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1

What is the cause of the economic problem facing the global market for gold?

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

2. The allocation of resources  →  2.10. Market failure

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2

The management of an airline decided to replace its aeroplanes with more technologically advanced aircraft. At the same time, the company retrained its pilots. Which factors of production has the airline improved?

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 world price of cocoa has been falling while the prices of products made from cocoa have been rising. Which combination might explain this?

2. The allocation of resources  →  2.4. Supply

2. The allocation of resources  →  2.6. Price changes

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5

The table shows the amounts demanded and supplied of tomatoes at different prices. The initial equilibrium is at a price of $40. supply demand price ($) The following year, more efficient harvesting means that the supply increases by 50% at each price. What will happen to the suppliers’ total revenue?

2. The allocation of resources  →  2.6. Price changes

2. The allocation of resources  →  2.5. Price determination

3. Microeconomic decision makers  →  3.6. Firms and production

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6

A fall in which variable would help eliminate a market shortage?

3. Microeconomic decision makers  →  3.6. Firms and production

2. The allocation of resources  →  2.4. Supply

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

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7

When the price of meat increased from $5 to $6 per kg, Joe decreased his purchase of meat from 40kg to 20kg a month. What was Joe’s price elasticity of demand for meat?

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

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8

In the diagram, which line represents perfectly inelastic 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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9

What is external benefit?

2. The allocation of resources  →  2.10. Market failure

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

4. Government and the macroeconomy  →  4.6. Economic growth

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10

What is a function of a commercial bank?

3. Microeconomic decision makers  →  3.1. Money and banking

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11

Under which circumstances are households more likely to save?

3. Microeconomic decision makers  →  3.2. Households

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

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12

A country wishes to increase the supply of nurses. What would be the most effective way of achieving this?

3. Microeconomic decision makers  →  3.3. Workers

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

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

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13

Employers based in large cities often pay employees special allowances above standard pay rates. What is the most likely reason for this?

3. Microeconomic decision makers  →  3.3. Workers

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14

Workers in a country have been concerned about their wages not keeping pace with inflation. How can trade unions assist workers in getting a pay rise?

3. Microeconomic decision makers  →  3.4. Trade unions

3. Microeconomic decision makers  →  3.3. Workers

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15

How is total revenue calculated?

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

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16

There is a number of cafés selling snacks and drinks in a city centre. Several of these cafés close due to their owners retiring. What is the likely effect on the prices and profits of the remaining cafés?

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

2. The allocation of resources  →  2.6. Price changes

3. Microeconomic decision makers  →  3.8. Market structure

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17

What is a macroeconomic aim of government?

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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18

The table shows earnings and total income tax paid per year. total income tax paid $ earnings $ Which type of tax system does this illustrate?

4. Government and the macroeconomy  →  4.3. Fiscal policy

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19

What is an example of monetary policy?

4. Government and the macroeconomy  →  4.4. Monetary policy

4. Government and the macroeconomy  →  4.3. Fiscal policy

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20

What is Gross Domestic Product (GDP) divided by in order to calculate GDP per head?

4. Government and the macroeconomy  →  4.6. Economic growth

5. Economic development  →  5.1. Living standards

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21

What is the consequence of economic growth for individuals and for the economy?

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

4. Government and the macroeconomy  →  4.6. Economic growth

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22

What does the labour force survey (LFS) measure?

3. Microeconomic decision makers  →  3.3. Workers

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

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23

The table shows the weights allocated to the three items in a Consumer Prices Index (CPfor two years. weights item year 2 year 1 food clothing housing total What can be concluded from this data?

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

3. Microeconomic decision makers  →  3.2. Households

2. The allocation of resources  →  2.6. Price changes

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24

A government increases the rate of progressive income tax and its spending on hospitals. What is likely to happen to the distribution of income and to living standards?

5. Economic development  →  5.1. Living standards

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25

The population pyramids for country 1 and country 2 in a given year are shown...

5. Economic development  →  5.3. Population

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26

Which country would be classified as the most developed based on the data in the table?

5. Economic development  →  5.1. Living standards

4. Government and the macroeconomy  →  4.6. Economic growth

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

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27

What encourages international specialisation?

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

6. International trade and globalisation  →  6.1. International specialisation

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28

A country wants to limit the number of imported cars to a maximum of 100 000 in a year. Which measure is most likely to achieve this objective?

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

4. Government and the macroeconomy  →  4.3. Fiscal policy

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29

The diagram shows a change in the exchange rate for the Indian rupee against the US$. quantity of Indian rupees price of Indian rupee in US$ Q2 Q1 P2 P1 S2 S1 O D What could cause the change in the exchange rate?

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

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30

Country X records these selected items in the current account of its balance of payments. • Country X exports $200m of goods. • Country X imports $50m of services. • Country Y’s citizens working in country X send home to relatives $25m. • Country X sends country Y $75m of aid. By how much did the balance on the current account of country X increase?

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

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