Revision Worksheet - Term 3 2024
Economics - Grade 9
MULTIPLE-CHOICE QUESTIONS
1. Which of the following is a supply-side policy measure?
A A decrease in government spending on education
B A decrease in government spending on healthcare
C An increase in corporation tax
D An increase in the threshold at which people pay income tax
2. What is most likely to conflict with a government's aim of full employment?
A Lower income tax
B Lower spending on imports
C Higher government expenditure
D Higher interest rates
3. What combination of macroeconomic aims is most likely to benefit from a decrease in
government spending?
A A fall in imports and price stability
B Economic growth and full employment
C Full employment and a fall in imports
D Price stability and economic growth
4. Which of the following may reduce the effectiveness of a government policy measure?
A Accurate information
B An absence of economic problems in other economies
C An absence of policy conflicts
D A time lag
5. What is meant by economic growth?
A An increase in exports
B An increase in population
C An increase in real GDP
D An increase in the price level
6. The labor force includes those who are
a) less than 16 years of age
b) in mental institutions
c) not seeking work
d) employed
7. If consumer expenditure is $30bn, government expenditure is $10bn, investment is
$20bn, exports are $16bn and imports are $20bn, what is GDP?
A $56bn
B $76bn
C $80bn
D $96bn
8. What is most likely to cause economic growth?
A An increase in capital depreciation
B An increase in education and training of workers
C An increase in taxation
D An increase in unemployment
9. Which of the following are of working age, but do not form a part of the labour
force?
A People past the age of retirement
B People who are in full-time education
C The self-employed
D The unemployed
10. A country's steel industry is closed down, as buyers switch their purchases of steel
to another country. What type of unemployment will occur as a result of this?
A Cyclical
B Frictional
C Seasonal
D Structural
11. What is a cost of unemployment?
A Higher tax revenue
B Lost output
C Lower productivity
D Reduced inflationary pressure
12. Which policy is most likely to reduce cyclical unemployment?
A A reduction in government expenditure
B A reduction in interest rates
C An increase in direct taxes
D An increase in indirect taxes
13. In 2016, output in Indonesia rose by 5%. Which of the government objectives does
this meet?
A balance of payments stability
B economic growth
C full employment
D price stability
14. Which government policy measure would be most likely to reduce unemployment?
A an increase in income tax
B an increase in interest rates
C a decrease in government expenditure
D a decrease in VAT
15. A government wants to redistribute income from the rich to the poor. Which
combination of policy measures would achieve this?
Progressive taxes Welfare payments
A increase increase
B increase reduce
C reduce reduce
D reduce increase
16. Which government policy measure is most likely to benefit people on a high income?
A increasing housing benefit
B increasing unemployment benefit
C reducing government expenditure on higher education
D reducing income tax
17. 'A tax levied on the profit made on selling assets such as second homes and shares' -
what type of tax is this?
A capital gains
B corporation
C income
D sales
18. India's economy grew by approximately 7% in 2016. What must have increased in
India in 2016?
A gross domestic product
B labour productivity
C the government's budget deficit
D the rate of inflation
19. What is a possible disadvantage of economic growth?
A a depletion of non-renewable resources
B an increase in unemployment
C a reduction in the government's ability to reduce poverty
D a reduction in the productive capacity of the economy
21. The occupational mobility of labour increases. Which types of unemployment is this
likely to reduce?
A cyclical and frictional
B frictional and structural
C structural and cyclical
D cyclical, frictional and structural
22. A worker who loses a job at a petroleum refinery because consumers and business
firms switch from the use of oil to the burning of coal is an example of
a) frictional unemployment
b) structural unemployment
c) cyclical unemployment
d) disguised unemployment
23. A worker who has quit one job and is taking two weeks off before reporting to a new
job is an example of
a) frictional unemployment
b) structural unemployment
c) cyclical unemployment
d) disguised unemployment
24. Insufficient total spending in the economy results in
a) frictional unemployment
b) structural unemployment
c) cyclical unemployment
d) disguised unemployment
25. If a person’s nominal income increases by 8% while the price level increases by 10%
the persons real income
a) increases by 2%
b) increases by 18%
c) decreases by 18%
d) decreases by 2%
26. The unemployment rate in an economy is 8 percent. The total population of the
economy is 250 million and the size of the civilian labor force is 150 million. The number
of employed workers in this economy is?
a) 128 million
b) 150 million 150x8%=12
150-12=138
c) 138 million
d) 160 million
27. Which of the following is GDP measured in actual market prices?
a) Actual GDP
b) Potential GDP
c) Nominal GDP
d) Real GDP
28. Which of the following is GDP calculated in constant or invariant prices?
a) Actual GDP
b) Potential GDP
c) Nominal GDP
d) Real GDP
29. The unemployment rate is:
a) the total number of people unemployed in the economy.
b) the percentage of the population that is unemployed.
c) the percentage of the labor force that is unemployed.
d) none of the above.
30. The labor force is:
a) equal to the size of the population.
b) equal to the size of the adult population.
c) all individuals employed or unemployed and seeking a job.
d) none of the above.
31. Transfer payments are:
a) the total number of inputs used in production.
b) the amount of capital that has been used in a year.
c) government payments to individuals that are not made in exchange for goods or services
supplied.
d) all the above.
32. People who perform any paid work, as well as those who have jobs but are absent
from work because of illness, strikes, or vacations are called:
a) not in the labor force.
b) unemployed.
c) employed.
d) the labor force.
33. People who are not employed but are actively looking for work or waiting to return
to work are called:
a) not in the labor force.
b) unemployed.
c) employed.
d) the labor force.
34. People who are keeping house, retired, too ill to work, or simply not looking for
work are:
a) not in the labor force.
b) unemployed.
c) employed.
d) the labor force.
35. All those who are employed or unemployed are called:
a) not in the labor force.
b) unemployed.
C) employed.
D) the labor force.
Answer the following questions (2 mark)
1. Supply side policy
• Supply Side Policy refers to measures governments take to increase the
availability or affordability of goods and service by increasing aggregate
supply and as a result productive potential.
• Examples of these policy measures includes Improving education and
training, lowering direct taxes and increasing incentives, Deregulation etc
2. Deregulation
De-regulation or liberalisation means the opening up of markets to
greater competition. Elimination of rules and regulations enforced by
law. The aim of this is to increase market supply (driving prices down)
and widen the choice available to consumers.
3. Subsidies are financial grants made to industries that need it. More
subsidies mean more money for producers to produce more, thereby
increasing supply.
4. GDP is the standard measure of the total goods and services produced in a
country during a certain period.
GDP=C+I+G+(X-M)
C= CONSUMPYION,
I= investment,
G= Government expenditures/spending,
X= exports,
M= imports.
5. Circular flow of income
It shows the redistribution of income in a circular manner between the
production unit and households.
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6. Value added
Value added is the difference between the value of goods and services
produced and the cost of intermediate inputs.
7. Transfer payment
a payment made or income received in which no goods or services are
being paid for, such as a benefit payment or a subsidy.
Transfer payments commonly refer to efforts by local, state, and federal
governments to redistribute money to those in need.
8. Balance of payment
The balance of payments (BOP) is the method by which countries measure all
of the international monetary transactions within a certain period. The BOP
consists of three main accounts: the current account, the capital account, and
the financial account.
9. Nominal GDP
Nominal gross domestic product (GDP) is GDP given in current prices,
without adjustment for inflation.
10.Real GDP
Real GDP is an inflation-adjusted measurement of a country's economic
output over the course of a year.
11.Subsistence agriculture
farming or a system of farming that provides all or almost all the goods
required by the farm family usually without any significant surplus for sale
12.Recession
A recession occurs when GDP fall over a period of 6 – months. This is a period
of negative output.
13.IMF
The International Monetary Fund (IMF) works to achieve sustainable growth and
prosperity for all of its 190-member countries. It does so by supporting economic policies
that promote financial stability and monetary cooperation, which are essential to increase
productivity, job creation, and economic well-being
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14.Sustainable economic growth
Sustainable growth is growth of national output that meets the needs of
the present without compromising the ability of future generations to
meet their own needs.
15.Employment
Employment is defined if a person in the labour force is in some occupation,
business, trade, or profession.
16.Unemployment
Unemployment is a situation where people in the labour force are actively
looking for jobs but are currently unemployed.
17.Flexible labour force
A flexible workforce refers to a group of employees who have the ability to adapt
to changing work demands and schedules. These workers have the ability to work
remotely, have flexible hours, or work on a project-based or contractual basis
18.Economically active
The economically active population comprises all persons who, during a
specific period, furnished the supply of labour for the production of
economic goods and services.
19.Economically Inactive
Economically inactive people are those who are neither employed nor
unemployed; they're not in paid full-time or part-time work, but they're
also not looking for a job or available to start work.
20.Labour market participation rate
The labour force participation rate is an estimate of the number of people
actively engaged in the workforce.
21.Claimant count
unemployed people can file for unemployment claims
(benefits/allowances provided to the unemployed job seekers) by the
government. The government can count the total number of unemployment
claims made in the economy to measure unemployment.
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22.ILO-labour force survey measure
Labour surveys (Also called as ILO International labour organization)
economies conduct surveys among the entire labour force to collect data
about it. This will include data on the number of people unemployed.
Formula for Unemployment rate
𝒖𝒏𝒆𝒎𝒑𝒍𝒐𝒚𝒎𝒆𝒏𝒕 𝒓𝒂𝒕𝒆
𝒏𝒖𝒎𝒃𝒆𝒓 𝒐𝒇 𝒑𝒆𝒐𝒑𝒍𝒆 𝒖𝒏𝒆𝒎𝒑𝒍𝒐𝒚𝒆𝒅
=
𝒕𝒐𝒕𝒂𝒍 𝒏𝒖𝒎𝒃𝒆𝒓 𝒐𝒇 𝒑𝒆𝒐𝒑𝒍𝒆 𝒊𝒏 𝒕𝒉𝒆 𝒍𝒂𝒃𝒐𝒖𝒓 𝒇𝒐𝒓𝒄𝒆
23.Frictional employment
this occurs as a result of workers leaving one job and spending time looking
for a new one. This type of unemployment is short-lived.
24.Structural unemployment
this occurs due to the long-term change in the structure of an economy.
Workers end up having the wrong skills in the wrong place – causing them
to be unfit for employment.
25.Cyclical unemployment
this occurs as a result of fall in aggregate demand due to an economic
recession. When demand falls, firms will cut their production and workers
will lose their jobs. If economy goes through there will be a nation-wide
rise in unemployment (cyclical unemployment).
26.Search unemployment
Unemployment which occurs while an unemployed worker searches the
job market for an acceptable job offer
27.Casual unemployment
The Casual Unemployment is when the worker is employed on a day-to-
day basis for a contractual job and have to leave it once the contract
terminates.
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28.Seasonal unemployment
this occurs as a result of the demand for a product being seasonal. For
example, the demand for umbrellas will fall in non-monsoon seasons, and
so workers in umbrella manufacturing firms will become unemployed over
those seasons
29.Regional unemployment
Regional unemployment occurs in certain areas of the country
because of products or industries that exist there
30.Technical unemployment
this has rose in recent times as industrial robots, machinery and other
technology are being substituted for labour, leaving people jobless.
31.Stock
• The number of people unemployed in one time is a stock.
• It is influenced by two factors
The rate of flow of people into unemployment
The time period for which they are unemployed.
Answer the following questions (5 mark each)
1. Explain how the unemployment rate may fall while the number of
people employed
It is possible for the unemployment rate to fall while the numbers employed
also decrease. This could occur if the size of the labour force fell. For
example, the labour force may initially be 30 m, with 27 m people being
in employment and 3 m being unemployed. In this case, the unemployment
rate would be 3 m.
30 m ×100 =10%. If then the labour force fell to 25 m, employment could
fall to 23 m, while the unemployment rate would fall to 2 m ×100 =8%..
2. Analyse how a cut rate of interest could reduce unemployment.
A cut in the rate of interest may reduce unemployment as it may increase
total demand. A lower interest rate may encourage households to borrow
more and discourage them from saving and so consumer expenditure may
rise. It may also stimulate investment as it will be cheaper for firms
to borrow, less rewarding for them to save and will increase their expected
sales. Higher total demand will encourage firms to expand their output and
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so they are likely to employ some of those looking for jobs. Higher total
demand will reduce cyclical unemployment.
3. Discuss whether or not unemployment is harmful!
• Unemployment does provide some flexibility, making it easier for
expanding firms to recruit more workers.
• It can also keep inflationary pressure down as rising total demand
can be matched by higher output.
• the workers may become reluctant to press for wage rises for the
fear of easy replacement by the unemployed labour.
• It is generally thought, however, that the costs of unemployment
exceed any benefits. Unemployment imposes a number of costs on
an economy.
▪ A key one is lost output. If the unemployed had been in work, more
goods and services could have been produced and hence living
standards could have been higher.
▪ Potential tax revenue is lost, which may mean that taxes may be
imposed at higher rates.
▪ The government may have to spend additional money on
unemployment benefits, which could have been used for other
purposes.
▪ The government may also have to spend more on healthcare and
other benefits. This occurs as people tend to suffer from poor
physical and mental health and lower income when unemployed.
Unemployment can also cause unemployment.
▪ The longer people are out of work, the greater the risk there is that
they will lose their skills, their confidence and their motivation to
work. They may become discouraged workers.
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4. Explain the types of unemployment.
(reference ppts/book)
Three broader types are
i. FRICTIONAL UNEMPLOYMENT
ii. STRUCTRUAL UNEMPLOYMENT
iii. CYCLICAL UNEMPLOYMENT
1. FRICTIONAL UNEMPLOYMENT
this occurs as a result of workers leaving one job and spending time
looking for a new one. This type of unemployment is short-lived.
i. Seasonal unemployment
this occurs as a result of the demand for a product being seasonal. For
example, the demand for umbrellas will fall in non-monsoon seasons, and
so workers in umbrella manufacturing firms will become unemployed over
those seasons.
ii. Casual unemployment
The Casual Unemployment is when the worker is employed on a day-to-
day basis for a contractual job and have to leave it once the contract
terminates.
iii.Voluntary unemployment
when people choose not to work for various reasons – they want to pursue
higher education, would like to take a break etc. Because they’re not
actively looking for work, voluntarily unemployed people do not belong to
the labour force.
iv. Search unemployment
Unemployment which occurs while an unemployed worker searches the
job market for an acceptable job offer.
2. STRUCTRUAL UNEMPLOYMENT
• this occurs due to the long-term change in the structure of an
economy. Workers end up having the wrong skills in the wrong
place – causing them to be unfit for employment.
• This can be explained by dividing it further
i. Technological unemployment
this has rose in recent times as industrial robots, machinery and other
technology are being substituted for labour, leaving people jobless.
ii. Sectoral unemployment
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unemployed caused as a sector/industry declines and leave its workers
unemployed.
3. CYCLICAL UNEMPLOYMENT
• this occurs as a result of fall in aggregate demand due to an
economic recession. When demand falls, firms will cut their
production and workers will lose their jobs.
• If economy goes through there will be a nation-wide rise in
unemployment (cyclical unemployment).
• Graphically it can be seen economy is operating below full
employment level of national output.
• In this situation govt. will increase aggregate demand through
fiscal policy (either by reducing taxes or increasing expenditures).
5. Explain 2 consequences of a recession.
a. One consequence of a recession is very likely to be an increase in
unemployment. With less output being produced, fewer workers will
be needed and so firms are likely to dismiss some of their workers.
b. Another possible consequence is a fall in the price level. If the
recession has been caused by a fall in total demand, firms may lower
their prices in a bid to increase demand.
6. Analyse the relationship between economic growth and the budget
balance.
▪ Economic growth would be expected to reduce a budget deficit or
increase a budget surplus. This is because higher output and so
higher incomes and more employment would increase income tax
revenue. Higher incomes are usually accompanied by higher
expenditure and so a rise in indirect taxes. Economic growth may
also generate higher profits and so increase revenue from
corporation tax.
▪ As well as increasing tax revenue, economic growth may reduce
government spending. With lower unemployment, less will be spent
on unemployment benefit and other benefits associated with low
income. With higher incomes, people may also be healthier due to
better nutrition and housing conditions.
▪ A healthier population may reduce government spending on
healthcare.
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7. Discuss whether or not an increase in government spending will lead
to economic growth.
An increase in government spending may lead to economic growth.
If a government spends more on, for example, defence, it will directly
increase aggregate (total) demand. If it increases benefits, it will allow the
recipients to spend. In the case where an economy is operating below its
productive capacity, an increase in total demand can result in an increase
in output. More demand will encourage firms to produce more and to do
so they will use previously unemployed resources. Figure 1 shows this
outcome using both an AD/AS diagram and a PPC diagram. Total demand
and the production point are moving closer to full capacity. As a result,
actual economic growth is achieved.
8. Explain whether a cut in income tax a fiscal policy measure or supply
side policy is measure.
A cut in income tax is a fiscal policy measure if it has been made with
the intention of increasing total demand. A reduction in income tax will
increase households’ disposable income, which may encourage them to
spend more. It might also be a supply-side policy measure if the intention
is to increase total supply. A lower rate of income tax increases the reward
from working and so may increase the supply of labour, which would
increase productive potential.
In some cases, the policy measure may be used in an attempt to achieve
both an increase in total demand and an increase in total supply.
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9. Analyse using the PPC, the intended outcome of a supply side policy
measure?
A supply-side policy measure has the intention of increasing total supply.
A higher total supply will increase an economy’s productive potential.
An ability to make more products will mean that the economy’s
production possibility curve will shift to the right as shown in the
diagram below.
10.Discuss whether or not supply-side policy measure always reduce
unemployment?
▪ One key supply-side policy measure, education and training,
would be expected to reduce unemployment. If workers are better
educated and trained, they will be more skilful and more productive.
This will make them more attractive to employers. It should also
mean that they are more occupationally mobile. Should they lose a
job, they should be able to find another one relatively quickly.
▪ The intention behind cutting income tax and lowering
unemployment benefit may be to reduce unemployment by
making work more attractive relative to depending on
unemployment benefit. If the gap between pay and unemployment
benefit is widened, some of the unemployed may search more
actively for jobs. I
▪ however, if there is a lack of demand for labour or if the
unemployed do not have the skills to fill any job vacancies,
unemployment will not fall.
▪ One of the aims of labour market reforms is also to reduce
unemployment. If, for instance, it is made easier for firms to hire
and fire workers, firms may be encouraged to employ more workers.
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There is, nevertheless, the possibility that removing employment
protection may increase short-term unemployment as workers may
be made redundant on a more frequent basis.
▪ It is debatable whether privatisation will increase or decrease
unemployment. It may increase employment if the industry responds
to the greater exposure to market forces by becoming more efficient
and increases its sales.
▪ Privatisation, on the other hand, may not increase efficiency. The
industry may just change from a state-owned monopoly to a private
sector monopoly. If so, competitive pressures on the industry will
not increase and it may not become more efficient. A private sector
industry may also be less concerned about keeping employment high
than a state-owned industry.
▪ Indeed, it may be prepared to reduce output in order to push up the
price. If it takes such action, unemployment would rise.
▪ So, it cannot be concluded that supply-side policy measures will
always reduce unemployment. It would be hoped that they would,
but there is a chance that some may increase unemployment.
▪ The outcome will be influenced by the supply-side policy measures
used and how economic agents respond to them.
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INDIVIDUAL AND GROUP ACTIVITIES
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Reference from ppts
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