Macroeconomic objectives and theory practice
QCE Economics · Original practice questions with worked solutions
All macroeconomic objectives and theory practice questions
38 original questions · Page 2 of 2
- Q41 · Original practice · 5 marksMacroeconomic objectives and theoryA transport innovation lowers production costs while a consumer-confidence shock reduces spending. Both shifts occur before prices adjust. Explain what can and cannot be predicted about real GDP and the price level without knowing the relative shift sizes.
- Q42 · Original practice · 5 marksMacroeconomic objectives and theoryA regional economy moves from B to A on the supplied diagram. Later, successful research raises its productive capacity. Explain the distinction between the two changes, including one limitation of the PPC model.
- Q43 · Original practice · 5 marksMacroeconomic objectives and theoryReal GDP rises from 2496 billion, while population rises from 24 million to 25.2 million. Calculate real GDP per capita in each period and its percentage change. Explain why a government should not use total GDP growth alone to judge living standards.
- Q44 · Original practice · 4 marksMacroeconomic objectives and theoryA workshop produces 6000 identical units using 2000 labour hours. After training, it produces 6600 units using 2200 hours. Calculate labour productivity before and after, and assess the claim that the training has demonstrated a productivity gain.
- Q45 · Original practice · 6 marksMacroeconomic objectives and theoryA cinema worker loses their job as local spending falls during a broad recession. A separate worker cannot find a job after firms adopt technology requiring different qualifications. Identify the unemployment type in each case and recommend a different policy mechanism for each.
- Q46 · Original practice · 4 marksMacroeconomic objectives and theoryAfter repeated unsuccessful applications, some willing workers stop actively searching. Explain how the measured unemployment rate could fall even though labour-market conditions have not improved. Name the relevant unemployment concept.
- Q47 · Original practice · 4 marksMacroeconomic objectives and theoryA business keeps every employee but reduces each person’s weekly hours from 38 to 24. All employees want and are available for their former hours. Explain why the unemployment rate may be unchanged and why labour underutilisation rises.
- Q48 · Original practice · 4 marksMacroeconomic objectives and theoryAn economy has 950 000 employed people and 50 000 unemployed people. Then 20 000 previously inactive people begin actively looking for work; none finds a job immediately. Calculate the unemployment rate before and after, and explain why this change need not signal job destruction.
- Q49 · Original practice · 5 marksMacroeconomic objectives and theoryAn estimated NAIRU falls after improved job matching. Explain how this could change the economy’s capacity to achieve full employment without accelerating inflation. Give one reason why the estimate should be treated cautiously.
- Q50 · Original practice · 5 marksMacroeconomic objectives and theoryA one-year loan has a nominal interest rate of 6%. Expected inflation at the start is 4%, but actual inflation over the year is 7%. Use the exact Fisher ratio, (1 + i)/(1 + inflation) − 1, to calculate expected and realised real interest rates. Explain who benefits from the unexpected inflation on a fixed nominal contract.
- Q84 · Original practice · 5 marksMacroeconomic objectives and theoryA model’s equilibrium price-level index falls from 120 to 116 after a positive supply shift. Explain what the model says about the price level. Does this single comparative-static diagram establish a continuing deflation rate? Justify your answer.
- Q85 · Original practice · 4 marksMacroeconomic objectives and theoryReal GDP grows by 0.5% in each of four consecutive quarters. Use (1 + quarterly growth)^4 − 1 to calculate the compounded annual increase. Explain why multiplying by four gives only an approximation.
- Q86 · Original practice · 5 marksMacroeconomic objectives and theoryReal GDP per capita rises 2%, but a supplied distributional study shows median real disposable income is unchanged and the lowest-income group’s income falls. Evaluate the claim that all households have become better off.
- Q90 · Original practice · 6 marksMacroeconomic objectives and theoryIn a hypothetical year nominal GDP grows 5%, the GDP deflator grows 4% and population grows 1.5%. Calculate real GDP growth and real GDP-per-capita growth using ratios. Evaluate a minister’s statement that 5% GDP growth demonstrates strong gains in average living standards.