C5

What does the term GDP per capita measure?
A. Total economic output of a country
B. Average income of an individual in a country
C. Total amount of capital goods in a country
D. Average amount of goods and services produced annually

GDP per capita measures the average income or economic output per person in a country (Correct answer: B).

What is the primary feature of a mixed economy?
A. Complete government ownership of all resources
B. Lack of a private sector
C. Coexistence of private and public sectors
D. Total dependence on international trade

A mixed economy is defined by the coexistence of private and public sectors (Correct answer: C).

Why might a government intentionally devalue its currency?
A. To increase the value of imports
B. To encourage exports and discourage imports
C. To boost foreign investments in the domestic market
D. To prevent inflation and maintain economic stability

Governments devalue currency to make exports cheaper and imports more expensive (Correct answer: B).

Which of the following is a characteristic of the service sector in the UK?
A. Reliance on manufacturing jobs
B. Dominance in industries like finance and banking
C. Decline due to deindustrialization
D. Dependence on agricultural exports

The UK service sector is dominated by finance, banking, and professional services (Correct answer: B).

What was one major effect of global competition on traditional manufacturing industries in the US?
A. Significant expansion in rural economies
B. Increase in labor-intensive industries
C. Decline in heavy manufacturing and industrial output
D. Growth in traditional farming practices

Global competition contributed to the decline of heavy manufacturing in the US (Correct answer: C).

The financial sector is one of the primary contributors to the GDP in the UK. (True/False)

True. The financial sector plays a major role in the UK economy.

A budget deficit occurs when a country exports more than it imports. (True/False)

False. A budget deficit relates to government spending exceeding revenue.

De-industrialization in the UK primarily affected northern England, Scotland, and Wales. (True/False)

True. Industrial decline heavily impacted these regions.

The US government plays no role in a mixed economy. (True/False)

False. The government regulates and intervenes where necessary.

occurs when government expenditures exceed revenues.

A budget deficit happens when government spending is higher than income.

The two main economic systems in the UK and the US are public and sectors.

The economies combine public and private sectors.

A country's measures the total value of goods and services produced annually.

Gross Domestic Product (GDP) measures total annual economic output.

is when the value of a currency decreases due to factors like political uncertainty.

Inflation refers to a general decline in currency purchasing power.

A happens when a country's imports exceed its exports over a period.

A trade deficit occurs when imports are greater than exports.

What is the role of the government in a mixed economy?

The government regulates markets, protects consumers, and supports economic stability while allowing private enterprise.

Why is the financial sector important to the British economy?

It creates jobs, contributes significantly to GDP, and strengthens the UK’s global financial position.

What is the main purpose of measuring the inflation rate?
A. To determine a country's trade balance
B. To track changes in the purchasing power of currency
C. To measure total economic output
D. To evaluate unemployment trends

Inflation rates track changes in the purchasing power of money (Correct answer: B).

What does the term trade deficit mean?
A. Government expenditures exceed tax revenues
B. Exports exceed imports over a specific time
C. Imports exceed exports over a specific time
D. The country faces a drop in foreign investments

A trade deficit occurs when imports exceed exports (Correct answer: C).

How does devaluation benefit a country’s economy?
A. By increasing foreign goods’ affordability
B. By boosting the competitiveness of its exports
C. By reducing its trade surplus
D. By strengthening its currency

Devaluation makes exports cheaper and more competitive internationally (Correct answer: B).

What is a characteristic feature of deindustrialization?
A. Growth in traditional farming
B. Decline in heavy manufacturing industries
C. Expansion of mining activities
D. Rise in agricultural employment

Deindustrialization is marked by the decline of manufacturing industries (Correct answer: B).

What major economic challenge is common to both the UK and the US?
A. Excessive dependence on agriculture
B. Decline in the manufacturing sector
C. Complete absence of service industries
D. Oversupply of skilled labor

Both countries face a decline in traditional manufacturing (Correct answer: B).

A budget deficit occurs when a government spends less than it earns. (True/False)

False. A budget deficit occurs when spending exceeds income.

Devaluation makes exports more expensive for international buyers. (True/False)

False. Devaluation makes exports cheaper.

The service sector in both the UK and US now accounts for a majority of their GDP. (True/False)

True. Services dominate both economies.

Currency depreciation can be influenced by political uncertainty. (True/False)

True. Political instability can reduce currency value.

A occurs when imports exceed exports in a given period.

A trade deficit occurs when imports are greater than exports.

The sector dominates the economies of both the UK and the US.

The service sector is the dominant economic sector.

The is a measure of total economic output divided by the population.

GDP per capita measures average economic output per person.

involves reducing the official exchange rate of a country's currency.

Devaluation is the intentional lowering of a fixed exchange rate.

Growth in has been a key structural shift in both economies.

Service industries have driven modern economic growth.

What is the difference between devaluation and depreciation?

Devaluation is deliberate in fixed systems, while depreciation is market-driven in floating systems.

Why is the mixed economy model significant for the UK and US?

It balances government regulation with private enterprise, supporting growth and stability.

Which of the following is a key feature of a mixed economy?
A. Complete reliance on market forces
B. A blend of private and public sectors
C. Government control of all industries
D. No role for private ownership

A mixed economy combines public and private ownership (Correct answer: B).

What is the primary goal of devaluation?
A. To increase the value of imports
B. To reduce the attractiveness of foreign goods
C. To eliminate trade deficits permanently
D. To strengthen domestic currency in the global market

The goal is to make imports more expensive and exports more competitive (Correct answer: B).

Which factor is most responsible for the decline in traditional manufacturing industries in the UK and US?
A. Lack of raw materials
B. Global competition and technological advancements
C. Increase in agricultural employment
D. Over-reliance on government subsidies

Global competition and technology reduced manufacturing jobs (Correct answer: B).

What does the service sector primarily encompass in the British and American economies?
A. Heavy industry and manufacturing
B. Agriculture and mining
C. Banking, insurance, and professional services
D. Transport and logistics exclusively

The service sector includes finance, insurance, and professional services (Correct answer: C).

Which metric provides insight into economic productivity per person?
A. GDP
B. GDP per capita
C. Inflation rate
D. Unemployment rate

GDP per capita measures productivity per person (Correct answer: B).

The trade deficit occurs when exports exceed imports over a specific period. (True/False)

False. A trade deficit occurs when imports exceed exports.

Currency depreciation in a floating exchange rate system can be affected by external market forces. (True/False)

True. Market forces influence floating exchange rates.

Deindustrialization has led to significant structural shifts in the British and American economies. (True/False)

True. It shifted economies toward services and technology.

The financial sector in the UK is a minor contributor to its GDP. (True/False)

False. It is a major contributor.

A is when a country spends more on imports than it earns from exports.

A trade deficit reflects higher imports than exports.

measures the general increase in prices over time.

The inflation rate tracks rising price levels.

The UK and the US both have economies described as .

Both countries operate mixed economies.

Growth in the has become the dominant economic driver for both countries.

Service sectors now drive economic growth.

is when the government intentionally reduces its currency's official exchange rate.

Devaluation is an intentional policy action.

How does the financial sector contribute to the UK economy?

It creates jobs, supports global trade, and contributes significantly to GDP.

What are the key structural shifts that have transformed the UK and US economies since the 1970s?

Both economies shifted from manufacturing to service- and technology-led growth with greater globalization.