Lesson M1.5.2

M1.5.2 The accelerator, economic cycle and output gaps Quiz: OCR Economics, Unit 6

20 questions

Written by Revision Ninja · Last reviewed 11 October 2026

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Lesson M1.5.2, The accelerator, economic cycle and output gaps: 20 multiple choice questions for the OCR Economics (H460), Unit 6: Aggregate demand and aggregate supply, written with Revision Ninja.

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The 20 questions

  1. What variable directly determines the level of investment according to the accelerator theory?

    • GDP growth rate
    • Interest rate levels
    • Exchange rate changes
    • Business confidence level

  2. What condition defines a positive output gap in an economy?

    • Actual exceeds potential
    • Potential exceeds actual
    • Inflation exceeds target
    • Actual equals potential

  3. What condition indicates that an economy is experiencing a negative output gap?

    • Actual exceeds potential
    • Imports exceed exports
    • Potential exceeds actual
    • Taxes exceed spending

  4. Which phase of the trade cycle occurs immediately after a prolonged period of economic boom?

    • Downturn
    • Recovery
    • Expansion
    • Trough

  5. What term describes the amount of capital needed to generate one unit of output?

    • Multiplier coefficient
    • Marginal propensity
    • Capital-output ratio
    • Capital allowance

  6. If GDP growth slows from 4% to 1%, what happens to net investment under the accelerator?

    • It doubles
    • It rises slowly
    • It remains constant
    • It falls

  7. What term describes the long-term average rate of growth of economy-wide potential output?

    • Actual growth rate
    • Trend growth rate
    • Cyclical growth rate
    • Nominal growth rate

  8. Which economic symptom is most likely to accompany a persistent positive output gap?

    • Falling real wages
    • Cyclical unemployment
    • Demand-pull inflation
    • Excess spare capacity

  9. Which macroeconomic feature is most associated with a large negative output gap?

    • Cyclical unemployment
    • Demand-pull inflation
    • Excess import demand
    • Overheating economy

  10. How do Classical economists believe a negative output gap will be resolved long term?

    • Automatic self-correction
    • Continuous state intervention
    • Permanent fiscal stimulus
    • Interest rate hikes

  11. What term describes the permanent loss of productive capacity caused by a deep downturn?

    • Stagflation
    • Hysteresis
    • Crowding out
    • Devaluation

  12. At which point in the trade cycle is actual output at its lowest relative to potential?

    • Peak
    • Recovery
    • Boom
    • Trough

  13. Which assumption must hold for the accelerator process to operate at full strength?

    • Zero spare capacity
    • Government surplus
    • High inflation
    • Fixed exchange rates

  14. If actual GDP is £2,000bn and potential GDP is £2,050bn, what is the output gap?

    • Negative £100bn
    • Positive £100bn
    • Negative £50bn
    • Positive £50bn

  15. What do Keynesian economists argue about negative output gaps without government intervention?

    • They eliminate debt
    • They self-correct rapidly
    • They can persist
    • They cause hyperinflation

  16. How does the interaction between the multiplier and accelerator affect economic fluctuations?

    • It eliminates them
    • It amplifies them
    • It stabilises them
    • It neutralises them

  17. Which event would cause a permanent upward shift in an economy's trend growth line?

    • Lower interest rates
    • Income tax cuts
    • Higher consumption
    • Technological breakthrough

  18. What term refers to the repeated fluctuations of national output around its long-term trend?

    • Phillips curve
    • Multiplier effect
    • Trade cycle
    • Lorenz curve

  19. A fall in capacity utilisation rates across factories typically indicates which output gap condition?

    • Zero output gap
    • Overheating economy
    • Widening negative gap
    • Widening positive gap

  20. If the capital-output ratio is 2 and output increases by £10bn, what is net investment?

    • £20bn
    • £2bn
    • £12bn
    • £5bn

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