What this practice covers
These questions are drawn from past Cambridge papers, mapped across to this topic because the concept is the same. You answer, you find out immediately whether you were right, and you get the reasoning for the correct option and for each distractor. Wrong answers go to a mistakes locker so you can come back to exactly those.
Practice is free. You need an account only so your progress and your mistakes are still there next time.
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What examiners see students get wrong here
These are the errors that cost marks on long-run consequences of stabilization policies, taken from our own topic notes. Read them before you practise and you will recognise the traps in the questions.
- Drawing the LRPC as downward-sloping. It is vertical at the natural rate.
- Shifting the SRPC when the correct answer is a movement along it. Any AD change moves the economy along the SRPC; only supply shocks and changed expectations shift it.
- Failing to make the AD–AS and Phillips-curve diagrams agree. They describe the same event and must tell the same story.
- Claiming a permanent unemployment–inflation trade-off.
- Treating crowding out as automatic regardless of spare capacity.
- Confusing the budget deficit (a flow) with the national debt (a stock).
- Assuming a widening deficit proves policy has loosened, when the cause may be cyclical.
- Shifting LRAS or the LRPC for a demand-side policy.
Revise it first
If any of the above is unfamiliar, work through the notes before practising: Long-Run Consequences of Stabilization Policies revision notes.