Econ practise 3
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Questions and Answers

Which of the following could influence liquidity preference

  • Transaction motives
  • a + b are correct (correct)
  • None of the above
  • Precautionary motives
  • You are a member of the Treasury, and you are concerned that the inflation rate is too high. Which of the following policies should you recommend?

  • An increase in government spending
  • A decrease in the money supply (correct)
  • A decrease in income tax rates
  • An increase in the money supply
  • Which of the following instruments is not used by the Bank of England to change the money supply?

  • Bank rate
  • The liquidity ratio
  • Open market operation
  • The tax system (correct)
  • If the economy was booming, we would expect

    <p>Government expenditure to be low and tax revenues to be high so that the public sector might be running a surplus</p> Signup and view all the answers

    Which of the following is not an automatic stabiliser?

    <p>Government expenditure on road building programmes</p> Signup and view all the answers

    If central government's spending exceeded its tax receipt in 2022, the country would have a:

    <p>Budget deficit</p> Signup and view all the answers

    Discretionary fiscal policies refer to:

    <p>Deliberate change in tax rates or the level of government expenditure in order to influence the level of aggregate demand.</p> Signup and view all the answers

    Which of the following determines the competitive advantage of a nation?

    <p>All of the above</p> Signup and view all the answers

    A higher domestic price level will result in

    <p>Higher imports.</p> Signup and view all the answers

    The UK and Tanzania have the option to produce wheat or rice but not both. Suppose that the UK can produce 60 units of Wheat, or 20 units of rice and Tanzania can produce 30 units of wheat or 60 units of rice. This means that

    <p>Tanzania has a comparative advantage over UK in the production of rice</p> Signup and view all the answers

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