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WJEC AS Level Economics: Macroeconomic Theory

10 Questions

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WJEC AS Level Economics: Macroeconomic Theory

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Questions and Answers

What is the impact of spare capacity on the elasticity of SRAS?

It makes SRAS elastic (correct)

It makes SRAS more inelastic

It makes SRAS inelastic

It has no impact on SRAS

What happens to the size of the multiplier in an economy with spare capacity?

It remains the same

It becomes zero

It increases (correct)

It decreases

What is the likely outcome if SRAS is inelastic?

Higher multiplier effect

Multiplier effect becomes zero

No impact on multiplier effect

Lower multiplier effect (correct)

What happens to interest rates when prices increase?

They increase Signup and view all the answers

What is a 'reverse' multiplier?

A withdrawal of income from the circular flow of income leading to a larger decrease in income Signup and view all the answers

What is the likely impact of higher interest rates on the economy?

Discourages spending and borrowing Signup and view all the answers

What happens to national income if SRAS is elastic?

It increases rapidly Signup and view all the answers

What is the likely outcome if there is a decrease in AD?

National income decreases Signup and view all the answers

Why does an increase in AD lead to a larger increase in national income in an economy with spare capacity?

Because SRAS is elastic Signup and view all the answers

What is the likely impact of a 'reverse' multiplier on the economy?

It leads to a decrease in economic growth Signup and view all the answers