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1

Economics textbooks often start by identifying the existence of the basic economic problem. What is it that makes this problem ‘basic’?

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

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

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2

Which statement about the factors of production is correct?

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

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3

The diagram shows two production possibility curves for an economy. O X Y Y X agricultural products manufactured products What could have caused the change in the economy’s production possibility curve from XX to YY?

1. The basic economic problem  →  1.4. Production possibility curve (PPC) diagrams

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4

What is most likely to influence the price elasticity of demand for a food?

2. The allocation of resources  →  2.7. Price elasticity of demand (PED)

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

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5

What is meant by the equilibrium quantity in the market for a product?

2. The allocation of resources  →  2.6. Price changes

2. The allocation of resources  →  2.5. Price determination

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

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6

The following is a headline from the newspaper. Car drivers to pay higher taxes What will result from an increased tax on cars?

3. Microeconomic decision makers  →  3.5. Firms

4. Government and the macroeconomy  →  4.3. Fiscal policy

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

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7

The diagram shows the market for refined oil with equilibrium of X. What will be the new equilibrium when a major oil refinery shuts down for repair work?

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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8

A group of workers in a firm joins a trade union. What would the union be expected to do?

3. Microeconomic decision makers  →  3.4. Trade unions

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9

In which occupations do wages tend to be lowest?

3. Microeconomic decision makers  →  3.3. Workers

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10

When might rapid inflation together with low interest rates be a source of concern for a consumer?

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

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11

Asda, a supermarket chain, noticed a regular, sharp decrease in sales in the third week of the month as people ran out of cash before their next wage payment. The supermarket offered their biggest price reductions at that time. Why might this policy increase total revenue?

2. The allocation of resources  →  2.7. Price elasticity of demand (PED)

2. The allocation of resources  →  2.6. Price changes

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12

A large tyre manufacturer expands by taking over a rubber plantation. Of what is this an example?

3. Microeconomic decision makers  →  3.5. Firms

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13

What may exist in perfect competition but not in monopoly?

3. Microeconomic decision makers  →  3.8. Market structure

2. The allocation of resources  →  2.10. Market failure

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14

The diagram shows the cost and revenue curves of a firm which starts to make a profit only after producing 100 units of output. costs and revenue $ output What are the correct labels for line 1 and line 2?

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

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15

The table shows output and total costs of production of a firm with three workers. output total costs ($) week 1 week 2 week 3 week 4 How did output per worker and average cost of the product change over the period?

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

3. Microeconomic decision makers  →  3.6. Firms and production

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16

A government aims to keep domestic prices stable in a fully employed economy. Which policy should it use?

4. Government and the macroeconomy  →  4.2. The macroeconomic aims of government

4. Government and the macroeconomy  →  4.3. Fiscal policy

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17

What describes a regressive tax?

4. Government and the macroeconomy  →  4.3. Fiscal policy

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18

In 2011 the Egyptian Government increased the top rate of income tax. What is likely to have been the main aim of this policy measure?

4. Government and the macroeconomy  →  4.3. Fiscal policy

4. Government and the macroeconomy  →  4.2. The macroeconomic aims of government

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19

The table shows the tax paid at different levels of income. income ($) amount of tax ($) Which describes this tax?

4. Government and the macroeconomy  →  4.3. Fiscal policy

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20

What must be a consequence of deflation in a country?

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

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21

World population increased from 5.26 billion in 1990 to just over 7.00 billion in 2012. It is predicted to rise to 8.00 billion by 2025. What is most likely to explain this?

5. Economic development  →  5.3. Population

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22

The table shows the rate of unemployment and the annual rates of change of gross domestic product (GDP) and consumer prices for four countries in 2012. Which country was experiencing the worst economic recession?

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

4. Government and the macroeconomy  →  4.6. Economic growth

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23

The table shows the percentage change (%) in employment over a period for a country with three economic sectors. economic sector (%) change in employment agriculture –6 manufacturing +2 services +4 What could be concluded from this information?

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

4. Government and the macroeconomy  →  4.6. Economic growth

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24

What is most likely to be found in a developed country?

5. Economic development  →  5.1. Living standards

3. Microeconomic decision makers  →  3.5. Firms

5. Economic development  →  5.3. Population

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25

What will increase the level of economic development in a country?

4. Government and the macroeconomy  →  4.6. Economic growth

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26

Developing countries have, relatively, far more poor people than developed countries. What is the reason for this?

5. Economic development  →  5.3. Population

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

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27

The table shows statistics for four countries in southern Africa. From the information given, which country has the lowest standard of living?

5. Economic development  →  5.1. Living standards

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28

When the US$ exchange rate falls it will usually A help to reduce a US trade deficit. B increase the foreign price of US exports. C reduce the price of US imports. D reduce US inflation.

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

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

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29

Which change will increase the demand for imports?

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

2. The allocation of resources  →  2.3. Demand

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30

In recent years, the US has experienced a deficit on its overall current account of the balance of payments. What could have led to an increase in the size of the deficit?

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

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