Economics policy practice questions

Original economics prompts for macroeconomic policy, objectives and evaluation.

Economics causal chain

Policy → transmission mechanism → economic indicator → distributional effect → evaluation.

Question 1 — 6 marks

Explain how monetary policy can influence inflation and economic growth.

Question 2 — 10 marks

Assess the effectiveness of fiscal policy in responding to an economic downturn.

Question 3 — 20 marks

Evaluate the use of macroeconomic policy in achieving internal and external stability.

Replace vague phrases like “helps the economy” with specific indicators: inflation, unemployment, growth, CAD, exchange rate or income distribution.