Economics 0455/11 October/November 2022: question paper and mark scheme

Question

The Chinese government is concerned about the level of poverty and the need for more resources in low-income regions of the country. As a result, it is increasing its expenditure in those regions and reducing it in high-income regions. Which economic concept does this government policy illustrate? A diseconomies of scale B market forces C opportunity cost D specialisation

Question

An airline needs people and equipment. These can be divided into factors of production. What is allocated to its correct factor of production? people or equipment factor of production A aircraft capital B airline owners labour C computer network land D pilots enterprise

Question

The diagram shows a production possibility curve (PPC) for country Z. Government policy is to move the economy from point X to point Y on the PPC. capital X goods Y O consumer goods What is the most likely effect of this policy? A Living standards rise in the short run. B More capital goods are produced. C Prices of consumer goods increase. D Total output increases.

Question

The table shows examples of changes in an economy. Which combination has two microeconomic changes? change 1 change 2 A an increase in the a rise in the average earnings rate of inflation of healthcare professionals B an increase in the a rise in the rate of rate of inflation unemployment C a reduction in output a rise in the average earnings in the car industry of healthcare professionals D a reduction in output a rise in the rate of in the car industry unemployment

Question

The diagram shows the supply of motor vehicles. S1 price S2 O quantity What will cause a shift in the supply curve from S1 to S2? A a decrease in the profits of suppliers B a fall in the real incomes of customers C a more efficient assembly line using robots D a rise in the cost of motor vehicle components

Question

The diagram shows the demand for and supply of plastic bags. The original equilibrium price is P. S2 price S1 S3 P D2 D1 D3 O Q quantity How would the introduction of a unit tax on plastic bags be shown? A Demand would shift to D2. B Demand would shift to D3. C Supply would shift to S2. D Supply would shift to S3.

Question

What is the significance to firms of price elasticity of demand? A It allows firms to measure the effect of a change in the price of their competitors. B It allows firms to measure their ability to change production due to a change in price. C It allows firms to predict the change in costs of production. D It allows firms to predict the effect of a change in price on their total revenue.

Question

In a free market, market failure causes a misallocation of resources. What is not an example of market failure? A external costs of production B internal diseconomies of scale C over-consumption of demerit goods D under-consumption of merit goods

Question

Which organisations can directly fund the growth of firms? central commercial governments banks banks A no yes no B no yes yes C yes no no D yes no yes

Question

Which advantage do coins have that makes them more suitable than paper banknotes to act as money? A They are more divisible. B They are more durable. C They are more portable. D They are more recognisable.

Question

Which statement about different income groups is correct? A High-income groups do not need to borrow money. B High-income groups save less money than low-income groups. C Low-income groups find it easier to borrow than high-income groups. D Low-income groups save a smaller percentage of their income than high-income groups.

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

A firm sells 50 units at a price of $3 per product. What is the firm’s total revenue and average revenue? total revenue average revenue $ $ A 50 3 B 50 50 C 150 3 D 150 50

Question

A firm produces bicycles. It uses a combination of workers and machines. The table shows the output from different combinations of workers and machines. Which combination shows the greatest labour productivity? workers machines output A 4 5 17 B 8 5 32 C 10 5 45 D 20 5 76

Question

Two large-scale firms involved in chemical manufacturing wish to merge. Why might the government decide to prevent the merger? A It enables greater economies of scale to operate. B It increases productivity per worker employed. C It reduces competition in the industry. D It results in higher wages paid to labour.

Question

What is included in a government budget calculation? A export revenue B external costs C indirect tax revenue D opportunity cost

Question

Which change is an example of monetary policy? A a depreciation of the foreign exchange rate B a reduction of unemployment benefits C an increased import tax D the introduction of import quotas

Question

What is the most likely effect of increasing the rate of interest? A Investment increases. B The cost of government borrowing falls. C The exchange rate falls. D The rate of inflation falls.

Question

What is the most effective way for a government to raise national output? A encourage a period of deflation B improve the productivity of resources C limit the size of its population D restrict its trade with other countries

Question

The table shows real GDP and population for four countries. Which country has the highest real GDP per head? real GDP population ($ billions) (millions) A 200 80 B 100 25 C 80 50 D 60 12

Question

A shop worker was made redundant due to the introduction of self-service checkouts. Which type of unemployment is this? A cyclical B frictional C seasonal D structural

Question

A decrease in which variable is most likely to cause the rate of inflation to increase? A the average wage rate B the budget deficit C the interest rate D the money supply

Question

Which type of goods have to be financed by a government? A capital goods B demerit goods C free goods D public goods

Question

The table shows the percentage changes in earnings and consumer prices for four countries for one year. Which country is likely to have experienced the greatest increase in real income during the year? country earnings consumer prices A France +6.5 +3.5 B Germany +4.0 +4.0 C Japan +4.0 –1.0 D UK +6.5 –2.0

Question

The table shows the Human Development Index (HDI) for a country in two years. year HDI value 1 0.467 2 0.609 What would not explain the changes in the HDI? A an increase in gender equality B an increase in income per head C an increase in life expectancy D an increase in years of schooling

Question

The table shows the percentage (%) contribution of agriculture to the GDP of three countries in a year. country % X 18.5 Y 3.9 Z 2.2 What can be concluded from the table? A Agricultural production in country Z was not as productive as it was in country Y. B Country X was likely to be less developed as a country than country Z. C Country Y was likely to import more agricultural produce than country Z. D Total agricultural production was higher in country X than in country Z.

Question

The table shows some details from a country’s balance of payments that has no secondary income (current transfers). item $ million exports of goods 280 imports of goods 350 exports of services 110 imports of services 60 net primary income – 40 What is the country’s balance on its current account? A a deficit of $60 million B a deficit of $160 million C a surplus of $20 million D a surplus of $760 million

Question

Vietnamese companies buy insurance from companies in the US. How will this transaction be recorded in the Vietnamese balance of payments? section credit / debit A trade in goods credit B trade in services credit C trade in services debit D current transfers debit

Question

Which row shows the potential benefits of free trade to consumers, producers and the economy? consumers producers economy A higher income lower costs deflation B lower quality higher prices greater equality C lower prices increased competition higher current account deficit D more choices larger market lower unemployment

Question

A manufacturing firm in a low-income country has decided to close. What is most likely to have caused this decision? A increase in foreign multinational companies operating in its country B increase in global demand for its products C increase in its productivity D increase in subsidies received from its government