OCR F585 - Revision Questions for Extract 1

Here are some revision questions relating to Extract 1 of the OCR F585 stimulus materials for the June 2010 paper

Revision questions for Extract 1

a. Explain the economic cycle
b. Distinguish between a slowdown, a recession and a depression
c. Explain two main causes of an economic recession
d. Analyse the multiplier and the accelerator effects that may occur when there is a fall in one or more of the components of aggregate demand
e. Explain the ways in which a recession in a country such as the UK may come to an end
f. Using an aggregate demand and supply (AD/AS) diagram explain what can cause an economy to fall into a recession
g. Analyse two macroeconomic policies to stimulate growth / recovery
h. Comment on the extent to which the Bank of England’s policy of ultra-low interest rates has worked in stabilising the economy
i. Define quantitative easing
j. Explain how quantitative easing works
k. Analyse the likely effects of quantitative easing on the UK economy using aggregate demand and supply curves
l. Explain how an economic recession can cause changes in government spending and tax revenues
m. Analyse the effects of a rise in the discretionary budget deficit on the economy using AD/AS and comment on the importance of the fiscal multiplier
n. If the UK had joined the euro, do you think the country would have fared better during the recession?
o. Discuss the extent to which a recession on the supply-side of the economy is crucial in determining the sustainability of a demand-led recovery?
p. Evaluate the alternative policies that can be used to bring an economy such as the UK out of recession