Lesson 2.6.1

2.6.1 Possible macroeconomic objectives Quiz: Pearson Edexcel Economics, Unit 2

20 questions

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Lesson 2.6.1, Possible macroeconomic objectives: 20 multiple choice questions for the Pearson Edexcel Economics (9EC0), Unit 2: Theme 2: The UK economy – performance and policies, written with Revision Ninja.

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The 20 questions

  1. Which of the following is a major UK macroeconomic objective?

    • Zero imports
    • Low stable inflation
    • Maximum tax revenue
    • High exchange rates

  2. Which macroeconomic trade-off occurs when demand-side policies reduce unemployment?

    • Lower tax revenue
    • Higher inflation rate
    • Higher exchange rate
    • Lower GDP growth

  3. What term describes a nation's current account inflows broadly matching outflows?

    • Current account balance
    • Monetary neutrality
    • Capital account deficit
    • Budget surplus

  4. A balanced government budget occurs when tax revenue equals which factor?

    • Total imports
    • Government spending
    • National debt
    • Gross domestic product

  5. Which negative environmental outcome often creates a trade-off with economic growth?

    • Reduced resource depletion
    • Increased carbon emissions
    • Increased biodiversity
    • Falling energy consumption

  6. Which macroeconomic objective is directly achieved when the unemployment rate falls?

    • Price stability
    • Low unemployment
    • Environmental protection
    • Balanced budget

  7. Why do some governments target greater income equality as a macroeconomic objective?

    • Reduces tax revenue
    • Lowers economic growth
    • Increases inflation rate
    • Improves social cohesion

  8. If inflation reaches 6% against a 2% target, which objective is failing?

    • Full employment
    • Low stable inflation
    • Current account equilibrium
    • Balanced government budget

  9. What is a potential trade-off of cutting government spending to balance the budget?

    • Increased import demand
    • Rapid wage growth
    • Higher demand-pull inflation
    • Slower economic growth

  10. What state allows an economy to achieve low unemployment without triggering inflation?

    • High budget deficit
    • Negative economic growth
    • Operating near potential
    • Surplus on imports

  11. Why can economic growth cause a trade-off with current account balance?

    • Export demand falls
    • Import demand increases
    • Government spending drops
    • Tax revenue declines

  12. Who officially sets the UK CPI inflation target?

    • The Prime Minister
    • The OBR Chairman
    • The Chancellor
    • The Bank Governor

  13. Why can governments usually not achieve all macroeconomic objectives simultaneously?

    • Constant exchange rates
    • Policy trade-offs
    • Inflexible interest rates
    • Strict budget limits

  14. Which event directly worsens a government's budget balance during a recession?

    • Higher export demand
    • Lower tax revenue
    • Higher interest rates
    • Lower benefit payments

  15. What is the official UK target rate for CPI inflation set by the government?

    • 0%
    • 2%
    • 5%
    • 10%

  16. Which macroeconomic objective focuses directly on long-term environmental sustainability?

    • Economic growth
    • Protection of environment
    • Income equality
    • Budget balance

  17. What is a major risk of running a persistent current account deficit?

    • Lower national debt
    • Higher domestic inflation
    • Excess budget surplus
    • High foreign borrowing

  18. Which policy combination most directly promotes greater income equality?

    • Interest rate cuts
    • Regressive taxation
    • Progressive taxation
    • Deregulation

  19. What trade-off often occurs when an economy achieves very low unemployment?

    • Higher budget surplus
    • Lower import spending
    • Higher inflation
    • Lower GDP

  20. What risk arises when promoting low unemployment while an economy operates above potential output?

    • Current account surplus
    • Demand-pull inflation
    • Deflationary pressure
    • Structural unemployment

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