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1

What would be an opportunity cost of growth in an economy?

4. The Macroeconomy (AS Level)  →  4.4. Economic growth

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2

A ««1«« economic statement is an objective statement that ««2«« be tested using factual evidence, whereas a ««3«« economic statement is a subjective statement that ««4«« be tested using factual evidence. Which words complete gaps 1, 2, 3 and 4?

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

9. The macroeconomy (A Level)  →  9.2. Economic growth and sustainability

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

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3

What would most likely be considered an advantage by producers and a disadvantage by consumers of the operation of a planned economy?

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

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

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

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4

A country can produce manufactured goods and agricultural products as shown...

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)  →  2.5. Consumer and producer surplus

Open

5

The diagram shows a demand curve for a good. O price quantity D Which statement describes the nature of this demand curve?

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 relationship between the price and the total expenditure on a good. total expenditure price O Which statement is correct?

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

Open

7

Over the last ten years the price elasticity of demand for tea in many countries has risen. What is the most likely cause of this change in price elasticity?

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

Open

8

What would be the price elasticity of supply of cell phones if their price rose from US$100 to US$110 and the quantity supplied rose from 200 to 250?

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

9

A product has a high price elasticity of supply. What might explain this?

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

10

The diagram shows the demand curve, DD1, and the supply curve, SS1, for eye operations. O number of operations price S S1 D D1 P The operations are provided free to the consumer. Which statement is correct?

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

11

The demand for houses in London has caused house prices to rise considerably in the last five years. Many people cannot now afford to buy a house. What can be concluded from this?

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)  →  2.1. Demand and supply curves

Open

12

A specific tax is placed upon each bottle of perfume sold. In the diagram, S is the supply curve before tax and St is the supply curve after tax. O P Y Z T U D Q price quantity R W St S X Which area represents the revenue received by the government from the tax?

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

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

Open

13

The diagram shows the demand curve and supply curve for a product. price quantity O X W Z S D Y Which area represents producer surplus?

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

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

Open

14

Which statement about maximum and minimum prices is correct?

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

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

7. The price system and the microeconomy (A Level)  →  7.8. Differing objectives and policies of firms

Open

15

The diagram shows the effect on the market for a product of the introduction of a government subsidy. price ($) quantity S1 S2 D What is the result of the payment of the subsidy?

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

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

Open

16

Why are the pensions paid to retired citizens an example of a transfer payment?

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

8. Government microeconomic intervention (A Level)  →  8.2. Equity and redistribution of income and wealth

Open

17

What is definitely a feature of a nationalised industry?

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

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

Open

18

Which government action would be identified as the direct provision of goods and services?

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

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

Open

19

In its 2016 budget statement, the South African government proposed stimulating business activity by the removal of regulations. It also announced that government expenditure was expected to grow by 7.1%. The diagram shows aggregate demand (AD) and aggregate supply (AS) for the South African economy. X is the original equilibrium point. Which new equilibrium would result from the changes?

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

Open

20

What would be certain to cause a fall in a country’s cost of living?

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

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

Open

21

The table gives figures for household spending in the UK economy between 2008 and 2010. nominal household consumption spending (£ million) real household consumption spending (£ million) 878 024 878 024 858 242 846 961 900 204 855 302 What can be concluded from the figures?

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

4. The Macroeconomy (AS Level)  →  4.4. Economic growth

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

Open

22

The table shows trade in goods and services for a selection of countries in 2005 and 2014. trade in goods and services (US$ millions) exports imports exports imports Argentina 46 892 34 797 82 026 79 194 Brazil 133 055 96 611 264 063 318 799 Ecuador 11 480 11 851 28 935 30 215 Mexico 230 369 245 100 418 952 433 977 What can be concluded about the balances of trade in goods and services from the table?

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

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

Open

23

A newspaper headline stated that the Australian car industry has been affected by the strength of the Australian dollar. What would not be an effect caused by a strong rising Australian dollar?

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

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

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

Open

24

The terms of trade for a country have improved. Which combination of price behaviour would have caused this?

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

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

25

The graphs show the production possibilities for commodities X and Y in two countries M and N. Y X country M Y X country N What will be the effect of an agreement between M and N to exchange the commodities at a rate of 1Y for 3X?

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

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

Open

26

In the diagram, D is a country’s demand curve for an imported good. The country’s government imposes an import tariff equal to PWPC on the good. price O quantity PC PW x y z D Which areas measure the resulting loss in consumer surplus and the resulting gain in government revenue?

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

Open

27

The demand for a country’s exports is price-elastic. What will be the effect of introducing export subsidies on its balance of trade and on its terms of trade?

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

11. International economic issues (A Level)  →  11.6. Globalisation

Open

28

A government decides to borrow from the general public in order to finance its extra spending on apprenticeship training schemes. Which types of macroeconomic policy are being used?

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

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

Open

29

Which policy is not likely to help reduce a balance of payments deficit?

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

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

Open

30

A country has a target rate of inflation of 2.5% and has recently experienced the actual rate rising to 6%, with unemployment falling to very low levels. Which policy option is most likely to be implemented?

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

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

9. The macroeconomy (A Level)  →  9.3. Employment/unemployment

Open