DP Economics Questionbank

Explain how an increase in investment might lead to economic growth.

Discuss the possible consequences of economic growth on living standards, unemployment and inflation.

Using a production possibilities curve (PPC) diagram, explain the effect on economic growth of the “destruction of much of the country’s physical, social and human capital” (paragraph [1]).

Explain the role of improved productivity in achieving economic growth.

Using a production possibilities curve (PPC) diagram, explain how rising numbers of university graduates will affect Bhutan’s potential output (paragraph [5]).

Using an AD/AS diagram, explain how expansionary monetary policy might lead to economic growth (paragraph [1]).

Explain the difference between economic growth and economic development (paragraph [7]).

Explain, using a production possibilities curve (PPC) diagram, an increase in the actual output of an economy.

Discuss the view that economic growth always leads to a rise in living standards.

Define the term economic growth indicated in bold in the text (paragraph [2]).

Using the data in Table 1 to support your answer, identify two reasons why many economists would consider Country A’s economy to be performing poorly in 2012.

Using the information in Table 2 for Country B, calculate the rate of economic growth between 2014 and 2015.

Gardia is aiming to increase its economic growth rate. Explain two sources of economic growth for economically less developed countries.

Using a production possibility curve (PPC) diagram, explain how damage to Fiji’s infrastructure has affected its production possibilities (paragraph [1]).

Explain how a better trained and educated labour force might affect economic growth.

Discuss the view that economic growth always leads to rising living standards.

Explain two possible positive consequences of economic growth in Kanyaland.

Using the information in Table 3, calculate Sierra Leone’s rate of economic growth between 2017 and 2018.

Using Table 1, calculate the unemployment rate.

Using the graph, determine short-run values for the unemployment rate in 2016 and the inflation rate in 2018. Enter your answers in Table 2 below.

Table 2

Explain how an increase in unemployment might lead to a loss of gross domestic product (GDP) and a budget deficit.

Define the term structural unemployment indicated in bold in the text (paragraph [4]).

Calculate the unemployment rate in Fairland using Table 1.

Outline two difficulties in measuring unemployment.

Draw and label a curve that illustrates Fairland’s minimum wage on Figure 6.

Calculate the resulting unemployment among the low-wage workers.

Calculate the unemployment rate for 2012 and for 2013. Enter your results in Table 1.

Using the data in Table 1 to support your answer, identify two reasons why many economists would consider Country A’s economy to be performing poorly in 2012.

Explain why measuring unemployment in a country is difficult. 

Discuss whether the most important consequence of unemployment is a loss of income for individuals.

Explain two causes of structural unemployment.

Discuss the consequences of different types of unemployment.

Explain why cyclical (demand-deficient) unemployment may occur in an economy.

Table 3 provides information relating to the labour market in the country of Buranda.

Table 3

Calculate the unemployment rate in Buranda.

Define the term unemployment indicated in bold in the text (paragraph [6]).

Define the term unemployment rate indicated in bold in the text (Text A, paragraph [6]).

Using the information provided in Table 1, calculate the rate of unemployment for Burundi in 2019.

Using the graph, determine short-run values for the unemployment rate in 2016 and the inflation rate in 2018. Enter your answers in Table 2 below.

Table 2

Calculate the rate of consumer price inflation in 2016.

Using the GDP deflator, calculate the percentage change in real GDP between 2014 and 2015.

Calculate the inflation rate for 2014 and for 2015. Enter your results in Table 1.

Explain two reasons why low and stable inflation is desirable.

Using the data in Table 1 to support your answer, identify two reasons why many economists would consider Country A’s economy to be performing poorly in 2012.

Calculate the cost of the typical basket in 2016.

The cost of the typical basket was $50 in 2017. Calculate the consumer price index (CPI) for 2017.

The consumer price index for 2014 was 101.23. Calculate the rate of inflation between 2014 and 2015 (the base year).

In 2019, nominal GDP was $102 874.55 million. Using data from Table 2, identify whether Country A experienced inflation or deflation or disinflation in 2019.

Discuss the view that the redistribution of income is the most important impact that inflation has on an economy.

Define the term inflation indicated in bold in the text (paragraph [2]).

Explain two causes of demand-pull inflation.

Explain the causes of cost-push inflation.

Discuss the view that deflation is more harmful than inflation.

Identify a period in which Country Y experienced disinflation.

Explain how rising commodity prices and wages might lead to cost-push inflation.

Discuss the possible consequences of deflation for an economy.

Using an AD/AS diagram, explain how “lower prices for food and raw materials” might put downward pressure on inflation (paragraph [1]).

Using Table 3, calculate the rate of inflation in 2017 and in 2018.

Using information from Table 1, calculate North Macedonia’s annual rates of inflation between 2016 and 2019.

Using your answer to part (b)(i), identify the year disinflation set in.

Using an AD/AS diagram, explain how the increase in the price of fuel might have contributed to inflation (Text D, paragraph [5]).

Explain how an increase in unemployment might lead to a loss of gross domestic product (GDP) and a budget deficit.

Explain the difference between a current account deficit and a budget deficit (paragraph [5]).

Define the term budget deficit indicated in bold in the text (paragraph [2]).

Define the term budget deficit indicated in bold in the text (paragraph [2]).

Using the graph, determine short-run values for the unemployment rate in 2016 and the inflation rate in 2018. Enter your answers in Table 2 below.

Table 2

The natural rate of unemployment in Country Alpha is 5 %.

On the diagram draw and label the long-run Phillips curve (LRPC).

The price of oil is expected to rise significantly, causing a sustained increase in energy costs.

Describe the likely effect of this sustained cost increase on the short-run Phillips curve (SRPC).

Discuss the view that economic growth can only be achieved at the expense of other macroeconomic objectives such as a low and stable rate of inflation and equity in the distribution of income.

Discuss the view that there will always be a trade-off between the unemployment rate and the inflation rate.

Explain why there is a possible trade-off between the unemployment rate and the inflation rate in the short run.