This quiz is completed
What is the cause of scarcity in an economy?
high employment levels
high investment levels
unlimited resources
unlimited wants
What does a point on a production possibility curve for an economy represent?
economic growth is falling
inefficient use of resources available
maximum output possible with current technology
total demand for goods and services
What is most likely to increase enterprise as a factor of production in an economy?
a decrease in government spending on education
a decrease in emigration
an increase in regulation firms
an increase in taxation on firms
Which economic activity would be classified as macroeconomics?
households spend less on holidays abroad
income tax is increased by the government
wages rise for construction workers
world coffee price rises due to poor weather
The diagram shows the effect of a decrease in price on the demand for a product.
What does the arrow on the diagram illustrate?
contraction in demand
decrease in demand
extension in demand
increase in demand
What is the correct formula to calculate price elasticity of supply?
the percentage change in price divided by the change in quantity supplied
the percentage change in price divided by the percentage change in quantity supplied
the percentage change in quantity supplied divided by the change in price
the percentage change in quantity supplied divided by the percentage change in price
What is the most likely cause of a product having a price elasticity of demand greater than one?
The product is a habit-forming good.
The product has a close substitute.
The product is a necessity.
The product requires only a small proportion of consumer income.
For some illnesses, wearing a face mask has a benefit as it could prevent people from getting infected. Not all people are willing to wear face masks. Based on the statement above, why would there be an inefficient allocation of face masks in the free market?
Consumers in the free market only consider private costs and benefits.
Face masks are non-rival and non-excludable.
There is abuse of monopoly power by the producer of face masks.
There is perfect information in the free market.
What would bring about a movement upwards along the supply curve for rice?
a decrease in the profitability of rice production
a decrease in the productivity of farmworkers
an increase in consumers’ incomes
an increase in farmworkers’ wages
A government decides to reduce air pollution in city centres by giving financial assistance to bus companies, reducing their costs of production and prices for passengers. Which type of policy measure is this?
a maximum price
a minimum price
a subsidy
regulation
What would least likely to act as a store of value during a period of rapid inflation?
gold
cash
property
shares
A country’s central bank raised the rate of interest from 1% to 4% per year.
How would this change have affected the amount saved and the cost of borrowing by individuals?
Table title
amount
cost of borrowing
A
descreased
descreased
B
descreased
increased
C
increased
increased
D
increased
increased
A
B
C
D
Which factor would not increase the bargaining strength of a trade union to raise wages?
a rapidly growing economy
high union membership in the industry
legislation limiting strike action
workers are in short supply
Which conditions are most likely to attract small firms to enter a market?
Table title
the market for the product
fixed cost of entering the industry
A
local
high
B
local
low
C
national
high
D
national
low
A
B
D
C
The diagram shows a firm’s total cost (TC) curve
What is the average variable cost if the firm produces 10 units of output?
$4
$5
$40
$50
The table shows the units of factors of production that a firm needs to employ for two different levels
of output.
Table title
land
labour
capital
output
5
2
4
100
10
4
8
150
What is the firm experiencing?
constant returns to scale
diseconomies of scale
external diseconomies of scale
external economies of scale
What is an example of a government macroeconomic aim?
a minimum of 10 years of schooling
a sales tax of 10% on consumer goods
a target rate of 2% inflation
increasing pay for nurses
Government policy measures can affect economic activity in a country.
Which pair of monetary policy measures would be likely to increase employment?
depreciate foreign exchange rates and increase education spending
increase money supply and reduce interest rates
provide subsidies and grants and lower sales tax
reduce income tax and improve infrastructureD
What would be most likely to encourage saving?
a rise in the exchange rate
a rise in the goods and services tax rate
a rise in the income tax rate
a rise in the interest rate
The government of a country operating at full employment increases its spending on education and
training.
How does this affect the likelihood of achieving low inflation in the short run and the long run
Table title
A
less likely
less likely
B
less likely
more likely
C
more likely
less likely
D
more likely
more likely
A
B
C
D
A government has introduced a tax on a necessity. Producers have passed on a large proportion
of this tax to consumers in the form of higher prices.
Which row is correct?
Table title
type of tax
price elasticity
of demand
A
direct
price elastic
B
direct
price inelastic
C
inderect
price elastic
D
inderect
price inelastic
A
B
C
D
What is most likely to lead to an increase in structural unemployment in a country?
The country is experiencing a period of negative economic growth
The country is experiencing a period of positive economic growt
The country is moving from producing primary sector goods to secondary sector goo
The country is moving towards more flexible labour markets
Which citizens are most likely to benefit in a period of rapid inflation?
citizens who are receiving fixed state benefits
citizens who earn fixed incomes
citizens who have lent money at a fixed rate of interest
citizens who have borrowed money at a fixed rate of interest
Which statement is correct about the Human Development Index (HDI) and real GDP
HDI includes exports and imports while real GDP does not.
HDI includes life expectancy and years of schooling while real GDP does no
HDI includes the level of output while real GDP does not.
HDI includes the level of unemployment in the population while real GDP does not
Other things being equal, what will cause a population both to increase and to age?
a fall in the birth rate
a fall in the death rate
a rise in both the birth rate and the death rate
a rise in the death rate and a fall in the birth rate
Which change would be unlikely to be found in a country as it develops?
an increase in average incomes and a decrease in unemployment
an increase in manufacturing production and an increase in shipping services
an increase in subsistence farming and a decrease in financial services
an increase in tourism and an increase in the export of agricultural products
It is cheaper for developed economies to buy some cereals from developing economies than to produce them domestically.
What might reduce international trade in cereals?
Cereals become less popular with the population of developing economies.
Developed economies place an embargo on cereal imports to prevent disease.
Governments tax cereal production in developed economies.
Producers of cereals in developing economies are subsidised.
A country imposes a quota on imported cars.
What is the most likely outcome of this action?
a decrease in the domestic output of cars
a decrease in the domestic price of cars
an increase in the tax revenue from car imports
an increase in the total revenue of domestic car producers
An Argentine product initially sells in the US for $50 when the exchange rate between the two
countries is 5 pesos to 1 dollar.
The exchange rate changes to 10 pesos to 1 dollar and the price of the product remains unchanged
in Argentina.
What will be the new price of the product in the US?
$5
$25
$100
$500
Which policy measure is most likely to reduce the current account deficit of the balance of payments
of an economy
decrease the level of subsidies to domestic producers
increase infrastructure spending to increase domestic productivity
increase interest rates
remove import tariffs