Economics: Mock/Practice Exam

Associate Level: This documents serves as a mock exam and includes the answers to the following questions:

1. If the economy is on a decline. Output is falling. EXPLAIN one way the executive Government can try and fix it.
2. The economy is growing too fast. The Executive government does not want to stop the growth because elections are due in less than a year. EXPLAIN one way that this growth can be dealt with without the Executive government.
3. If the economy is in an inflationary period what action would fiscal policy most likely take?
4. St. Maarten has an on and off discussion about direct and in direct taxation. Select the type of taxation you think is best for St. Maarten. Defend your answer.
5. There are three ways the government can levy taxes. Select the one you think is best and defend your answer. Outline one way in which you will encourage short term growth. Explain why this will cause growth.
6. Explain one way you can stimulate long term growth. Explain why this will cause growth.
7. This is the Philips curve. When Unemployment goes up inflation goes down and the opposite. Explain what is happening in the economy when the inflation goes from 2% to 8%
8. If the taxes are raised above 30 percent the government will start to collect less. Explain why this is the case.