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1

A production possibility curve shows the combinations of outputs an economy can produce using all available resources. At which points on the diagram are all available resources used?

1. Basic economic ideas and resource allocation (AS Level)  →  1.5. Production possibility curves

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2

What is a normative economic action based on?

1. Basic economic ideas and resource allocation (AS Level)  →  1.2. Economic methodology

2. The price system and the microeconomy (AS Level)  →  2.4. The interaction of demand and supply

3. Government microeconomic intervention (AS Level)  →  3.1. Reasons for government intervention in markets

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3

Which function of money overcomes the double coincidence of wants problem that exists in a barter system?

9. The macroeconomy (A Level)  →  9.4. Money and banking

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4

The production possibility curves (PPCs) show the abilities of four economies to produce wheat and rice. Which PPC has the lowest opportunity cost for producing wheat?

1. Basic economic ideas and resource allocation (AS Level)  →  1.5. Production possibility curves

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5

The diagram shows a supply curve for chicken. price quantity O S What explains why the supply curve for chicken slopes upwards?

2. The price system and the microeconomy (AS Level)  →  2.1. Demand and supply curves

2. The price system and the microeconomy (AS Level)  →  2.4. The interaction of demand and supply

Open

6

The diagram shows the demand and supply curves for cars in India. The initial equilibrium is at X. What will be the new equilibrium if there is a subsidy given to Indian car manufacturers and there is also an increase in the price of train and bus journeys in India?

2. The price system and the microeconomy (AS Level)  →  2.4. The interaction of demand and supply

2. The price system and the microeconomy (AS Level)  →  2.1. Demand and supply curves

Open

7

Demand curves are drawn ceteris paribus. Which ‘other things’ are not required to remain the same when an individual’s demand curve for ice cream is constructed?

2. The price system and the microeconomy (AS Level)  →  2.1. Demand and supply curves

7. The price system and the microeconomy (A Level)  →  7.1. Utility

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8

What is the measure of cross-elasticity of demand for good X in terms of good Y?

2. The price system and the microeconomy (AS Level)  →  2.2. Price elasticity, income elasticity and cross elasticity of demand

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9

When will the price mechanism be least likely to reallocate resources to meet a change in consumer preferences?

2. The price system and the microeconomy (AS Level)  →  2.4. The interaction of demand and supply

2. The price system and the microeconomy (AS Level)  →  2.3. Price elasticity of supply

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10

A firm estimates that the price elasticity of supply of its product is +1.5. What does this indicate?

2. The price system and the microeconomy (AS Level)  →  2.3. Price elasticity of supply

2. The price system and the microeconomy (AS Level)  →  2.2. Price elasticity, income elasticity and cross elasticity of demand

Open

11

A rise in the price of a good is accompanied by an increase in the quantity demanded. What could explain this?

2. The price system and the microeconomy (AS Level)  →  2.3. Price elasticity of supply

2. The price system and the microeconomy (AS Level)  →  2.5. Consumer and producer surplus

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12

What causes the demand curve for an inferior good to shift to the right?

2. The price system and the microeconomy (AS Level)  →  2.1. Demand and supply curves

4. The Macroeconomy (AS Level)  →  4.3. Aggregate Demand and Aggregate Supply analysis

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13

The diagrams show the effect of a change in the market for good X on the market for good Y. price O quantity good X S1 D1 S2 price O quantity good Y D1 D2 S1 What is the most likely relationship between the two goods?

2. The price system and the microeconomy (AS Level)  →  2.4. The interaction of demand and supply

2. The price system and the microeconomy (AS Level)  →  2.1. Demand and supply curves

Open

14

To improve its financial position, a government decided to reduce expenditure on investment in the public sector. There was not a fall in economic growth. What was the most likely effect of the government’s action?

5. Government macroeconomic intervention (AS Level)  →  5.2. Fiscal policy

Open

15

What are the effects of a government imposing a maximum price below the equilibrium price?

2. The price system and the microeconomy (AS Level)  →  2.4. The interaction of demand and supply

3. Government microeconomic intervention (AS Level)  →  3.2. Methods and effects of government intervention in markets

Open

16

The National Library Board of Singapore is a public sector organisation that finances and manages the state libraries. What is the most likely reason for this?

3. Government microeconomic intervention (AS Level)  →  3.1. Reasons for government intervention in markets

1. Basic economic ideas and resource allocation (AS Level)  →  1.6. Classification of goods and services

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17

Three types of tax are listed.  a sales tax (VAT) on fuel  a specific tax of 10% on cigarettes  the percentage of income tax on individual earnings increases as taxable income increases Which combination describes the effect of each of these types of tax?

5. Government macroeconomic intervention (AS Level)  →  5.2. Fiscal policy

3. Government microeconomic intervention (AS Level)  →  3.2. Methods and effects of government intervention in markets

9. The macroeconomy (A Level)  →  9.1. The circular flow of income

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18

The bus fare in a rural area is $5 per journey. The government decides to improve local transport by giving bus firms a subsidy of $2 per journey. The diagram shows the possible changes in demand and supply. bus fare per journey ($) quantity of journeys per week 950 1050 S S S D D D What is the new quantity of journeys and the bus fare for a journey?

2. The price system and the microeconomy (AS Level)  →  2.1. Demand and supply curves

2. The price system and the microeconomy (AS Level)  →  2.4. The interaction of demand and supply

Open

19

The diagram shows the annual consumer prices index for Japan over the years 1990–2010 inclusive. –1 –2 –3 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 consumer prices index (%) year In which period did Japan experience both inflation at a rate of approximately 2% and deflation at a rate of approximately 2.5%?

4. The Macroeconomy (AS Level)  →  4.6. Price stability

4. The Macroeconomy (AS Level)  →  4.1. National income statistics

Open

20

A government removes its quota on imported laptops. Assuming a normal demand curve and upward-sloping supply curve for laptops, what are the likely effects on domestic laptop manufacturers?

4. The Macroeconomy (AS Level)  →  4.3. Aggregate Demand and Aggregate Supply analysis

2. The price system and the microeconomy (AS Level)  →  2.4. The interaction of demand and supply

2. The price system and the microeconomy (AS Level)  →  2.1. Demand and supply curves

Open

21

The terms of trade index for Mauritius fell from 111.2 in the first quarter of 2018 to 106.1 in the second quarter. Which combination could have produced this outcome?

6. International economic issues (AS Level)  →  6.1. The reasons for international trade

4. The Macroeconomy (AS Level)  →  4.1. National income statistics

Open

22

From the initial position of equilibrium shown...

5. Government macroeconomic intervention (AS Level)  →  5.2. Fiscal policy

5. Government macroeconomic intervention (AS Level)  →  5.3. Monetary policy

5. Government macroeconomic intervention (AS Level)  →  5.4. Supply-side policy

Open

23

The diagram shows a shift in an economy’s aggregate demand curve from AD1 to AD2. O general price level real output AD1 AD2 What could not be a cause of the shift?

2. The price system and the microeconomy (AS Level)  →  2.1. Demand and supply curves

4. The Macroeconomy (AS Level)  →  4.3. Aggregate Demand and Aggregate Supply analysis

Open

24

Which item is not included in the current account on the balance of payments statement?

6. International economic issues (AS Level)  →  6.3. Current account of the balance of payments

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25

The prices of a country’s exports rise by 5% while the prices of its imports fall by 5%. What will definitely improve in the country as a result of these changes?

6. International economic issues (AS Level)  →  6.4. Exchange rates

6. International economic issues (AS Level)  →  6.1. The reasons for international trade

11. International economic issues (A Level)  →  11.2. Exchange rates

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26

What is not a form of protectionism?

6. International economic issues (AS Level)  →  6.2. Protectionism

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27

Two countries, X and Y, produce food and drink. The table shows how many hours it takes them to produce one unit of each. food drink X Y What will be the result if country Y doubles its productivity in the output of drink and both countries produce only one good according to comparative advantage?

1. Basic economic ideas and resource allocation (AS Level)  →  1.1. Scarcity, choice and opportunity cost

6. International economic issues (AS Level)  →  6.1. The reasons for international trade

Open

28

‘Reducing the exchange rate helps to decrease a country’s balance of payments deficit because it makes imports more expensive and exports cheaper.’ What does this statement describe?

11. International economic issues (A Level)  →  11.1. Policies to correct disequilibrium in the balance of payments

6. International economic issues (AS Level)  →  6.5. Policies to correct imbalances in the current account of the balance of payments

Open

29

An increase in which variable is a contractionary monetary policy?

5. Government macroeconomic intervention (AS Level)  →  5.3. Monetary policy

5. Government macroeconomic intervention (AS Level)  →  5.2. Fiscal policy

Open

30

What are government monetary policies that would be the most effective in a global recession?

5. Government macroeconomic intervention (AS Level)  →  5.3. Monetary policy

10. Government macroeconomic intervention (A Level)  →  10.3. Effectiveness of policy options to meet all macroeconomic objectives

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