economics

1. which economic question is least likely to arise as a result of scarcity?
a for whom will we produce?
b how will we produce?
c what will we produce?
d when will we produce?

2 what is opportunity cost?
a the allocation of resources in an economy
b _ the cost to the individual when they consume a good
c the lack of goods and services available to satisfy unlimited wants
d_ the next best alternative forgone when making an economic decision

3 the diagram shows a production possibility curve (ppc) for an economy that produces two goods,
xand y.
which point shows the greatest opportunity cost of producing one more unit of good x?
a
good y
b
cc
o good x

4 a period of bad weather leads to a failure of the rice crop.
what is the effect on the market for rice?
a ashortage of rice and a fall in its price
b_ashortage of rice and a rise in its price
c_ asurplus of rice and a fall in its price
d_asurplus of rice and a rise in its price

5 the diagram shows a change in demand for coffee.
price of
coffee —
d, d,
o ,
quantity of coffee
demanded per month
what would cause the demand for coffee to change from d, to d5?
a agood coffee harvest
b arise in the price of substitute drinks
c_ arise in the wages of coffee workers
d  asuccessful advertising campaign for tea

6 the table shows the supply for a product at different prices.
price supply

($) (units)

10 120

12 160

14 200

16 240

18 280
if the price changes from $12 to $14, what will be the change in supply?
a supply will contract by 40 units and there will be a movement down along the supply curve.
b_ supply will contract by 200 units and there will be an inward shift of the supply curve.
c supply will extend by 40 units and there will be a movement up along the supply curve.
d_ = supply will extend by 200 units and there will be an outward shift of the supply curve.

7 which changes would move the equilibrium in the diagram from point x to point z?
is)
z
price
xx
d
ie) quantity
a adecrease in demand with a decrease in supply
b_ adecrease in demand with an increase in supply
c_anincrease in demand with a decrease in supply
d_anincrease in demand with an increase in supply

8 when the price of shirts rises from $8 to $10, the demand for shirts falls from 1000 to 500.
what is the value of the price elasticity of demand for shirts?
a greater than 1
b unitary
c less than 1
d = zero

9 agovernment intends to build a new international airport in an area of outstanding natural beauty.
what would be an external cost of this decision?
a __ the cost of importing construction materials
b_ the enjoyment lost by those unable to use the countryside
c the increase in profits for local businesses
d_ the wages paid to the construction workers

10 what is an important role of a central bank?
a attempts to achieve price stability
b issues credit cards
c provides loans to producers
d_ provides savings accounts for consumers

11. how would a change in the demand for labour affect the labour market in an occupation?
change in demand change in the change in quantity
for labour equilibrium wage | of labour supplied
a decrease decrease extend
b decrease increase contract
cc increase decrease contract
d increase increase extend

12 a fast-food multinational bought a food-ordering website, in order to allow the multinational’s
customers to download menus and make advance payments.
which term best describes this merger?
a __ backward vertical
b_ conglomerate
c forward vertical
d horizontal

13 the diagram shows the average total cost (atc) for a firm, in the long run.
~ \
qni«
atc,
ie) output
what would cause the shift from atc, to atc,?
a difficulties in controlling the firm
b_ external economies of scale
c managerial economies of scale
d_ technical economies of scale

14 what is most likely to encourage capital-intensive production methods in a low-income economy?
a_ expensive capital equipment costs
bs grants from foreign aid programmes
c _ supplies of local low-cost labour
da shortage of highly trained supervisors

15 a firm’s average revenue is $20. it sells 1000 units.
what are the firm’s total revenue and the price of the product?
total revenue price

($) (8)
a 20 20
b 1000 50
cc 20000 20
d 20000 50

16 acompetitive industry becomes a monopoly.
what is the most likely advantage for consumers?
a consumer choice may increase
b_ economies of scale may reduce prices
c more goods may be produced
d prices may be set by market forces

17 what will cause real gdp to rise in a country?
a_ nominal gdp rising at a faster rate than employment
b_ nominal gdp rising faster than inflation
c nominal gdp rising faster than the population
d nominal gdp rising

18 what is the money supply?
a the total quantity of foreign currency available within the economy
b _ the total quantity of money available within the economy
c the total quantity of money issued by the central bank
d the total quantity of money within commercial banks

19 which macroeconomic policy is most likely to achieve economic growth and price stability at the
same time?
a fiscal policy
b import barriers
c monetary policy
d supply-side policy

20 what is the definition of economic growth?
a__litis an increase in the general level of prices over time.
b_itis an increase in the level of a nation's output over time.
c_itis an increase in the level of total demand over time.
d_itis an increase in wages, interest, profits and rent over time.

21 what causes cyclical unemployment in a recession?
a apermanent decrease in the demand for labour
ba permanent decrease in the supply of labour
c  atemporary decrease in the demand for labour
d  atemporary decrease in the supply of labour

22 the table shows government expenditure and revenue in selected years.
government tax
year expenditure revenue
$bn $bn
1 500 500
2 600 400
3 700 300
what might explain the changes in the government’s budget over the period?
a _afall in the dependency ratio
ba fall in the exchange rate
c_anincrease in cyclical unemployment
d_anincrease in real gdp

23 the table shows changes in economic policies for four countries, a, b, c and d.
which country is most likely to be following a policy of preventing deflation?
money suppl srveminiene taxation
a shpry spending
a decreasing decreasing decreasing
b decreasing decreasing increasing
cc increasing increasing decreasing
d increasing increasing increasing

24 workers in switzerland earn more on average than workers in mexico.
what is a likely cause of this?
a_ agreater percentage of workers in switzerland work part-time than in mexico.
b_ the average worker in switzerland is more productive than the average worker in mexico.
c_ the average worker in switzerland pays more income tax than the average worker in mexico.
d the unemployment rate is higher in switzerland than in mexico.

25 the table contains details on birth rate, death rate and net migration for several countries in a year.
migration

australia 13 7 850000
brazil 14 6 30000
nigeria 39 12 —300 000
us 12 8 4500000

what can be concluded from the table?

a_ only one country, nigeria, had a decreasing population.

b_ the country with the lowest birth rate had the lowest death rate.

c_ the country with the lowest death rate had the highest birth rate.

d_ the country with the lowest natural rate of increase in population was the us.

26 which combination best describes the characteristics of a high-income economy?
human percentage of the
ee development labour force in the
index value tertiary sector

a high high high
b high high low
c low low high
d low low low

27 what might encourage international specialisation between countries?
a free trade
b _ inefficiencies in production
c labour immobility
d tariffs

28 a government wishes to stop the dumping of a specific imported good at a very low price.
which method of protection would be most effective?
a apply an embargo to this good
b_ devalue the currency
c increase interest rates
d provide subsidies to home producers of this good

29 the price of the us dollar in terms of other currencies is set by the forces of demand and supply.
to what does this statement refer?
a analternative method of trade protection
b__ the determination of the exchange rate in a fixed exchange rate system
c__ the determination of the exchange rate in a floating exchange rate system
d _ the increasing globalisation of international trade

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