economics

1 aconsumer has $10 to spend. a meal costs $9 and a drink costs $5.
what would describe the situation if the consumer did not have enough money to purchase both
the meal and the drink?
a excess demand
b_ free goods
c_ market failure
d_ the economic problem

2 ~the diagram shows a production possibility curve (ppc) for a country. the country moved from

position x to position y on the ppc.

capital

goods

xx
y
0 consumer goods

what is the most likely reason for this change?
a firms have decided to increase investment in technology.
b new economic resources have been discovered in the country.
c_ the government has brought about an increase in living standards.
d_ the government has encouraged long-term economic growth.

3. which type of factor of production is a railway track?
a capital
b_ enterprise
c labour
d land

4 which statement must be correct if a market is in disequilibrium?
a quantity demanded and quantity supplied are equal.
b_ the government must intervene if anything is to be sold.
c_ there can be no changes to demand or supply.
d_ there is excess supply or excess demand.

5 what is a determinant of price elasticity of demand (ped)?
a availability of stocks of the product
b_ change in the income of consumers
c_ degree of necessity of the product
d_ existence of monopoly

6 what would cause the supply curve for an agricultural product to shift to the right?
a _anincrease in the costs of production
b_anincrease in the price of substitutes
c_anincrease in the price of the good
d_anincrease in the productivity of farms

7 what would increase the price elasticity of supply (pes) of a product?
a _anincrease in the cost of inputs
b_anincrease in the firm’s profits
c_anincrease in the number of close substitutes
d_anincrease in the time a product can be stored

8 the diagram shows a demand curve.
price
peas
papo
a d
o -. 6
quantity
what does the movement from x to y show?
a adecrease in quantity demanded due to an increase in price
b_ adecrease in quantity demanded due to changes in the conditions of demand
c_anincrease in quantity demanded due to changes in the conditions of demand
d_anincrease in quantity demanded due to an increase in price

9  inamarket there is a surplus of a good.
which change would cause the market to come to an equilibrium?
a adecrease in demand
b a fall in price
c_ arise in price
d_anincrease in supply

10 when the price of a good is $10, the quantity demanded is 100 units per day.
which combination of price change and price elasticity of demand will cause the largest increase
in the quantity demanded for the good?
feereharige price elasticity
p 9 of demand

a price falls to $9 0.8

b price falls to $9 1.2

c | price rises to $11 0.8

d | price rises to $11 1.2

11 a function of money is to act as a measure of value.
what does this mean?
a itis used for future savings.
b it is used to compare the worth of different goods.
c_itis used to enable monthly payments for expensive goods.
d_itis used to pay the price of a good.

12 in 2008-2009 the central bank of a developed country reduced interest rates from 5% to 0.5% per
year to stimulate the economy.
how would this policy have affected the amount saved and the cost of borrowing by individuals?
cost of
amount saved :
borrowing
a decreased decreased
b decreased increased
cc increased decreased
d increased increased

13 many small energy providers have closed down due to rising costs.
what is the likely effect of this on the price of energy and choice of energy providers for consumers,
assuming there is no government intervention?
price of choice of
energy energy providers
a decreases decreases
b decreases increases
cc increases decreases
d increases increases

14 what is the most likely goal of a state-owned enterprise providing health services?
a profits
b public satisfaction
c sales revenue
d © survival

15 some governments allow monopoly markets to exist.
what is a reason for this?
a to attract entry into the market
b to fund research and development
c_toincrease prices for consumers
d_ to maximise monopoly profits

16 the table shows the costs incurred by a firm producing computers.
output total costs
(thousands) ($ thousands)
0 20
1 1200
2 1350
3 1450
what are the fixed costs if 3000 computers are produced?
a  $20000 b  $1430000 c $1450000 d $4020000

17 agovernment increases its revenue by higher direct taxation of both personal incomes and company
profits.
what is most likely to be the reason for this increase?
a __tocontrol spending on specific consumer goods
b__ to encourage business investment
c to provide public and merit goods
d to reduce pollution from industrial production

18 income tax in a country gives all individuals an initial tax-free income allowance. any income above
this allowance is taxed at increasing rates as the incomes of individuals rise.
which change to this income tax will be regressive?
a decreasing the lowest rate of tax
b_ decreasing the tax-free income allowance
c increasing the tax-free income allowance
d increasing the top rate of tax

19 a government lowers the rate of interest.
who is most likely to be disadvantaged by this policy?
a house buyers
b- manufacturers
c retailers
d savers

20 what is a supply-side policy measure?
a _atariff on imported goods
b_anincrease in indirect taxes
c  acontractionary monetary policy
d_ the removal of barriers to entry to a market

21 what is the most likely consequence of economic growth?
a more equal income distribution
bmore use of resources
c_ reduced imports
d_ reduced tax revenue

22 in high-income economies, cereal farming is highly productive but few workers are employed.
what could have caused this employment situation?
a a fall in world demand for cereals
bs alack of capital equipment
c_ increased mechanisation of agriculture
d large-scale migration from rural areas

23 who is most likely to benefit during a period of inflation?
a creditors (lenders)
b_ debtors (borrowers)
c fixed income earners
d holders of cash

24 the table shows some economic indicators.
which increase in the first indicator is most likely to lead to an increase in the second indicator?
a budget surplus consumer saving
b | consumer spending unemployment
c inflation trade surplus
d productivity living standards

25 which combination would be most likely to increase the population of a country?
| | birth rates death rates
a high high positive
b high low positive
cc low high negative
d low low negative

26 which economic consequence is most likely to result from an increasing proportion of the population
being over the age of 65?
a government transfer payments will increase.
b_- more facilities will be needed to retrain workers.
c_ the total savings in the economy will increase.
d_ there will be a rise in the economic growth rate.

27 what is most likely to encourage international specialisation?
a _ similarities in climate in different countries
b _ the ability to produce products more cheaply than other countries
c the discovery of oil in a country that had no oil before
d very high international transport costs

28 country x established free trade agreements with other nations.
what would be the intended benefit of such agreements to country x?
a increased labour shortages
b increased tariff revenue
c_ more efficient allocation of resources
d protection from low wage competition

29 acountry’s foreign exchange rate appreciates significantly.
which group in the country will directly benefit from this change?
a agovernment department which only buys locally made goods
b retailers who get all their supplies from foreign producers
c_ workers in local companies that compete with foreign firms in the local market
d_ workers in local companies that sell only in foreign countries

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