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Question: What is an example of an expansionary fiscal policy? A decreased budget deficit B higher interest rates C increased money supply D reduced tax rates Answer: D

Question: A government lowers interest rates to encourage more borrowing and spending by households to increase economic growth. Why could this lead to a conflict with other government aims? A It could cause uncertainty and lead to lower demand. B It could encourage more savings and lead to higher unemployment. C It could lead to lower prices of consumer goods and result in deflation. D It could stimulate consumer demand and lead to inflation. Answer: D

Question: Which policy would be most likely to reduce unemployment in the short run? A a programme of privatisation B a reduction in the standard rate of income tax C grants to firms to research new technology D removal of all restrictions on imports into the country Answer: B

Question: A country has the highest GDP per head in the world. What is this information most likely to suggest about the country? A It has the world’s biggest economy. B It has the world’s fastest economic growth rate. C It has the world’s greatest size of population. D It has the world’s highest standard of living. Answer: D

Question: What is included in the Human Development Index (HDI) of a country? A level of net immigration B life expectancy at birth C population size D rate of population growth Answer: B

Question: What is an example of someone who lost their job because of structural unemployment? A Aneesha lost her job as an engineer when her firm had to make redundancies in a recession. B Jamie lost his job as an ice cream seller during the winter months when little ice cream was sold. C Sunjeev decided to stop working and claim benefits when the government increased unemployment benefits. D Sunjit lost his job as a bank worker when the bank replaced his job with a new computer system. Answer: D

Question: An economy experienced deflation. Which combination shows the likely outcome of this? consumer confidence price level investor confidence A decrease decrease decrease B decrease increase decrease C increase decrease increase D increase increase increase Answer: A

Question: A developing country starts to show increases in economic growth. What is most likely to occur? A a reduction in imports B a reduction in the number of doctors per capita C an increase in absolute poverty D an increase in incomes Answer: D

Question: A country’s minister for agriculture said “the biggest challenge the country faces is to develop irrigation so that we are not at the mercy of the weather for crucial export earnings”. Which type of country is this most likely to be? A developed, exporting manufactured goods B developed, exporting services C developing, exporting primary commodities D developing, exporting services Answer: C

Question: 3 C Indonesia 24 8 D Mauritius 21 7 27 What usually decreases when there is a depreciation of a country’s foreign exchange rate? A the level of national debt B the level of trade protection C the price of exports D the price of imports Answer: C

Question: A country imposes tariffs and quotas on imported goods. What will citizens of that country experience? A higher prices B higher unemployment C higher welfare D wider consumer choice Answer: A

Question: Skin creams preventing sunburn made in the European Union (EU) are more effective than those made in the United States (US). US tourists stock up on the creams when visiting Europe. Such creams are banned from production in the US because of the chemicals in them. In 2013, negotiations began to remove this ban in order to allow production in the US. How is this freer trade likely to affect manufacturers of skin creams in the US and the EU? manufacturers in the US manufacturers in the EU A gain gain B gain lose C lose gain D lose lose BLANK PAGE BLANK PAGE Answer: B

Question: Sanjay is a risk taker and sets up a restaurant in Chennai. Sanjay works for the business as a chef. He leases the restaurant building from Raghav and employs him to serve the customers. Which income is earned by Sanjay and Raghav? Sanjay Raghav A interest and profit wages only B interest and wages profits and rent C profits and wages rent and wages D profits only interest and wages Answer: C

Question: A government reduces social security spending by $10 bn in order to increase defence spending by $10 bn. What is this an example of? A expansionary fiscal policy B market forces C price stability D reallocation of resources Answer: D

Question: What is included in macroeconomics? A the causes of a change in the price of one product B the causes of a market failure C the causes of determinants of price elasticities of supply D the causes of economic growth Answer: D

Question: What is an advantage of a market economy in the allocation of resources? A It ensures that all consumers are willing to pay the same price. B It fixes prices based on costs of production. C It guarantees suppliers will make a profit. D It indicates the relative demand for goods and services. Answer: D

Question: Which characteristics of a product will cause market failure? A Information about the product is known equally by consumers and producers. B The consumption of the product has no external benefits. C The product is non-rival and non-excludable. D The production of the product has no external costs. Answer: C

Question: Which function does a central bank provide for the general public? A accepting deposits B issuing banknotes C making loans D providing overdrafts Answer: B

Question: What might cause a rise in wages? A a more elastic supply of labour B an increase in the size of the labour force C improved fringe benefits for workers D the introduction of a national minimum wage Answer: D

Question: A national trade union wishes to increase the wages of its members without reducing the numbers employed. Which factor would help the union to do this? A The demand for the industry’s product is increasing. B The industry consists of a small number of well-organised employers. C The union workers have low-level skills. D The workers’ wages are the largest cost of the industry. Answer: A

Question: What will occur when there is a conglomerate merger? A increased control over supply of raw materials B increased risk-bearing economies of scale C reduced marketing economies of scale D reduced technical economies of scale Answer: B

Question: What is total revenue? A the money received by the firm for each additional unit of output sold B the price of the good multiplied by the total quantity sold C the revenue per unit sold divided by the quantity sold D the revenue per unit sold minus the cost per unit sold Answer: B

Question: How would a state-owned oil refining firm be classified? A as a multi-national company (MNC) in the private sector B as a private sector firm in the tertiary sector C as a public sector firm in the primary sector D as a public sector firm in the secondary sector Answer: D

Question: What is included in a government’s budget? A the balance of government revenue and government expenditure B the balance of export revenue and import expenditure C the difference between investment and saving D the difference between social benefits and social costs of production Answer: A

Question: A country has rapidly increasing inflation. What is an example of a monetary policy measure to reduce this problem? A increasing income tax B increasing interest rates C introducing maximum prices for some products D subsidising key industries Answer: B

Question: Deflation is a sustained fall in the general price level. What might cause deflation? A insufficient private capital investment B loss of confidence in the government’s economic policies C rising oil prices D shortages of skilled labour in relation to demand Answer: B

Question: Tax is charged at 1.45% on all wages earned to pay for basic medical provision. How would this tax be described? A direct and proportional B direct and regressive C indirect and proportional D indirect and regressive Answer: A

Question: What is included in the construction of the Consumer Prices Index (CPI)? A a base year B incomes C price elasticity of demand D quantity supplied Answer: A

Question: Which country is likely to have the highest standard of living? birth rate death rate infant mortality rate life expectancy A 41 20 31 49 B 32 14 29 59 C 25 Answer: D

Question: 6 25 79 D 25 5 22 79 25 Which statement about poverty is correct? A Absolute poverty occurs when income falls below what is needed for survival. B An advanced economy is likely to have a higher level of absolute poverty than relative poverty. C It is impossible for relative poverty to rise as absolute poverty falls. D Relative poverty is measured by the same goods and services in all countries. Answer: A

Question: The United Nations (UN) predicts that the population in low-income countries will increase. What is likely to be a cause of this? A Climate change will lead to lower food output and starvation. B Improved education for girls will lead to a small decline in birth rates. C Increasing numbers of people will migrate to higher income countries. D Modern medicine and sanitation will lead to a rapid decline in death rates. Answer: D

Question: Which method of trade protection would enable domestic firms to lower their prices and undercut the price of imported goods? A a subsidy B a tariff C an embargo D an import quota Answer: A

Question: How might a multinational company (MNC) directly benefit a host country? A It creates local employment. B It depletes local natural resources. C It imports raw materials. D It receives tax concessions. Answer: A

Question: A country has a current account deficit on its balance of payments. Which measure is most likely to reduce the deficit? A a cut in interest rates B a cut in the rate of income tax C a depreciation of the exchange rate D an increase in government expenditure Answer: C

Question: A country experienced a deficit on each of its trade in goods, primary income and secondary income. Overall, it had a surplus on the current account of its balance of payments. What must this mean? A It had a floating exchange rate. B It had a surplus on its trade in services. C It had a surplus on the government’s budget. D It was a low-income country. BLANK PAGE BLANK PAGE Answer: B

Question: inflation A population B supply C unemployment D The diagram shows the choices for an individual between leisure and earnings. Answer: B

Question: 24 20 16 12 8 4 0 20 40 60 80 100 120 earnings $ hours of leisure per day X Y The person decides to take a job that gives more leisure time. What is the opportunity cost to the individual of moving from position Y to position X? $20 A $80 B 4 hours of leisure per day C 12 hours of leisure per day D A student defined opportunity cost as ‘the alternative given up when a course of action is followed’. Why is this definition inadequate? Answer: A

Question: The ‘next best’ alternative is not stressed. A The type of economic system is not identified. B There is no mention of money values. C There is no reference to finite resources and unlimited wants. D 03 0455 12 2023 1 16 © UCLES 2023 The market for a good was in equilibrium. A change occurred which resulted in a new equilibrium with a higher price for the good and a lower quantity traded. Which change would have caused this? Answer: A

Question: a change in tastes A an increase in income B a rise in the price of the product C a successful advertising campaign for the product D © UCLES 2023 03 0455 12 2023 1 16 In a year when there were big increases in demand for new cars, many used cars also came onto the market. The diagrams show the demand for and the supply of new and used cars. The original equilibrium position was at E in each case. Answer: C

Question: quantity new cars price O D2 D1 S1 D3 X Y E quantity used cars price O D1 S1 S2 D2 X Y E What will be the new equilibrium position in each market? used cars new cars X X A Y X B X Y C Y Y D A government places an indirect tax on a good which has price-elastic demand. What is the result? Answer: D

Question: quantity demanded of the good total expenditure on the good decrease decrease A increase decrease B decrease increase C increase increase D © UCLES 2023 03 0455 12 2023 1 16 The price elasticity of demand for cigarettes is estimated to be 0.5. The government introduces a tax on cigarettes to reduce consumption. By how much must the price of cigarettes rise to reduce consumption by 10%? Answer: A

Question: 20% D 15% C 10% B 5% A The diagram shows the demand for and the supply of bread. Answer: D

Question: price quantity O S D P1 A maximum price P1 is fixed by the government. What is likely to be the immediate result of this? a movement of the demand curve to the right A a movement of the supply curve to the right B a shortage of bread C a surplus of bread D What is a function of commercial banks? Answer: C

Question: accept deposits and savings A lender of last resort to government B manage the national debt C operate monetary policy D © UCLES 2023 03 0455 12 2023 1 16 The table shows spending in the leisure sector of a country in 1995, 1999 and 2005. Answer: A

Question: wage rate quantity of labour A B C D O wage rate quantity of labour O wage rate quantity of labour O wage rate quantity of labour O S S S S © UCLES 2023 03 0455 12 2023 1 16 What would be likely to happen within a country if its government granted more work permits to doctors coming from other countries? Answer: D

Question: increased demand for doctors A increased productivity of doctors B increased salaries for doctors C increased supply of doctors D What is not a benefit of trade union membership for a worker? Answer: D

Question: achieving higher wages for workers A negotiating a higher rate of interest on a bank loan for workers B providing support to workers when being made unemployed C an improvement in health and safety standards at work D What will happen to a firm that expands to take advantage of economies of scale? Answer: B

Question: Average costs of production will decrease. A Average costs of production will increase. B Profits will decrease. C The price of the firm’s products will increase. D The table shows total fixed and total variable costs at different levels of output for a firm. Answer: A

Question: total variable cost $ total fixed cost $ output 1000 1500 2000 2500 1000 1000 1000 1000 100 200 300 400 What happens as output rises? Average fixed cost falls. A Average fixed cost rises. B Average variable cost remains constant. C Average variable cost rises. D © UCLES 2023 03 0455 12 2023 1 16 Which characteristics are found in a monopoly? Answer: A

Question: freedom of entry to the market and a single seller A freedom of entry to the market and many sellers B many buyers and a single seller C many buyers and many sellers D What is deflation? Answer: C

Question: a decrease in the claimant count A a decrease in the Consumer Prices Index B a decrease in the Human Development Index C a decrease in the real Gross Domestic Product D What is the likely outcome of an expansionary monetary policy? Answer: B

Question: Borrowing by consumers falls as the money supply increases. A Firms expand to meet higher consumer demand. B Prices fall as total supply exceeds total demand. C Wages rise due to a lower rate of inflation. D In the past, governments have adopted policies to try to end a recession in their country and increase economic growth. Which combination of policies is most likely to achieve this? Answer: B

Question: lower taxes and decrease government spending A lower taxes and increase government spending B raise taxes and decrease government spending C raise taxes and increase government spending D © UCLES 2023 03 0455 12 2023 1 16 The table shows taxes as a percentage of Gross Domestic Product (GDP) for four countries. From this information, which country had the highest percentage of direct taxation as a percentage of GDP? Answer: B

Question: tax on goods and services % tax on dividends % tax on business profits % income tax % 5 2 14 12 A 14 2 15 14 B 10 5 13 17 C 10 1 10 18 D As a country develops economically, what is most likely to happen? Answer: C

Question: There will be an increase in productivity. A There will be an increase in the birth rate. B There will be an increase in the death rate. C There will be reduced occupational mobility. D Which government policy would be most likely to reduce structural unemployment? Answer: A

Question: a decrease in the rate of interest A a decrease in the tax on goods and services B an increase in spending on education and training C an increase in tariffs on imported goods and services D © UCLES 2023 03 0455 12 2023 1 16 A government has a target of keeping inflation between 2% and 3%. The diagram shows the rate of inflation over a four-year period. Answer: C

Question: 1 2 3 4 5 4 3 2 1 0 –1 year inflation target rate of inflation % What can be deduced from the diagram? The government target was missed in two years. A The price level fell in two years. B The price level was at its highest in the first year. C The real value of money fell in three years. D A town has a population of 20000. The birth rate is 25 per thousand and the death rate is 15 per thousand. The number of people moving in and out of the town exactly balances. What will the population be at the end of one year? Answer: D

Question: 22000 D 20200 C 20010 B 19800 A What is most likely to be found in a high-income economy? Answer: C

Question: high low infant mortality rate access to safe water A adult literacy rate birth rate B access to safe water gross domestic product per head C death rate infant mortality rate D © UCLES 2023 03 0455 12 2023 1 16 The table shows figures for the real GDP of a country in a particular year. Answer: B

Question: quarter 4 ($bn) quarter 3 ($bn) quarter 2 ($bn) quarter 1 ($bn) 98 99 101 100 A quarter is three months. At the end of which quarter had the economy experienced a recession? quarter 1 A quarter 2 B quarter 3 C quarter 4 D What is a quota in international trade? Answer: D

Question: a government grant to encourage production A a limit on the quantity of imports B a tax on imports C an administrative and technical barrier D What is an advantage of a floating exchange rate for an economy? Answer: B

Question: It can correct a current account deficit or surplus. A It creates certainty for firms importing goods. B It increases government control of the economy. C It stops money flows into and out of the economy. D © UCLES 2023 03 0455 12 2023 1 16 Answer: A

Question: An unemployed worker accepts a job. Which of the following is the opportunity cost of this decision? A the cost of travel to work B the income from the new job C the leisure time lost D the training in the new job Answer: C

Question: A hospital cannot treat all the people that need treatment. This is an example of A excess supply. B limited wants. C scarcity. D unlimited resources. Answer: C

Question: Economic growth in Russia and China used to be led by the public sector. Now it results more from activities in the private sector. However, both sectors are important. Which term describes the current system in Russia and China? A market B mixed C planned D subsistence Answer: B

Question: What is necessary for a company to be classified as a multi-national? A It diversifies its range of products. B It exports most of its output. C It increases its scale of production. D It produces some of its output in different countries. Answer: D

Question: Which advantage is most likely to enable a small retailer to compete with larger stores? A a convenient location B a wide range of products C internal economies of scale D national advertising Answer: A

Question: In 2001 some countries, including India and Pakistan, criticised the European Union for continuing to protect European farmers with a subsidy while expecting poorer African countries not to restrict trade. Identify the concepts that are not involved in this situation. A developing and developed economies B free trade and protection C market prices and official intervention D multi-nationals and public corporations Answer: D

Question: A commercial bank is appointed to act as a country’s central bank. What new function would it now have? A controlling monetary policy B dealing in foreign exchange C ensuring security for loans D holding liquid assets Answer: A

Question: Which trade union action is most likely to have harmful effects on the productivity of a firm? A acceptance of new technology B agreement to a bonus system C opposition to planned redundancies D participation in a profit-sharing scheme Answer: The threshold (minimum mark) for B is set halfway between those for Grades A and C.

Question: 12 40 10 14 What will be the effect if the government imposes a minimum price of $40 per tonne? A a fall in the price of X B a shortage of X C a surplus of X D a waiting-list for X 12 The diagram shows the market for white sugar which is in equilibrium at X. A report is published stating that brown sugar is healthier to eat than white sugar. What will be the new equilibrium position for white sugar? X A B C D O price quantity Answer: B

Question: Nazmin Uddin works in a local office as a secretary three days a week. She lives with her parents in a small apartment. Meer Ali owns a successful fitness centre that employs about twenty people and lives in a large house. Which is likely to be true? A Nazmin spends a smaller proportion of her income than Meer. B Nazmin saves most of her income. C Nazmin would find it easier than Meer to borrow money. D Nazmin has a lower disposable income than Meer. Answer: D

Question: In a country, male workers on average earn more than female workers, although male and female workers receive equal pay for equal work. What could explain this? A Female workers are more experienced. B Female workers are more likely to achieve promotion. C Male workers are more likely to be in trade unions. D Male workers have fewer qualifications. O price quantity A B D C X 18 Answer: C

Question: Which of the following groups of workers is most likely to be successful in obtaining a wage increase? A building workers during a period of bad weather B computer operators when firms are installing new computers C doctors when entrance qualifications to the profession are reduced D farm workers as farming becomes more mechanised Answer: 12

Question: There is an increase in interest rates. What is the likely effect on saving and borrowing? saving borrowing A falls falls B falls rises C rises falls D rises rises Answer: C

Question: A firm is producing an output which enables it to make more than normal profit. What must be true at that output? A Average revenue must equal average cost. B Average revenue must be greater than total revenue. C Total revenue must be greater than total cost. D Variable cost must equal price. Answer: A

Question: The price of a firm’s product is $10. It sells 2000 units. What is the firm’s total revenue (TR) and average revenue (AR)? TR ($) AR ($) A 10 10 B 2 000 200 C 20 000 10 D 20 000 200 Answer: B

Question: What would improve a firm's profits in the short run? A government controls on its prices B grants for the purchase of new machines C an increase in the wages paid to its workers D rising costs of raw materials Answer: Component 6

Question: What is likely to result in the creation of a large business rather than a small business? A expensive technology that reduces the average cost of producing standardised products B higher incomes that allow consumers to be more selective in purchases C unemployment that causes people to set up their own companies D widely scattered markets that cause high transport costs Answer: C

Question: Which of the following is likely to be a disadvantage of economic growth? A Government tax revenue falls. B Resources are depleted. C The level of unemployment rises. D The standard of living of the population falls. Answer: 17

Question: The government of a country used fiscal policy to achieve price stability. What is another way of saying this? A The government increased taxes to achieve low inflation. B The government reduced the money supply to achieve low inflation. C The government used interest rates to achieve economic growth. D The government used restrictions on banks to achieve stable exchange rates. Answer: B

Question: Which is a description of indirect taxes? A They are easy to avoid and deter effort. B They are levied on income and cause inflation. C They are levied on spending and are regressive. D They are progressive and discourage consumption. Answer: C

Question: In a country, income tax is charged at $50 on an income of $500. Compared with this, which of the following would indicate that the income tax scale was progressive? A $150 tax on $2000 income B $300 tax on $3000 income C $450 tax on $4000 income D $480 tax on $5000 income Answer: C

Question: Which of the following is an example of cyclical unemployment? A An airline cuts jobs in a world recession. B Cleaners lose their jobs as more machines are used. C Fishermen sell their boats owing to a reduction in fish stocks. D Hotels employ fewer people in the rainy period. Answer: 17

Question: In constructing a retail price index, what is not used? A a base year B the prices of a basket of goods C the wage rate D a weight given to each good Answer: C

Question: Two industries in Namibia are fishing and tourism. The value of the currency of Namibia fell in 2001. If there were no other changes what resulted from the fall? A Imported goods in Namibian shops became cheaper. B The price of Namibia’s fish sold in foreign markets became cheaper. C The volume of Namibia’s exports decreased. D Tourists were discouraged by higher prices in Namibia. Answer: C

Question: As a result of two months of bad weather, the demand for hotel rooms decreases and staff are not required. What type of unemployment is this? A cyclical B frictional C seasonal D structural Answer: C

Question: The most common way of comparing the living standards of two countries is to study each country’s A average weekly working hours. B consumer expenditure. C GNP per head. D national income. Answer: C

Question: The chart shows the birth rate and death rate in 1983 and 1993 in the European Union (EU) as a whole and in Italy. European Union Italy births and deaths per 1000 population birth rate death rate 8 9 10 12 11 1983 1993 1983 1993 What does this chart show? A The average age of the population rose in Italy but not in the EU as a whole. B The birth rate remained above the death rate in the EU as a whole. C The size of the population increased in the EU as a whole but not in Italy. D People tended to live longer in Italy but not in the EU as a whole. Answer: C

Question: Construction companies are building new houses on land previously used for farming. What is the opportunity cost to society of this activity? A improved living conditions B less congestion in city centres C more homes for new homeowners D some farm output Answer: D

Question: What is most likely to cause queues of consumers to appear regularly outside shops in a planned economy? A the failure of money to act as a unit of account B the inefficient operation of the market system C the misallocation of resources by the government D the rising opportunity cost of shopping Answer: C

Question: What is regarded as a factor of production? A capital B interest C profit D rent Answer: A

Question: Although people may satisfy their basic needs there is always something more they want. To what economic issue does this statement refer? A exchange B market forces C scarcity D income distribution Answer: C

Question: Which source of finance cannot be used by a private company? A a bank loan B a bank overdraft C an issue of shares on the Stock Exchange D retained profits Answer: C

Question: What best describes a multi-national company? A a company that is owned by the government B a company that has many shareholders C a company that trades internationally D a company that produces in more than one country Answer: D

Question: Kimberly-Clark Corporation manufactures many products, including Kleenex paper handkerchiefs. It has operations in 43 countries. What is not a reason why a company might decide to have operations in more than one country? A availability of raw materials B local markets can be served C transport is a high proportion of costs D trade union pressure Answer: D

Question: The price of a good is temporarily above the market equilibrium price. What must happen for the market to be brought back to equilibrium? quantity demanded quantity supplied A rises rises B rises falls C falls rises D falls falls Answer: B

Question: What is not held constant in calculating a demand schedule? A the incomes of consumers B the prices of complementary goods C the price of the good itself D the tastes of consumers Answer: C

Question: In 2002 in Paris there was a decrease in demand for theatre tickets. What might have caused this? A a decrease in fares on public transport in Paris B a decrease in the number of tourists in Paris C an increase in the number of jobs available in Paris D an increase in the subsidy given to theatres in Paris Answer: B

Question: Why is a surgeon likely to have a higher wage rate than a hospital porter? A The surgeon has been in the job a longer time. B The surgeon has a longer training period. C The surgeon is older. D The surgeon is in a trade union. Answer: B