Lecturer ECONOMICS past papers

Which combination of events must increase the level of scarcity in an economy?
A discovery of new oil reserves and higher saving ratios
B improved application of technology and new invention
C less certain weather patterns and a fashion for greater consumption
D more efficient power generation and a reduced birth rate


 Which characteristic of money is most essential if it is to serve effectively as a store of value?
A divisibility
B liquidity
C portability
D scarcity

 A worker can make 10 hats or 5 pairs of shoes in a day. In the market, three hats can be sold at
the same price as two pairs of shoes.
The worker should make
A hats only.
B shoes only.
C 4 hats and 3 pairs of shoes daily.
D 6 hats and 2 pairs of shoes daily.



If the price of each item increased by 1%, for which items would the total expenditure increase?
A football tickets and light bulbs
B football tickets only
C motorcycles and telephone calls
D motorcycles only




What is the value of the price elasticity of demand if the price is halved from P1 to P2?
A zero
B –0.5
C –1
D infinity


 The price of a good doubles but firms are able to increase production by only 10%.
This is an example of
A excess supply.
B inelastic supply.
C market disequilibrium.
D market failure.


 In a market there is a surplus of a good.
Which change would cause the market to come to an equilibrium?
A a decrease in demand
B a fall in price
C a government minimum price
D an increase in supply

 The market for sugar is in equilibrium. A disease affects the sugar crop and newspapers report
harmful health effects of consuming sugar.
Which combination of changes in demand and supply matches these events?
 demand supply
A falls falls
B falls rises
C rises falls
D rises rises




 Which statement about costs is correct?
A External cost only affects consumers.
B Opportunity cost affects all transactions.
C Private cost only affects producers.
D Social cost affects all members of society equally.

 A government is considering building a high-speed rail link.
Why would it not proceed with the project?
A The external benefit is greater than the external cost.
B The private cost is greater than the private benefit.
C The social benefit is greater than the social cost.
D The social cost is greater than the social benefit.

 The production of a product generates a negative externality that increases as output rises.
Which form of government intervention in the market is most suitable to tackle this externality?
A a direct income tax
B a specific indirect tax
C a subsidy
D an ad valorem indirect tax



 In the base year, which combination of export and import price changes will have the greatest
effect on the country’s terms of trade?
 export prices import prices
A decrease by 1% increase by 1%
B decrease by 2% no change
C increase by 1% decrease by 1%
D no change increase by 2%


 Aggregate demand in an economy may decrease as a result of an increase in
A consumption expenditure.
B government expenditure.
C import expenditure.
D investment expenditure.

 The table shows the CPI rate of inflation (%) in the US from 2006 to 2013.
2006 2007 2008 2009 2010 2011 2012 2013
2.5% 4.1% 0.1% 2.7% 1.5% 3.0% 1.7% 2.0%

What can be concluded from the figures about the period 2006 to 2013?
A There was one year of constant prices.
B There were three years of deflation.
C There were only four years of inflation.
D There were eight years of rising living costs.

 How might an increase in the general price level lead to a rise in real household expenditure?
A by increasing the expectations of further price increases
B by increasing the level of real household debts
C by increasing the level of real wages
D by increasing the spending on exports

 Between 2011 and 2013, high street retailers reported that expenditure on home-produced and
imported goods was reduced. Consumers did not take out loans as the economy was in a
recession.
What is the likely result of this?
A a decline in the deficit in the trade account
B a decline in the level of savings
C a decline in the terms of trade
D a decline in unemployment
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 What does not directly increase the supply of £ sterling on the world currency market?
A lower interest rates in the United Kingdom
B higher interest rates in the United States
C an increase in investment opportunities for foreign capital in Latin America
D an increase in sales of United Kingdom exports to the United States

 There is a depreciation in a country’s exchange rate.
If wage costs remain unchanged, what would be the most likely consequence?
A a fall in the rate of inflation
B an increase in profits of manufacturing exporters
C an increase in unemployment
D an outflow of foreign direct investment