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Macro Practice Paper 1 Questions

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(a) Using examples, explain the difference between economic growth and economic development.

(b) Is economic growth always a desirable policy objective for a government?
Remember that in both Parts A and B you need to analyze using key concepts, have key terms defined, include at least one diagram that is fully explained, as well as make use of real world examples. Part B must also have evaluation. "In DEEED We Trust"
Check your Course Companion for assistance in answering the question.
(a) Describe three strategies which governments may use to increase their economic growth rates.

(b) Should increasing the rate of economic growth be the major policy objective of governments?
Remember that in both Parts A and B you need to analyze using key concepts, have key terms defined, include at least one diagram that is fully explained, as well as make use of real world examples. Part B must also have evaluation. "In DEEED We Trust"
Check your Course Companion for assistance in answering the question.
(a) What macroeconomic policies would a government adopt if it wished to reduce aggregate demand in an economy?

(b) Should a government attempt to manage the level of aggregate demand to influence unemployment and inflation rates?
Remember that in both Parts A and B you need to analyze using key concepts, have key terms defined, include at least one diagram that is fully explained, as well as make use of real world examples. Part B must also have evaluation. "In DEEED We Trust"
Check your Course Companion for assistance in answering the question.
(a) Explain the difference between demand-side and supply-side economic policies.

(b) "Higher economic growth can only be achieved through the implementation of supply-side policies." Discuss.
Remember that in both Parts A and B you need to analyze using key concepts, have key terms defined, include at least one diagram that is fully explained, as well as make use of real world examples. Part B must also have evaluation. "In DEEED We Trust"
Check your Course Companion for assistance in answering the question.
(a) To what extent is GNP per capita an appropriate measurement to use to compare living standards in different countries?

(b) Discuss other measures which might be used to compare living standards.
Remember that in both Parts A and B you need to analyze using key concepts, have key terms defined, include at least one diagram that is fully explained, as well as make use of real world examples. Part B must also have evaluation. "In DEEED We Trust"
Check your Course Companion for assistance in answering the question.
(a) With the help of examples, explain the purpose of the various supply-side policies.

(b) Evaluate the success of these measures in countries where they have been implemented.
Remember that in both Parts A and B you need to analyze using key concepts, have key terms defined, include at least one diagram that is fully explained, as well as make use of real world examples. Part B must also have evaluation. "In DEEED We Trust"
Check your Course Companion for assistance in answering the question.
(a) The world economy may be subjected to economic shocks, such as a sudden increase in oil prices and terrorist attacks. With the help of an aggregate demand/aggregate supply diagram, explain the possible economic effects of such shocks.

(b) Evaluate the main economic policies that governments might use to minimize these effects.
Remember that in both Parts A and B you need to analyze using key concepts, have key terms defined, include at least one diagram that is fully explained, as well as make use of real world examples. Part B must also have evaluation. "In DEEED We Trust"
Check your Course Companion for assistance in answering the question.
(a) Identify the components of aggregate demand and briefly explain two factors which might determine each of these components.

(b) Evaluate the likely impact on an economy of a substantial rise in the level of interest rates.
Remember that in both Parts A and B you need to analyze using key concepts, have key terms defined, include at least one diagram that is fully explained, as well as make use of real world examples. Part B must also have evaluation. "In DEEED We Trust"
Check your Course Companion for assistance in answering the question.
(a) Why do growth rates vary between countries?

(b) Discuss the obstacles that a Less Developed Country might face in attempting to increase its growth rate substantially.
Remember that in both Parts A and B you need to analyze using key concepts, have key terms defined, include at least one diagram that is fully explained, as well as make use of real world examples. Part B must also have evaluation. "In DEEED We Trust"
Check your Course Companion for assistance in answering the question.
Evaluate the effectiveness of demand-side and supply-side policies in the short and long run.
Remember that in both Parts A and B you need to analyze using key concepts, have key terms defined, include at least one diagram that is fully explained, as well as make use of real world examples. Part B must also have evaluation. "In DEEED We Trust"
Check your Course Companion for assistance in answering the question.
Is economic growth compatible with the protection of the environment? Discuss with reference to sustainable development.
Remember that in both Parts A and B you need to analyze using key concepts, have key terms defined, include at least one diagram that is fully explained, as well as make use of real world examples. Part B must also have evaluation. "In DEEED We Trust"
Check your Course Companion for assistance in answering the question.
"Unemployment remains persistently high in a majority of countries throughout the world."

(a) Explain the economic problems that high unemployment may cause for a country.

(b) Discuss the reasons why governments find the goal of full employment difficult to achieve.
Remember that in both Parts A and B you need to analyze using key concepts, have key terms defined, include at least one diagram that is fully explained, as well as make use of real world examples. Part B must also have evaluation. "In DEEED We Trust"
Check your Course Companion for assistance in answering the question.
(a) What are the costs of a high level of unemployment in a developed economy?

(b) Suggest and evaluate measures to deal with high unemployment.
Remember that in both Parts A and B you need to analyze using key concepts, have key terms defined, include at least one diagram that is fully explained, as well as make use of real world examples. Part B must also have evaluation. "In DEEED We Trust"
Check your Course Companion for assistance in answering the question.
(a) What are the consequences of unemployment in an economy?

(b) Examine the strategies that may be used to reduce unemployment, referring to more developed countries and less developed countries in your answer.
Remember that in both Parts A and B you need to analyze using key concepts, have key terms defined, include at least one diagram that is fully explained, as well as make use of real world examples. Part B must also have evaluation. "In DEEED We Trust"
Check your Course Companion for assistance in answering the question.
(a) Explain the various costs of unemployment.

(b) Evaluate the alternative policies aimed at reducing unemployment.
Remember that in both Parts A and B you need to analyze using key concepts, have key terms defined, include at least one diagram that is fully explained, as well as make use of real world examples. Part B must also have evaluation. "In DEEED We Trust"
Check your Course Companion for assistance in answering the question.
(a) What problems can a prolonged period of high inflation bring to an economy?

(b) Evaluate the strategies that can be used to reduce the level of inflation. Include some reference in your answer to countries with which you are familiar.
Remember that in both Parts A and B you need to analyze using key concepts, have key terms defined, include at least one diagram that is fully explained, as well as make use of real world examples. Part B must also have evaluation. "In DEEED We Trust"
Check your Course Companion for assistance in answering the question.
'What is wanted is not inflation (a rise in the general price level) or deflation (a fall in the general price level) but price stability.' Discuss.
Remember that in both Parts A and B you need to analyze using key concepts, have key terms defined, include at least one diagram that is fully explained, as well as make use of real world examples. Part B must also have evaluation. "In DEEED We Trust"
Check your Course Companion for assistance in answering the question.
(a) Briefly explain the various major objectives of macroeconomic policy.

(b) Critically examine the view that the control of inflation should always be the most important objective of governments.
Remember that in both Parts A and B you need to analyze using key concepts, have key terms defined, include at least one diagram that is fully explained, as well as make use of real world examples. Part B must also have evaluation. "In DEEED We Trust"
Check your Course Companion for assistance in answering the question.
(a) What are the main macroeconomic objectives of government?

(b) Assume the government chooses to pursue one of these objectives. Evaluate the possible consequences for the other objectives.
Remember that in both Parts A and B you need to analyze using key concepts, have key terms defined, include at least one diagram that is fully explained, as well as make use of real world examples. Part B must also have evaluation. "In DEEED We Trust"
Check your Course Companion for assistance in answering the question.
Discuss the view that the achievement of price stability should be the major objective of government economic policy.
Remember that in both Parts A and B you need to analyze using key concepts, have key terms defined, include at least one diagram that is fully explained, as well as make use of real world examples. Part B must also have evaluation. "In DEEED We Trust"
Check your Course Companion for assistance in answering the question.
(a) What are the costs of a high rate of inflation?

(b) What policies are effective in reducing inflation?
Remember that in both Parts A and B you need to analyze using key concepts, have key terms defined, include at least one diagram that is fully explained, as well as make use of real world examples. Part B must also have evaluation. "In DEEED We Trust"
Check your Course Companion for assistance in answering the question.
With the help of diagrams:
(a) distinguish between demand-pull and cost-push inflation

(b) explain which policies would be appropriate to deal with these two types of inflation.
Remember that in both Parts A and B you need to analyze using key concepts, have key terms defined, include at least one diagram that is fully explained, as well as make use of real world examples. Part B must also have evaluation. "In DEEED We Trust"
Check your Course Companion for assistance in answering the question.
Discuss the view that investment in human capital is the most effective way to provide development.
Remember that in both Parts A and B you need to analyze using key concepts, have key terms defined, include at least one diagram that is fully explained, as well as make use of real world examples. Part B must also have evaluation. "In DEEED We Trust"
Check your Course Companion for assistance in answering the question.
(a) Explain how economists might measure the extent to which living standards vary between countries.

(b) Evaluate the ways in which more developed countries might help the less developed countries to raise living standards.
Remember that in both Parts A and B you need to analyze using key concepts, have key terms defined, include at least one diagram that is fully explained, as well as make use of real world examples. Part B must also have evaluation. "In DEEED We Trust"
Check your Course Companion for assistance in answering the question.
Discuss the possible consequences that might occur when a government attempts to reduce inflation.
Remember that in both Parts A and B you need to analyze using key concepts, have key terms defined, include at least one diagram that is fully explained, as well as make use of real world examples. Part B must also have evaluation. "In DEEED We Trust"
Check your Course Companion for assistance in answering the question.
(b) Evaluate the proposition that the most effective way to reduce unemployment is through the use of demand-side policies.
Remember that in both Parts A and B you need to analyze using key concepts, have key terms defined, include at least one diagram that is fully explained, as well as make use of real world examples. Part B must also have evaluation. "In DEEED We Trust"
Check your Course Companion for assistance in answering the question.
(a) Describe the main causes of inflation.

(b) "If inflation is a major problem faced by governments it must follow that the opposite, deflation, is desirable." To what extent do you agree with this statement?
Remember that in both Parts A and B you need to analyze using key concepts, have key terms defined, include at least one diagram that is fully explained, as well as make use of real world examples. Part B must also have evaluation. "In DEEED We Trust"
Check your Course Companion for assistance in answering the question.
(a) Explain the costs of inflation and the costs of deflation.

(b) Evaluate demand-side policies as a means of reducing inflation.
Remember that in both Parts A and B you need to analyze using key concepts, have key terms defined, include at least one diagram that is fully explained, as well as make use of real world examples. Part B must also have evaluation. "In DEEED We Trust"
Check your Course Companion for assistance in answering the question.
(a) Explain how governments can use fiscal policy to redistribute income.

(b) Evaluate the advantages and disadvantages of policies aimed at reducing income inequalities.
Remember that in both Parts A and B you need to analyze using key concepts, have key terms defined, include at least one diagram that is fully explained, as well as make use of real world examples. Part B must also have evaluation. "In DEEED We Trust"
Check your Course Companion for assistance in answering the question.
(a) Explain the relationship between the Lorenz Curve and the Gini Coefficient.

(b) Evaluate the effectiveness of the various methods that governments may use to redistribute income.
Remember that in both Parts A and B you need to analyze using key concepts, have key terms defined, include at least one diagram that is fully explained, as well as make use of real world examples. Part B must also have evaluation. "In DEEED We Trust"
Check your Course Companion for assistance in answering the question.
(a) Describe the main barriers to economic development that countries may experience.

(b) Evaluate the view that countries with a more equal distribution of income and wealth are more likely to experience higher levels of development.
Remember that in both Parts A and B you need to analyze using key concepts, have key terms defined, include at least one diagram that is fully explained, as well as make use of real world examples. Part B must also have evaluation. "In DEEED We Trust"
Check your Course Companion for assistance in answering the question.
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