Economics 0455/11 May/June 2019: question paper and mark scheme

Question

What would an economist regard as an example of the factor of production capital? A an individual’s purchase of stocks and shares B borrowing by a firm to pay for electricity C the building by a firm of a new factory D total savings by individuals in a country

Question

The diagram shows a production possibility curve (PPC). goods O services Why is the curve usually drawn like this? A International free trade exists. B Opportunity cost changes. C Resources are unlimited in supply. D Some resources will be unemployed.

Question

In recent years more golf courses, which use large quantities of water, have opened in China. What may be the opportunity cost of this? A cost of water B loss of farmland C sales of golf equipment D wages of golf course staff

Question

Which situation indicates a mixed economy? A Economic activity is controlled entirely by the private sector. B Individual choices are unaffected by government actions. C Services are provided by both private and public sectors. D The government carries out all planning and decision making.

Question

What causes market failure? A government provision of services B social costs equal private costs C the existence of external benefits D the existence of perfect competition

Question

A newspaper reported that ‘The world market for coffee has returned to equilibrium’. Which situation supports this statement? A A sequence of poor harvests resulted in shortages. B Decreased transport costs led to a surplus of supply. C Farmers matched demand by planting more coffee bushes. D The price of coffee was fixed between producers.

Question

The table shows the demand schedule for a good at different prices. price quantity $ demanded 8 200 10 160 12 120 14 60 The current market price for the good is $10. Following a 20% increase in price, what will be the change in the quantity demanded? A – 60 B – 40 C +120 D +200

Question

Carlos has been offered a new job with a large multinational company. He is undecided whether to accept the position. What is a non-wage factor he might consider? A bonus payments B holiday entitlement C overtime rate D salary level

Question

Unlike the UK and US, a significant proportion of the shares on the stock exchanges of China and Russia are of state-owned enterprises. Which judgement about China and Russia can be made from this information? A their distribution of income and wealth B their level of development C their stages of production D their type of economic system

Question

What is the most important factor that affects how much a family saves? A the income of the family B the level of taxation C the rate of inflation D the reliability of banks

Question

The table shows the change in real incomes for a number of occupations between 1985 and 2015. change in occupation real income % doctors 153 lawyers 114 accountants 60 bricklayers 37 bus and coach drivers 19 fork-lift truck drivers –5 What can be concluded from the table? A All occupations were better off in 2015 than in 1985. B Fork-lift truck drivers earned the lowest wages in 2015. C Doctors have earned more than lawyers since 1985. D Professionals received higher percentage increases in income than manual workers.

Question

A large bakery buys a flour mill. Which form of integration is this? A conglomerate B horizontal C vertical backwards D vertical forwards

Question

Why is the energy supply industry dominated by very large firms in many economies? A Government controls prevent the exploitation of consumers. B High fixed capital costs exist. C Labour-intensive production techniques are used. D Non-price advertising increases competition.

Question

The diagram shows the fixed costs, variable costs and total costs of a firm. costs W X Y O Z output Which distance represents the firm’s fixed costs? A WX B WY C XY D XZ

Question

An entrepreneur buys a workshop for $200 000 to make plastic boxes. In the first year of operation he spends $70 000 on materials, employs ten production workers paid by the amount produced (piece rate) at a total cost of $80 000 and buys two delivery vehicles for $10 000 each. What are his total variable costs? A $100 000 B $150 000 C $220 000 D $370 000

Question

A government increases the rate of income tax in order to pay for extra transfer payments, including cash benefits to the poor. What must occur as a result of this? A It changes the distribution of income. B It ensures the equality of incomes. C It leads to more people paying income taxes. D It reduces the level of unemployment.

Question

The standard rate for Value Added Tax (sales tax) is 20% in a country. Different consumers buying the same product have to pay the same amount of tax. What kind of tax is this? A direct B progressive C proportional D regressive

Question

The diagram shows the demand curve D1 and supply curve S1 for a good. The government introduces a subsidy to encourage production. price S1 $ S2 30 25 20 D1 0 4 5 quantity What will be the total cost of the subsidy to the government? A $40 B $50 C $100 D $150

Question

Which statement about interest rate changes is accurate? A A fall in interest rates will always increase inflation. B A rise in interest rates may increase cost-push inflation. C A rise in interest rates will raise the level of investment in a country. D Interest rate changes have no impact on the level of production.

Question

In Uganda, the rate of inflation fell from 5% in 2014 to 2% in 2015. Which conclusion can be drawn from this information? A Prices were higher in 2015 than in 2014. B The cost of living fell between 2014 and 2015. C The standard of living fell between 2014 and 2015. D Ugandan citizens were better off in 2015 than 2014.

Question

What would not increase the Human Development Index (HDI) of a country? A an increase in the level of car ownership B an increase in life expectancy at birth C a rise in the GDP per head D a rise in the number of years of schooling

Question

A country is experiencing a period of full employment. What is most likely to lead to an increase in demand-pull inflation? A an increase in government spending B an increase in imports C an increase in income tax rates D an increase in sales tax

Question

The table shows the percentage change from 2015–2016 in gross domestic product (GDP) and consumer prices for selected countries. Which country was suffering from economic recession and inflation? country GDP consumer prices A Australia +1.8 +1.3 B Brazil –2.9 +8.3 C China +6.7 +2.0 D Japan +1.1 –0.2

Question

Which policy is most likely to reduce relative poverty? A make income tax rates less progressive B reduce benefit payments C reduce the minimum wage D reduce the rate of sales tax

Question

Given the following information, which country is most likely to have the highest standard of living? birth death life infant rate rate expectancy mortality rate A Bangladesh 27 10 58 93 B Bhutan 36 14 53 107 C Botswana 31 21 40 57 D Brunei 25 5 72 22

Question

In a country the birth rate increased but the population decreased. What could have happened to other factors to cause this? A a fall in infant mortality but no change in the death rate B a rise in net immigration but no change in the death rate C no change in migration but the death rate rose D the death rate fell with no change in migration

Question

The US government decides to reduce the size of the quota on a good it buys from China. What is likely to happen? A The good will become cheaper in the US. B The US balance of trade will worsen. C The US government’s revenue will decline. D There will be less of the good imported into the US.

Question

What is the most accurate definition of a foreign exchange rate? A a rate at which exports are exchanged for imports B a rate determined by the demand and supply of the currency C a value of a currency as fixed by the government D a value of a currency expressed in terms of another currency

Question

In 2013, the European Union (EU) levied a 48% tariff on low-priced Chinese solar panels because the low price was the result of subsidies from the Chinese government. Which argument for protectionism was the EU using? A the anti-dumping argument B the infant industry argument C the strategic industry argument D the sunset industry argument

Question

A large amount of the agricultural products in a country were damaged by floods. What is likely to have happened to the price of agricultural products and the volume of imports of agricultural products? price of products volume of imports A fall fall B fall rise C rise fall D rise rise