizens.
Production Possibility Curve (PPC)
- A shift in the PPC from PPC1 to PPC2 can be caused by improved education, leading to enhanced productivity and economic capacity.
Labor Mobility
- Geographical mobility of labor may increase due to investments in low-cost housing, enabling workers to relocate for job opportunities.
Microeconomic Decision-Making
- A government's decision to increase interest rates is not a microeconomic decision; it pertains to macroeconomic policy affecting the overall economy.
Market Equilibrium
- A feature of a market in equilibrium is that the market will clear, meaning supply equals demand, with no surpluses or shortages.
Supply Curve Dynamics
- Movement along the supply curve from point X to Y indicates a change in quantity supplied due to market price changes or shifts in supply conditions.
Studying That Suits You
Use AI to generate personalized quizzes and flashcards to suit your learning preferences.
Description
Explore the impacts of supply-side policies on the economy in this quiz. Carefully analyze various fiscal measures like taxation and investment changes. Determine what effect a successful implementation of these policies might have on GDP and other economic indicators.