economics

1. what is the cause of scarcity in an economy?
a __ high employment levels
b high investment levels
c unlimited resources
d_ unlimited wants

2 what does a point on a production possibility curve for an economy represent?
a economic growth is falling
b _ inefficient use of resources available
c maximum output possible with current technology
d__ total demand for goods and services

3 what is most likely to increase enterprise as a factor of production in an economy?
a adecrease in government spending on education
b-adecrease in regulation on firms
c_anincrease in emigration
d_anincrease in taxation on firms

4 which economic activity would be classified as macroeconomics?
a households spend less on holidays abroad
b_ income tax is increased by the government
c_ wages rise for construction workers
d_ world coffee price rises due to poor weather

5 the diagram shows the effect of a decrease in price on the demand for a product.
d
price
p, ee
i | d
0 q, @
quantity
demanded

what does the arrow on the diagram illustrate?
a_ contraction in demand
b_ decrease in demand
c_ extension in demand
d_ increase in demand

6 what is the correct formula to calculate price elasticity of supply?
a the percentage change in price divided by the change in quantity supplied
b_ the percentage change in price divided by the percentage change in quantity supplied
c_ the percentage change in quantity supplied divided by the change in price
d__ the percentage change in quantity supplied divided by the percentage change in price

7 what is the most likely cause of a product having a price elasticity of demand greater than one?
a_ the product has a close substitute.
b_ the product is a habit-forming good.
c_ the product is a necessity.
d_ the product requires only a small proportion of consumer income.

8 for some illnesses, wearing a face mask has a benefit as it could prevent people from getting
infected. not all people are willing to wear face masks.
based on the statement above, why would there be an inefficient allocation of face masks in the
free market?
a consumers in the free market only consider private costs and benefits.
b face masks are non-rival and non-excludable.
c_ there is abuse of monopoly power by the producer of face masks.
d_ there is perfect information in the free market.

9 what would bring about a movement upwards along the supply curve for rice?
a adecrease in the productivity of farmworkers
ba decrease in the profitability of rice production
c_anincrease in consumers’ incomes
d_anincrease in farmworkers’ wages

10 a government decides to reduce air pollution in city centres by giving financial assistance to bus
companies, reducing their costs of production and prices for passengers.
which type of policy measure is this?
a amaximum price
b  aminimum price
c  asubsidy
d_ regulation

11. what would be least likely to act as a store of value during a period of rapid inflation?
a cash
b_ gold
c property
d shares

12 acountry’s central bank raised the rate of interest from 1% to 4% per year.
how would this change have affected the amount saved and the cost of borrowing by individuals?

amount cost of
saved borrowing

a decreased decreased

b decreased increased

c increased decreased

d increased increased

13 which factor would not increase the bargaining strength of a trade union to raise wages?
a arapidly growing economy
b high union membership in the industry
c legislation limiting strike action
d_ workers are in short supply

14 which conditions are most likely to attract small firms to enter a market?
the market for fixed uni of
entering the
the product ‘
industry

a local high

b local low

cc national high

d national low

15 the diagram shows a firm's total cost (tc) curve.
tc
a
cost !
$
10
z 10
units of output
what is the average variable cost if the firm produces 10 units of output?
a $4 b $5 cc $40 d $50

16 the table shows the units of factors of production that a firm needs to employ for two different levels
of output.
5 2 4 100
10 4 8 150
what is the firm experiencing?
a constant returns to scale
b_ diseconomies of scale
c_ external diseconomies of scale
d_ external economies of scale

17 what is an example of a government macroeconomic aim?
a aminimum of 10 years of schooling
b_asales tax of 10% on consumer goods
c_atarget rate of 2% inflation
d increasing pay for nurses

18 government policy measures can affect economic activity in a country.
which pair of monetary policy measures would be likely to increase employment?
a_ depreciate foreign exchange rates and increase education spending
b_ increase money supply and reduce interest rates
c provide subsidies and grants and lower sales tax
d_ reduce income tax and improve infrastructure

19 what would be most likely to encourage saving?
a_ arise in the exchange rate
b_ arise in the goods and services tax rate
c_ arise in the income tax rate
d arise in the interest rate

20 the government of a country operating at full employment increases its spending on education and

training.
how does this affect the likelihood of achieving low inflation in the short run and the long run?
[sete [in

a less likely less likely

b less likely more likely

c more likely less likely

d more likely more likely

21 a government has introduced a tax on a necessity. producers have passed on a large proportion
of this tax to consumers in the form of higher prices.
which row is correct?
price elasticity
a ipa oia of demand
a direct price elastic
b direct price inelastic
c indirect price elastic
d indirect price inelastic

22 what is most likely to lead to an increase in structural unemployment in a country?
a_ the country is experiencing a period of negative economic growth.
b_ the country is experiencing a period of positive economic growth.
c_ the country is moving from producing primary sector goods to secondary sector goods.
d_ the country is moving towards more flexible labour markets.

23 which citizens are most likely to benefit in a period of rapid inflation?
a citizens who are receiving fixed state benefits
b_ citizens who earn fixed incomes
c citizens who have lent money at a fixed rate of interest
d citizens who have borrowed money at a fixed rate of interest

24 which statement is correct about the human development index (hdi) and real gdp?
a_ hdi includes exports and imports while real gdp does not.
bhd includes life expectancy and years of schooling while real gdp does not.
chd includes the level of output while real gdp does not.
d_ hd includes the level of unemployment in the population while real gdp does not.

25 other things being equal, what will cause a population both to increase and to age?
a afall in the birth rate
b a fallin the death rate
c arise in both the birth rate and the death rate
d arise in the death rate and a fall in the birth rate

26 which change would be unlikely to be found in a country as it develops?
a_anincrease in average incomes and a decrease in unemployment
b_anincrease in manufacturing production and an increase in shipping services
c_anincrease in subsistence farming and a decrease in financial services
d_anincrease in tourism and an increase in the export of agricultural products

27 it is cheaper for developed economies to buy some cereals from developing economies than to
produce them domestically.
what might reduce international trade in cereals?
a cereals become less popular with the population of developing economies.
b developed economies place an embargo on cereal imports to prevent disease.
c governments tax cereal production in developed economies.
d_ producers of cereals in developing economies are subsidised.

28 acountry imposes a quota on imported cars.
what is the most likely outcome of this action?
a adecrease in the domestic output of cars
b- adecrease in the domestic price of cars
c_anincrease in the tax revenue from car imports
d_anincrease in the total revenue of domestic car producers

29 an argentine product initially sells in the us for $50 when the exchange rate between the two
countries is 5 pesos to 1 dollar.
the exchange rate changes to 10 pesos to 1 dollar and the price of the product remains unchanged
in argentina.
what will be the new price of the product in the us?
a $5 b $25 c $100 d $500

30 which policy measure is most likely to reduce the current account deficit of the balance of payments
of an economy?
a_ decrease the level of subsidies to domestic producers
b "increase infrastructure spending to increase domestic productivity
c increase interest rates
d_ remove import tariffs

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