Exam (elaborations)
Exam (elaborations) Economics IB (Macroeconomics I) (ECS1601)
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Grade 65.00 out of 100.00Question 1
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Question text
Cost-push inflation can be caused by …
a.
an increase in profit margins, a decrease in productivity and the impact of natural disasters.
b.
an increase in investment spending and government spending.
c.
a decrease in wages and salaries.
d.
a decrease in the cost of imported capital and intermediate goods.
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Refer to section 10.4 of the prescribed textbook.
Question 2
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Which one of the following is an example of inflation?
a.
A 4% increase in the interest rate.
b.
, A 4% increase in the tax rate.
c.
A 4% increase in the CPI.
d.
A 4% increase in the petrol price.
Feedback
Refer to section 10.1 of the prescribed textbook.
Question 3
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If inflation accelerates due to the increase in the price of oil (an import), the best policy to
combat such inflation in a country with a high unemployment rate, would be to...
a.
respond with demand management policy that will increase aggregate demand, which will
be illustrated by a rightward shift of the AD curve.
b.
apply the supply-side policy that will increase aggregate supply, which will be illustrated by
a rightward shift of the AS curve.
c.
apply incomes policy, illustrated by a leftward shift of the AS curve.
d.
implement contractionary monetary policy, illustrated by the rightward shift of the AD curve.
Feedback
See sections 9.1 and 10.5 of the prescribed textbook.
Question 4
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