B inflation will be generated in the economy C the country will suffer a trade

B inflation will be generated in the economy c the

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B inflation will be generated in the economy. C the country will suffer a trade deficit. D the marginal propensity to save will be negative. 24 Which row correctly identifies net leakages from the circular flow of income? trade surplus (exports - imports) government budget deficit (government spending - taxes) private sector surplus (saving - investment) A B C D
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10 © UCLES 2016 9708/32/O/N/16 25 The table shows the levels of consumption expenditure and savings for given family incomes. disposable family income ($) consumption expenditure ($) savings ($) 2000 2150 –150 3000 3100 –100 4000 4000 0 5000 4850 150 6000 5650 350 7000 6380 620 Over the range of disposable income shown, as income rises the marginal propensity to consume A falls and then rises. B falls continuously. C rises and then falls. D rises continuously. 26 What would cause an increase in the transactions demand for money? A a fall in the price of bonds B an increase in nominal national income C an increase in the rate of interest D an increase in unemployment 27 Government economic advisers disagree over the relative impact of fiscal and monetary controls. What is most likely to be the first stage at which a time lag will occur? A in the introduction of the chosen policy B in the operational effectiveness of the policy C in the recognition of the existence of the problem D in the selection of the appropriate policy
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11 © UCLES 2016 9708/32/O/N/16 28 What has not accompanied global economic growth over the last twenty five years? A a depletion of non-renewable resources B decreased international trade C growing urbanisation D increased atmospheric pollution 29 Which policy pursued by a central bank represents a contractionary monetary policy? A a reduction in the interest rate at which it will lend to banks B a reduction in the minimum cash to deposit ratios of banks C the purchase of foreign currency to influence the country’s exchange rate D the sale of government bonds in the open market 30 Which policy’s principal aim is to ensure sound public finances? A environmental policy B fiscal policy C monetary policy D supply-side policy
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12 BLANK PAGE Permission to reproduce items where third-party owned material protected by copyright is included has been sought and cleared where possible. Every reasonable effort has been made by the publisher (UCLES) to trace copyright holders, but if any items requiring clearance have unwittingly been included, the publisher will be pleased to make amends at the earliest possible opportunity. To avoid the issue of disclosure of answer-related information to candidates, all copyright acknowledgements are reproduced online in the Cambridge International Examinations Copyright Acknowledgements Booklet. This is produced for each series of examinations and is freely available to download at after the live examination series. Cambridge International Examinations is part of the Cambridge Assessment Group. Cambridge Assessment is the brand name of University of Cambridge Local Examinations Syndicate (UCLES), which is itself a department of the University of Cambridge. © UCLES 2016 9708/32/O/N/16
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