9708A. 24 March

1. What is a cause of seasonal unemployment?
A a general decrease in the demand for goods and services
B a lack of necessary skills in the workforce
C a temporary change in the pattern of consumers’ expenditure
D an unwillingness of workers to move to other parts of the country where there is work

2. A firm initially employs 50 workers, each working 40 hours a week, and produces a total output
of 18 000 units. It then employs an additional 10 workers, again each working 40 hours, and total
output rises to 19 200 units.
Which effect does this rise in employment have on labour productivity per hour?
A decreases it by 1 unit
B decreases it by 40 units
C increases it by 120 units
D increases it by 1200 units

3. According to Keynesian theory, when will an increase in the money supply leave the level of
output unchanged?
A when there is a liquidity trap
B when the money supply increase was not anticipated
C when there is a floating exchange rate
D when there is an immediate adjustment to expectations about future price levels

4. An economy is experiencing a negative output gap.
What is most likely to happen to the inflation rate and unemployment in this economy?

Inflation RateUnemployment

5. What do Monetarists believe?
A Economies are naturally unstable.
B Policy makers should follow set rules targeting the money supply.
C The aggregate supply curve has a slight slope.
D Wage movements are ‘sticky’ downwards.


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