1. Based on the International Labour Office definition of unemployment, which individual is most
likely to be classified as unemployed?
A a single parent who would like to work but cannot afford to pay for child-care facilities
B a teacher who has decided to retire permanently
C a redundant steel worker who is not actively seeking alternative work
D a student who is desperately seeking any weekend job to supplement his income

2. What is most likely to lead to an increase in labour productivity?
A encouraging women to enter the workforce
B increasing automation
C raising the retirement age
D reducing the division of labour

3. Which components of the Quantity Theory of Money are considered constant and which are
considered variable?

	Money supply	Velocity of circulation	Price level	Transactions
A	Constant	Variable	Constant	Variable
B	Constant	Constant	Variable	Constant
C	Variable	Constant	Variable	Constant
D	Variable	Variable	Constant	Variable

4. Four students are asked to complete a table showing the aggregate demand equation and the
multiplier formula for a closed economy without a government.
Which student is correct?

5. Keynesian and Monetarist economists believe different things about the way the economy works.
Which combination is correct?

	Keynesian	Monetarist
A	decreasing AD will always lead to an increase in economic growth	economic growth is achieved using fiscal policy
B	increasing AD brings the economy out of recession	the economy always tends to full employment in the long run
C	increasing AD will always lead to increased employment	economic growth is achieved by cutting taxation
D	increasing AS brings the economy out of recession	full employment will always be achieved in the long run

Answers