Explanation​:
LRAS shifts rightward when there is an increase in the quantity or quality of factors of production (FOPs), improvements in technology, increases in efficiency, or improvements in institutions.

Choices I and II: both will shift LRAS to the right. An increase in immigration increases the quantity of labour, and improvements in technology will increase efficiency in production, improving the quality of FOPs.

Choices III and IV are determinants of SRAS that would lower production costs and thus shift the SRAS curve rightward. Indirect taxes and production costs do not affect the quality or quantity of FOPs, so LRAS is unaffected.

Explanation​:
A shift of the SRAS curve to the left constitutes a negative supply shock and will push the economy into a period of stagflation, where the economy is experiencing both inflation and recession. As a result, the inflation rate rises and the unemployment rate rises as well.

Choice A would be the result of AD shifting rightward.

Choice B would be the result of AD shifting leftward.

Choice D would be the result of SRAS shifting rightward.

Explanation​:
When the short-run RGDP equilibrium level exceeds the full employment level of GDP, the economy is experiencing an inflationary gap. Contractionary monetary policy is required to decrease aggregate demand, which involves shifting the AD curve to the left. This shift reduces both the aggregate price level and the short-run RGDP equilibrium level, ultimately helping to close the inflationary gap.

I and IV are examples of contractionary monetary policy.

II and III are examples of expansionary monetary policy.

Explanation​:
In the Keynesian model, wages are assumed to be downwardly inflexible: they may rise in times of inflation, but rarely fall in times of recession. For this reason, the economy could get stuck in a recessionary gap if the government does not intervene. This is because production costs will not fall, and so, aggregate supply will not increase.

Choices A, B, and C are all associated with the new classical/monetarist model, which assumes that recessionary gaps are not persistent.

Options A, B, and C are the three dimensions in which poverty is measured using MPI

Explanation​:
There is often a conflict between achieving economic growth and environmental sustainability. The pursuit of better economic well-being for citizens and increased efficiency of the economic system does not always guarantee environmental sustainability.

Economic growth is often accompanied by job creation and improvements in the standard of living of many citizens, so choices A and B are likely to be true. Economic growth often means an increase in total output produced by the economy, which involves the use of more resources and the production of more waste, so choice C is likely to be true.

It is least likely that economic growth is accompanied by decreases in greenhouse gas emissions, and thus choice D is the least likely to be true.

Explanation​:
Statement I is correct because a fall in consumer confidence will lead to a decrease in consumption expenditure and a decrease in AD, thus creating a deflationary gap.

Statement II is incorrect because a fall in interest rates will make borrowing cheaper (increasing consumption and investment expenditures) thus leading to an increase in AD, creating an inflationary gap.

Statement III is correct because a rise in taxes on corporate profits will lead to a decrease in investment expenditure and a decrease in AD, thus creating a deflationary gap.

Explanation‾Explanation​:
The unemployment rate is calculated using the following equation:

Number of unemployed/Size of labor force × 100

500 000/8 million × 100 = 6.25%

Choice B divides the number of unemployed by the working age population, rather than the size of the labor force.

Choice C adds discouraged workers to the number of unemployed.

Choice D adds discouraged workers and divides by population of working age.

Explanation​:
Statement I is a strength of market-based supply-side policies: they make the economy more efficient and competitive, which improves the allocation of resources.

Statement II is another strength of market-based supply-side policies. Removing restrictions from free market activities is less costly than interventionist supply-side policies.

Statement III is a constraint of market-based supply-side policies, as they can lead to a more unequal distribution of income, and deregulation may increase market failures, negatively impacting the environment.

Statement IV is a strength of interventionist supply-side policies, rather than market-based supply-side policies.

Explanation​:
Choice D is the correct answer because it shows that the equilibrium price level would increase without any increase in the equilibrium GDP level. This occurs when the economy has reached the full employment real GDP and there are no unused factors of production. Increasing AD causes inflation without any growth to real GDP.

Choice A is incorrect because it shows a scenario of growth without any inflation.
Both choices B and C depict a scenario of growth with inflation where both the equilibrium APL and real GDP increase.

Explanation​:
Statement I is a limitation because interventionist supply-side policies involve a long time lag between implementation and seeing the desired effects.

Statement II is not a valid point when discussing the effectiveness of interventionist supply-side policies (these polices are very costly and do burden the government budget).

Statement III is an advantage of interventionist supply-side policies because the government can target the sectors it deems most important for growth.

Explanation​:
An increase in the corporate tax rate will decrease AD by decreasing investment in the economy.

Choices B and D redistribute income in a way that should increase consumption, as the marginal propensity to consume for lower-income households tends to be higher.

Choice C is wrong, as increasing government spending directly increases AD.

Explanation​:
While many governments pursue policies such as tariffs to protect their domestic producers from cheap imports, this is not a goal of supply-side policies, but rather of trade protection policies.

Choices A, B, and D are all goals of supply-side policies.

Explanation​:
Increasing the money supply is a type of expansionary monetary policy that aims to stimulate overall spending and may increase national output and the average price level. It is usually implemented by central banks during recessions, which are characterized by a decrease in price level, a high unemployment rate, or a negative economic growth rate.

Choice A depicts an ideal situation for the implementation of expansionary monetary policy as it could deal with weak demand that caused the recession without significant inflation coming from three successive quarters of deflation.

Choice B is incorrect as the maintenance of a 2$\%$ inflation rate is consistent with achieving inflation targeting by central banks. Expansionary monetary policy would introduce greater volatility in the average price level, causing higher inflation.

Choices C and D both depict a scenario where rapid economic growth is achieved through an increase in aggregate demand. However, implementing expansionary monetary in this case would not result in stable prices and low inflation.

Explanation​:
The goals of a central bank are focused on achieving short-term economic stability. These objectives include achieving low and stable inflation, implementing inflation targeting (choice A), reducing unemployment rates (choice B), and minimizing fluctuations in the business cycle (choice D).

Choice C is the correct answer because it is usually attributed to the goal of the executive branch of government and not the central bank.

Explanation​:
Statement I is correct because deregulation lowers production costs and makes it easier for new competitors to enter the market. These outcomes encourage competition.

Statement II is incorrect because personal income tax cuts fall under market-based supply-side policies relating to incentives, rather than encouraging competition.

Statement III is correct because removing barriers to trade will allow foreign businesses to compete with domestic businesses. This competition incentivises domestic firms to be more efficient.

Statement IV is incorrect because abolishing minimum wages falls under market-based supply-side policies that are aimed at making the labour market more flexible rather than policies to encourage competition.

Explanation​:
A decrease in aggregate demand will create a recessionary gap and push the economy into recession. This creates cyclical unemployment, which is caused by a decrease in overall aggregate demand, and so businesses decrease their demand for labor.

Choices A, C, and D are also types of unemployment, but they are not caused by a decrease in aggregate demand.

Explanation​:
There is often a conflict between achieving economic growth and equity in the distribution of income.

The pursuit of better economic well-being for citizens and increased efficiency of the economic system does not always guarantee an equitable distribution of the benefits.

Choices A and C are also possible conflicts with the goal of high economic growth, while choice B often accompanies high economic growth.

Explanation​:
Changes in taxation and government spending can be directed towards different socioeconomic groups or different branches of industry.

Choice B is wrong because there are many trade-offs in achieving macroeconomic goals. For example, increased economic growth and employment can cause high inflation and/or a current account deficit.

Choice C is wrong as it can take time:

• for governments to recognise that action is required in the first place
• for political bodies to agree on what to do
• for the policy to impact the economy

Choice D is wrong because expansionary fiscal policy will have a greater impact on real output if there is plenty of excess capacity in the economy.

B

Explanation​:
The data shows South Sudan is experiencing negative inflation rates or deflation.

Thus, the equation becomes:
real interest rate = nominal interest rate − ($-$) inflation rate,

making the real interest rate greater than the nominal interest rate (Choice B).

Explanation​:
An excise tax is a tax paid on specific commodities like cigarettes or petrol. It is a tax on expenditure, therefore it is an indirect tax.

Options A, B, and D are examples of direct taxes.

• Option A: as it is a tax on the wealth of an individual.
• Option B: as it is a tax on the income of companies.
• Option D: as it is the tax on the income of individuals.

Explanation​:
Structural unemployment is caused by a decrease in demand for specific labor skills due to increased automation (replacement of workers by machinery) or outsourcing (moving jobs overseas due to cheaper labor costs).

Choices A, C, and D are also types of unemployment, but their causes are different.

Explanation​:
Governments borrow by issuing bonds, which domestic or overseas individuals or entities (such as commercial or central banks) can purchase.

Choice A is incorrect because transfer payments only entail a redistribution of income. They do not directly increase demand for a nation’s goods or services.

Choice B is incorrect, as contractionary fiscal policy lowers inflation, making exports more competitive. Additionally, contractionary fiscal policy suppresses consumer spending, including spending on imports.

Choice D is incorrect, as fiscal policy can redistribute income by adjusting income tax and transfer payment policies.

Explanation​:
The HDI is a composite indicator measuring economic development across three dimensions:

• Standard of living, measured by GNI per capita (PPP) (Choice B)
• Education, measured by mean years of schooling (Choice C) and expected years of schooling
• Health, measured by life expectancy at birth (Choice D)

Explanation​:
Seasonal unemployment is a type or cause of unemployment, not one of the difficulties of measuring unemployment.

Choices A, C, and B are all factors making the measurement of unemployment unreliable.