Section A: Choose the rise, fall, or not affected.

Section B and C: Choose Yes or No.

A. The gross domestic product of a country is the total production of goods and services in an economy over a period of time. The components of GDP are consumption, investment, government spending and net exports. Any change in GDP is likely to have an impact on important variables in the economy such as following. Identify what impact would a FALL in GDP will have on each of the variables. A. The rate of inflation B. The level of cyclical unemployment Rise/Fall / Not C. The level of structural unemployment affected? D. The surplus on the government budget E. The deficit on the current account of the balance of payments B. Can the following be a reason for an increase in an demand in an economy? A large rise in rate of return expected by businesses on new investment An improvement in the balance of payments current account An increase in rates of personal income tax A significant fall in the average proportion of income that is saved Yes/No? C. Will the following reduce supply in an economy? A change to employment employment legislation which reduces the average weekly number of hours that can be worked A steep increase in the price of imported oil and gas An increase in availability of credit as a result of increased deregulation in the financial system An increase in labour productivity as a result of the widespread application of new technology