1.Structural unemployment is most likely to be causedby

A. a recession in the economy.

B. changes in the demand for labourat different times of the year.

C. an increase in the number ofpeople changing jobs.

D. the skills of the unemployed not matching those skillsrequired for the available jobs

2.Which one of the following is most likely to leadto an increase in structural unemployment in the UK?

A. An increase in the size of the UKgovernment’s budget deficit

B. A decision by the Monetary PolicyCommittee (MPC) of the Bank of England to increase interest rates

C. Improving internationalcompetitiveness of the Chinese and Indian economies

D. A fall in consumer confidence which leads to arecession in the UK 

3.If the world economy goes into recession, this islikely to increase unemployment in the UK because

A. the ability of other economies to supply UKindustry with basic commodities will be reduced.

B. the value of goods and services exported fromthe UK will fall.

C. the price of oil and other rawmaterials is likely to rise.

D. the value of the pound will fall on the foreignexchange market.

4.The annual rate of inflation in an economy fallsfrom 5 per cent to 2 per cent but the annual rate of inflation of its maintrading partners remains at 5 per cent. As a result, all other things beingequal, it is likely that in the long term for this economy

A. exports will increase.

B. imports will increase.

C. the current account balance willdeteriorate.

D. withdrawals from the circular flow of income willincrease. 

5.A government attempts to reduce the rate of inflation byreducing aggregate demand (AD). All other things being equal, in the short run,which one of the following combinations, A, B, C or D, is most likely to resultfrom the reduction in AD?