Economics 0455/11 October/November 2019: question paper and mark scheme

Question

What is classified as one of the four economic resources? A consumption B enterprise C production D trade

Question

Countries X and Y have identical resources. The diagram shows their production possibility curves. food Y X O drink What can be concluded from the diagram? A X can produce food and drink more cheaply than Y. B X experiences higher unemployment than Y. C Y can produce food and drink more efficiently than X. D Y has higher retail prices than X.

Question

Sam wrote a list of how he would prefer to spend his Saturday afternoon. first choice go to a cricket match second choice watch the annual town parade third choice go to the cinema fourth choice visit relatives Unfortunately a thunderstorm caused the cricket match and the town parade to be cancelled. Sam went to the cinema. What was the opportunity cost of going to the cinema? A going to a cricket match B watching the annual town parade C visiting relatives D losing his Saturday free time

Question

Which pair of economic institutions can be found in a market economy? A local government and charities B monopolies and commercial banks C nationalised industries and partnerships D stock exchange and public corporations

Question

In a city, what is most unlikely to be provided by the private market system? A a museum B a school C a sports field D street lights

Question

The table shows the quantity demanded and supplied for a commodity at different prices. price quantity quantity ($) demanded supplied 10 100 800 9 210 700 8 400 600 7 500 500 6 600 400 What would happen to the equilibrium price if the quantity supplied increased by 200 units at each price? A It would decrease by $1. B It would decrease by $2. C It would increase by $1. D It would increase by $2.

Question

The table shows the quantity that producers are willing to supply at different price levels. price quantity ($) supplied 120 20 150 40 180 80 If the price increases from $120 to $180, what would be the price elasticity of supply? A 0.16 B 4 C 6 D 60

Question

What is an example of a non-wage factor? A bonus B commission C fringe benefits D overtime rates

Question

An African government has abandoned its own dollar and now uses the US dollar as its currency. Why would such a policy have been necessary? A Commercial banks restricted their lending. B Consumers only used credit cards rather than paper money. C Its own dollar no longer acted as a store of value. D The central bank controlled the issue of money too tightly.

Question

The table shows how three people (X, Y and Z) spend their income. person X person Y person Z food, clothing and housing 35% 50% 20% entertainment and leisure 25% 20% 40% luxury goods 40% 30% 40% For these three people, what is the most likely order of income, from highest income to lowest income? A X → Y→ Z B Y→Z→X C Z→X→Y D Z→Y→X

Question

A musician has a choice of playing for an orchestra in either Germany or England. Which combination of incomes and cost of living is most likely to cause her to choose the German orchestra? Incomes and cost of living in Germany compared with those in England pre-tax (gross) income after-tax (net) income cost of living A higher higher higher B higher lower lower C lower higher higher D lower higher lower

Question

What must result from an increase in output? A a decrease in the average cost B a decrease in the total costs C an increase in the fixed costs D an increase in the variable costs

Question

What is characteristic of a monopoly market structure? A A monopolist may determine the price of its product. B A monopolist’s product has many substitutes. C There are no external costs. D There is easy entry into the market.

Question

The table shows the sales of cold drinks made by a company in the UK in 2016 and 2017. Demand for cold drinks is influenced by changes in the temperature. In 2016 the sales followed the usual seasonal pattern. sales 2016 sales 2017 month (thousand cans) (thousand cans) April 300 290 May 400 350 June 550 270 July 570 490 August 620 590 In which month of 2017 was the usual pattern disturbed? A May B June C July D August

Question

A firm producing bicycles has the following costs at different levels of output. total fixed costs total variable costs output ($) ($) 10 300 800 20 300 1500 30 300 3300 What happens to the average total cost over this range of output? A It falls continuously. B It falls then rises. C It rises continuously. D It rises then falls.

Question

One aim of government policy is to redistribute income through taxation in order to reduce inequality. Which policy will achieve this aim? A Impose a tax of $0.20 on every dollar earned. B Increase the tax-free allowances after which tax must be paid progressively. C Introduce a tax on all food. D Provide an incentive to earn by reducing taxes for the highest paid.

Question

What is an example of expansionary monetary policy? A a decrease in income tax rates B a decrease in the budget deficit C a decrease in the money supply D a decrease in the rate of interest

Question

Which actions would be likely to increase government expenditure and reduce revenues from taxation? government expenditure tax revenues A improve health facilities for the elderly encourage people to reduce their spending B increase the amount of the state pension increase VAT (sales tax) C provide free bus transport for retired people encourage people to work beyond retirement D raise the age of retirement decrease bus fares

Question

The diagram shows the impact of a government imposing an indirect tax on a good. The original demand curve is D1 and original supply curve is S1. price S2 $ S1 60 50 40 D1 0 80 100 quantity What is the total tax revenue gained by the government? A $1600 B $3200 C $4800 D $5000

Question

The chart shows the GDP annual growth rate (percentage), 2012–2016, for Greece. 2 growth 0 rate % –2 –4 –6 –8 –10 –12 2012 2013 2014 2015 2016 year In which years did Greece experience the longest period of positive economic growth? A 2012–2013 B 2013–2014 C 2014–2015 D 2015–2016

Question

What are the components of the Human Development Index (HDI)? A life expectancy at birth, expected years of schooling, GDP B life expectancy at birth, expected years of schooling, GDP per head C population growth, adult literacy rate, GDP per head D population size, expected years of schooling, number of doctors per head

Question

Which government policy would reduce economic growth? A cutting the rate of corporation tax B increasing expenditure on education C lowering the rate of income tax D raising interest rates

Question

Rates of inflation and deflation are measured using a consumer prices index (CPI) over a period of time. The table shows average rates of CPI for Japan from 2010–2014. year change in CPI 2010 –0.72 2011 –0.28 2012 –0.03 2013 0.36 2014 2.75 In which period did Japan experience deflation followed by inflation? A 2010–2011 B 2011–2012 C 2012–2013 D 2013–2014

Question

What is a typical characteristic of a developing country? A equal distribution of income and wealth B good medical care C high gross domestic product per head D high reliance on natural resources

Question

In Botswana, better healthcare has meant that birth rates have been falling faster than death rates. Also the number of children born, on average, to each woman has declined from 6.4 to 3.2. What may be concluded from this information? A Government spending on education will need to increase. B Medical improvements have resulted in falling infant mortality rates. C There will be a decline in income for each person working. D There will, in the long run, be an increase in the working population.

Question

The table shows the percentage share of GDP held by the richest 20% and poorest 20% of the population in each country. Which country had the greatest extremes of income and poverty? country richest 20% poorest 20% A Ghana 41.7% 8.4% B Nigeria 55.7% 4.4% C Senegal 48.2% 6.4% D South Africa 64.8% 2.9%

Question

What would cause a favourable change in the Kenyan trade in services (invisible) account? A A Kenyan company wins a contract to transport exports from Uganda. B A Kenyan tea company increases its exports. C A Kenyan trade delegation promoting coffee sales visits India. D A Zambian company increases its exports to Kenya.

Question

Protectionist policies reduce the level of global economic growth. What is a possible reason for this? A Incomes earned from trading decline. B Tariffs encourage trade. C The average cost of production decreases. D The production possibility of an economy expands.

Question

The table shows the current account balance for four countries in 2016. It also shows each country’s exchange rate against the US dollar for 2015 and 2016. Which country had a trade surplus and a strengthened currency against the US dollar? current number of units of currency country account balance against US dollar US$ billion 2016 2015 2016 A Australia –47.9 1.39 1.38 B Belgium +4.8 0.92 0.96 C China +266.6 6.48 6.95 D Taiwan +74.7 32.90 32.00

Question

What would reduce the volume of international trade in the world economy? A a German bank making a loan to a Nigerian company B a Japanese car manufacturer establishing a factory in the Czech Republic C the Canadian government introducing quotas on Malaysian electronics products D the Swedish government granting aid to Somalia