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1

A government department provides milk at no charge to very low income families. Which term best describes the milk?

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

Open

2

Which statement is a normative statement?

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

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

Open

3

What do economists regard as the reward for taking risks and organising production?

1. Basic economic ideas and resource allocation (AS Level)  →  1.3. Factors of production

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

Open

4

The British pound is the national currency of the UK. In Brixton in south London it is possible to get a distinctively marked currency called the Brixton pound from special cash machines. This can be spent with 150 local shopkeepers. Similar schemes are found in towns in the US, Italy and France. Should Brixton pounds be considered money?

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

Open

5

When stating the law of demand for a good, economists use the phrase ‘all other things being equal’. What is not one of these ‘all other things’?

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)  →  2.5. Consumer and producer surplus

Open

6

What will not cause a shift in the market supply curve of a commodity?

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

7

A product has a low price elasticity of supply. What might 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)  →  2.2. Price elasticity, income elasticity and cross elasticity of demand

Open

8

A car manufacturer estimates that the price elasticity of supply of its cars is +2.5. What will be the impact of a 10% increase in price?

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

The diagram shows the original demand curve D1 and supply curve S1 for diesel cars in Europe. Point X is the initial equilibrium. There is a successful advertising campaign by electric car producers and a new unit tax on diesel cars. What will be the new equilibrium?

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

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

Open

10

A UK based food company wishes to diversify its product range. To finance this, it has obtained a $10m loan from a bank to buy land, build and equip a bakery. What would not be classified by an economist as a factor of production?

1. Basic economic ideas and resource allocation (AS Level)  →  1.3. Factors of production

Open

11

A country’s central bank has commissioned a report on the demand for and price of houses. What might be the most likely combination of reasons for an increase in the price and quantity demanded of houses?

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)  →  2.2. 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

The diagram shows the outcome when a landowner, who had allowed motorists to park on his field at no cost, introduces a parking charge of $1. charge parking spaces $1 X Y Z demand supply What happens as a result of the change?

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

Open

13

The table gives information about the market for two models of car. model number of cars sold per week cross elasticity of demand with respect to the price of petrol 1200 cc 10 000 –0.25 2000 cc 5 000 –0.50 If the prices of the cars remain unchanged, but the price of petrol increases by 100%, what will be the effect on the number of cars sold per week?

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

Open

14

In many countries there are goods that must be provided directly by the government. What would be the most convincing argument for such provision?

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

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

Open

15

The provision of rail services is switched from the private sector to the public sector. What is necessarily correct?

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

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

Open

16

The diagram represents the original demand curve D1 and the original supply curve S1 for electric cars. The government decides to provide a subsidy to electric car manufacturers. R N T M X Y E F G H O price of electric cars quantity of electric cars S1 D1 S2 Which area represents the total revenue of the car manufacturer after receiving the subsidy from the government?

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

17

A government decides to build additional public sector housing to be rented to people receiving low incomes. What is most likely to fall as a result of this increase in public sector housing?

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

Open

18

Government spending for a year includes these items. $m pensions for elderly people welfare payments to sick people spending on hospitals payment to unemployed workers defence spending teachers’ salaries What is the total of transfer payments by this government in $m?

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

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

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

Open

19

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

20

What is not an aim of protectionism?

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

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

Open

21

A country with a fixed exchange rate experiences a higher rate of inflation than its trading partners. What is the likely effect on the country’s volume of exports and imports?

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

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

Open

22

A sudden rise in the price of imported oil caused the annual rate of inflation in a given period to be higher than expected. What might be a likely result of this?

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

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

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

Open

23

What may increase the benefits a country gains from international trade?

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

Open

24

The world trade price of cars in country Y is US$10 000. At this price domestic car producers supply 100 000 cars to the market and domestic consumers purchase 200 000 cars. The government of country Y imposes a 10% tariff on imported cars. Under which conditions will this tariff raise the most revenue for the government?

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)  →  2.5. Consumer and producer surplus

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

Open

25

A country has a balance of trade deficit. When will this be least likely to be improved as a result of a depreciation of its currency?

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

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

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

Open

26

Which statement about trade protection is correct?

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

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

Open

27

Which type of policy would have the most immediate effect in dealing with a deflationary economic downturn?

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

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

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

Open

28

Which combination identifies a main aim of supply-side policy and a measure used to achieve this target?

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

5. Government macroeconomic intervention (AS Level)  →  5.1. Government macroeconomic policy objectives

Open

29

Deflation is associated with persistent falling price levels. Which government policy would be most effective to prevent deflation?

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

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

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

Open

30

The graph shows inflation rates over 10 years for selected emerging economies. year inflation % year on year W X Y Z Government central banks set target minimum inflation rates before readjusting interest rates to stabilise the economy. If the minimum inflation rate target set by central banks was 4% per year, at which points would they allow interest rates to fall?

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

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

Open