Introduction to the National Economy

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1. Higher interest rates means that inflation would decrease, so consumers and producers can make long term plans, however...

  • repayments on mortgage payments increase
  • long term plans are unrealistic, due to the uncertainty of the economy
  • banks will be more willing to lend
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2. Which of these is an example of proportional tax?

  • National insurance
  • Excise duties
  • Income tax

3. Which of these is an advantage of full employment?

  • Boom and bust economic cycle
  • Labour shortages
  • Improves business and consumer confidence
  • Wage inflation

4. Which of these is NOT a consumer's reason for saving?

  • To pay for future factors of production
  • Saving up for a big spend
  • Back up money for the future
  • To save for retirement
  • Lack of confidence in the economy

5. Which of these do consumers NOT have to pay interest on?

  • Mortgages
  • Credit card overdraft
  • Income
  • Bank loans
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