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1

People plant flowers in a local park. Which statement is correct?

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

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

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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2

A government decides that all non-essential businesses must close for three months due to a disease pandemic. What is an opportunity cost of this policy?

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

Open

3

The diagram shows an economy’s production possibility curve. The economy produces combinations of goods and services using all available resources. O goods services What does the production possibility curve indicate for goods and services?

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

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4

Which economic conditions are likely to encourage an increase in enterprise?

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

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

Open

5

When is the price elasticity of demand for a product most likely to be price elastic?

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

6

What is most likely to cause a shift in the supply curve for rice?

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 free market is in disequilibrium with a shortage of a product. As the market moves towards equilibrium, what will happen to the price, the quantity demanded and the quantity supplied?

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

Open

8

What would not cause a shift in the demand curve for a good?

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

9

What does joint supply mean?

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

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

Open

10

When the price of a firm’s product falls by 5%, its total revenue also falls by 5%. What describes the product’s price elasticity of demand?

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

11

The table shows how an individual’s weekly consumption of biscuits and coffee varies with income. income ($) biscuits coffee Which statement about the income elasticity of demand over the range of income shown...

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

Open

12

The diagram shows four supply curves. O price quantity W X Y Z Which statement about the price elasticity of these supply curves is correct?

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

13

Product X has a price elasticity of supply (PES) of +2, whilst product Y has a PES of +0.2. Which statement about products X and Y is correct?

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

14

There are 10 000 tickets available to watch a sports final at a national stadium. The initial market equilibrium ticket price is $20. The government decides to fix an effective minimum price for the tickets. Under which conditions will the consumer surplus for the tickets decrease the most as a result of the minimum 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)  →  2.5. Consumer and producer surplus

Open

15

The diagram shows the impact of a government imposing a unit tax on a demerit good. S is the supply curve before the tax and S1 is the supply curve after the tax. S1 S D 5 10 quantity price $ What is the after-tax revenue of the firm producing the demerit good?

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

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

Open

16

A government has a policy aim of reducing income inequality. It considers three policies. Which combination of policies would be most effective?

3. Government microeconomic intervention (AS Level)  →  3.3. Addressing income and wealth inequality

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

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

Open

17

A Bangladeshi citizen is employed as a construction worker in Qatar. He sends some of his wages to his family in Bangladesh. How will this be recorded on Qatar’s balance of payments?

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

Open

18

The table gives data for an economy. Gross Domestic Product (GDP) at current prices ($ billion) GDP deflator (price inde100 In which year did real GDP decline compared with the previous year?

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

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

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

Open

19

Which policy is most likely to help to correct an adverse balance on 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

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

Open

20

In year 1, a country’s real GDP was $500 billion. In year 2, nominal GDP rose to $577.5 billion and the prices increased by 5%. What is the real GDP in year 2?

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

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

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

Open

21

The table gives details of national income statistics for an economy. US$bn consumption investment government expenditure net exports –100 net foreign factor income –200 depreciation What is the net national income for this economy?

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

Open

22

The table shows the relative price of exports compared with imports expressed as an index number for an economy (2013 = 100). date index Which statement about the period 2013–2015 is correct?

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

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 and country Y each allocate half of their resources towards the manufacturing of shoes, and the other half towards the manufacturing of t-shirts. Resources can be used equally effectively in the production of both products in both countries. The table shows the output of shoes and t-shirts produced by both countries using half their resources in each case, before specialisation. country shoes t-shirts X 4 000 12 000 Y 2 000 8 000 total 6 000 20 000 What can be concluded from the data?

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

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

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

Open

24

Which government action is least likely to prevent a fall in economic growth?

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

Open

25

What is the most likely cause of an outward shift of a country’s aggregate demand curve?

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

Open

26

The diagram shows the macroeconomic equilibrium output and price level changing from Y and P to Y1 and P1. O P Y Y1 real output price level LRAS AD1 AD P1 What could have caused this change?

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

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

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

Open

27

A country had a current account surplus of $141bn. Which policy may its government implement to reduce this surplus in the short run?

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

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

Open

28

The diagram shows aggregate demand (AD) and aggregate supply in the short run (SRAS) and the long run (LRAS). LRAS LRAS1 AD SRAS SRAS1 W Y price level real GDP O Which row is correct in causing a shift in the short run aggregate supply from SRAS to SRAS1 and the long run aggregate supply from LRAS to LRAS1?

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

Open

29

The diagram shows that the imposition of a tariff raises a product’s world price from $10 to $14. domestic supply domestic demand quantity price $ By how much did domestic producers’ income increase as a result of the tariff?

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)  →  2.5. Consumer and producer surplus

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

Open

30

Which approach would a government be most likely to use to eliminate deflation?

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

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

Open