Economics 0455/13 October/November 2020: question paper and mark scheme

Question

Why do consumers have to make choices when spending their income? A Advertising encourages consumer spending. B Consumers have unlimited incomes. C Consumer wants cannot all be satisfied with their income. D Not all products will be attractive to consumers.

Question

What is the key role of an entrepreneur? A inventor B risk taker C shareholder D worker

Question

The diagram shows the production possibility curve (PPC) of an economy producing at point X. capital 100 goods X 70 0 0 180 240 consumer goods What would be the opportunity cost of moving from point X to produce only consumer goods? A 60 units of consumer goods B 70 units of capital goods C 100 units of capital goods D 180 units of consumer goods

Question

Economics is divided into two: microeconomics and macroeconomics. statement 1 When the price of oil falls there is an expansion in demand. statement 2 The Organization of the Petroleum Exporting Countries (OPEC) can influence the price of oil. Which combination correctly describes these two statements? statement 1 statement 2 A macroeconomic statement macroeconomic statement B macroeconomic statement microeconomic statement C microeconomic statement macroeconomic statement D microeconomic statement microeconomic statement

Question

What is a disadvantage of a market economic system? A Entrepreneurs lack incentives to produce what consumers want. B Government intervention will reduce the efficiency of firms. C Market dominance by firms can lead to higher prices. D There is underproduction of demerit goods.

Question

The diagram shows the demand curve for coffee in the US. price P1 P2 demand for coffee O Q1 Q2 quantity Why did the quantity demanded move from Q1 to Q2? A Coffee became cheaper. B Incomes rose in the US. C There was a successful advertising campaign by coffee retailers. D The price of substitutes for coffee rose.

Question

In an African country with large areas of tropical desert the price elasticity of demand for salt is highly inelastic. This will result in greater consumer expenditure on salt when price changes from P1 to P2. Which diagram illustrates this situation? A B price price of salt of salt P2 P2 P1 P1 D D O quantity O quantity C D price price of salt of salt P2 P2 P1 D P1 D O quantity O quantity

Question

In which occupation would wages tend to increase? A in those where a worker is paid weekly B in those where a worker needs less training C in those where there is an excess demand for labour D in those where work becomes less dangerous

Question

Which row shows a characteristic of money and a function of money? characteristic function A acceptability medium of exchange B cash measure of value C divisibility portability D store of value bank deposit

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 total cost of firm X at each level of output. output total cost 0 3 1 5 2 6 3 9 At which level of output does total variable cost exceed total fixed cost? A 0 B 1 C 2 D 3

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

Which combination is usually found in a monopoly? A many buyers and many sellers B many buyers and single seller C single buyer and many sellers D single buyer and single seller

Question

What is usually considered to be an advantage to a firm of using division of labour? A high labour turnover B increased mechanisation C movement of labour between tasks D need for quality control

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

A government decreased the tax on all goods produced in its country. What is the most likely consequence of this? A a decrease in exports B an increase in imports C an increase in production D a worsening of the balance of trade in goods

Question

Which government policy measure would cause an increase in a country’s supply of labour? A increasing unemployment benefits B lowering interest rates C raising income tax D raising the age of retirement

Question

Due to a rise in the number of retired people, there has been increased demand for some government expenditure. Which type of government expenditure is most likely to be directly affected? A defence B health services C re-training grants D street lighting

Question

The diagrams show Italy’s unemployment rate and GDP per head. Italy’s unemployment rate Italy’s GDP per head 13 39 000 % $ 38 000 11 37 000 9 36 000 35 000 7 34 000 5 33 000 2000 2005 2010 2015 2000 2005 2010 2015 year year When do Italy’s unemployment rate and GDP per head rise at the same time? A 2000–2001 B 2007–2008 C 2009–2010 D 2014–2015

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

One of the indicators of living standards is the Human Development Index (HDI). What is not taken into consideration when calculating the HDI? A education B income per head C level of savings D life expectancy

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 would not be included in the current account of the balance of payments? A dividends earned from a firm in another country B imports of TVs from another country C purchase of a house in another country D rents paid to owners of land in another country

Question

What is most likely to discourage international specialisation and trade for an economy? A decreasing labour supply B decreasing transport costs C increasing oil prices D increasing trade barriers

Question

Many low-income countries rely on multinational companies (MNCs) to provide economic development. What is a disadvantage of this for the low-income country? A Local firms close because MNCs are more efficient. B New production techniques are introduced. C The balance of payments may improve. D The MNCs have to pay taxes on their profits.

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