Lesson 4.2.3.1

4.2.3.1 Economic growth and the economic cycle Quiz: AQA Economics, Unit 2

20 questions

Written by Revision Ninja · Last reviewed 11 October 2026

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Lesson 4.2.3.1, Economic growth and the economic cycle: 20 multiple choice questions for the AQA Economics (7136), Unit 2: The national and international economy, written with Revision Ninja.

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The 20 questions

  1. Long-run economic growth is primarily caused by an increase in which economic variable?

    • Interest rates
    • Aggregate demand
    • Productive capacity
    • Consumer spending

  2. What condition exists when actual real GDP exceeds the economy's maximum potential output?

    • Recessionary gap
    • Positive output gap
    • Trade deficit
    • Negative output gap

  3. Which phase of the economic cycle is typically marked by falling real GDP and rising unemployment?

    • Trough growth
    • Recession
    • Recovery
    • Boom

  4. What condition occurs when actual real GDP is below the economy's productive potential?

    • Negative output gap
    • Inflationary gap
    • Positive output gap
    • Trade surplus

  5. Which financial factor is a primary cause of cyclical instability in an economy?

    • Low national debt
    • Excessive credit growth
    • Stable savings rates
    • Fixed exchange rates

  6. Which of the following is a negative externality commonly associated with rapid economic growth?

    • Increased tax revenue
    • Lower poverty
    • Higher employment
    • Environmental pollution

  7. What term describes the long-run average rate of expansion in real output for an economy?

    • Short-run growth rate
    • Seasonal growth rate
    • Trend growth rate
    • Cyclical growth rate

  8. Real GDP is 1200 billion pounds and productive potential is 1100 billion pounds. What is the output gap as a percentage of potential output?

    • Plus 8.3 per cent
    • Minus 9.1 per cent
    • Plus 12.0 per cent
    • Plus 9.1 per cent

  9. Real GDP rises from 1000 billion pounds to 1030 billion pounds in one year. What is the percentage growth rate?

    • 2.9 per cent
    • 30 per cent
    • 1.5 per cent
    • 3 per cent

  10. A rapid surge in house prices fuelled by lending, followed by a sharp crash, describes what phenomenon?

    • Negative supply shock
    • Asset price bubble
    • Structural unemployment
    • Liquidity trap

  11. Unemployment is rising, business investment is falling and real GDP has fallen for several quarters. Which phase of the economic cycle does this best describe?

    • Recovery
    • Inflationary peak
    • Recession
    • Boom

  12. What is the immediate effect of a sharp rise in global oil prices on short-run aggregate supply?

    • Shift to left
    • No change
    • Movement downwards
    • Shift to right

  13. Which phase of the economic cycle is characterised by high business confidence and rising inflation?

    • Recovery
    • Boom
    • Recession
    • Slowdown

  14. What happens to an economy's trend growth rate when investment in technology significantly increases productivity?

    • It becomes negative
    • It remains unchanged
    • It decreases
    • It increases

  15. Which environmental cost of rapid economic growth makes it unsustainable?

    • Output gap
    • Resource depletion
    • Deflationary pressure
    • Capital widening

  16. Which factor can prevent economic growth from improving overall individual well-being?

    • Lower inflation
    • Increased investment
    • Income inequality
    • Rising employment

  17. Animal spirits and herding behaviour in an economy primarily cause which phenomenon?

    • Long-run growth
    • Structural unemployment
    • Cost-push inflation
    • Cyclical instability

  18. Which policy is most suitable to close a large negative output gap?

    • Expansionary demand-side
    • Deflationary supply-side
    • Contractionary monetary
    • Contractionary fiscal

  19. If actual output growth is 2% and potential growth is 3%, what happens to the output gap?

    • Remains at zero
    • Becomes more positive
    • Becomes more negative
    • Equals 5%

  20. What economic problem is directly created by a sustained positive output gap?

    • Inflationary pressure
    • Deflationary spiral
    • Structural deficit
    • Cyclical unemployment

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