Question 1

GDP measures:
A) inflation
B) The cost of living
C) The standard of living
D) National income

Accepted Answer

GDP, or Gross Domestic Product, measures the total value of all goods and services produced over a specific time period within a country's borders. It is used as a broad indicator of a country's economic performance, essentially representing the national income.

Question 2

CPI measures:
A) inflation
B) The cost of living
C) The standard of living
D) National income

Accepted Answer

CPI measures inflation, which is the rate at which the prices of goods and services increase over time.

Question 3

GDP per person measures:
A) inflation
B) The cost of living
C) The standard of living
D) National income

Accepted Answer

GDP per person, also known as per capita GDP, is often used as an indicator of the standard of living in a country, reflecting the average income of its citizens.

Question 4

If demand is income elastic it means:
A) the percentage change in quantity demanded is less than the percentage change in income
B) the percentage change in quantity demanded is equal to the percentage change in income
C) the percentage change in quantity demanded is more than the percentage change in income
D) the percentage change in income is less than the percentage change in price

Accepted Answer

When demand is income elastic, it means that the percentage change in quantity demanded is more than the percentage change in income, indicating that consumers buy significantly more of the good as their income increases.

Question 5

If inflation was 3% and the following year is 2%, prices have fallen

Accepted Answer

Inflation decreasing from 3% to 2% means the rate at which prices are increasing has slowed down, but prices are still rising, not falling.

Question 6

Inflation is measured with a weighted index.

Accepted Answer

Inflation is typically measured using a weighted index such as the Consumer Price Index (CPI), which tracks the average change over time in the prices paid by consumers for a basket of goods and services.

Question 7

A high interest rate is likely to discourage borrowing.

Accepted Answer

High interest rates increase the cost of borrowing, which can discourage individuals and businesses from taking out loans.

Question 8

A low interest rate is likely to reduce aggregate demand.

Accepted Answer

A low interest rate typically increases aggregate demand by making borrowing cheaper, which encourages spending and investment.

Question 9

Gearing measures the profitability of a business:

Accepted Answer

Gearing refers to the financial leverage of a company, indicating the ratio of its borrowed funds to its equity, not its profitability.

Question 10

Anyone without a job is part of the unemployment rate in the UK

Accepted Answer

In the UK, to be considered part of the unemployment rate, an individual must not only be without a job but also be actively seeking work and available to start work.

Question 11

An increase in the value of a currency is likely to:
A) Make exports abroad cheaper in the foreign currency
B) Make imports abroad more expensive in the foreign currency
C) Reduce export sales
D) Reduce imports

Accepted Answer

An increase in the value of a currency makes exports more expensive in foreign markets, which can reduce export sales as foreign buyers may find the goods less affordable.

Question 12

An increase in the value of a currency may be caused by:
A) An increase in supply of the currency
B) An decrease in demand of the currency
C) An increase in demand of the currency
D) The government selling its currency

Accepted Answer

An increase in demand for a currency typically leads to an increase in its value, as more people or entities want to hold or use that currency, driving up its price relative to other currencies.

Quiz 11: Analysing the Macroeconomic Environment

GDP measures:

CPI measures:

GDP per person measures:

If demand is income elastic it means: