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1

To help reduce the price of oil, new supplies are needed. However, objectors oppose exploration of new sites because of the environmental damage it may cause. Why is this statement an example of the basic economic problem?

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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2

Which diagram shows an opportunity cost by movement from point X to point Y?

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

1. The basic economic problem  →  1.3. Opportunity cost

2. The allocation of resources  →  2.10. Market failure

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3

Helium is a gas that is limited in supply because it takes thousands of years to form. The US government holds 35% of the world’s supply of helium and has been selling its stocks. Helium is essential in medical scanners. It is also used for party balloons, which is a wasteful alternative use of a valuable good. Which two concepts apply to this statement?

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

2. The allocation of resources  →  2.4. Supply

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4

What is an example of a public good?

5. Economic development  →  5.2. Poverty

4. Government and the macroeconomy  →  4.3. Fiscal policy

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

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5

Why does a government provide certain goods and services in a mixed economic system?

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

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6

What is a microeconomic decision?

4. Government and the macroeconomy  →  4.4. Monetary policy

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

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7

The diagram shows a shift in the supply curve for New Zealand’s airlines from S1 to S2. S1 S2 O price quantity What is the cause of this shift?

2. The allocation of resources  →  2.6. Price changes

2. The allocation of resources  →  2.4. Supply

2. The allocation of resources  →  2.3. Demand

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8

The diagram shows the demand curve for rice. 2.5 2.0 1.5 1.0 price $ per kilo quantity D What is the price elasticity of demand (PED) for rice as price increases from $1.0 to $1.5 per kilo?

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

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9

The table shows the output of cakes from four bakeries, A–D. Which bakery has the highest labour productivity?

3. Microeconomic decision makers  →  3.6. Firms and production

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

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10

What is an advantage of labour-intensive production and what is an advantage of capital-intensive production?

3. Microeconomic decision makers  →  3.6. Firms and production

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

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11

The market equilibrium wage rate is $10 per hour. What explains why the wage rate actually paid is $12 per hour?

3. Microeconomic decision makers  →  3.3. Workers

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12

A firm imports 20 high quality bicycles into the US at a cost of $3000 each. It sells them all, making a profit of $1000 per bicycle. What is the firm’s average revenue?

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

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13

The diagram shows total cost (TC), total fixed cost (TFC) and total variable cost (TVC). costs output O W X Y Which costs are shown...

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

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14

The table shows output and total cost of a firm with four production methods, A–D. Which method causes diseconomies of scale as the firm expands production from 1000 to 3000 units?

3. Microeconomic decision makers  →  3.5. Firms

3. Microeconomic decision makers  →  3.6. Firms and production

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15

A clothing manufacturer expands by taking over a clothing retailer. Which type of merger is this?

3. Microeconomic decision makers  →  3.5. Firms

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16

Which economic situation exists when there are two consecutive quarters (six months) of negative economic growth?

4. Government and the macroeconomy  →  4.6. Economic growth

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

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17

Why might measures to reduce unemployment also make inflation rise?

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

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

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18

Which change affecting an economy’s labour market promotes economic growth?

4. Government and the macroeconomy  →  4.6. Economic growth

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

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19

The table shows a government’s receipts from taxation. $m air passenger duty tax on firms’ profits import duty income tax inheritance tax sales tax (VAT) What is the total amount of revenue raised by indirect taxes?

4. Government and the macroeconomy  →  4.3. Fiscal policy

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20

Which statement relating to supply-side policies is correct?

4. Government and the macroeconomy  →  4.5. Supply-side policy

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

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21

What is always indicated by an increase in the Consumer Prices Index (CP?

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

4. Government and the macroeconomy  →  4.6. Economic growth

2. The allocation of resources  →  2.6. Price changes

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23

Which combination of policy measures is most likely to increase the level of employment?

4. Government and the macroeconomy  →  4.3. Fiscal policy

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

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24

What could reduce poverty?

5. Economic development  →  5.2. Poverty

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25

The table shows information about four countries, A–D. Which country is most likely to have a falling population?

5. Economic development  →  5.3. Population

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26

The table shows statistics for four countries, A–D. Which country has the lowest standard of living?

5. Economic development  →  5.1. Living standards

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27

Malaysia and Indonesia specialise in the production of palm oil. What is a disadvantage of specialisation?

3. Microeconomic decision makers  →  3.6. Firms and production

6. International trade and globalisation  →  6.1. International specialisation

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

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28

The diagram shows China’s trade with Brazil for two years. China’s exports China’s imports year 1 year 2 key $ billion What happened to China’s trade balance with Brazil between year 1 and year 2?

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

What is a reason for trade protection?

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

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30

What is an immediate effect for a country of a fall in its foreign exchange rate?

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

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