Free CIMAPRA17-BA1-1 Exam Braindumps

The Phillips curve shows that the government

  1. cannot use monetary policy to reduce the level of unemployment without causing a rise in interest rates.
  2. can only use fiscal policy to reduce the rate of unemployment in the short run but not in the long run.
  3. can only use expansionary policy to reduce the level of unemployment if it is prepared to accept a higher rate of inflation.
  4. in the long run expansionary fiscal and monetary policy can only lead to higher inflation and higher unemployment.

Answer(s): C



A government might increase its budget deficit in order to reduce

  1. Demand-deficient or cyclical unemployment
  2. Frictional unemployment
  3. Technological unemployment
  4. Classical or real-wage unemployment

Answer(s): A



Which of the following businesses would benefit most from an expansionary monetary policy?

  1. Companies with high levels of borrowing producing consumer durables.
  2. Companies with low levels of borrowing in the supermarket industry.
  3. Cash rich companies producing consumer durable goods.
  4. Low geared companies whose inputs are mainly imported.

Answer(s): A



When faced with a recession, the appropriate combination of policies for a government in order to generate a recovery is

  1. Tax cuts, reduced public expenditure and lower interest rates.
  2. Monetary expansion, increases in public expenditure and an appreciation of the exchange rate.
  3. Reduction of the fiscal deficit and increased money supply.
  4. Tax cuts, monetary expansion and a depreciation of the exchange rate.

Answer(s): D






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