Economics 9708 · AS & A Level
Government macroeconomic policy objectives
68 practice questions on Government macroeconomic policy objectives, with worked solutions and instant marking.
Which macroeconomic policy aims are most likely to support each other?
Feb/March 2018
What do Keynesians assume?
Feb/March 2021
A government introduces an expansionary fiscal policy in order to raise the economic growth rate. Which other main macroeconomic aim is this policy most likely to support?
Feb/March 2023
Which macroeconomic policy objective would not be relevant to a government in a closed economy?
Feb/March 2024
Explain how a rise in consumer spending affects China’s national income.
May/June 2005
How far do you agree with the view that the principal objectives of economic government policy should be low unemployment and low tax rates?
May/June 2007
Discuss whether all countries ought to set annual inflation targets of around 3%.
May/June 2010
Prior to 1999, the Brazilian government did not set a desired inflation target rate. Starting in 1999, it established target rates with an upper limit and a lower limit. The diagram illustrates the inflation rate from 1994 to 2003 and the target rate from 1999 to 2003. What can be concluded from the diagram?
May/June 2012
A cost-benefit analysis suggests that a nuclear power station project could be socially worthwhile, even though it would take 10 years to become operational. Why might a government choose not to carry out the project?
May/June 2013
What must a government do to keep its budget balanced?
May/June 2013
The pairing of rapid economic growth and inflation is no coincidence. (Source: The Times) Explain why rapid growth and high inflation might often occur at the same time.
May/June 2013
Identify three reasons why there was a problem with the world cereal market in 2012.
May/June 2015
What is the purpose of stabilisation policy?
May/June 2016
Identify two government policies in the article that could help to raise aggregate demand.
May/June 2016
When a government keeps tax rates and benefit rates unchanged in response to cyclical fluctuations in output, what is it aiming to achieve through this fiscal policy?
May/June 2017
A country's economy is at the same time facing a balance of payments deficit, a budget deficit, demand-pull inflation and unemployment. The government chooses to reduce personal income taxes. Which macroeconomic objective is it most likely to be aiming for?
May/June 2017
The government chooses to increase the rate of Value Added Tax (General Sales Tax). What does this indicate about the government’s principal macroeconomic objective?
May/June 2019
Which set of policies is most likely to raise output?
May/June 2019
The government chooses to increase the rate of Value Added Tax (General Sales Tax). What does this indicate is the government’s chief macroeconomic objective?
May/June 2019
What does the term nudge theory mean?
May/June 2020
Which objective would be unsuitable for a government if it were aiming for sustainable economic growth?
May/June 2021
The article refers to macroeconomic policy aims. Identify and explain two such macroeconomic policy aims.
May/June 2021
The article mentions macroeconomic policy aims. Identify and explain two of these aims.
May/June 2021
Governments establish economic policy aims. Which outcome would be least likely to happen if every one of these aims were met?
May/June 2023
The government chooses to increase the rate of value added tax (general sales tax). What does this imply is the government’s chief macroeconomic objective?
May/June 2023
Which macroeconomic objective is most likely to be met by raising income tax?
May/June 2024
At what point is a policy regarded as macroeconomic?
May/June 2024
Why might a government raise its inflation rate target from 3% to 5%?
May/June 2025
What is one macroeconomic policy objective that a government in a developed economy might aim for?
May/June 2025
Which pairing of income tax and government benefit payment systems would lead to automatic stabilisation?
May/June 2025
A government raises its inflation rate target from 3% to 5%. What is a likely explanation for this?
May/June 2025
What might be one macroeconomic policy objective for a government in a developed economy?
May/June 2025
A country is facing stagflation, with a high inflation rate occurring alongside a negative output gap. Using a diagram, evaluate how effective fiscal policy would be in solving this problem.
May/June 2025
Explain how inflation influences the functions of money.
Oct/Nov 2004
Describe the other main aims of a government’s macro-economic policy.
Oct/Nov 2004
To what extent do you agree that low interest rates and low inflation are the most important aims of government policy in maximising economic welfare?
Oct/Nov 2005
Analyse the reasons the aims of government policy may clash with one another and discuss which of the aims should be given priority.
Oct/Nov 2007
Explain the reasons unemployment occurs.
Oct/Nov 2008
Economic analysis states that the aims of the government include economic growth and economic efficiency. Explain in what ways achieving economic growth might clash with other macroeconomic aims of the government.
Oct/Nov 2010
A country’s economy is, at the same time, dealing with a balance of payments deficit, a budget deficit, demand-pull inflation and unemployment. The government opts to reduce personal income taxes. What does this imply is its main macroeconomic objective?
Oct/Nov 2011
Explain the main macroeconomic aims a government might have and analyse which would be the most important for your country.
Oct/Nov 2011
Explain what is meant by government macroeconomic policies and government microeconomic policies. Use two examples of policy from each category to illustrate your answer.
Oct/Nov 2011
Explain what effects a rise in consumer expenditure and a rise in government subsidies might have on national income.
Oct/Nov 2011
For what reasons do people demand money?
Oct/Nov 2012
Explain why some government economic policies can be in conflict and discuss which ones should take priority.
Oct/Nov 2013
Some governments attach very high importance to the goals of economic growth and keeping unemployment at a low level. How far do you agree that these should be a government’s top priorities?
Oct/Nov 2013
Discuss whether the statement has any validity.
Oct/Nov 2014
Identify two government macroeconomic aims and analyse how a boom will bring beneficial changes for consumers and producers.
Oct/Nov 2014
The government chooses to increase the Value Added Tax (General Sales Tax) rate. What does this indicate about the government’s primary macroeconomic objective?
Oct/Nov 2015
What does productive efficiency mean?
Oct/Nov 2015
The diagrams illustrate UK Government total spending and welfare spending in £ billions from 2005 to 2014. What conclusion can be drawn from the diagrams about UK Government spending over the period 2005 to 2014?
Oct/Nov 2017
In what ways, if at all, do fiscal policies differ from monetary policies and supply side policies?
Oct/Nov 2017
Statement 1 says that a market economy is naturally unstable, so the government has to help stabilise it by using monetary policy and fiscal policy. Statement 2 says that the economy will always move back to its equilibrium level of output and unemployment, and therefore long-run aggregate supply is vertical. Which row correctly matches these statements to Keynesian and Monetarist theories?
Oct/Nov 2020
Which combination of macroeconomic policies would be most likely to succeed if the objective were to cut unemployment and lower inflation?
Oct/Nov 2020
Explain what is meant by labour productivity and whether the information proves that countries with higher labour productivity are always more competitive than countries with lower labour productivity.
Oct/Nov 2020
Explain the quantity theory of money and discuss why the theory may fail in practice.
Oct/Nov 2021
The table shows some economic indicators for four countries. Which country is nearest to meeting the main aims of government economic policy?
Oct/Nov 2023
What does the term government macroeconomic aim mean?
Oct/Nov 2023
Using examples, explain how the marginal rate of taxation differs from the average rate of taxation, and consider whether a government should raise the rate of indirect tax in order to collect extra revenue.
Oct/Nov 2024
During 2021, year-on-year inflation in many economies rose to a level that had not been seen for fifty years. Using a diagram, explain the meaning of cost-push inflation and discuss whether this form of inflation has affected your own economy since 2021.
Oct/Nov 2024
Which of the following is not an aim of macroeconomic policy?
Oct/Nov 2024
Which of the following is not one of a government’s macroeconomic policy objectives?
Oct/Nov 2025
A country’s government lowers its budget deficit by reducing public expenditure. Meanwhile, the central bank increases interest rates. In what situation might this policy mix be adopted?
Oct/Nov 2025
Which of the following is not a probable reason why a government would set economic growth as an objective?
Oct/Nov 2025
A country has an inflation target of 2.5% and has recently seen the actual inflation rate increase to 6%, while unemployment has dropped to very low levels. Which policy option is most likely to be used?
Oct/Nov 2025
Which category of government expenditure is a transfer payment?
Oct/Nov 2025
An economy is experiencing both rising prices for imported raw materials and demand-pull inflation. Which set of policies would be most likely to enable its government to meet its macroeconomic objective of price stability?
Oct/Nov 2025
Which pair of policies is most likely to cut cyclical unemployment, but may increase frictional unemployment?
Oct/Nov 2025