If the government wants to close a gdp gap of 500

17. If the government wants to close a GDP gap of $500 billion, they should:
a) Inject $200 billion of spending, if the MPC is 0.5
b) Inject $400 billion of spending if the MPC is 0.8
c) Inject $150 billion of spending if the MPC is 0.6
d) Inject $100 billion of spending, if the MPC is 0.8
18. Which of the following pairs of objectives are least likely to be compatible?
19. Which of the following events would cause the aggregate demand curve to shift to
the left?
20. A possible cause of a government’s actual budget surplus being smaller than its
intended budget surplus could be:
21. A significant weakness of fiscal policy is that:
a) Political constraints may hinder the budgetary process
b) Specific sectors of the economy cannot be targeted
c) There is a short decision time lag
d) It is not particularly effective during a contraction
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9 Economics Units 3 & 4
22. A tightening of monetary policy would likely involve the Reserve Bank of Australia
the cash rate. This would most likely cause an of Foreign
investment and cause the Australian dollar to
23. Which of the following is not considered an indicator of structural change?
24. The relationship between Structural change and Economic growth can be
considered:
End of Section One
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Economics Units 3 & 4 10
Section Two: Data interpretation/Short response 36% (36 Marks)
This section contains three (3) questions. Answer all questions. Write your answers in the
spaces provided.
Spare pages are included at the end of this booklet. They can be used for planning your
responses and/or as additional space if required to continue an answer.
 Planning: if you use the spare pages for planning, indicate this clearly at the top of the
page.
 Continuing an answer: if you need to use the space to continue an answer, indicate in
the original answer space where the answer is continued, i.e. give the page number.
Fill in the number of the question that you are continuing to answer at the top of the
page.