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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 81

Economy X is currently operating at its full-employment level of national output. A sudden, significant economic expansion in its primary trading partner nations leads to a substantial increase in the demand for Economy X's exports.

All other things being equal, what is the most likely consequence of this shock for Economy X?

A

A rise in structural unemployment and a decrease in cost-push inflation

B

A negative output gap and a period of deflation

C

A positive output gap and an increase in demand-pull inflation

D

An increase in cyclical unemployment and a fall in the price level

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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