Economics 0455/12 October/November 2020: question paper and mark scheme

Question

What causes economic agents to make choices? A limited needs and wants B the existence of finite resources C the existence of free goods D the market mechanism

Question

Which combination of a factor of production and its factor income is not correct? factor of factor income production A capital interest B enterprise profit C labour dividends D land rent

Question

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 X Y O 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.

Question

What is an example of a macroeconomic aim? A to create and maintain full employment B to improve efficiency in the manufacturing sector of the economy C to provide consumers with greater information when buying goods and services D to encourage greater occupational mobility of labour

Question

Why might a market economy fail to achieve the best use of scarce resources? A Consumers may lack information about which good to buy. B Demerit goods are underconsumed. C Public goods are overconsumed. D Most resources are owned by the government.

Question

The diagram shows the global market for copper with an equilibrium point of X. Which point represents the new equilibrium after the copper producers’ costs increase and there is rapid global economic growth? price S2 S1 A S3 D X B C D2 D1 D3 O quantity

Question

The diagram shows the supply curve for a good. price ($) S 12 10 0 100 140 quantity (units) What is the price elasticity of supply when the price rises from $10 to $12? A 0.5 B 0.75 C 1.4 D 2.0

Question

Which task is not a function of a trade union? A agreeing the minimum number to be employed on a particular job B deciding on the level of a national minimum wage C negotiating working hours and conditions of work D providing legal advice on unfair dismissal

Question

What does not have an effect on wages in a free market economy? A danger levels in the workplace B government regulations C the number of people willing and able to work D the years of training required

Question

The table shows how household spending changes with income. income spending ($ per month) ($ per month) 3000 3150 3300 3375 3600 3500 3900 3825 4200 4050 4500 4275 What is the lowest level of income at which savings are positive? A $3000 B $3600 C $3900 D $4200

Question

What can a central bank increase in order to reduce consumer borrowing? A commercial bank deposits B government spending C the exchange rate D the rate of interest

Question

The table shows the output and total costs of a small firm. output total costs (units) ($) 0 50 000 1 000 100 000 5 000 400 000 10 000 600 000 What is the average fixed cost of producing 10 000 units? A $5 B $6 C $55 D $60

Question

A firm has fixed costs of $1000. The table shows the variable cost at different levels of output. output (units) 1 2 3 4 variable cost ($) 100 190 270 350 If the goods are sold for $500 each, how much profit will be made from the sale of 4 units? A $650 B $1000 C $1650 D $2000

Question

Firm X supplies bricks and decides to merge with firm Y that also supplies bricks. Which form of merger has taken place? A backward vertical B conglomerate C forward vertical D horizontal

Question

Who owns a public sector organisation? A individuals B shareholders C specialist managers D the government

Question

What are two aims that a government normally pursues when managing the performance of the whole economy? A to encourage an increase in production and to prevent high inflation B to ensure no one is unemployed and to reduce exports C to give everyone equal incomes and to increase government revenue D to protect the environment and to reduce interest rates

Question

What is most likely to be the responsibility of a central government? A the provision of immigration officials at an airport B the provision of security cameras in a shopping centre C the provision of security staff at a bank D the provision of ticket inspectors on a train

Question

The table shows the tax that an individual would pay at different levels of disposable income. disposable 10 000 20 000 30 000 40 000 income ($) tax ($) 0 2000 4000 6000 Which type of tax is shown in the table? A corporation tax B indirect tax C progressive tax D regressive tax

Question

The government wants to reduce the consumption of cigarettes. Which policy would be most likely to do this? A increasing a subsidy on cigarettes B increasing income tax C increasing interest rates D increasing the indirect tax on cigarettes

Question

Which group should not be included in the measurement of unemployment? A redundant unskilled workers seeking alternative work B seasonal agricultural workers in out-of-season periods C students over 18 years continuing with full-time education D those who have left school and cannot get a job

Question

The table shows the rates of unemployment and real GDP growth for an economy in 2014 and 2018. 2014 2018 rate of 3 10 unemployment (%) rate of real GDP 4 –2 growth (%) Which combination of policy measures would be most effective in returning the economy to the 2014 level of economic activity? A a decrease in direct taxes and an increase in the rate of interest B a decrease in government expenditure and an increase in the rate of interest C an increase in direct taxes and a decrease in the rate of interest D an increase in government expenditure and a decrease in the rate of interest

Question

An economy is experiencing rising prices. Which government policy will help reduce consumer expenditure? A introducing compulsory saving for income earners B investing more in building infrastructure C issuing more banknotes and coins D reducing indirect taxes

Question

Some goods take a greater percentage of a typical household’s total spending than others. How is this accounted for in the construction of a consumer prices index? A by deducting the goods B by giving a weight to the goods C by taking an average of price fluctuations during a year D by using the price elasticity of demand for the goods

Question

In countries with absolute poverty, low incomes can start a process that keeps incomes low. What are the stages of this process? A low incomes → low consumption → low prices → low output → low incomes B low incomes → low government spending → high taxation → low employment → low incomes C low incomes → low investment → high profits → low dividends → low incomes D low incomes → low saving → low investment → low productivity → low incomes

Question

Which factor in the world’s low-income countries limits their economic development? A balance of payments surpluses B high saving ratios C large inflows of foreign investment D rapid population growth

Question

The table shows the percentage employment in the primary, secondary and service sectors in four countries. Which country is likely to be the most developed? percentage employment primary secondary service country sector sector sector A 10 35 55 B 20 60 20 C 35 35 30 D 40 40 20

Question

What causes the birth rate to fall in a country? A Fewer women work. B Infant mortality rates rise. C Medical supplies and healthcare improve. D The optimum population increases.

Question

A country wishes to increase a current account surplus on the balance of payments. Which action would it take? A abolish an import quota B increase import tariffs C remove export subsidies D tax export producers

Question

The table shows a country’s exports and imports. $m 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 a deficit of $7 million B a deficit of $13 million C a surplus of $7 million D a surplus of $13 million

Question

The diagram shows the value of a country’s exports and imports of goods over five years. 30 $m 25 key 20 exports of goods 15 imports of goods 10 5 0 1 2 3 4 5 year Between which two years did the country have an increase in the value of imports and an improvement in its balance of trade in goods? A 1 and 2 B 2 and 3 C 3 and 4 D 4 and 5