Economics 9708/13 October/November 2022: question paper and mark scheme

Question

Which action would not raise the quality of the particular factor of production? A capital – operating a machine continuously at full capacity B enterprise – providing risk management advice C land – increasing the use of fertilisers D labour – making apprenticeships and training compulsory

Question

During a period of deflation an economy’s aggregate monetary demand falls. Which function of money explains this fall? A a measure of value B a medium of exchange C a standard for deferred payment D a store of value

Question

What will usually result if production is divided into separate processes that are assigned to different people? lower output more repetitive lower costs per worker tasks A no no no B no yes yes C yes no no D yes yes yes

Question

The diagram shows a production possibility curve. good Y O good X Which combination is correct? opportunity cost of opportunity cost of producing more of producing more of good Y good X A decreases decreases B decreases increases C increases decreases D increases increases

Question

A government wishes to ensure adequate flood defences are provided in its coastal areas. Which action is most likely to be undertaken only by the government? A building the defences B designing the defences C financing the defences D maintaining the defences

Question

Consumer surplus exists in the market for rice. What does this mean? A Consumers benefit from rice production more than producers. B Consumer demand for rice exceeds supply. C Some consumers would be willing to pay more than the market price for rice. D The production of rice exceeds the supply.

Question

The diagram shows the demand curve and supply curve for a product. S X price Y W D O Z quantity Which area represents producer surplus? A OWYZ minus OWY B OWYZ minus OYZ C OXYZ minus OYZ D OXYZ minus WXY

Question

The diagram shows the relationship between total expenditure and price for three products, 1, 2 and 3. 1 2 price 3 O total expenditure Which curves represent the products with price-elastic and unitary price-elastic demand? elastic unitary A 1 2 B 2 3 C 3 1 D 3 2

Question

What causes an inelastic market supply curve for an agricultural crop such as wheat? A a government decision to import crops at times of shortage B an efficient use of fertilisers causing crop production to rise C the storage of excess production for future sale D the very long time required to produce additional output

Question

The diagrams show the effect of a change in the market for good X on the market for good Y. S1 S2 S1 price price D1 D2 D1 O quantity O quantity good X good Y What can be concluded about the goods? A X and Y are complements. B X and Y are in joint supply. C X and Y are substitutes. D Y is a derived demand from X.

Question

The final of a major sports event is held in a stadium which has a fixed capacity of 40 000 people. The price for a seat is set at PF, but when the tickets go on sale all tickets are sold very quickly with many disappointed people unable to buy a ticket. Which diagram best represents this? A B S S price price PF PF D D O O 40 000 40 000 quantity quantity C D S S PF price price PF D D O O 40 000 40 000 quantity quantity

Question

Which product has the lowest price elasticity of demand? quantity demanded price rises by falls by (%) (%) A 0 10 B 5 5 C 10 5 D 10 0

Question

The market for a product is initially in equilibrium. Which combination of changes will cause the price of the product to rise and the quantity sold to fall? A a decrease in demand that is larger than a decrease in supply B a decrease in demand that is smaller than a decrease in supply C an increase in demand that is larger than an increase in supply D an increase in demand that is smaller than an increase in supply

Question

The diagram shows two demand curves and two supply curves. The initial equilibrium is at H. price H K O quantity Which combinations of shifts in the demand and supply curves would result in a change in the equilibrium position from H to K? A an increase in demand and an increase in supply B an increase in demand and a decrease in supply C a decrease in demand and an increase in supply D a decrease in demand and a decrease in supply

Question

In 2009, the Australian Government made a payment of $900 to those who earned less than $100 000 per year. How would this payment best be described? A neutral B progressive C proportional D regressive

Question

The market for good Z is in equilibrium with 1000 units sold at a price of $10. The government pays a subsidy of $2 per unit to producers of good Z. Under which conditions will the total spending by the government on the subsidy be smallest? price elasticity of price elasticity of demand for good Z supply for good Z A <1 <1 B <1 >1 C >1 <1 D >1 >1

Question

If an industry is currently state-owned and state-run, what does not represent a reason for it being privatised? A Decisions will no longer be taken with political considerations in mind. B The benefits of merit goods will be taken into account in decision-making. C Its owners would have more incentive to make it operate profitably. D There will be greater incentives for managers to introduce modern technology.

Question

What does the incidence of an indirect tax on a product refer to? A the proportion of the tax paid by the consumer relative to the producer B the reduction in output as a result of the imposition of the tax C the revenue the tax generates for the government D the increase in the hidden economy as a result of tax evasion after the tax is imposed

Question

A government wishes to influence the price of a good. It introduces a maximum price, Pmax, and a minimum price, Pmin. The diagram shows these prices relative to the current market price P. S price P Pmax Pmin D O quantity What can be concluded from the diagram? A Both the maximum and the minimum price will be effective. B Only the maximum price will be effective. C Only the minimum price will be effective. D The market price will continue to operate.

Question

A government removes the tariff on a product, as shown. D domestic supply price P P1 world supply with tariff P2 world supply without tariff S domestic demand O V W X Y Z quantity What will be the change in domestic production? A a reduction of W V B a reduction of XV C a reduction of XW D a reduction of ZY

Question

An economy is initially in equilibrium. Which combination of events will definitely cause an increase in the general price level of the economy and a decrease in its real output? aggregate short-run demand aggregate supply A decreases decreases B decreases unchanged C increases decreases D unchanged decreases

Question

The government of a country changes from a balanced budget to a budget deficit. From which point along the country’s long-run aggregate supply curve (LRAS) will this change cause the largest increase in employment without creating inflationary pressure? LRAS price level D C A B O real output

Question

The price and volume indexes of a country’s imports and exports are shown in the table, for year 2 [year 1 = 100]. year 2 price index year 2 volume index imports exports imports exports 110 121 90 80 What is the country’s terms of trade index for year 2? A 90.9 B 97.8 C 110.0 D 111.0

Question

What is a certain outcome on an aggregate demand and aggregate supply diagram of an increase in factor productivity? A downward shift of the aggregate demand curve B downward shift of the aggregate supply curve C an upward shift of the aggregate demand curve D an upward shift of the aggregate supply curve

Question

Trade in services is a component of the current account of the balance of payments. What is an example of a trade in services? A development aid for foreign countries B export revenue from primary commodities C income from foreign tourists D income from overseas investments

Question

Which statement about changing price levels is correct? A Anyone on a fixed income has rising real income during deflation. B Government revenue from indirect taxes falls during inflation. C Producers prefer deflation to inflation. D Savers prefer index-linked savings when there is deflation rather than inflation.

Question

What would be likely to decrease inflation in an economy? A a decrease in consumer saving B a decrease in unemployment C an increase in labour productivity D an increase in taxes on imports

Question

Which change in economic circumstances is most likely to lead to a reduction in the rate of domestic inflation in an economy? A a depreciation in the currency B a reduction in the productivity of labour C a worldwide recession D an increase in direct taxes to finance increased welfare payments

Question

A country is currently experiencing deflation. It has a large national debt that is greater than its annual real income. Which combination of policies is most likely to increase the general price level without adding to the national debt? fiscal policy monetary policy A decrease the budget deficit decrease the money supply B decrease the budget deficit increase the money supply C increase the budget deficit decrease the money supply D increase the budget deficit increase the money supply

Question

Which government action will conflict with the named economic target? target action A lower price inflation lower exchange rate B more consumer spending lower interest rates C more equal incomes lower indirect tax rate D reduced import levels smaller trade quotas