Short-answer questions
1. Assume that advances in technology increases the factor productivity of labour and of capital. Explain step-by-set how a new market equilibrium is reached in the markets for each of these factors.
2. What is the 'business cycle' and explain the economic indicators used to determine which phase of the business cycle an economy is in.
3. What is the natural rate of unemployment, and outline the main factors that are thought to influence the natural rate of unemployment.
4. What is the monetary policy (MP) curve, why does it slope upwards, and what factors cause the MP curve to shift?
5. Discuss the main arguments put forward in support of the use of economic stabilisation policies and against the use of economic stabilisation policies.
6. Explain what is meant by the term 'structural budget deficit' and outline the factors that can cause this to occur.