Economics section A

This is based on all choice questions from unit 1 of microeconomics. Most of these questions are from many different past papers. 

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1. There is an output gap when

  • productivity is continuously higher in one country than in another.
  • national output is higher or lower than it would have been if the country had grown continuously at its trend rate of growth.
  • unemployment occurs because the rate of economic growth increase above its trend rate of growth.
  • the economy is continuously producing more capital goods than consumer goods over a period of time.
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2. Which one of the following is a measure of productivity?

  • the total amount of output produced each month.
  • output divided by employment.
  • the annual percentage increase in production.
  • the quantity of capital equipment used divided by its price.

3. What are goods provided by the government for people who are deemed to need them called?

  • Negative externalities.
  • Demerit goods.
  • Merit goods.
  • Positive externalities.

4. An increase in imports of consumer goods is most likely to have been caused by a

  • fall in the exchange rate.
  • rise in household saving.
  • rise in household disposable income.
  • rise in direct taxation.

5. A decision by the government to introduce and expansionary fiscal policy would be less likely to succeed in reducing unemployment if a country had

  • a high marginal propensity to import.
  • a fixed exchange rate.
  • a high level of business and consumer confidence.
  • a high level of cyclical unemployment and spare capacity.


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