AQA A Level · Economics 7136

The measurement of macroeconomic performance: Practice Questions

5 multiple-choice questions marked as you go, and 3 written questions with worked solutions. All on The measurement of macroeconomic performance.

8 questions16 marksFree, no account

Question 1

1 mark

Which of the following is most likely to be considered a macroeconomic indicator of an economy's performance?

Question 2

1 mark

When comparing the living standards of two countries, economists prefer using Purchasing Power Parity (PPP) exchange rates rather than market exchange rates because:

Question 3

1 mark

Which of the following identifies a significant limitation of using Real GDP as the sole indicator for comparing the economic well-being of a population over time?

Question 4

1 mark

When comparing the standard of living between two countries using national income data, which of the following adjustments is most essential to account for the fact that a U.S. dollar can buy more goods in India than in the United States?

Question 5

1 mark

Which of the following combinations of changes is most likely to occur during the 'recovery' phase of the economic cycle?

Question 6

2 marks

Using the Fisher equation of exchange \( MV = PQ \), if the money supply \( M \) increases by 10% and the velocity of circulation \( V \) and real output \( Q \) remain constant, what is the predicted effect on the price level \( P \)?

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Question 7

3 marks

In an economy with a base year index of 100, the Consumer Prices Index (CPI) rises to 110 in Year 1 and 115.5 in Year 2. Calculate the annual rate of inflation for Year 2.

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Question 8

6 marks

An economy's nominal GDP increased by 8% over a year, while the GDP deflator increased from 120 to 126 over the same period. Calculate the percentage change in real GDP and identify whether the economy experienced real economic growth.

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