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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

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

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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

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

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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?

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

2. The allocation of resources  →  2.10. Market failure

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

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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  →  2.4. Supply

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

2. The allocation of resources  →  2.6. Price changes

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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  →  2.6. Price changes

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8

The demand for a good is totally inelastic with regard to price. What will happen to the firm’s revenue if the price rises by 20 %?

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

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9

Which is a type of market failure?

2. The allocation of resources  →  2.10. Market failure

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10

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

2. The allocation of resources  →  2.5. Price determination

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11

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

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

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12

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  →  3.4. Trade unions

3. Microeconomic decision makers  →  3.3. Workers

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13

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

4. Government and the macroeconomy  →  4.3. Fiscal policy

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

4. Government and the macroeconomy  →  4.4. Monetary policy

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14

Why do banknotes function as money?

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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15

Which function is performed by both commercial banks and central banks?

3. Microeconomic decision makers  →  3.1. Money and banking

4. Government and the macroeconomy  →  4.4. Monetary policy

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16

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  →  5.1. Living standards

3. Microeconomic decision makers  →  3.3. Workers

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17

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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18

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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19

In January 2008, ICI, a major UK chemical firm, was bought by its rival, a Dutch chemical firm. What definitely occurred when the Dutch firm bought ICI?

3. Microeconomic decision makers  →  3.5. Firms

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

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20

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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21

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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22

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  →  2.10. Market failure

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

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23

Which government policy would best protect the environment?

4. Government and the macroeconomy  →  4.3. Fiscal policy

4. Government and the macroeconomy  →  4.6. Economic growth

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24

In 2010, the Brazilian Government stated it was concentrating on making the country the world’s fifth biggest economy by 2025, and on narrowing the gap between the rich and the poor in the country. What does the statement indicate were the main aims of the Brazilian Government?

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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25

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

4. Government and the macroeconomy  →  4.3. Fiscal policy

4. Government and the macroeconomy  →  4.4. Monetary policy

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26

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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27

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

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28

The government pays a subsidy for each worker employed by a firm in an area of high unemployment. When would this policy be most successful in reducing unemployment?

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

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29

What is not involved in the construction of a retail price index?

2. The allocation of resources  →  2.6. Price changes

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

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30

The Human Development Index (HDmeasures more than just average incomes. What are two additional measures it includes?

5. Economic development  →  5.1. Living standards

5. Economic development  →  5.2. Poverty

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31

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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32

A country’s Gross Domestic Product (GDP) falls, while its population falls. What happens to GDP per head?

4. Government and the macroeconomy  →  4.6. Economic growth

5. Economic development  →  5.1. Living standards

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33

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

4. Government and the macroeconomy  →  4.6. Economic growth

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34

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  →  5.4. Differences in economic development between countries

5. Economic development  →  5.1. Living standards

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35

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

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

4. Government and the macroeconomy  →  4.6. Economic growth

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36

Which feature is a typical characteristic of a developed country?

5. Economic development  →  5.3. Population

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

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37

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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38

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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39

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  →  6.3. Foreign exchange rates

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

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40

The value of the Pakistani rupee changes, from 60 rupees to US$1, to 50 rupees to US$1. What effect will this have on the price of Pakistani products sold in the US and the price of US products sold in Pakistan?

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

2. The allocation of resources  →  2.6. Price changes

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