What is a characteristic of positive economic statements?
A They are subjective opinions
B They can be proven true or false
C They explain correctly what is happening in an economy
D They explain the best outcome from a choice that can be made
Your answer
[1]
Which of the industries below operates in the tertiary sector?
A Construction
B Fishing
C Leisure
D Manufacturing
Your answer
[1]
What does point X on the diagram below represent?
A Constant returns to scale
B Diseconomies of scale
C Economies of scale
D Minimum efficient scale
Your answer
[1]
In 2020 Sony announced the launch of the PlayStation 5 games console. It was estimated that at a price of £500 Sony would sell 87 million consoles. Analysts suggested these sales would increase to 122 million if the price was reduced to £400. What is the price elasticity of demand?
A –2.01
B –1.61
C –0.50
D 0.71
Your answer
[1]
Many developing nations face the problem of a poorly developed financial sector. This is partly because individuals are unwilling to save their money in financial institutions. Some are worried that the financial institutions may go bankrupt, which will result in them losing their savings. How can a central bank help to overcome this problem?
A Act as a lender of last resort
B Issue banknotes and coins
C Maintain price stability
D Manage the government’s borrowing
Your answer
[1]
What is likely to be the most effective policy solution to overcome the market failure caused by the existence of positive externalities of production?
A Competition policy
B Regulation
C Subsidy
D Taxation
Your answer
[1]
Which form of economic integration describes a situation in which there is free trade between members who set common external tariffs but each have different currencies?
A Customs union
B Economic union
C Free trade area
D Monetary union
Your answer
[1]
What does the accelerator effect show?
A An increase in a component of aggregate demand causes a greater final change in real GDP
B Economic growth will increase the rate of environmental degradation
C Firms undertake investment to replace depreciating capital and expand their capacity
D When the economy is approaching full capacity increases in aggregate demand cause inflation
Your answer
[1]
[1]
What indicates a structural budget deficit?
A Government expenditure exceeds tax revenue in the downturn of a business cycle
B Government expenditure exceeds tax revenue when the economy is at full employment
C Tax revenue exceeds government expenditure in the downturn of a business cycle
D Tax revenue exceeds government expenditure when the economy is at full employment
Your answer
[1]
In 2019 the price level in Nigeria increased by 11.4%, compared to a 12.1% increase in prices in 2018. What does this represent?
A Deflation and disinflation
B Disinflation and hyperinflation
C Hyperinflation and inflation
D Inflation and disinflation
Your answer
[1]
What is marginal external cost equal to?
A Marginal private cost – marginal social cost
B Marginal social cost
C Marginal social cost + marginal private cost
D Marginal social cost – marginal private cost
Your answer
[1]
What does the neo-classical approach to aggregate supply suggest will be the impact of expansionary demand side policy in the long run?
A It will be purely inflationary
B It will cause economic growth and reduce the rate of inflation
C It will cause economic growth at the cost of higher inflation
D It will result in non-inflationary growth
Your answer
[1]
What is the diagram below most likely to illustrate?
A Monopolistic competition in the long run
B Monopolistic competition in the short run
C Monopoly in the long run
D Monopoly in the short run
Your answer
[1]
Output is one way of measuring the level of economic activity in an economy. What is another way?
A Employment
B Expenditure
C Human Development Index
D Inflation
Your answer
[1]
The table below outlines how import and export prices in a country have changed over time. How much has the country’s terms of trade increased by between 2000 and 2020?
Your answer
[1]
A local restaurant employs five staff – a manager, a chef, a barman and two waiters. What economic theory is this an example of?
A Bilateral monopoly
B Comparative advantage
C Derived demand for labour
D Division of labour
Your answer
[1]
Which of the following is the most likely recipient of microfinance?
A Individuals in developed nations
B Individuals in developing nations
C Public limited companies in developed nations
D Public limited companies in developing nations
Your answer
[1]
What does area X in the diagram below represent?
A Consumer surplus
B Economic rent
C Producer surplus
D Transfer earnings
Your answer
[1]
A zoo charges £29.17 + VAT (payable at 20%) for admission, giving a total price of £35. The monthly running costs of the zoo are £675 000, with 30 000 visitors each month. In July 2020 the government announced a temporary reduction in the rate of VAT charged to zoos from 20% to 5%. If the zoo continued to price entrance at £35 and visitor numbers remained constant, what would the impact on its profit be?
A Increases by £124 900
B Increases by £200 100
C Increases by £325 000
D Remains unchanged
Your answer
[1]
What is the most likely impact of an exchange rate appreciation?
A Aggregate demand shifts to the right
B Contraction along the aggregate demand curve
C Long run aggregate supply shifts to the left
D Short run aggregate supply shifts to the right
Your answer
[1]
In March 2020, India announced it was increasing its fuel excise duty. What type of tax is this?
A Direct
B Indirect
C Progressive
D Proportional
Your answer
[1]
Equilibrium in a market changes from X to Y in the diagram below. What area represents the new
Your answer
[1]
A firm manufactures and sells a limited edition watch at a price of £1000. Within minutes of launching the product online it has sold all its watches, with hundreds of potential customers left disappointed. What has occurred here?
A Ceteris paribus
B Disequilibrium
C Free rider problem
D Negative externalities of consumption
Your answer
[1]
The table below shows the income tax brackets in France in 2020:
| Taxable Income | Tax Rate |
| €0 – €10 064 | 0% |
| €10 065 – €27 794 | 14% |
| €27 795 – €74 517 | 30% |
| €74 518 – €157 806 | 41% |
| Over €157 807 | 45% |
What is the average tax rate for an individual who earns €110 000?
A 28.2%
B 30.0%
C 32.1%
D 40.0%
Your answer
[1]
What is the problem caused by scarcity?
A Allocative inefficiency will occur
B Individuals have to make choices
C Productivity falls as a result of boredom from repetition
D There will be a missing market as no one is willing to pay for the good
Your answer
[1]
What does the kinked demand curve in the oligopoly model show?
A A firm’s revenue will decrease if it increases or decreases its price
B A firm’s revenue will increase if it decreases its price
C A firm’s revenue will increase if it increases its price
D A firm’s revenue will remain constant if it increases its price
Your answer
[1]
What does the data in the table indicate has happened in the economy from 2016 to 2020?
| Year | Gini-coefficient |
| 2016 | 0.52 |
| 2017 | 0.49 |
| 2018 | 0.53 |
| 2019 | 0.58 |
| 2020 | 0.59 |
A Environmental degradation has decreased
B Environmental degradation has increased
C The distribution of income has become more equal
D The distribution of income has become more unequal
Your answer
[1]
What type of firm is most likely to engage in profit satisficing?
A Charity
B Public limited company
C Public sector
D Sole trader
Your answer
[1]
[1]
31 Using the data in Fig. 1.1, explain what happened to public sector wages after 2010.
[2]
Explain, using information in Extract 1, two reasons why the wage elasticity of supply of labour for public sector workers is likely to be inelastic.
[4]
Evaluate, using an appropriate diagram(s), whether unhealthy food is a demerit good.
[8]
34* Evaluate, using the information in Extract 2, whether economic agents benefit from the food
industry becoming more contestable.
[15]
Using the data in Fig. 3.1, calculate the growth rate in GDP per capita in Brazil between 2000 and 2019.
[3]
Explain, using the data in Fig. 3.1 and Fig. 3.2, in which country exports accounted for the greatest proportion of output in 2019.
[3]
37* Evaluate, using the information in Extract 3, the extent to which emerging economies gain more
from international trade than developed economies.
[15]
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