QCAA Economics External Practice Test

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• What does the Gini coefficient measure?
• Which term refers to policy actions that aim to influence economic activity by adjusting the money supply and interest rates?
• Which describes the government choosing what to spend and adjusting tax rates?
• How do income elasticity classify luxury goods versus necessities, and what would you expect for each in terms of sign and magnitude?
• Which option correctly describes a positive output gap?
• Which term captures the overall stance of fiscal policy regarding its impact on economic activity?
• What happens to the demand curve for a normal good when income rises, and how is the shift characterized?
• What does the aggregate demand curve illustrate?
• Which statement best describes the balance of payments and its main accounts?
• Which term is indicated by a decrease in the cyclically adjusted budget deficit or an increase in the cyclically adjusted budget surplus?
• Which tax system increases the tax rate as income rises?
• Name three types of unemployment.
• Which term describes the paths through which a central bank's monetary policy decisions are transmitted to the economy?
• What term describes the budget balance adjusted for the cyclical position of the economy?
• In a simple open economy, what is the relationship between saving, investment, and the current account?
• What is comparative advantage and how does it influence trade patterns?
• Quality of life describes the overall well-being of individuals according to their material living standards and other considerations such as health standards and education levels.
• Dynamic efficiency is defined as the economy's ability to
• Which term is a measure of the money supply including currency and deposits?
• What condition makes a price ceiling binding?
• Name three determinants of long-run productivity growth beyond physical capital.
• One basis point equals 1/100th of 1 per cent or 0.01 per cent.
• If the government increases spending financed by borrowing, what happens to the aggregate demand curve?
• Which term describes deliberate changes in government spending and tax policy?
• Industry-wide changes in the pattern of production that result in certain products production processes and even industries disappearing while new ones emerge.
• What is a key trade-off in fixed exchange rate regimes?
• Which tax is borne by the person or firm on whom it is levied and cannot be passed on to others?
• Define market power and describe one microeconomic consequence.
• Which of the following best describes the Production Possibilities Frontier (PPF)?
• Which concept is defined as the economy's ability to respond to changing consumer demands by reallocating resources to new industries or production processes?
• An increased output gap is associated with which phase of the business cycle?
• Which policy aims at making markets more competitive and preventing the abuse of market power?
• Which tax is levied on aspects of economic activity other than income and can be passed on to others by the firm?
• A Gini coefficient of 0 indicates what?
• Which term describes a measure of lifestyle standards based on material and quantitative indicators such as possessions, income, education and housing standards?
• Which term describes government initiatives that aim to improve efficiency and productivity by targeting specific industries?
• In a tax on a good, if demand is relatively inelastic and supply is relatively elastic, who bears the larger burden?
• The cost of borrowing or reward for lending money, expressed as a percentage of the total amount borrowed or loaned is known as what?
• What is the relationship between the real interest rate and inflation expectations?
• Which concept states that saving more by everyone can reduce overall income and growth?
• A carbon tax is an example of which type of tax?
• Explain the concept of the fiscal multiplier and provide a simple example formula.
• Exchange settlements (ES) balances define which monetary term?
• What term describes the market that deals in short-term discount securities such as Treasury notes, bank bills and promissory notes?
• Identify three sources of long-run productivity growth beyond simply increasing physical capital.
• Which term describes the central bank's use of market operations to influence liquidity in the short-term money market?
• To adopt a more expansionary monetary policy stance; this involves lowering the cash rate to stimulate an increase in economic activity.
• Which term refers to a graph of the relationship between the price of a good and the quantity demanded?
• Which type of unemployment tends to rise during a recession?
• Explain the circular flow model with injections and leakages and name two injections and two leakages.
• Which policy option requires deliberate legislative action to change spending or tax levels?
• Which term describes the time it takes for the policy measure to have its effect on the targeted economic variables and the level of economic activity?
• Which statement best describes contractionary fiscal policy?
• Which policy tool directly limits total emissions by setting a cap and allowing trading among firms?
• What is crowding out in the context of fiscal expansion?
• Which is not a determinant of long-run productivity growth beyond physical capital?
• What effect does a decrease in consumer confidence have on AD in the short run?
• The interest rate that banks pay to borrow funds from other banks on overnight loans in the short-term money market is called what?
• Which policy tool is designed to address environmental costs by raising the cost of pollution?
• If the currency appreciates, what happens to net exports and AD?
• In a floating (flexible) exchange rate regime, what primarily determines the exchange rate?
• Buying and selling of second-hand government securities by the RBA in the short-term money market to implement monetary policy decisions.
• Which policy uses taxation and government spending to influence the level of macroeconomic activity and may be discretionary or automatic?
• Which term describes the curve showing the maximum attainable combinations of two products that may be produced with available resources and current technology?
• What is the government document that outlines planned spending and estimated revenues for the coming financial year called?
• How do demographic changes affect long-run growth potential?
• A measure of the money supply that includes currency, plus deposits in banks, credit unions and building societies, plus funds held by other authorised deposit taking institutions.
• What is the definition of terms of trade and when does it improve?
• An inflow of income into the circular flow from outside sources including government and overseas is called?
• Investment in technology to increase the capacity of firms through the development of new products, processes and services is known as what?
• What term refers to the overall effect of a budget on the level of economic activity?
• What is the term for a budget balance when tax receipts exceed government expenditures?
• Which term describes automatic features of fiscal policy that counteract economic fluctuations without new legislation?
• Which option best describes the incidence of direct taxes?
• Which concept refers to the opinion households and firms have of the future rate of inflation that influences saving, purchasing and investing decisions?
• Which term is the target for the short-term interbank rate?
• If the exchange rate depreciates, what happens to net exports and AD?
• A set of government priorities and objectives used to manage the economy.
• Output per unit of input per unit of time is called what?
• Which factors drive shifts in the Aggregate Demand curve?
• Payments from government to individuals in cash welfare, such as pensions and unemployment benefits, are called?
• In a regressive tax, the tax burden as a share of income tends to do what as income rises?
• Why is the aggregate demand curve downward sloping?
• The percentage change in prices over time, as measured by the consumer price index; also referred to as the consumer inflation rate.
• Dynamic efficiency is the ability of an economy to ...
• Which policy tool is most directly used to shift aggregate demand to the right in the short run?
• The model of the economy based on income flows between sectors in a circular motion is called?
• Output per unit of input per unit of time is called what?
• Outline the transmission mechanism of monetary policy.
• Which term describes the general constraint on policy actions resulting from political processes such as elections and international negotiations?
• Which of the following is included in the current account?
• Which lag describes the delay between policy implementation and its effects on the economy?
• What is the term for a budget balance when government spending exceeds tax receipts?
• A balanced situation with no tendency to change, such as a stable level of income.
• In the expenditure approach to GDP, what do the components C, I, G, and NX represent?
• In an open economy, which of the following statements about injections and leakages is correct?
• Which term describes the period from the time a macroeconomic problem is recognised to the time policy action is taken and has effect?
• Production of goods and services from land, labour, capital and enterprise; another name for GDP.
• Which of the following is a determinant that can shift the aggregate demand curve to the right?
• A binding price floor in the labor market causes unemployment because the floor sets wage above equilibrium, creating excess supply of labor.
• Which term describes the inflow of income into the circular flow from outside sectors such as government or overseas?
• Which statement best describes a characteristic of the monetary policy transmission mechanism?
• What is the Human Development Index and what dimensions does it include?
• Which tax is levied on goods and services and can be passed on to consumers?
• Allocative efficiency is achieved when resources are used to ...
• A sustained rise in productive capacity over a period, typically one year.
• Inflation is defined as a general rise in the price level. Which of the following statements correctly describes how demand-pull and cost-push inflation differ?
• If a country runs a current account deficit, what must be true about its capital/financial account?
• Which two accounts form the main components of the balance of payments?
• Protectionism is the use of government actions to restrict imports.
• Which scenario results in a budget surplus?
• What happens to AD if there is a tax cut increasing disposable income?
• Distinguish between money, money supply, and monetary policy tool categories.
• Which term refers to the government's plan to influence macroeconomic activity and promote structural changes through revenue and expenditure decisions?
• Inflows of money to a sector from other sectors are known as?
• Which statement best characterizes the typical distinction between merit goods and demerit goods?
• What are the criteria such as equity, efficiency, and simplicity used to judge whether a tax is good?
• Outflows of money from one sector to another are referred to as?
• How does a monopolist's pricing outcome compare to perfect competition in terms of quantity, price, and welfare?
• A graph of the proposition that there is a trade-off between inflation and the unemployment rate is called what?
• Optimum population is the ideal population for a nation, judged by characteristics such as population size, structure, education, training and geographic distribution.
• Which statement about public goods and government provision is correct?
• An outflow of expenditure from the circular flow is called?
• What is information asymmetry, and how can it affect efficiency?
• A common critique of aid as a development strategy, and conditions that improve its effectiveness.
• Which of the following is an automatic stabilizer?
• Which term describes the intended overall effect of the monetary policy setting on the level of economic activity?
• What does cross price elasticity of demand tell us about the relationship between two goods and how is it interpreted for substitutes and complements?
• If the cross-price elasticity of demand between two goods is +0.6, the two goods are substitutes; a price rise in one leads to what in demand for the other?
• Which statement best describes the aggregate demand curve?
• Which policy aims at making markets more competitive and preventing the abuse of market power?
• What are automatic stabilizers? Choose the best description.
• Net exports (NX) equals exports minus imports. Which of the following statements is true about NX?
• Productive efficiency is defined as the ability to ...
• Define negative externality and provide a commonly used policy tool to correct it.
• What causes a movement along the aggregate demand curve rather than a shift?
• What term describes fiscal components that automatically adjust to economic conditions without new legislation?
• Differentiate expansionary and contractionary fiscal policy and give one typical effect on AD.
• What is the term for a budget balance when taxation equals government spending?
• What are the defining characteristics of a public good, and why might government provision be warranted?
• What is the effect of globalization on domestic welfare and the distribution of income?
• If the price elasticity of demand is -2, a 5% price increase leads to what percentage change in quantity demanded?
• What term is used when the budget balance is zero, meaning receipts equal expenditures?
• Which term describes government initiatives targeting specific industries to improve competitiveness by boosting efficiency and productivity?
• Which statement describes the relationship between a current account surplus/deficit and capital flows?
• What describes changes in fiscal policy caused by changes in economic activity, not by government action?
• Which item is not a direct component of aggregate demand?
• The revenue that the government obtains from economic activity and participants in that activity, and that is a leakage from the circular flow, is called what?
• In the context of unemployment, which statement best describes the influence of expectations on the natural rate of unemployment?
• A price increase leads to a total revenue increase for a good. What is the price elasticity of demand in this case, and what does it imply for revenue under further price changes?
• A negative output gap corresponds to which phase?
• Who bears the burden of a tax initially—the seller or the buyer—and how is tax incidence determined?
• How is the price elasticity of demand interpreted when the value is -1.5?
• Which statement best describes the short-run and long-run Phillips Curve and the unemployment-inflation trade-off?
• Which term best describes policy actions designed to influence macroeconomic outcomes such as growth and unemployment?
• What distinguishes monopolistic competition from perfect competition?
• In Australia, what is the typical inflation target range?
• What is potential output and what is the significance of the output gap?
• List three determinants of price elasticity of demand.
• Investment in technology to increase the capacity of firms through the development of new products, processes and services is known as what?
• What are the standard components of aggregate demand?
• Which term refers to non-discretionary elements that automatically counterbalance changes in economic activity?
• Which economic concept is commonly used to illustrate the inverse relationship between inflation and unemployment in the short run?
• The rate excluding on-off or seasonal factors that cause short-term volatility in prices measured by the headline rate.
• What are the typical macroeconomic effects of a binding price floor in the labor market?
• What is the difference between nominal GDP and real GDP?
• Which term studies economic behaviour at the level of the individual units of an economy, focusing on decisions by individuals, firms and governments about resource allocation and prices?
• A terms of trade improvement tends to raise a country's real income from trade. Which option best reflects this?
• The limitations on government policy actions resulting from the need to tailor policies to win elections, retain popular support, gain passage of the Senate, and maintain productive relationships with other nations are known as what?
• Which term describes the study of economic behaviour at the level of the individual units of an economy?
• In the long run, the Phillips Curve is vertical at the natural rate of unemployment, implying what about the unemployment-inflation trade-off?
• In the circular flow framework, which component increases national income when government spending rises?
• What term describes how changes to monetary policy affect the interest rate households and businesses face, and flow through to economic activity, employment and inflation?
• Which statement best characterize crowding out and crowding in in public finance?
• If saving exceeds investment, the current account will be in surplus.
• Which term describes the total value of goods and services produced in an economy?
• The concept that increased saving can reduce the economy's income and wealth.
• What is information asymmetry, and how can it lead to market failure?
• Which of the following is a determinant of a shift in aggregate demand?
• What is the term for adopting a more contractionary monetary policy stance by raising the cash rate?
• Which statement is true about flexible vs fixed exchange rate regimes?
• What is the term for the central bank's target range for inflation?
• A level of the cash rate (interbank overnight rate) that the RBA specifies as the target for short-term money market transactions.
• An expansionary fiscal policy stance is indicated by which change in the cyclically adjusted budget?
• If foreign income rises, what happens to AD?
• Which term describes a graph that shows the price and quantity demanded?
• Measures implemented through the Reserve Bank of Australia to bring about changes in aggregate demand by influencing money supply and interest rate, with the main focus on stability in a crisis are known as what?
• Which term refers to the development of a new idea, technology, device or method of production?
• Which policy action lowers the cash rate to stimulate economic activity?
• Intergenerational equity is defined as what?
• Explain the effects of a binding price ceiling on a market with a shortage.
• Which of the following are major participants in the short-term money market?