economics

1 people plant flowers in a local park.

which statement is correct?

a_ flowers in parks are a public good because people can enjoy them at no charge.

b_ flowers in parks are a public good because they are owned by local people and are not for
profit.

c_ flowers in parks are not a public good if local people can limit the number of visitors to the
parks.

d_ flowers in parks are not a public good if they are individual, not identical, in nature.

2 a government decides that all non-essential businesses must close for three months due to a
disease pandemic.
what is an opportunity cost of this policy?
a _ increased leisure time for employees
b lives that are saved due to reduced disease levels
c_ the production of goods by essential businesses
d_ the loss of goods from the closed businesses

3 the diagram shows an economy’s production possibility curve. the economy produces
combinations of goods and services using all available resources.
services
ie) goods
what does the production possibility curve indicate for goods and services?
a_ constant returns to scale in the production of both goods and services
b_ diminishing returns to scale in the production of both goods and services
c_ increasing returns to scale in the production of both goods and services
d infinite returns to scale in the production of both goods and services

4 which economic conditions are likely to encourage an increase in enterprise?
[ee [rate |s [ser
a high high high high
b high low low high
c low low high low
d low low low low

5 when is the price elasticity of demand for a product most likely to be price elastic?
a alarge percentage of income is spent on the product.
b_ it is measured in the short run.
c_itis anecessity product.
d_ there are few substitutes available.

6 what is most likely to cause a shift in the supply curve for rice?
a achange in the price of the rice
b= achange in the price of meat
c  achange in the size of the rice industry
d  achange in tastes and preferences for rice

7 a free market is in disequilibrium with a shortage of a product.
as the market moves towards equilibrium, what will happen to the price, the quantity demanded
and the quantity supplied?
. quantity quantity
| prise demanded supplied
a decrease decrease increase
b decrease increase decrease
cc increase decrease increase
d increase increase decrease

8 what would not cause a shift in the demand curve for a good?
a achange in the price of a complement
b= achange in the price of a substitute
c  achange in the price of the good itself
d  achange in consumers’ incomes

9 what does joint supply mean?
a_ a firm can choose between producing a range of different goods.
b  agood has multiple uses.
c_ agood is a by-product of the production process of another good.
d consumers consider two goods as complements.

10 when the price of a firm’s product falls by 5%, its total revenue also falls by 5%.
what describes the product's price elasticity of demand?
a elastic
b infinite
c_ unitary
d- zero

11 the table shows how an individual’s weekly consumption of biscuits and coffee varies with
income.
income biscuits coffee
($) (packs) (cups)
100 0 5
150 5 10
which statement about the income elasticity of demand over the range of income shown is
correct?
a_ for biscuits it is greater than 1.
b_ for biscuits it is zero.
c_ for coffee it is less than 1.
d_ for coffee it is unitary.

12 the diagram shows four supply curves.
ww x
rice
p y
zz
oo quantity
which statement about the price elasticity of these supply curves is correct?
a w has elasticity of 0 that will rise as price rises.
b_ xhas elasticity greater than 1 that will be constant as price rises.
cy has elasticity greater than 1 that will fall as price rises.
d_ zhas elasticity of 0 that is constant as quantity rises.

13 product x has a price elasticity of supply (pes) of +2, whilst product y has a pes of +0.2.
which statement about products x and y is correct?
a xhas more substitutes than y.
b a 20% price fall would lead to a greater decrease in production of y than of x.
c_ after a price rise, it is more difficult to increase y’s output than x’s.
d_ after a price fall of 10%, more people would buy x than would buy y.

14 there are 10000 tickets available to watch a sports final at a national stadium. the initial market
equilibrium ticket price is $20. the government decides to fix an effective minimum price for the
tickets.

under which conditions will the consumer surplus for the tickets decrease the most as a result of
the minimum price?
minimum price elasticity
price level of demand
$ for tickets
a 18 -0.5
b 18 -1.5
cc 22 -0.5
d 22 -1.5

15 the diagram shows the impact of a government imposing a unit tax on a demerit good. s is the
supply curve before the tax and s, is the supply curve after the tax.
price
$ s,
s
50 pewnenee nem oy
aq pans dk i
30 4----------5%-4->
204 eye |
. d
0 a
0 5 10
quantity
what is the after-tax revenue of the firm producing the demerit good?
a $100 b $200 c $300 d $500

16 a government has a policy aim of reducing income inequality. it considers three policies.
which combination of policies would be most effective?
an increase in the 5 ‘ a subsidy on
: an increase in the battery-powered
marginal rate of tax ne bich t
from 40% to 50% minimum wage cars which cos‘
over $40000
a yes no no
b yes yes no
cc yes no yes
d no yes no

17 a bangladeshi citizen is employed as a construction worker in qatar. he sends some of his
wages to his family in bangladesh.
how will this be recorded on qatar’s balance of payments?
a as part of the balance of trade in services
b as part of net primary income
cas part of net secondary income
das part of the financial account

18 the table gives data for an economy.
gross domestic product (gdp) 200 220 240 300 320
at current prices ($ billion)
gdp deflator (price index) 100 109 125 149 154
in which year did real gdp decline compared with the previous year?
a 2011 b 2012 c 2013 d 2014

19 which policy is most likely to help to correct an adverse balance on the current account of the
balance of payments?
a abolishing tariffs
b_ depreciating the currency
c_ reducing direct taxes
d_ reducing indirect taxes

20 in year 1, a country’s real gdp was $500 billion. in year 2, nominal gdp rose to $577.5 billion
and the prices increased by 5%.
what is the real gdp in year 2?
a $4.76 billion b $5 billion c $476 billion d $550 billion

21 the table gives details of national income statistics for an economy.
sti
consumption 2000
investment 500
government expenditure 600
net exports -100
net foreign factor income -200
depreciation 100
what is the net national income for this economy?
a  us$2700bn b_ us$2800bn c _ us$2900bn d us$3000bn

22 the table shows the relative price of exports compared with imports expressed as an index
number for an economy (2013 = 100).
2013 100
2014 97
2015 95
which statement about the period 2013-2015 is correct?
a export prices have increased each year.
b_ the general level of prices has fallen.
c_ the terms of trade have deteriorated.
d_ the volume of imports increasingly exceeds the volume of exports.

23 country x and country y each allocate half of their resources towards the manufacturing of
shoes, and the other half towards the manufacturing of t-shirts. resources can be used equally
effectively in the production of both products in both countries.

the table shows the output of shoes and t-shirts produced by both countries using half their
resources in each case, before specialisation.

x 4000 12000

y 2000 8000

total 6000 20000

what can be concluded from the data?
a_ the opportunity cost of country y producing two shoes is four t-shirts.
b_ the opportunity cost of country x producing one t-shirt is four shoes.
c_ the total output of shoes and t-shirts after specialisation would be 24000.
d_ the total output of shoes and t-shirts after specialisation would be 28 000.

24 which government action is least likely to prevent a fall in economic growth?
a additional controls on commercial banks’ lending
b relaxation of rules for immigration of adult population
c_ removal of trade barriers on import of raw materials
d_ training and education of workforce

25 what is the most likely cause of an outward shift of a country’s aggregate demand curve?
a adecrease in the competitiveness of domestically produced products
b  adecrease in the general price level
c  adecrease in the money supply
d  adepreciation of the country’s exchange rate

26 the diagram shows the macroeconomic equilibrium output and price level changing from y and p
to y; and p;.
lras
price
level
p}---------------------\---->
p, rn }
1 ad
; | sad,
[e) ¥,
real output
what could have caused this change?
a adecrease in exports
b adecrease in labour productivity
c_anincrease in the government's spending
d_anincrease in the money supply

27 acountry had a current account surplus of $141bn.
which policy may its government implement to reduce this surplus in the short run?
a adecrease in direct taxes
b adecrease in regulations to encourage more foreign firms to locate in this country
c_anincrease of import duties
d_anincrease in interest rates

28 the diagram shows aggregate demand (ad) and aggregate supply in the short run (sras) and
the long run (lras).
lras_ lras,
price
level
wx
sras b <
sras; y
ad
@ real gdp
which row is correct in causing a shift in the short run aggregate supply from sras to sras,
and the long run aggregate supply from lras to lras;?
| | shift from sras to sras; shift from lras to lras;
a change in ad from w to y increase in population
b decrease in raw material costs improvements in the education of workers
cc decrease in wage rates decrease in immigration
d increase in availability of labour increase in labour productivity

29 the diagram shows that the imposition of a tariff raises a product’s world price from $10 to $14.
domestic supply
price
$
14 psscsemneeacicneg fe oscnamscnsnnae ess
q0 a “a a domestic
, | 1 demand
0 ' i 1 ;
0 20 30 70 100
quantity (millions)
by how much did domestic producers’ income increase as a result of the tariff?
a $120 million b $160million c $220 million d $280 million

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