Economics 9708/11 October/November 2023: question paper and mark scheme

Question

What will help solve the basic economic problem? A the control of the market system B the efficient allocation of scarce resources C the preservation of a healthy environment D the elimination of hunger

Question

Country Z operates with a production possibility curve (PPC). Currently, output is at combination 1. PPC good Y 2 3 1 4 O good X Which movement has zero opportunity cost in terms of the goods produced? A 1 to 2 B 1 to 3 C 2 to 3 D 3 to 4

Question

A country’s health care is funded by taxation but can be used free of charge by patients. Which type of good is health care in this country? A demerit good B free good C private good D public good

Question

What is least likely to increase as a result of a transition from a planned economy to a free market economy? A prices of goods and services B privately owned resources C provision of merit goods D structural unemployment

Question

Which statement correctly describes the area of producer surplus on a demand and supply diagram? A It is above the supply curve and below the equilibrium price line. B It is above the supply curve and below the demand curve. C It is below the demand curve and above the equilibrium price line. D It is below the supply curve and above the horizontal axis.

Question

The diagram shows a demand curve for pineapples. 2 price ($) X 1.5 1 Y 0.5 0 D 0 3 6 9 12 quantity (000s) What happens to the value of price elasticity of demand (PED) when there is a movement from point X to point Y and what describes the value of PED at point Y? effect on value of value of PED PED at Y A fall elastic B fall inelastic C rise elastic D unchanged unitary

Question

In a free market, there is a surplus of a good. Which change would cause the market to come to an equilibrium? A a decrease in demand B a fall in price C a government minimum price D an increase in supply

Question

The cross-elasticity of demand between good P and good Q is –0.4. The cross-elasticity of demand between good P and good R is +0.6. Which combination of goods is most likely to be represented by this information? good P good Q good R A cream yoghurt raspberry B yoghurt strawberry raspberry C strawberry cream raspberry D strawberry raspberry cream

Question

The supply, S, of a product is determined by the equation S = 10 + 10P where P is the price of the product in $. What is the product’s price elasticity of supply when its price rises from $1 to $2? A 0.5 B 1.0 C 2.0 D 5.0

Question

In the diagram, the supply curve shows the number of spaces in a car park and the demand curves show the demand for spaces on four different days, D1, D2, D3 and D4. S price P4 P3 D4 P2 D3 P1 D2 D1 O quantity The owner wishes to charge a parking fee on each of these days to allocate the spaces according to the market mechanism. Which pricing policy should the owner use? A set a fixed price at P1 B set a fixed price at P4 C vary prices between P2 and P3 D vary prices between P1 and P4

Question

The table shows the demand schedule for textbooks. price quantity $ demanded 50 0 40 100 30 200 20 300 10 400 0 500 What can be concluded from this information? A Profit would be maximised at a price of $30. B Profit would not change if the price rose from $20 to $30. C Revenue would increase if the price was decreased from $40 to $30. D Revenue would be maximised at a price of $40.

Question

Which event is most likely to enable firms to respond to an increase in demand by increasing supply rather than by raising price? A Firms reduce their expenditure on the training of workers. B Import duties are increased on machines that increase the speed of production. C The government introduces buffer stock schemes for the goods produced by the firm. D Trade unions become strong, leading to poor labour productivity.

Question

In the diagram, S1 is the supply curve and D1 is the initial demand for facemask X. A rival firm produces facemask Y, which is a close substitute. price of S1 facemask X D2 D1 O quantity of facemask X What would cause the demand curve to shift to D2? A a decrease in the costs of the materials to make facemask X B a decrease in the costs of the materials to make facemask Y C an increase in the price of facemask X D an increase in the price of facemask Y

Question

A government introduces charges for vehicles using the roads in its capital city. Which characteristic must the roads have for this to be successful in reducing congestion? A The roads must be excludable. B The roads must be merit goods. C The roads must be non-rivalrous. D The roads must be public goods.

Question

The table shows the tax an individual would pay at different levels of income. annual income tax paid ($) ($) 20 000 1 000 30 000 3 000 40 000 6 000 50 000 8 000 60 000 12 000 What is the average rate of taxation and the marginal rate of taxation for an individual with an annual income of $50 000? average rate marginal rate of taxation of taxation % % A 15 16 B 16 20 C 16 28 D 20 20

Question

A government has increased output with no effect on the price level. AS price level AD1 AD2 AD3 AD4 O output What must have been the initial level of aggregate demand (AD)? A AD1 B AD2 C AD3 D AD4

Question

What is not included in the measurement of national income? A benefits paid to the unemployed B dividends paid to shareholders C profits retained by companies D rent paid to landlords

Question

Four students have to fill in the gaps in the sentence shown. ‘A person is defined as unemployed if they are ……1…… to work at ……2…… wage rate, but cannot find a job despite an active search for work.’ Which student fills gaps 1 and 2 correctly? 1 2 A able below the current B able the current C able, available and willing above the current D able, available and willing the current

Question

Which statement best describes the consumer prices index (CPI)? A It is a measure of changes in the spending patterns of the average household. B It is a measure of changes in the standard of living of the average household. C It is a measure of the average change in prices of a basket of goods and services over time. D It is a measure of the level of prices of all goods and services.

Question

The diagram shows the production possibility curves (PPCs) for country X and country Y, the only two countries in the world. Both countries produce just two goods, M and N. 200 output of good M PPCY 100 PPCX 0 0 100 150 output of good N Under which terms of trade will both country X and country Y benefit from trading with each other? A 1M for 0.75N B 1M for 0.8N C 1M for 1N D 1M for 2N

Question

Why is increased government provision of education most likely to shift the aggregate demand curve to the right? A It will increase aggregate supply. B More schools will be built. C The government will have to raise taxes. D Workers will be more highly skilled.

Question

Which item is not included in the current account of a country’s balance of payments? A exports of services B interest on foreign loans C profits from foreign investments D the purchase of foreign assets

Question

Under which conditions will nominal GDP and real GDP increase at the same rate in an economy? rate of change of rate of change of national output general price level (% per annum) (% per annum) A 0 –2 B 0 +2 C +2 0 D +2 +2

Question

General equilibrium in the macroeconomy is achieved when total injections are equal to total leakages. What is most likely to cause disequilibrium in the macroeconomy in the short run? A an increase in government spending of $10bn and a decrease in exports of $10bn B an increase in investment of $30bn and a decrease in household savings of $30bn C an increase in spending on imports of $40bn and an increase in government spending of $40bn D an increase in taxation of $40bn and a decrease in spending on imports of $40bn

Question

What would be the most likely reason for a decrease in frictional unemployment? A more capital-intensive manufacturing B more demand for public sector workers C more government spending on education D more information on labour market vacancies

Question

A Kenyan banker who lives and works in India sends 15% of their wage back to Kenya every month. What would be the change in the current account components for either country? A a fall in secondary income for India B an increase in the balance of trade in services for Kenya C an increase in the current account surplus for India D an increase in primary income for Kenya

Question

Over a period of a year, the annual rate of inflation becomes negative. Which statement must be correct? A The cost of living has fallen. B The purchasing power of money has fallen. C The standard of living has increased. D There has been an increase in the Consumer Price Index.

Question

The government of a country plans to raise income tax rates. The initial equilibrium for the country is represented by point X on the diagram. Which new equilibrium point would an economist predict as the result? price level AS1 A AS2 X B D AD3 C AD1 AD2 O real national income

Question

Which combination would represent the most expansionary set of monetary policies? credit availability interest rates money supply A increased up reduced B increased down increased C reduced up increased D reduced down reduced

Question

An economy is experiencing accelerating cost-push inflation. Which group is likely to be least concerned by this? A borrowers B consumers C creditors D exporters