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    A2 Revision 3

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    chohanvihaan

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    A2 Revision 3

    Uploaded by

    chohanvihaan
    5 views2 pages

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    Download as docx, pdf, or txt
    5 views2 pages

    A2 Revision 3

    Uploaded by

    chohanvihaan

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    of 2

    A2 Revision

    1. Explain what economists mean by an inflationary gap and discuss why this is considered to be
    an economic problem. Use a diagram(s) to support your answer.

    2. (a) Explain the Keynesian theory of the determination of the rate of interest.
    (b) Discuss the impact on the economy of the introduction of quantitative easing (QE) by the
    central bank.

    3. Explain why an economy might be in equilibrium at less than a full employment


    level of output and critically evaluate alternative policy measures which might be
    used to move the economy to a full employment level of output.

    4. ‘Monetarists insist that control of the money supply is the key to solving the
    problem of inflation, Keynesians argue that inflation can only be controlled by
    controlling expenditure.’

    To what extent do you agree that both these approaches are only partially
    correct?

    5. ‘The use of quantitative easing (QE) has the same effect on the economy as the
    use of Keynesian fiscal demand management policy. Both policies create
    employment in the short run at the expense of inflation in the long run.’

    How far would you support this view?

    6. ‘The failure of the policy of quantitative easing (QE) to solve problems associated with an
    economic recession illustrates the weakness of monetary transmissions mechanisms in
    particular and monetary policy in general.’

    Critically evaluate this statement

    7. Explain what is meant by actual economic growth and potential economic growth.

    8. ‘Health, education and savings are the most important factors in determining long-term
    development in developing countries.’

    Comment on this statement.

    9. (a) Distinguish between leakages and injections in the circular flow of income and consider
    how they might be related.

    (b) Critically evaluate a central bank’s use of interest rates to increase injections into an
    economy.

    10. Explain the difference between autonomous investment and induced investment. Consider
    whether there is a link between these two types of investment.

    11. Distinguish between the transactions demand for money and the speculative demand for
    money. Consider which is likely to be more important for a consumer in a modern economy.
    12. Consider the extent to which the commercial banks can influence the money
    supply.

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