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1

Scarcity means that goods need to be rationed between competing consumers. Which basis for rationing is the most likely to result in the most equal distribution of goods?

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

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

Open

2

In which aspect is the planned economy likely to offer more than the market economy?

1. Basic economic ideas and resource allocation (AS Level)  →  1.4. Resource allocation in different economic systems

7. The price system and the microeconomy (A Level)  →  7.6. Different market structures

Open

3

Line XX is the production possibility curve (PPC) of a worker picking peas and beans in a 10 hour working day. quantity of peas picked per day quantity of beans picked per day O Y Y X X What would cause the worker’s PPC to shift to the line YY?

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

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4

Four students are given the following list of assets. ● a three bedroom house ● banknotes and coins in a purse ● money in a bank savings account ● shares in a public limited company The students are asked to order the assets from the most liquid to the least liquid and the table shows their choices. Which student is correct?

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

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

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

Open

5

How would an economist establish the market demand curve for a private good?

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

Open

6

D1 and S1 are the initial demand and supply curves for a normal product. They then change to D2 and S2. O price of good quantity of good S1 D1 X1 X2 D2 S2 Which pair of changes would result in the market equilibrium for the product changing from X1 to X2?

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

7

The table gives a set of price and cross-price elasticities for four commodities, W, X, Y and Z. with respect to price of elasticity of demand for commodity W X Y Z W –0.3 –0.5 +0.7 –1.3 X –0.7 –1.2 +0.8 +1.6 Y +1.3 +1.7 –3.6 +0.8 Z –2.7 +2.6 +1.7 –0.7 Which pairs of commodities are complements?

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

Open

8

The price elasticity of demand for a product is constant and equal to unity. Which curve in the diagram shows the relationship between total expenditure on the product and its price?

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

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

Open

9

A bottle making business announced it had introduced a new production system. As a result the quantity produced per week could be increased or reduced much more easily when the price of bottles changed. What term describes this change?

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

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

Open

10

The supply function for a good can be written as Q = 2P + 10, where Q is the quantity supplied in kilos and P is the price per kilo in dollars. The price falls from $15 to $10 per kilo. The value of price elasticity of supply for this price change lies in a range from A 1 to 4 1 . B 3 to 2 1 . C 2 to 4 3 . D 1 4 1 to 1 2 1 .

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

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

Open

11

A local government is deciding whether to increase parking charges and provide more lanes for bus use only. One official said that the increase in parking charges should cause more bus travel. A second official said that an increase in the frequency of bus services will not cause demand for bus travel to rise. Are these official statements correct or incorrect?

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

8. Government microeconomic intervention (A Level)  →  8.3. Labour market forces and government intervention

Open

12

What would prevent the operation of the market mechanism’s rationing function?

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

7. The price system and the microeconomy (A Level)  →  7.3. Efficiency and market failure

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

Open

13

The diagram shows the demand and supply curves for a good during a certain period. The market price is shown...

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

14

A specific tax is placed on the sale of bottles of lemonade. In the diagram, SS is the supply curve before imposition of the tax and StSt is the supply curve after tax. price quantity O D D W T U X S S St St Which distance represents the specific tax on each bottle?

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

15

A market is in equilibrium at point X. The government then subsidises both consumers and producers by direct payments. What will be the new equilibrium position?

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

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

Open

16

Which is a transfer payment?

8. Government microeconomic intervention (A Level)  →  8.3. Labour market forces and government intervention

Open

17

What is an example of direct public provision of goods and services?

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

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

Open

18

What would supporters of a nationalised public transport service expect to be the most likely outcome from the privatisation of train and bus services?

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

7. The price system and the microeconomy (A Level)  →  7.4. Private costs and benefits, externalities and social costs and benefits

Open

19

The diagram shows a shift in the aggregate demand curve of an economy from AD1 to AD2. price level real national income O AD1 AD2 What could have caused this 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

20

Which statement about changing price levels is correct?

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

Open

21

Which combination of events is most likely to cause inflation?

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

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

Open

22

The table gives information about the trade between Singapore and New Zealand during 2001, the first year after they signed a free trade agreement. The values are given both in Singapore dollars (S$) and New Zealand dollars (NZ$). S$ m NZ$ m percentage change from 2000 Singapore exports to New Zealand +20% Singapore imports from New Zealand –17% What can be concluded from the table?

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

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

Open

23

Country X conducts 60% of its trade with country Y and 40% of its trade with country Z. The initial value of the trade weighted exchange rate index of country X is 100. What will be its new trade weighted exchange rate index value if its currency rises in value by 20% against the currency of Y and falls by 10% against the currency of Z?

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

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

Open

24

In the diagram D1 and S1 are the initial supply and demand curves of the pound sterling (£) on the foreign exchange markets. D1 S1 D2 S2 O price of £ (in $) quantity of £ What will cause the demand curve to shift to D2 and the supply curve to S2?

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

25

A country’s terms of trade currently stands at 150 (base year 2000 = 100). Since 2000 the average price the country has received for its exports has increased by 20%. What has been the change in the average price it has paid for its imports?

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

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

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

Open

26

The table shows the ability of two countries, P and Q, to produce two goods, Y and Z. production of good Y per person production of good Z per person country P country Q Which statement is correct?

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

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

Open

27

Which government policy could be considered as a protectionist policy?

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

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

Open

28

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?

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

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

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

Open

29

What is an example of an expenditure-dampening policy?

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

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

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

Open

30

An economy is currently operating close to its full employment level of national income. Which combination of macro-economic policies would be most likely to have net deflationary effects?

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

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

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

Open