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Question: Which statement about factors of production is correct? A Capital is the money people keep in the bank. B Enterprise is found more in service industries than in manufacturing industries. C Labour includes only those who work using their hands. D Land includes resources found in or under the sea. Answer: D

Production

Question: China earns enough income to purchase large quantities of natural resources from developing countries. Which statement explains this situation? A China does not experience the economic problem of scarcity. B Supplies of natural resources in China are limited relative to demand. C There are unlimited supplies of natural resources in developing countries. D There is an excess stock of land in China. Answer: B

Natural Resources

Question: Although some economists believe that resources should be allocated through market forces, markets often fail. What might be an example of market failure? A access to subsidised health care B monopoly pricing of electricity supplies C prohibiting cigarette smoking in public places D regulation of interest rates charged by banks Answer: B

Market Failure

Question: A group of shops sells all its products at the same price of $1. It is still able to make a profit, although in other shops the products are sold at a higher price. Which statement about this group of shops must be correct? A Consumers recognise that the group’s products are better value. B Costs will be lower than in the other shops. C Revenue will be less than in the other shops. D The group does not advertise nor use any form of marketing. Answer: A

Profit

Question: In 2011, the Bank of England released into circulation a new design for the £50 note to replace the old design £50 note. What might have been the reason for issuing these notes? A to ease the use of the barter system B to enable a means of exchange C to lower the external value of the £ sterling D to reduce inflationary pressures in the economy Answer: B

Bank

Question: A security company wishes to recruit an experienced person for a senior position to answer customers’ emergency calls, some of which would be during the night. It is offering a good salary and a small apartment next to the company premises. Which person would be most likely to apply and be offered the position? A a confident person currently employed in installing security systems for the company B a person who has experience of answering customers’ queries in a travel company C a recently qualified engineering graduate in security systems D a reliable person who says that he needs to live with his young family of five children Answer: A

Employment

Question: Why do female workers in many countries have a lower income than male workers? A Female workers are more experienced. B Female workers are more likely to be employed part-time. C Female workers are more likely to be in trade unions. D Female workers have more qualifications. Answer: B

Income

Question: India is experiencing rapid growth in air travel. The number and size of airlines is increasing every year. Which effect arising from this growth is an external economy of scale? A Banks are more prepared to lend to large airlines rather than small airlines. B Colleges are established to train flight crew. C Fuel suppliers charge less to airlines that buy in bulk. D Larger airlines operate aircraft which can carry more passengers. Answer: B

Economic Growth

Question: The financial director of a company adds up the cost for the firm of rent, insurance, new machinery and the chief executive’s basic salary. The director then divides that total by the firm’s output. What has the director calculated? A average fixed cost B average revenue C average total cost D average variable cost Answer: A

Finance

Question: If a perfectly competitive market becomes a monopoly, what will be likely to increase and what will be likely to decrease? increase decrease A barriers to entry economies of scale B consumer choice prices C long-run profits competition D output market share Answer: C

Profit

Question: 10 5 0 costs ($000) output 100 What is the firm’s total variable cost at an output of 100 units? A $250 B $5000 C $25 000 D $30 000 15 A government achieves a high rate of economic growth. What may result from this that might cause a conflict with other government aims? A it may increase government income B it may increase incomes for the lower paid C it may increase the supply of exports D it may increase the volume of imports Answer: D

Government Policy

Question: What type of tax is a tax of 10% on the price of petrol? A a direct tax B a progressive tax C an income tax D an indirect tax Answer: D

Tax

Question: What could a government in a developed economy do to decrease demand? A create a budget deficit B increase government spending C increase taxes D reduce interest rates Answer: C

Tax

Question: A country closed its oil wells because it had used up most of its supplies of oil. What type of unemployment would this cause? A cyclical B frictional C seasonal D structural Answer: D

Unemployment

Question: In a country, in one year, average transport prices rose by 15% and the price of electrical products fell by 15%. The two products had equal weights in the retail price index. If no other prices changed, what happened to the index? A It fell by less than 15%. B It fell by over 15%. C It remained unchanged. D It rose by less than 15%. Answer: C

Price Index

Question: There is a decrease in a country’s birth rate. What must occur at the same time to lead to an increase in the country’s population? A positive net migration and a fall in the death rate B positive net migration and a fall in the fertility rate C zero net migration and a fall in infant mortality D zero net migration and a fall in the fertility rate Answer: A

Population Growth

Question: In 2008, the Peruvian Government set itself the target of reducing the number of its people in poverty to 30% of the population. What change does not indicate that the Peruvian Government had made progress towards this objective? A a rise in employment B a rise in infant mortality C a rise in life expectancy D a rise in the level of adult literacy Answer: B

Poverty

Question: Which would cause a favourable change in the Kenyan trade in services (invisible) account? A A Kenyan company wins a contract to transport exports from Uganda. B A Kenyan tea company increases its exports. C A Kenyan trade delegation visits India. D A Zambian company increases its exports to Kenya. Answer: A

Trade

Question: What is most likely to result from an extension of specialisation in manufacturing? A for the consumer some prices will be reduced B for the country there will be less dependency on international trade C for the employee the work will become more varied D for the producer there will be less efficiency Answer: A

Specialisation

Question: What would reduce the volume of international trade in the world economy? A a German bank making a loan to a Nigerian company B a Japanese car manufacturer establishing a factory in the Czech Republic C the Canadian Government introducing quotas on Malaysian electronics products D the Swedish Government granting aid to Somalia Answer: C

International Trade