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2.2 How the macroeconomy works: the circular flow of income, aggregate demand/aggregate supply analysis and related concepts

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Question 7

The table below shows the planned change in government spending, the size of the initial output gap, and the size of the multiplier in four economies: Alpha, Beta, Gamma, and Delta.

EconomyPlanned change in government spending (£bn)Initial output gap (£bn)Multiplier
Alpha+150-3602.4
Beta-80+1802.0
Gamma-120+3602.5
Delta+250+4501.8

All other things being equal, in which one of the economies, Alpha, Beta, Gamma, or Delta, will the planned change in government spending eliminate the economy's output gap?

A

Alpha

B

Beta

C

Gamma

D

Delta

Markscheme

2.2 How the macroeconomy works: the circular flow of income, aggregate demand/aggregate supply analysis and related concepts Questions

  1. A Level
  2. /Economics
  3. /2.2 How the macroeconomy works: the circular flow of income, aggregate demand/aggregate supply analysis and related concepts

222 exam-style questions on AQA A Level Economics 2.2 How the macroeconomy works: the circular flow of income, aggregate demand/aggregate supply analysis and related concepts, covering 2.2.1 The circular flow of income, 2.2.2 Aggregate demand and aggregate supply analysis, 2.2.3 The determinants of aggregate demand, 2.2.4 Aggregate demand and the level of economic activity, 2.2.5 Determinants of short-run aggregate supply, and 2.2.6 Determinants of long-run aggregate supply. Each one has a worked solution and a mark scheme showing where the marks go.

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