economics

1. what is part of the economic definition of scarcity?
a high levels of taxation
b low levels of investment
c unequal distribution of income
d unlimited consumer wants

2  acountry’s production possibility curve (ppc) moves from ppc, to ppc,.
consumer
goods
ppc,
e) capital goods
what could cause this movement in the ppc?
better higher lower
education investment unemployment
a false false true
b false true false
c true false true
d true true false

3 a government spends $100m on subsidising wind farm construction instead of spending it on an
increase in healthcare.
which economic concept does this spending decision illustrate?
a external cost
b_ free goods
c_ market disequilibrium
d_ opportunity cost

4 what is an example of a macroeconomic indicator?
a agricultural prices
b_ average earnings in the secondary sector
creal gross domestic product (real gdp)
d total costs of german pharmaceutical firms

5 good x is demanded in two areas, y and z. the table shows the amount of x demanded in these
areas at different prices.
good x per month
5 1000 200

10 800 150

15 600 100

20 400 50

25 200 0
what can be concluded from the table?
a consumers in area y are more willing and able than consumers in area z to buy good x.
b consumers in area y are richer than consumers in area z.
c consumers in area y want the good more than consumers in area z.
d_ there are more consumers living in area y than in area z.

6 which price elasticity of demand (ped) would cause an increase in total revenue if the price of the
good increased?
a perfectly elastic
b _ relatively elastic
c relatively inelastic
d unitary elastic

7 the diagram shows the supply curve for coffee.
supply
price

ee ee

|

oo q, q;

quantity

the price of coffee increases from p, to p,.
how would this benefit firms in the coffee industry?
a_ ahigher price gives firms the ability to increase profits.
b_ ahigher price gives firms the incentive to reduce total fixed costs.
c_ ahigher price will encourage consumers to buy more coffee increasing total revenue.
da higher price will encourage less firms to enter the market to supply coffee.

8 what might be an external benefit of an increase in the number of university graduates in an
economy?
a _anincrease in revenue for the universities from fee-paying students
b_anincrease in tax revenue from a more productive labour force
c_anincrease in graduate employment as a percentage of the working population
d_anincrease in wages for graduates

9 the price of a good increases.
what could cause this?
a_ the cost of raw materials falls.
b_ the incomes of consumers rise.
c_ the price of a complement rises.
d_ the price of a substitute falls.

10 imposing a maximum price for a good is an example of which type of government policy?
a fiscal
b- monetary
c_ regulation
d supply-side

11 savers suffer as inflation rises to 4.4%.
which function of money is most involved in this statement?
a means of deferred payments
b- medium of exchange
c _ store of value
d unit of account

12 one of the functions of money is to act as a measure of value.
what does this mean?
a money allows people to borrow and lend.
b money allows people to save their surplus income.
c money is used to buy goods and services.
d money is used to compare the worth of different goods and services.

13 which trade union activity will be beneficial for firms?
a balloting for industrial action to prevent redundancies
b campaigning to raise wages of trade union members
c instructing workers to strike over a safety dispute
d providing training which raises productivity of workers

14 what is not a variable cost of production?
a cost of fuel
b cost of raw materials
c_ extra pay for working additional hours
d rent of offices

15 what is a definition of a firm’s revenue?
a money received from sales
b _ sales volume
c surplus over costs
d_ tax payments

16 what could cause internal diseconomies of scale for a firm?
a _afall in demand for the products produced by the firm
b  amerger with another firm that results in slower decision-making
c_ spending more on research and development to create new products
d the lack of skilled labour in the geographical area where the firm is based

17 a government decides to leave direct taxes unchanged but to increase indirect taxes.
what is this policy intended to achieve?
a to increase the value of the exchange rate
b _ to redistribute income from higher to lower income groups
c_ to reduce a budget deficit
d_ to reduce the rate of inflation

18 what is the most likely reason to increase government subsidies?
a __ to decrease consumption of a merit good
b_ to increase consumption of a merit good
c_ to decrease consumption of a demerit good
d to increase consumption of a demerit good

19 which people are most likely to gain at a time of inflation?
a companies who sell abroad
b foreign tourists visiting the country
c those living on their savings
d__ those who are repaying borrowed money

20 the government of country z announces an increase in spending on work-place training.
what is the effect of this supply-side policy likely to be?
a adecrease in country z’s employment rate
b- adecrease in country z’s exchange rate
c_anincrease in country z’s economic growth rate
d_anincrease in country z’s interest rate

21 the table shows real gdp in us$ billion for a country over a three-year period.
ear real gdp
¥ us$ billion
1 205
2 215
3 219
what does the gdp data indicate for the country between year 1 and year 3?
a areduction in the rate of inflation
b_anincrease in the rate of economic growth
c_ the existence of economic growth
d_ the existence of economic growth per capita

22 what is a likely consequence of a falling level of unemployment?
a downward pressure on wage rates
b _ increase in welfare benefit payments
crise in absolute poverty
d rise in income tax revenue

23 the diagrams show ltaly’s unemployment rate and gdp per head.
italy’s unemployment rate italy’s gdp per head
” 13 $ 39000
° 9" 38 000
37 000
9 36 000
4 35000
34000
5 33000
2000 2005 2010 2015 2000 2005 2010 2015
year year
when do italy’s unemployment rate and gdp per head rise at the same time?
a 2000-2001
b 2007-2008
c 2009-2010
d 2014-2015

24 during arecession, many people in a city become unemployed and their incomes fall. some people
can no longer pay the rent on their houses or buy the food they need.
what is the effect of the recession in the city?
| | absolute poverty relative poverty
a increases increases
b increases unchanged
c unchanged increases
d unchanged unchanged

25 the peruvian government set itself the target of reducing the number of its population in poverty.
what change does not indicate that the peruvian government had made progress towards this
target?

a arise in employment

b arise in infant mortality

c arise in life expectancy

d_ arise in the level of adult literacy

26 whatis nota reason for the decline in manufacturing industries in developed economies in recent
years?
a growth of newly industrialised competitor countries
b _ invention of automated production methods
c_ rising costs of factor inputs in the steel industry
d_ considerable skill shortages as school-leavers prefer to work in the service sector

27 the table shows a country’s exports and imports.

we
exports of goods 200
imports of goods 190
exports of services 35
imports of services 38

what was the country’s balance of trade in goods and services?

a adeficit of $7 million

ba deficit of $13 million

c_asurplus of $7 million

d_asurplus of $13 million

28 country x exports steel to country y at a price below its cost of production. this has led to a fall in
demand for steel produced in country y.
what is a method of trade protection that country y could use to reduce the imports of steel from
country x?
a apply anti-dumping tariffs
b "increase interest rates
c_revalue the currency
d _ subsidise the export of steel

29 what would increase the demand for a country’s currency on the foreign exchange market?
a adecrease in its inward investment
b- adecrease in its rate of interest
c_anincrease in its exports
d_anincrease in its imports

30 country x has a persistent deficit on the current account of the balance payments.
which policy measure is most likely to improve this situation?
a lowering import quotas
b__ lowering income tax
c lowering import tariffs
d lowering export subsidies

Solve 0455_s23_qp_12