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1

In China the government is concerned about the level of poverty and the need for more resources in the poorer regions of the country. As a result, it is increasing its expenditure there and reducing it in the wealthier regions. Which economic concept does this government policy illustrate best?

2. The allocation of resources  →  2.2. The role of markets in allocating resources

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2

A country with a low income per head discovers large quantities of oil, which eventually makes everybody better off. Why is the basic economic problem of scarcity not solved by this discovery?

1. The basic economic problem  →  1.1. The nature of the economic problem

2. The allocation of resources  →  2.2. The role of markets in allocating resources

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3

Two telecommunications companies are to merge to finance investments in new technology, which will be more efficient and require smaller buildings. Three hundred workers will lose their jobs. What will happen to the factors of production used?

3. Microeconomic decision makers  →  3.6. Firms and production

1. The basic economic problem  →  1.2. The factors of production

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4

Why might a free market economy be more advantageous than a mixed economy?

2. The allocation of resources  →  2.11. Mixed economic system

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5

An international company drilled for oil in deep water and caused a major oil leakage, which affected the jobs of the fishing community. The government ordered the company to close the well and to stop drilling in the area. What are the external costs of this incident?

2. The allocation of resources  →  2.10. Market failure

1. The basic economic problem  →  1.1. The nature of the economic problem

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6

A supply curve for a commodity is drawn to show how quantity supplied varies with A government taxes. B income. C tastes. D the price of the commodity.

2. The allocation of resources  →  2.8. Price elasticity of supply (PES)

2. The allocation of resources  →  2.4. Supply

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7

In 2010, floods caused severe damage to wheat production. How would this be shown...

2. The allocation of resources  →  2.3. Demand

2. The allocation of resources  →  2.4. Supply

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8

Which is a type of market failure?

2. The allocation of resources  →  2.10. Market failure

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9

The market for a normal good is in equilibrium at point X. Consumers’ incomes fall and the cost of producing the good rises. In which area of the diagram will the new equilibrium be?

2. The allocation of resources  →  2.6. Price changes

2. The allocation of resources  →  2.2. The role of markets in allocating resources

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10

On average, doctors earn more than bus drivers. Which change would be likely to reduce the earnings gap between doctors and bus drivers?

3. Microeconomic decision makers  →  3.3. Workers

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11

What could reduce the ability of a trade union to gain a pay rise for its members in a shoe factory?

3. Microeconomic decision makers  →  3.3. Workers

3. Microeconomic decision makers  →  3.4. Trade unions

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12

What might encourage a consumer to save rather than to spend?

3. Microeconomic decision makers  →  3.2. Households

4. Government and the macroeconomy  →  4.8. Inflation and deflation

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13

Why do banknotes function as money?

3. Microeconomic decision makers  →  3.1. Money and banking

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14

The table shows the proportion of income saved for different age groups. age 15 – 29 30 – 39 40 – 49 50 – 62 63+ % of income saved –34 % – 4 % 18 % 29 % –23 % What can be concluded from this data?

3. Microeconomic decision makers  →  3.2. Households

5. Economic development  →  5.3. Population

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15

Which is an external economy of scale?

3. Microeconomic decision makers  →  3.5. Firms

3. Microeconomic decision makers  →  3.6. Firms and production

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16

What is a variable cost to a firm producing bicycles?

3. Microeconomic decision makers  →  3.7. Firms’ costs, revenue and objectives

1. The basic economic problem  →  1.2. The factors of production

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17

Partnerships in the United States of America (US) can now issue tradable shares and can limit the amount of money that shareholders may lose. To which type of business organisation do these changes make US partnerships similar?

3. Microeconomic decision makers  →  3.5. Firms

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18

The graphs show the average total cost (ATC) curves of four firms and how they change as output increases. Which firm has the highest fixed costs?

3. Microeconomic decision makers  →  3.7. Firms’ costs, revenue and objectives

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19

What is a possible advantage to the consumer of a monopoly supplier in a market?

3. Microeconomic decision makers  →  3.8. Market structure

2. The allocation of resources  →  2.9. Market economic system

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20

Which government policy would best protect the environment?

4. Government and the macroeconomy  →  4.3. Fiscal policy

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21

A government wishes to stimulate economic recovery. Which action will assist this?

4. Government and the macroeconomy  →  4.3. Fiscal policy

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22

A country has a proportional system of taxation. A person pays $500 tax when earnings are $5000. How much tax will be paid if earnings rise to $12 000?

4. Government and the macroeconomy  →  4.3. Fiscal policy

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23

The graph shows government revenue and spending in a country, as a percentage of GDP, between 2004 and 2011. % of GDP government spending government revenue year What can be concluded from the graph?

4. Government and the macroeconomy  →  4.3. Fiscal policy

6. International trade and globalisation  →  6.4. Current account of balance of payments

4. Government and the macroeconomy  →  4.6. Economic growth

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24

Each year, extra cleaning staff were employed by a hotel on a temporary basis during the busy holiday period. They were not employed when the hotel was not busy. What type of unemployment occurred when the hotel was not busy?

4. Government and the macroeconomy  →  4.7. Employment and unemployment

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25

In the measurement of the UK’s Retail Prices Index, a greater weight was given to bottled water in 2010 than 2009. What does this change indicate?

2. The allocation of resources  →  2.6. Price changes

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26

An Economics student described a typical developing country as having a large population, a low GDP per head, a relatively large primary sector and an uneven income distribution. Which of these features is not necessarily accurate?

5. Economic development  →  5.3. Population

5. Economic development  →  5.4. Differences in economic development between countries

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27

In the developing economies of southern Africa, both infant mortality and life expectancy have fallen. Life expectancy now averages only 41 years. What is the result of these changes?

5. Economic development  →  5.4. Differences in economic development between countries

5. Economic development  →  5.3. Population

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28

The table shows the percentages of consumer spending on different items in four countries, which have similar geographical conditions and climate. Which country is likely to have the highest standard of living?

5. Economic development  →  5.1. Living standards

3. Microeconomic decision makers  →  3.2. Households

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29

A government agreed to provide $20 million to a developing country to help supply emergency aid. In which part of the current account of the balance of payments was this payment recorded?

6. International trade and globalisation  →  6.4. Current account of balance of payments

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30

In some Asian countries the cost of labour is lower than in developed countries. As a result they manufacture and export clothes to Europe, where the demand for clothes is high. The quality of these clothes, however, is not as good as some of the clothes produced in Europe. What is likely to happen in the Asian countries and to the total expenditure on clothes in Europe?

6. International trade and globalisation  →  6.4. Current account of balance of payments

6. International trade and globalisation  →  6.3. Foreign exchange rates

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