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2012 September Past Year

R

Robert

Very Active Member
21 Which of the following is best suited to reducing the level of structural
unemployment?
A Lowering the rate of interest.
B Raising the rate of unemployment benefit.
C Higher voluntary redundancy payments for workers in declining industries.
D More government funds for retraining of the unemployed.
May I know why B is not accepted for this question ?
 
24 Country A exports Good X and imports Good Y from Country B. The price of Good
X rises by 20 per cent and the price of Good Y falls by 40 per cent. Which of the
following statements is correct about Country A’s terms of trade?
A It has improved by 100 per cent.
B It has improved by 60 per cent.
C It has deteriorated by 100 per cent.
D It has deteriorated by 60 per cent.

May I know why the answer is A?
 
19 In a closed economy with no government sector if the amount people plan to save
exceeds the amount they plan to invest then there will be:
A a rise in national income.
B an unplanned rise in stocks.
C inflationary pressures.
D a rise in the amount people plan to invest.

Can i get more elaboration on why the answer is B?
 
33 The following data refers to a simple closed economy.
Money Supply = 200
Price Index = 10
Real Output (i.e. Real Income) = 100 units
Bank multiplier = 20%
Use the equation of exchange to determine the following with the above figures as
your starting point in each of your calculations:
(i) the numerical value of the velocity of circulation. [1]
(ii) the value of the price index if the money supply were to increase to 300. [1]
(iii) the likely change in the money supply if there is an initial increase in bank
deposits of 15.

May I know why ii is 15 and iii is 75?
 
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