10 years ago, a growing economy enjoyed an increase in GDP of $1,000 per worker per year when net investment increased the capital available to each worker by 5,000. The same level of net investment last year was followed by an increase in GDP of $800. Which of the following describes the situation?

a.Investment is falling

b.GDP is falling.

c.The marginal product of capital is rising.

d.The marginal product of capital is falling.

Last year, an economy had 1m registered unemployed and a labour force of 20m. Official statistics forecast a level of unemployment of 0.8m by the year's end while the size of the labour force remains unchanged. If this happens then the unemployment rate will have:

a.Risen by 0.2m.

b.Fallen by 0.2 per cent.

c.Fallen from 5 per cent to 4 per cent.

d.Stays the same

Which of the following is a definite consequence of a high inflation rate?

a.It reduces everyone's real wealth and real income.

b.It can distort price signals.

c.It makes borrowing more expensive.

d.It makes poor people worse off.