17During a year, a country’s national income in money terms increased by 5%, prices increased by 4% and the total population increased by 2%. What was the approximate change in real income per head? Aa decrease of 1% Ba decrease of 2% Can increase of 1% Dan increase of 2% 18Which represents an injection into an economy’s circular flow of income? 19In a closed economy with no government sector, investment is increased by $100million and real income increases by $500million. What is the marginal propensity to consume? 5.0
1020The income velocity of circulation is equal to 2.0. If the rate of growth of the money supply is 8% and the average price level increases by 4%, what will be the change in real output (transactions)? © UCLES 2015 9708/31/M/J/15 D +16% 21The diagram shows the demand curves and supply curves of loanable funds. The market is in equilibrium at point X. What would be the new equilibrium point if there were an increase in business confidence and a reduction in the propensity to save? D 1 S 1 D 2 D 3 S 2 S 3 O loanable funds rate of interest X A B C D 22What will be most likely to decrease a country’s national output in the short-run but to increase its potential for long-run growth? A a decrease in the level of import tariffs B a decrease in the rate of immigration C an increase in female participation in the labour force D an increase in the money supply 23Which change would bestindicate that a country has experienced economic development?
11© UCLES 2015 9708/31/M/J/15 [Turn over24The diagram shows the relationship between the rate of inflation and the rate of unemployment. O inflation rate unemployment rate JFKGWhat would cause the curve FG to shift to JK? 25What is the bestmeasure of the economic cost of an increase in unemployment?
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