Select one answer for MCQ

1. When people give up actively looking for work, other things being equal, the

a. labour force participation rate increases.

b. unemployment rate increases.

c. they are no longer counted as unemployed

d. working-age population decreases.

2. When conducting fiscal policy it is important to know whether an economy is closed or open because

a. Expansionary fiscal policy crowds out investment spending only in an open economy.

b. Expansionary fiscal policy is much more effective in an open economy.

c. Expansionary fiscal policy is less effective in an open economy

d. None of the answers is correct, openness of the economy does not impact on the effectiveness of the fiscal policy

Structural budget deficit may represent a better measure of government fiscal position because

a. it is negative when economy is producing at potential GDP

b. it takes into account sustainability of government debt

c. budget deficit varies over the business cycle due to the presence of automatic stabilisers

d. it is positive when economy is producing at potential GDP

The current account deficit can decrease because of

a. An increase in imports

b. decrease in the amount of income going to foreigners who own investments in the coutnry

c. A decrease in exports

d. all answers are correct