Acca paper F1 fia diploma in Accounting and Business Accountant in Business (AB/fab) exam kit

S E CTI ON 5
K APLA N PUBLISH ING 
187
4
 
Country X is currently experiencing a significant downturn in its economy. The Government 
of Country X is looking at a number of policy options to try to deal with this. The 
Government does not currently have an overall policy to dealing with the country’s issues. 
(a) 
The following are economics theories: 
A Classical 
theory 
B Supply 
side 
C Demand 
side 
Required: 
For each of the following, indicate whether they relate to classical, supply side or 
demand side economic theory. 
(i) 
The Government should borrow money from the money markets and inject it 
into the economy. Select ONE of A, B or C 
(ii) 
The Government should not interfere with the market and should let it reach 
its own equilibrium. Select ONE of A, B or C 
(iii) The Government should provide worker retraining schemes. Select ONE of A, 
B or C 
(iv) 
The Government should cut state benefits to make work more attractive. 
Select ONE of A, B or C 
(2 marks)
(b) 
Complete the following sentences, with reference to economics theories. 
1 inflation occurs in countries which make significant levels of purchases from foreign 
suppliers and where 2. 
(i) 
Select which ONE of the following fills Gap 1: 
A Monetary 
B Demand-pull 
C Cost-push 
D Imported 
(ii) 
Select which ONE of the following fills Gap 2: 
A 
The money supply rises 
B 
The national currency weakens
C 
The national currency strengthens 
A demand curve may 
1
to the left or right if any of the demand conditions change, 
such as 
2
. 
(iii) 
Select which ONE of the following fills Gap 1: 
A Expand 
B Shift 
C Contract 
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