11.What is meant by the marginal propensity to consume?
12.According to the AD AS model, if the aggregate supply curve is perfectly vertical, what would be the effect on aggregate supply of a shift in the demand curve to the right—on both price and quantity? (Draw a diagram if it helps).
13.Sometimes governments have dropped interest rates very low (close to zero), in the hope of stimulating growth, but without success. What might explain such failure?
14.How do you calculate National Income per capita and why might this figure not give adequate information about people’s actual income?
15.Given an example of a fiscal policy you might use to boost aggregate demand—and explain how it should work.
16.Why did Keynes think it was bad policy to cut wages and government spending in a depression?
17.What is the Multiplier and what role does it play in calculating the effects of government policy?
18.What innovations in production are associated with F W Taylor (so called ‘Taylorism’)?
19.Give an example of one policy a government could use to counteract a balance of payments deficit.
20.What is quantitative easing and why have many governments used it recently?
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