IGCSE ECONOMICS

MCQs CHECKLIST

1. A Bowed out PPC ( Concave ) represents increasing opportunity costs

2. A straight line downward sloping PPC reflects constant opportunity costs.

3. A point on the PPC represents full employment.

4. A point inside the PPC represents unemployment.

5. A point outside the PPC is unattainable unless resources are increased.

6. Market System promotes incentive

7. Market System- Price Mechanism acts as a signal

8. Command Economy- Government sets prices, government control and

regulations

9. Change in price of Product- Movement along the demand curve

10. Price rises- demand contracts Price Falls- Demand Extends

11.Non Price Factors- Shift in the demand Curve

12.Income Increases – Demand for Normal goods Increases- Positive

relationship

13.Income Increases- Demand for Inferior goods decreases- Negative

relationship

14.Price of Substitutes Increase- Demand for Product Increases

15.Price of Compliments Increase- Demand for Product Decreases

16.Degrees of Elasticity

A set of graphs shows the relationship between demand and total

revenue (TR) for a linear demand curve. As price decreases in the
 elastic range, TR increases, but in the inelastic range, TR
decreases. TR is maximized at the quantity where PED = 1.

17.Factors affecting PED

 Availability of Substitutes
 Relative expense of the product
 Time
 18.Factors affecting PES

19. A maximum price fixed below market equilibrium – effective

 A maximum price fixed above market equilibrium – ineffective

A Minimum price fixed above market equilibrium - effective

A Minimum price fixed below market equilibrium – ineffective

20.Absolute Advantage –
One country can produce more of a good with the same quantity of
resources
Lower cost per unit

21.Comparative advantage-
One country can produce at a lower opportunity than another country

22. Factors Causing an appreciation in exchange rate

 Demand for the currency Increases

 Demand for the exports of the currency Increases
 Rate of Interest Increases- Hot money Flows
  An increase in the competitiveness in the goods
 Expectations- encourage speculation
 Lower inflation
 Current Account Surplus
 Higher economic growth
 Selling Foreign exchange and buying own currency
 Long term supply side policy

23.Factors causing a depreciation in the exchange rate

 Demand for currency decreases
 Demand for exports of the currency decreases
 Rate of Interest decreases
 A decrease in competiveness of goods
 Expectations that currency will fall further
 High Inflation
 Current Account deficit
 Low Economic growth
 Loss of Investor confidence
 Recession in Foreign countries
 Political instability

https://studywithswati.in/