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1

Every business organisation faces the problem of satisfying wants. What is the reason why wants are not fully satisfied?

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

2. The allocation of resources  →  2.10. Market failure

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2

A university rejects 2000 qualified applicants who wish to study there. What factor of production could have caused the university to make this decision?

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

3. Microeconomic decision makers  →  3.6. Firms and production

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3

The diagram shows the choices for an individual between leisure and earnings. earnings $ hours of leisure per day X Y What is the opportunity cost to the individual of the extra earnings when moving from position X to position Y?

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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4

The table shows how employment in selected industries changed in a country between 2000 and 2010. year 2000 (thousands employed) year 2010 (thousands employed) banking and finance distribution and catering farming manufacturing According to the table, which type of employment has increased?

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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5

How are economic decisions determined in a pure market system?

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

2. The allocation of resources  →  2.5. Price determination

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

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6

What is always a feature of a mixed economy?

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

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7

Wet weather in 2009 led to a fall in the sales of summer clothes. To support businesses the government reduced the sales tax (VAT). How would these events be shown...

2. The allocation of resources  →  2.6. Price changes

2. The allocation of resources  →  2.3. Demand

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8

Drought in African countries often results in poor harvests. Other countries then help by sending quantities of food. What are the likely results of these events for the price of food in the drought-affected countries?

2. The allocation of resources  →  2.6. Price changes

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

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9

The graphs, drawn to the same scale, show the demand curves of four firms. The market price is $10. The price then falls to $8. Which firm will have the largest increase in total revenue?

2. The allocation of resources  →  2.6. Price changes

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

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10

Which person would wish to encourage the use of the market system?

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

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

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11

What is an example of an external cost?

1. The basic economic problem  →  1.3. Opportunity cost

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

3. Microeconomic decision makers  →  3.5. Firms

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12

Which motive is most likely to increase the wish to open a savings account?

3. Microeconomic decision makers  →  3.1. Money and banking

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

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13

In most countries, which organisation controls the banking system?

3. Microeconomic decision makers  →  3.1. Money and banking

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

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14

Share prices on the stock market are most likely to rise if A employment falls. B interest rates fall. C interest rates rise. D tax rates rise.

4. Government and the macroeconomy  →  4.4. Monetary policy

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

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15

The ways of making and receiving payments continue to develop. As well as cash, debit cards and credit cards, mobile phones are now being used to make payments. Which method of paying for products provides no information to sellers about their customers?

3. Microeconomic decision makers  →  3.1. Money and banking

2. The allocation of resources  →  2.6. Price changes

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16

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

3. Microeconomic decision makers  →  3.4. Trade unions

3. Microeconomic decision makers  →  3.3. Workers

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17

In 2009, the Chinese Government tried to increase household spending. Which policy measure would have been most likely to achieve this objective?

4. Government and the macroeconomy  →  4.3. Fiscal policy

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18

Mr Jones runs a small shop selling household appliances. His total revenue has declined due to the opening of a large supermarket which sells a similar range of goods. How could Mr Jones compete with the supermarket?

3. Microeconomic decision makers  →  3.5. Firms

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

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19

The table shows how a firm’s total cost rises with changes in output. output total cost ($) 20 000 30 000 35 000 40 000 45 000 50 000 What is the average fixed cost of producing 5000 units?

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

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

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20

General Motors, a large multi-national company based in the United States, sold some of its European car assembly plants to other car manufacturers during the world recession (economic downturn) in 2009. Which economic reason would have been most likely to influence this decision?

3. Microeconomic decision makers  →  3.6. Firms and production

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

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21

A firm is producing an output which enables it to make more than normal profit. What must be true at that output?

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

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22

Which statement about total fixed cost is correct?

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

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23

Which type of business organisation has its shares quoted on a stock exchange?

3. Microeconomic decision makers  →  3.5. Firms

2. The allocation of resources  →  2.10. Market failure

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

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24

Which type of tax is a sales tax (VAT)?

4. Government and the macroeconomy  →  4.3. Fiscal policy

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25

What is a long-term advantage of economic growth?

4. Government and the macroeconomy  →  4.6. Economic growth

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

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26

A tax on which of the following is usually progressive and is paid by a large number of tax payers?

4. Government and the macroeconomy  →  4.3. Fiscal policy

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

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27

Which government policy would be likely to help local companies expand?

4. Government and the macroeconomy  →  4.3. Fiscal policy

4. Government and the macroeconomy  →  4.4. Monetary policy

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28

Between December 2008 and August 2009, the Central Bank of South Africa cut the rate of interest from 12.5 % to 7 %. What effect would this action be expected to have on economic growth and unemployment?

4. Government and the macroeconomy  →  4.6. Economic growth

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

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29

A government decides to subsidise a major industry that is making a loss and also reduce sales tax (VAT) to increase consumer demand. Which aim would these policies be likely to help and which aim would they be likely to hinder?

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

4. Government and the macroeconomy  →  4.6. Economic growth

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30

There was a fall in investment spending by businesses in the third quarter of 2008. What would be the likely result of this?

4. Government and the macroeconomy  →  4.6. Economic growth

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

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31

What is typical of a recession (economic downturn)?

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

4. Government and the macroeconomy  →  4.6. Economic growth

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32

A newspaper reported that there were signs of economic growth and inflation in an economy. What would not be evidence of such a situation?

4. Government and the macroeconomy  →  4.6. Economic growth

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33

What is the most obvious sign of inflation?

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

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34

The table gives information about four countries. Which country is likely to have the lowest standard of living?

5. Economic development  →  5.1. Living standards

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35

What is most likely to happen if there is a fall in the death rate while the birth rate and migration remain unchanged?

5. Economic development  →  5.3. Population

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36

Developing countries are sometimes given aid by charities and foreign governments. Which aid programme would be least likely to lead to long-term economic growth?

4. Government and the macroeconomy  →  4.6. Economic growth

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

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37

In 2008, the Peruvian Government set itself the target of reducing the number of its people in poverty to 30 % of the population. Which change would be most likely to indicate that the Peruvian Government had made progress towards this objective?

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

5. Economic development  →  5.2. Poverty

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38

Many sportsmen and sportswomen from developing countries go to the United States (US) to earn money, most of which they send back to their own countries. What impact would this have on the Balance of Payments?

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

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39

The table gives the retail price of a paperback book as printed on its back cover. United Kingdom £6.99 Canada $11.99 (Canadian dollars) Australia $14.99 (Australian dollars) New Zealand $20.95 (New Zealand dollars) What is needed to make a clear comparison of the price in the four countries?

2. The allocation of resources  →  2.6. Price changes

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

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40

What might encourage international specialisation between countries?

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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