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6. The real rate of interest is calculated by : (2.6)

  • The nominal rate less the rate of inflation
  • The nominal rate of interest + the rate of inflation
  • Inflation rate less the nominal rate of interest
  • Inflation rate multiplied by the nominal rate of interest

7. Statutory Sick Pay (SSP) is paid to employees who are off work due to sickness or disability. The benefit is payable for a maximum of: (2.7)

  • 28 weeks
  • 4 weeks
  • 26 weeks
  • 12 weeks

8. Which of the following correctly describes the Retail Prices Index (RPI) and the Consumer Prices Index (CPI) ? (2.5)

  • Mortgage and housing costs are included in the CPI, but excluded from the RPI
  • Mortgage and housing costs are included in the RPI, but excluded from the CPI
  • House price movements are included in the RPI, but excluded from the CPI
  • House price movements are included in the CPI, but excluded from the RPI

9. Economic theory states that the money supply should increase only if: (2.4.2)

  • the volume of just services increases
  • the volume of goods and services also increases
  • the volume of goods and services decreases
  • the volume of just goods increases

10. Which of the following would NOT be considered to be one of the main economic objectives of modern governments? (2.1)

  • Balance of payments equilibrium
  • Expansionary fiscal policy
  • Low unemployment
  • Price stability

11. What happens to prices during a period of disinflation ? (2.5)

  • They rise, but at a slower rate than before.
  • There is negative inflation
  • They match trends in output and demand
  • They start to fall across the entire economy

12. If the money supply exceeds the real value of goods and services, this will tend to lead to :
(2.4.2)

  • Disinflation
  • Inflation
  • Deflation
  • Recession

13. During a period of deflation, prices tend to: (2.5)

  • rise and fall in line with average earnings.
  • fall significantly across the entire economy.
  • fall dramatically only for identified industries.
  • rise, but at a slower rate than previously.

14. Disposal of which of the following would not give rise to a capital gains tax charge?

  • Shares.
  • Unit trusts.
  • Corporate bonds.
  • Investment trusts.

15. One of the criteria to be eligible to receive the Carer’s Allowance is that the time spent as a carer must be at least: (2.7)

  • 50 hours a week
  • 35 hours a month
  • 35 hours a week
  • 50 hours a month

16. Responsibility for setting the UK Bank Rate lies with:

  • the Chancellor of the Exchequer.
  • the Monetary Policy Committee of the Bank of England.
  • the Governor of the Bank of England.
  • HM Treasury.

17. The key component of monetary policy is: (2.4)

  • Interest rates
  • Balance of payments
  • Government spending
  • Taxation

18. Harold pays Class 4 National Insurance. This confirms that he is:

  • self-employed only.
  • making voluntary contributions.
  • employed only.
  • an employer.

19. A capital gains tax charge could arise on the disposal of which of the following? (2.3.3)

  • Gilt-edged securities
  • Investment trusts
  • Corporate bonds
  • Venture capital trusts

20. What is normally the effect of an economic boom in the UK? The rate of inflation tends to:

  • rise and the UK current account shows a growing surplus.
  • fall and the UK current account shows a growing deficit.
  • rise and the UK current account shows a growing deficit.
  • fall and the UK current account shows a growing surplus.