Economics

Mock Exam
(1)
1. Which example of a factor of production in the fishing industry is correct?

2. The diagram shows the demand curve D1 and the supply curve S1 for healthcare in an
economy. The original equilibrium is X.
What will be the new equilibrium if the economy experiences sustained economic growth and
the government reduces planning controls on the building of new hospitals?

3. What is not a function of a central bank?

A. It is the lender of last resort to financial institutions
B. It is the sole issuer of notes and coins
C. It lends to individual firms and consumers
D. It manages the national debt for the government

4. What is most likely to help a trade union’s claim for wage increases in an industry?
a. A decrease in the price of close substitutes for the product
b. An increase in the profits of the industry
c. An increase in the number of workers
d. A decrease in the qualifications needed for the job
5. What is most likely to be an example of a progressive tax?
A. Customs duties on imported goods
B. Excise duties on cigarettes
C. Income tax
D. Sales tax

6. Which statement about total fixed cost is correct?

A. It falls as output increases
B. It is calculated by adding total cost and total variable cost
C. It is calculated by dividing total cost by output
D. It must be paid even if output is zero

7. Which pair of government actions combines a fiscal policy with a supply-side policy?
A. Changing government spending with changing interest rates
B. Cutting tax rates with providing information on job vacancies
C. Limiting bank lending with the privatization of industry
D. Restricting credit with less control over labour markets

8. A company with a chain of restaurants bought another chain of restaurants.

How is this purchase most likely to be classified?
A. Conglomerate merger
B. Diversification
C. Horizontal integration
D. Vertical integration

9. What is likely to cause a rise in a country’s foreign exchange rate?

A. A fall in its exports of goods and services
B. A fall in its imports of goods and services
C. A fall in its inflow of income
D. A rise in its outflow of transfers

10. Each of the four sets of descriptions in the table refers to a person applying for a job.
Which person is likely to receive higher pay?
11. Which country is suffering from the worst deflation?

12. A country experienced its usual August increase in the rate of unemployment. Unfortunately
this was followed by the loss of jobs resulting from the regular downturn in global economic
activity.
Which types of unemployment occurred?

13. What is a benefit of the free market system?

A. Innovation is encouraged to increase profits
B. Negative externalities can be controlled
C. Subsidies can be used to encourage exports
D. The distribution of goods and services is fair

14. What is a country said to have if the value of its exported goods exceeds the value of its
imported goods?
A. A surplus on its balance of payments
B. A surplus on its balance of trade
C. A surplus on its capital account
D. A surplus on its current account
15. What is a likely consequence of economic growth?
A. Decreased levels of employment
B. Decreased levels of exports
C. Decreased levels of output
D. Decreased levels of poverty