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1

$2 bn is invested in developing a country’s natural resources and infrastructure. Which two factors of production does this refer to directly?

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

3. Microeconomic decision makers  →  3.6. Firms and production

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2

What makes specialisation easier?

6. International trade and globalisation  →  6.1. International specialisation

6. International trade and globalisation  →  6.2. Globalisation, free trade and protection

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3

A free market economy is more likely than a planned economy to encourage development because A equality of income is encouraged. B factors of production would be employed efficiently. C government intervention uses taxes and subsidies. D social costs are taken into consideration.

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

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

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4

An economy is producing at X. food machines X Y What is the opportunity cost of choosing to produce at Y instead of X?

1. The basic economic problem  →  1.3. Opportunity cost

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

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5

Each country of Southern Africa has a mixed economy. Which statement about a mixed economy is correct?

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

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6

When will a trade union be most effective in pursuing its members' interests?

3. Microeconomic decision makers  →  3.4. Trade unions

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

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7

The table gives information about four business organisations. Which organisation is most likely to be described as a co-operative?

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

3. Microeconomic decision makers  →  3.5. Firms

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8

What is the function of a stock exchange?

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

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9

A French company employs French people, is located only in France, sells shares on the stock exchange but uses other firms to transport its products to other countries. What type of company is this?

3. Microeconomic decision makers  →  3.5. Firms

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10

A demand curve for a product shows the relationship between its price and A cost of production. B population changes. C the income of the consumer. D the quantity of the product consumed.

2. The allocation of resources  →  2.3. Demand

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

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11

The following was printed in a magazine. More soft drinks are being consumed than ever before by the 16 – 34 age group. Schweppes, the drink manufacturers, claim that over 45 per cent of their soft drinks are now being consumed without alcohol as people switch away from alcoholic spirits. How would this change be represented on a demand and supply diagram for soft drinks?

2. The allocation of resources  →  2.3. Demand

2. The allocation of resources  →  2.6. Price changes

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12

A firm produces a good with a price elasticity of demand greater than 1. What must the firm experience if there is a fall in the price of this good?

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

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13

Australian mines are among the world’s largest suppliers of uranium but the mines are contaminating Australia’s natural environment. It is recommended that the mining companies install new equipment which causes less pollution. If this is done, how would it be represented on a demand and supply diagram for uranium?

2. The allocation of resources  →  2.3. Demand

2. The allocation of resources  →  2.6. Price changes

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14

The diagram shows the demand and supply of places in independent schools which charge fees. The equilibrium position is X. The costs of independent schools rise. Also a report is issued which states that Government schools achieve very good examination results. What is likely to be the new equilibrium position?

2. The allocation of resources  →  2.6. Price changes

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

2. The allocation of resources  →  2.5. Price determination

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15

Which group is likely to save the largest proportion of its income?

3. Microeconomic decision makers  →  3.3. Workers

3. Microeconomic decision makers  →  3.2. Households

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16

What is not included in a person’s stock of wealth?

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17

What might cause the wages of bus drivers to rise?

3. Microeconomic decision makers  →  3.3. Workers

3. Microeconomic decision makers  →  3.6. Firms and production

Open

18

What will lead to an increase in spending?

4. Government and the macroeconomy  →  4.3. Fiscal policy

4. Government and the macroeconomy  →  4.6. Economic growth

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19

Which diagram represents a firm with economies of scale?

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

3. Microeconomic decision makers  →  3.5. Firms

Open

20

A British firm, Dyson, moved production of its vacuum cleaners from the UK to Malaysia. Why might it have made this change?

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

2. The allocation of resources  →  2.6. Price changes

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21

What is a fixed cost of production?

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

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

Open

22

What is not equal to the average revenue?

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

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23

What is most likely to happen if a regressive tax replaces a progressive tax?

4. Government and the macroeconomy  →  4.3. Fiscal policy

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24

A government decides to reduce income tax. Which aims of government policy would this help to achieve?

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

4. Government and the macroeconomy  →  4.3. Fiscal policy

Open

25

Why might a government discourage monopolies?

2. The allocation of resources  →  2.10. Market failure

6. International trade and globalisation  →  6.2. Globalisation, free trade and protection

3. Microeconomic decision makers  →  3.8. Market structure

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26

Which type of unemployment is generally regarded by economists as the least serious for the economy?

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

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27

The citizens most likely to benefit in a period of rapid inflation are those who A are receiving fixed state benefits. B earn fixed incomes. C have lent money at a fixed rate of interest. D have borrowed money at a fixed rate of interest.

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

3. Microeconomic decision makers  →  3.2. Households

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28

The table shows the proportion of the working population in different sectors in three countries. country agriculture % manufacturing % services % Iran Nepal UK What can be concluded from the table?

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

3. Microeconomic decision makers  →  3.5. Firms

3. Microeconomic decision makers  →  3.3. Workers

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29

In rural areas in developing countries women often do unpaid work on traditional activities. Why might this mean that the GDP is not a good measure of the standard of living in those countries?

5. Economic development  →  5.1. Living standards

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30

The table shows unemployment and inflation statistics for the US, Japan and Sweden for year 1 and year 2. unemployment (%) inflation (% pa) country year 1 year 2 year 1 year 2 US 4.8 4.4 5.6 3.4 Japan 2.7 2.7 1.7 0.7 Sweden 2.7 3.2 8.3 6.6 Which conclusion can be made from the table?

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

Open

31

Two industries in Namibia are fishing and tourism. The value of the currency of Namibia fell in 2001. If there were no other changes, what resulted from the fall?

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

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32

What is likely if the proportion of retired people in a country increases?

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

4. Government and the macroeconomy  →  4.6. Economic growth

3. Microeconomic decision makers  →  3.2. Households

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33

Which country is likely to have the lowest standard of living?

5. Economic development  →  5.1. Living standards

5. Economic development  →  5.3. Population

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34

In 2005, world population had grown to 6.5 billion with an increase of more than 4 billion since 1950. What is most likely to have been the cause of this?

5. Economic development  →  5.3. Population

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35

At the G8 Economic Summit in 2005, it was decided to cancel much of the debt which African countries owed to European and North American countries. This will have the same effect as a transfer of resources from A developed countries to developing countries. B developing countries to developed countries. C market economies to planned economies. D planned economies to market economies.

4. Government and the macroeconomy  →  4.6. Economic growth

6. International trade and globalisation  →  6.2. Globalisation, free trade and protection

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

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36

A government decides to reduce the size of the quota on a good. What is likely to happen?

6. International trade and globalisation  →  6.2. Globalisation, free trade and protection

4. Government and the macroeconomy  →  4.3. Fiscal policy

Open

37

What is an external cost of smoking cigarettes?

4. Government and the macroeconomy  →  4.3. Fiscal policy

1. The basic economic problem  →  1.3. Opportunity cost

Open

38

Why may it be better to increase public expenditure while reducing private expenditure?

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

4. Government and the macroeconomy  →  4.3. Fiscal policy

Open

39

In London, an extra charge is placed on the use of cars in the city centre which causes car drivers to switch to public transport. What is likely to happen to the private costs of those who continue to drive cars and to external benefits?

4. Government and the macroeconomy  →  4.6. Economic growth

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

Open

40

What will result if Europe reduces trade barriers to increase imports of clothing and food from Asia and Africa?

6. International trade and globalisation  →  6.2. Globalisation, free trade and protection

Open