11 mark
What is defined as ‘a reduction in gross domestic product (GDP) for more than two successive quarters’?
deflation
falling wages
recession
rising unemployment
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Economic Growth (Cambridge (CIE) IGCSE Economics)
Exam Questions
3 hours43 questions21 mark
Which increase is most likely to cause a rise in the output of an economy?
hyperinflation
income taxes
interest rates
investment
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31 mark
An increase in which economic indicator is usually taken as the measure of a country’s economic growth?
the balance of payments surplus
the foreign exchange rate
the government budget surplus
the gross domestic product
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41 mark
Economic growth is usually measured by the annual change in
consumer spending.
gross domestic product.
the output of the manufacturing and construction industries.
the retail price index (RPI).
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51 mark
When is a recession said to occur?
Economic growth in the economy falls for at least two consecutive quarters.
Gross domestic product (GDP) falls for at least two consecutive quarters.
The current account of the balance of payment is in deficit for at least two consecutive quarters.
The government experiences a budget deficit for at least two consecutive quarters.
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11 mark
In the past, governments have adopted policies to try to end a recession in their country and increase economic growth.
Which combination of policies is most likely to achieve this?
lower taxes and decrease government spending
lower taxes and increase government spending
raise taxes and decrease government spending
raise taxes and increase government spending
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21 mark
Which combination of policy measures would be effective in reducing the effects of a recession?
a reduction in interest rates and a reduction in income tax
a reduction in interest rates and an increase in income tax
an increase in interest rates and a reduction in income tax
an increase in interest rates and an increase in income tax
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31 mark
A country has the highest GDP per head in the world.
What is this information most likely to suggest about the country?
It has the world’s biggest economy.
It has the world’s fastest economic growth rate.
It has the world’s greatest size of population.
It has the world’s highest standard of living.
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41 mark
In 2016, Romania had an increase in its real gross domestic product of 4.8%.
What must this mean about the Romanian economy?
Living standards increased by 4.8%.
Total consumer income increased by 4.8%.
Total output of all goods and services adjusted for inflation increased by 4.8%.
Total output of manufactured goods adjusted for inflation increased by 4.8%.
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51 mark
What is the most likely result of a sustained increase in Gross Domestic Product (GDP)?
a decrease in living standards
a decrease in the budget surplus
an increase in tax revenues
an increase in unemployment
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61 mark
The table shows the percentage change from 2015–2016 in gross domestic product (GDP) and consumer prices for selected countries.
Which country was suffering from economic recession and inflation?
| country | GDP | consumer prices |
A B C D | Australia Brazil China Japan | +1.8 –2.9 +6.7 +1.1 | +1.3 +8.3 +2.0 –0.2 |
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11 mark
Countries in Europe were in a recession in 2012. World oil prices were expected to fall. In fact in 2012, oil prices rose.
Which combination of international events might explain this?
| Possible causes of the expected fall in oil prices | Possible causes of the oil price rise in 2012 |
A | European industrial production declined | China increased its car production |
B | India invested huge amounts in road building | Japan’s economy had negative growth |
C | Middle East conflicts made oil supplies uncertain | Saudi Arabia increased oil production |
D | New oil exploration in Poland was successful | Demand for alternative fuels increased |
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21 mark
The table shows the rates of unemployment and real GDP growth for an economy in 2014 and 2018.
| 2014 | 2018 |
rate of unemployment(%) | 3 | 10 |
rate of real GDP growth (%) | 4 | –2 |
Which combination of policy measures would be most effective in returning the economy to the 2014 level of economic activity?
a decrease in direct taxes and an increase in the rate of interest
a decrease in government expenditure and an increase in the rate of interest
an increase in direct taxes and a decrease in the rate of interest
an increase in government expenditure and a decrease in the rate of interest
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31 mark
A government uses a mixture of fiscal policy measures and supply-side policy measures to stimulate growth in the economy.
Which combination of policy measures will achieve this?
| fiscal policy measures | supply-side policy measures |
A B C D | increase government expenditure increase government investment increase direct taxation increase interest rates | increase skills training increase indirect taxes decrease unemployment benefit decrease money supply |
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41 mark
The diagram shows the rate of unemployment and the periods of recession in a country between 1978 and 2012.
What can be concluded from the diagram?
Each recession lasted for more than two years.
Recessions occurred at regular intervals.
The unemployment rate peaked in a recession period.
The unemployment rate rose during recession periods.
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51 mark
The chart shows the GDP annual growth rate (percentage), 2012–2016, for Greece.
In which years did Greece experience the longest period of positive economic growth?
2012–2013
2013–2014
2014–2015
2015–2016
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