t.

Which ofthe following rewards accrues to Item 5 refers to the following diagram
the factor of production called lcapital'? which shows afirm's total fixed cost (TFC),
total variable cost (TVC) and total cost
(A) Rent (rc).
(B) Profit
(C) Wage (000) Cost

(D) Interest

2. An 'economy' is BEST described as a

system where

(A) suppliers produce all the goods

and services needed by the
consumers
(B)
3 all the goods and services used
by the citizens of a country are
provided by the government
(C) resources are used by manufacturers 5. The firm's total variable cost at 100 units
of output is
N to produce goods and maximize
profits
K (D) resources are used to produce (A) l0 000
goods and services to meet the (B) 15 000
.l$ needs and wants of society (c) 20 o0o
(D) 25 000

Which of the following pairs of activities

in a count4l falls under the tertiary sector? 6. The economic system of MOST Caribbean
$ (A)
countries can be described as

U (B)
Banking and tourism
Tourism and agriculture (A) mixed
(C) Banking and construction (B) planned
(D) Manufacturing and fishing (C) traditional
(D) free market

4. Astudent has a daily allowance of$20 with

which he can purchase chicken and chips
or a burger, but NOT both. If he purchases
the chicken and chips, the opportunity cost
of his decision will be the

(A) burger he gave up

(B) price of the chicken and chiPs
(c) satisfaction he gets from burgers
(D) satisfaction he gets from the
chicken and chips

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0r216010/F 2015
 Item 7 refers::tolthe fottowing diagram Item l0 refers to the following table which
wh ich i | ustrates'the production possi bi I ity
| shows a country's gross domestic product
frontier for an,eioncimy that is capable of (GDP) for a five-year period.
producing bauxite and sugar in different
combinations. Year GDP($1\{)
2009 372
20r0 455
20tl 496
2012 53r
20t3 s80
:\
ip \
.-.]-..--...--
10. During the period 2009-2013, the GDP of
i this country

(A) declined
(B) increased
7. Point X on the graph represents (c) fluctuated
(D) remained constant
(A) economic growth
(B) unemployed resources
(C) an efficient combination 11. An advantage of a planned economic
(D) an unattainable combination system is that

(A) there is usually a more equitable

E. The burden of an excise duty falls distribution of wealth
ENTIRELY on the consumer if the (B) firms have a greater incentive to be
efficient
(A) supply curve is perfectly elastic (c) workers are more motivated and
(B) demand curve is perfectly elastic
diligent
(C) demand curve is perfectly inelastic (D) consumers have a wider variety of
(D) supply curve is perfectly inelastic goods

9. An outward shift in a production possibility t2. Economic choices are made because
curve can be caused by an
(A) people's needs exceed their wants
(A) increase in wages (B) resources are unlimited and
(B) increase in prices
people's wants are limited
(c) increase in imports (c) resources are scarce while people's
(D) improvement in technology
wants are unlimited
(D) people may not always have the
money to conduct business

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0t2t60t0tF 2015
13. In an attempt to increase the efficiency of 17. A firm produces 29 pairs of high quality
its staff, management assigns specific tasks leather shoes at a fixed cost of$20 000 and
to each worker. This is an example of a variable cost of $9 000. On producing
the 30th pair, the new total cost rises to
(A) progress $30 000.
(B) productivity
(C) specialization What is the marginal cost of the 30th pair?
(D) entrepreneurial ability
(A) $ l 000
(B) $ e 000
14. In a commercial bank, wages and salaries (c) $20 oo0
are NOT paid to (D) $2e 000

(A) shareholders ofthe bank

(B) bank tellers and supervisors 18. One ofthe problems associated with barter
(C) investment managers of the bank is that
(D) maintenance workers employed by
the bank (A) it requires the use of coins
(B) it is a cause of market failure
(C) surplus output can be exchanged
15. One example of a'good'is (D) it requires double coincidence of
wants
(A) an extra lesson at school
(B) a loan approval by a bank
(C) a bottle of soda water 19. Which ofthe following isNOTan example
(D) a beauty makeover at a spa of a factor of production in a commercial
bank?

16. Prices of goods in market economies (A) The building

fluctuate while prices of goods in planned (B) The bank's vault
economies tend to be fixed. The MOST (C) Shareholders of the bank
likely reason for this difference is that in (D) Special savings accounts for
the market economy students

(A) profits are lower

(B) producers are never efficient 20. A government reduces tax on carrots. This
(C) buyers and sellers determine prices causes the price of carrots to fall by 50Yo.
(D) there are higher unemployment Quantity demanded then rises by 50%. The
levels price elasticity ofdemand forcarrots in this
case is

(A) 0
(B) 0.4
(c) I
(D) 2.5

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01216010/F 201s

/
21. Open competition on a worldwide scale Item 26 refers to the following table which
facilitates shows the market demand and supply of
potatoes at given prices.
(A) high levels of dependence on
tourism Price of Market Market
(B) increases, in trade unions' Potatoes Demand Supply
negotiating power ($) (000 kg) (000 kg)
(C) government manipulation of 4 700 100
market outcomes 500 200
8
(D) the development of comparative
l2 350 350
advantage
l6 200 530
20 r00 700

22. Money is long-lasting, easy to carry 26. What is the equilibrium price?
around and can be changed into smaller
denominations. Which of the following (A) $4
characteristics ofmoney are being described (B) $8
above? (c) $12
(D) $16
(A) Durability, portability, liquidity
(B) Durability,scarcity,uniformity
(C) Durability, portability, divisibility
27. 'Globalization' may be MOST accurately
(D) Portability, uniformity,divisibility defined as the

(A) movement of technology and

23. Which of the following features is NOT a
financial markets worldwide
characteristic of perfect competition? (B) movementoftangibleandintangible
goods among countries
(A) Freedom of entry and exit (C) international trade of goods and
(B) Many buyers and one seller services including skilled
(C) Knowledge of market conditions workers
(D) Selling of homogeneous products (D) integration of financial services,
technology and commodity
markets worldwide
24. Which of the following is usually a
consequence of widespread retrenchment
in a country? 28. If company X is engaged in the cutting of
trees to obtain lumber which is then used
(A) Reduction in crime rate by Company Y to make furniture, to which
(B) Increased standard of living
sector of the economy does Company X
(C) A fall in the standard of living belong?
(D) Equality in income distribution
(A) Public
(B) Primary
25. A pure public good can be described as (C) Tertiary
(D) Secondary
(A) excludable
(B) zero-priced
(C) diminishable
(D) complimentary

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01216010/F 20t5
29. Whichofthefollowingfinancialinstruments 33. Joe Brown first sells his produce at the
' are issued by the central bankon behalfof market and then saves his money until he
the government? has enough to buy a tractor. Which of the
following functions is money performing
(A) Treasury bills in the second case?
(B) Corporate bonds
(C) Equity securities (A) Store of value
(D) Shares on the stock exchange (B) Unit of account
(C) Medium of exchange
(D) Standard of deferred payment
30. When injections of capital are greaterthan
withdrawals, national income will
34. Which ofthe following isNOT a function
(A) increase of the financial sector?
(B) decrease
(C) remain constant (A) Providing a safe place for saving
(D) be in equilibrium (B) Preventing liquidity within the
economy
(C) Facilitating payments for goods
Item 31 refers to the following diagram and services
which shows the circular flow of income. (D) Making credit available to
households and firms

r +i Househlds i - r
Ill '----r 35. If Country X has a comparative advantage
X, rPayment in the production of computers over
I I for
goods Country Y then
' and sen'ices
l..l (A) Country X will export all its
L- J computers
-l_Flrms ,t+ (B) X nor Country
neither Country
Y should specialize in the
31. Line X represents payment production of computers
(C) the opportunity cost of producing
(A) for goods taken on credit computers is higher in Country
(B) to the factors of production X than in Country Y
(C) of taxes to the government (D) the opportunity cost of producing
(D) to financial institutions for loans computers is lower in Country X
. than in Country Y

32. When a financial asset is described as

liquid, it means that

(A) it is a weak financial asset

(B) its price or value fluctuates often
(C) it can easily be converted into cash
(D) it is not acceptable as a medium of
exchange

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012160r0/F 2015
 36. Which of the following,is NOT a financial ltem 39 refers to the following table which
institution in, an, eConomy? shows the flow of money in an economy.
:.-:

(A) Trade union ,

x Y
(B) Credit union
I Borrowers Savers
(C) Commercialbank
(D) Development bank II Savers Borrowers
fI III Lenders Borrowers
IV Borrowers Lenders
(
T

37. Which of the following statements BEST

' describes a fiscal deficit? 39. The flow labelled III represents
(A) Government revenue exceeds (A) loanable funds
government borrowing (B) national income
(B) Government revenues are greater (c) goods and services
than subsidies (D) factors of production
(C) Government spending equals
- govemment revenue
(D) Government spending exceeds 40. 'Resources, both human and physical, are
government revenue required to produce goods'.

Ihe statement above MOST accurately

38. Fred earns his money by occasionally describes
doing jobs such as painting, repairing and
cleaning while Wilma earns her money (A) ' productivity
from occasional babysitting. (B) entrepreneurship
(C) factors of production
In which sector would Fred and wilma's (D) factors of productivity
activities be located?

(A) The formal sector 41. Which of the following is NOT a service?
(B) The foreign sector
(C) The informalsector (A) Education
(D) The financial sector (B) Health care
(C) Motorcycle
(D) Hairdressing

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01216010tF 20t5
 Item42referstothefollowlngtablewhich 45. Which of the following situations would
shows the rate of inflation and theaverage lead to an improvement in a country's terms
percentage increase, in wages over afour- of trade?
year period.
I. Export prices rise and import prices
Year Rate of Wage fall
Inflation fncrease II. Exportpricesrisefasterthanimport
(o/") (%) prices
20tr 5 20 III. Importprices rise fasterthan export
prices
2012 IO 20
2013 IO 5 (A) I only
2014 l5 5 (B) I and II only
(C) I and III only
42. In which yearwas the increase in real wages (D) II and III only
thc GREATEST?

' (A) 20ll 46. The terms of trade of Country X is 150.

(B) 2012 This is considered to be
(c) 2013
(D) 2014 (A) neutrat
(B) inadequate
(C) favourable
43. which of the following is Nor a (D) unfavourable
characteristic of Caribbean countries?

(A) High debt burden 47. The International Monetary Fund (lMF)
(B) High levels of unemployment functions as a
(C) Low levels of capitalformation
(D) Major producers of manufactured (A) human rights organizatibn
goods (B) regulatory authority for
international trade
(C) large, multinational corporation
44. Which of the following is NOT a benefit maximizing its efficiency
of internationaltrade? through globatization
(D) financial institution that provides
(A) A larger market size strategic guidance to countries
(B) A wider variety of products to ensure financial stability
(C) lncreased efficiency of localfirms
(D) Increased dependency on other
countries

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012160t0/F 2015
48. One imporant objective,of CARICOM is 52. Which of the following is NOT
to a 'determinant of demand' for laptop
computers?
(A) improve standafds of living
beginning with smaller states (A) lncome
(B) encourage the economic (B) Price of laptops
development of its members (C) Atax on laptops
(C) maximizemultinationalefficiency (D) Preference for desktop computers
through globalization
(D) provide strategic guidance to
countries to ensure financial 53. The central bank calls for an increase in
stability the reserve requirements of commercial
banks. How will this affect the operations
of commercial banks?
49. Ifa country can produce 20 units ofproduct
X or l0 units of product Y the opportunity (A) Their liquid assets will be reduced-
cost of I unit of product Y is (B) Their ability to create credit will
increase-
(A) 0.1 units of product X (C) Their loans to money markets will
(B) I unit of product X increase.
(C) 2 units of product X (D) They will attract less deposits from
(D) 2.5 units of Product X the Public.

50. Which of the following phrases BEST 54. The restriction of international trade
explains the term 'tariff? through tariffs, embargoes, quotas and
exchange controls is referred to as
(A) The amount of subsidies received
by local exPorters (A) globalization
(B) The level of tax that is levied on (B) protectionism
imports entering a country (C) a bilateral agreement
(C) The amount of goods that can be (D) structural adjustment
imPorted into a country
(D) The common ta:c levied by countries
on member countries within a 55. Country A is experiencing a balance of
region payments deficit. Which of the following
measures could be taken to reduce the
deficit in the short-term?
51. Which of the following will contribute
to a surplus on the balance of trade of a (A) Reduce the volume of exPorts to
other countries.
country?
(B) Engage in trade with other low-cost
producers ofgoods.
(A) The value ofexports is greaterthan
the value of imPorts' (C) Increase the importation of goods
(B) The value of imports is greaterthan
from other countries.
the value of exPorts' (D) lmpose restrictions on goods
(C) The volume of exports is greater imPorted from other countries'
than the volume of imPorts'
(D) The volume of imports is greater
than the volume of exPorts'

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0r215010/F 2015
 56- Which of the following is MOST likely 59. One example of an 'entrepreneur' is
' to lead to greater international investment

(A) Grobarization [3] :;:ffi;::H,

(B) Specialization (D) airline
an
(C) Trade unionism "rlroy""
(D) Currency fluctuation
60. Which of the following is NOT a benefit
of trade liberalization to consumers?
57. Which of the following are ways of
calculating national income? (A) Prices of goods and services will
decline.
I. Income method (B) There will be greater access to a
II- Elasticity method variet5r of goods and services.
III. Expenditure method (C) Cost of providing goods and
services will be lower-
' (A) I and II only (D) Prices of goods and services witl
(B) I and III only increase.
(C) II and III onty
(D) I, II and III

58. The acronym 'FDI'stands for

(A) Foreign Direct Income

(B) Foreign Direct Investment
(C) Fixed Domestic Investment
(D) Floating Domestic Investment

END OF TEST

IF YOU FINISH BEFORE TIME IS CALLED, CI{ECK YOI'R WORK ON THIS TEST.

0t216010/F 2015
 cANDlrrar['. - PI.['.AS['. NOT['.!

PRINT your nome below alrd return this booklet

with youranswersheet ['allure to do 3o may reult
in disqualificrtlon.
TEST CODE 01216010
FORM TP 2016059 MAY/JUNE 2OI6

CARIBBEAN EXAMINATIONS COUNCIL

CARIBBEAN SECONDARY EDUCATION CERTIFICATE@
EXAMINATION
ECONOMICS
Paper 01 - General Proficiency
I hour 15 minutes

01 JUNE 2016 (p.m.)

READ THE FOLLOWING INSTRUCTIONS CAREFULLY.

I. This test consists of 60 items. You will have I hour and l5 minutes to answer them.
2. In addition to this test booklet, you should have an answer sheet.
3. Each item in this test has four suggested answers lettered (A), (B), (C), (D). Read each item you
are about to answer and decide which choice is best.

4. On your answer sheet, find the number which corresponds to your item and shade the space having
the same letter as the answer you have chosen. Look at how it is done in the sample item below.

Sample Item

Economics may be described as a 'Social Science' Sample Answer

because it deals with

(A) the economy

@@o@
(B) the environment
(C) human behaviour
(D) production and consumption

The best answer to this item is "human behaviour", so (C) has been shaded.

5 If you want to change your answer, erase it completely before you fill in your new choice.
6. When you are told to begin, turn the page and work as quickly and as carefully as you can. If you
cannot answer an item, go on to the next one. You may return to that item later.
I

I
DO NOT TURN THIS PAGE UNTIL YOU ARE TOLD TO DO SO
-
II
Copyright @ 2014 Caribbean Examinations Council
--
I
- All rights reserved.
 1

I Which of the following rewards accrues to Item 5 refers to the following diagram
the factor of production called 'capital'? which shows the relationship between the
production of Good X and Cood Y by a
(A) Rent certain country using all its resources.
(B) Profit
(c) Wage
Good X
JDf Interest

2. Which of the following is a component of

a country's balanceof payments account?

-<frI- The value of imports and exports

(B) The value of government 0
expenditure
(C) The country from which goods are 5 What name is given to the curve represented
imported above?
(D) The number of commercial banks
in the country (A) Demand curve
(B) Market supply curve
(C) Individual supply curve
3. Trade liberalization can be defined as -,=(E) --1 Production possibility curve

(A) an increase in trade deficit

(B) _ an increase in trade surplus 6. Some Caribbean countries are experiencing
--(C)
" the removal of trade barriers a lack of industrialization, a low standard
(D) trading between many countries of living and a high population growth
rate. Which of the following terms BEST
describes the economies ofthese countries?
4. Which of the following strategies is
NOT used by governments to influence (A) Advanced
economic decisions of businesses? (B) - Developed
*q Developing
-(*)-'- Increasing retirement benefi ts (D) Agricultural
(B) Passing minimum wage legislation
(c) Regulating the emissions of toxic
waste 7 Country X allows the foreign exchange
(D) Identifying areas where businesses market to determine the rate of its domestic
should be located currency based on the forces of demand
and supply. This type of exchange rate is
referred to as

(A) fixed
(B)
-pegged
$f. floating
(D) managed

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0l2l50l olF )ol6
 -3-

8. An outward shift in a production possibility 12. Which of the following accounts is NOT
curve can be caused by an included in the balance of payments
account?
(A) lncrease ln pnces
(B) increase in wages 'r'(A) Asset account
(c) - increase in imports (B) Capital account
),Dr= improvement in technology (c) Current account
(D) Offi cial fi nancing account

9 Choice is the MOST important issue in

economics because 13. In seeking to stabilize the economy of
a Caribbean territory, the role of the
(A) incomes are not evenly distributed government should be to
(B) most countries have a low per
capita income (A) increase its taxes, borrow more and
-(e ) resources are scarce relative to forecast revenues
consumers'wants (B) encourage skilled labourers to stay
(D) money is scarce in relation to a within the territory
country's resources
' review its policy on taxation,
,'!Pl
borrowing and expenditure
(D) import more consumer goods to
10. Prices of goods in market economies ' satisfy the needs of the people
fluctuate while prices of goods in planned
economies tend to be fixed. The MOST
likely reason for this difference is that in 14. Jamaica buys motor cars from Japan while
the market economy, Japan buys coffee from Jamaica. This has
resulted in a balance of payments deficit
(A) profits are lower for Jamaica. Which of the following
(B) producers are never efficient statements BEST describes Jamaica's
(c) there are higher unemployment situation?
"-" levels
(D) demand and supply forces -)r'- Jamaica has to pay Japan more
determine prices money.
II. Japan has to pay Jamaica more
._.-..,.-- mOngy.
II Which ofthe following is LEAST likely to ,.LJl:' Jamaica needs to export more to
affect the efficiency of labour? Japan.

(A):_ Worker motivation (A) I only

J;B)'' Firm's profitability
(C) Levelof technology
4$f
(c)
I and III only
II and III only
(D) Education and training (D) I, II and III

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0l 21601 otF 2016
 4

15. Price elasticity of supply refers to the Item 17 refers to the following diagram
responsiveness of the quantity supplied to which shows the price and quantity
a change in demanded for Cood X.

-wf
'(e)
prrce
income s
(c) demand
(D) prices of substitutes Price

Dt
Item 16 refers to the following table which
shows tlre amount of money associated D
with various items. o Quantity demanded
Item Amount ($)
17. The movement of the demand curve of
;P.gnsumer consumption 800 Good X from D to D, results from an
Government spending 300 increase in
Gross investment
Export of goods
Import of goods
100
80
s0
.4r
(B)
consumer rncome
the price of Good X
(c) .
the price of a complement
(D) the cost of inputs used to produce
16. Based on the information in the table. the Good X
gross domestic product (GDP) is

(A) $l 2oo l8 According to economic theory, 'second

(B) $r 230 hand'cigarette smoke is an example of a
*@\-
(D)
$1 280
$2200 (A) merit good
(B) . private good
iay' (C) positive externality
Li\i ) *gf -
c.l I t
negativeexternality

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 5

Item 19 refers to the following table which 20. Which ofthe following financial irrstrunrents
shows units of labour and total output of are issued by the central bank on behalfof
labour. the government?

Units of Labour Total Output "1,I'

)-, WY Treasury bills
6 372 (B) Corporate bonds
7 455 (C) Equity securities
8 496 (D) Shares on the stock exchange
9 53r
l0 580

19. What is the number of labour units that

produces the HIGHEST average product
of labour?

(A) 6
(B) 7
(c) 8
(D) 9

Item 2l refers to the following curves which show the demand for some products

PPD

D D

a 0 a
I II

P P D

0 a 0 D a
Itr IV

21. Which of the curves above indicates that demand for the product is perfectly elastic?

(A) |
(B) II
-
g'Irr
(D) rv

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0l 2l 601 olF )ot 6
 -6

22. The MAIN objective of a credit union is to 25 A normal supply curve for farm produce will
slope upwards from left to right if farmers
(A) z encourage 'summer'spending
encourage thrift among its (A)-"- pass on increased costs to customers
"W
(C)
members
provide credit
agencies
to government r\
(c)
are willing to produce more as
prices increase
increase their profit margins as
(D) provide investment funds for prices increase
companies (D) are willing to increase supply as
demand increases

23. The term 'recession'refers to a period of

26. In 2013, the government's fiscal budget
(A) increased economic activity showed that total estimated revenue
(B) gradual increase in the GDP of a was GREATER than total estimated
country expenditure. The difference ii known as
(c) national economic prosperity in a
country {k)' a budget surplus

)w temporary economic decline (B)

(c)
a budget deficit
a balanced budget
(D). an accumulated budget
Item 24 refers to the following diagram
which shows the demand for and supply
ofgrapes. Item27 refers to the following information
which relates to a manufacturing company.
Price z1
t-/
L)
l-/
$r0 000)
Do Total fixed cost
Total cost $s0 d00'- 'ep
,t,J
Output 100 units

p, v 27. The average variable cost is

(A) ) $ 4oo
r00

$
--T J
JPf
(c)
p, $l
000
Do
(D) $4 000
0 q. q,
Quantity

24 What is the equilibrium price and quantity

demanded?
.iF-,
((A)/ p"andq"
tBt po and q,
(C) p, and q,
(D) p, and q.

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 -7 -

Item 28 refers to the following diagram Item 30 refers to the following table which
which shows the simple circular flow of shows the price of a product, the quantity
income for an economy. demanded (QD) and quantity supplied
(QS).
Firms
Price QD Qs
($) (Units) (Units)
Y
l0 8 20
I
8 t2 t6
Households 6 t4 t4
4. l6 12"

28. The nominalflow labelled Y refers to 2 29 8

(A) savings 30 At which of the following prices are there

(B) investment @
d
(D)
factor incomes
factors of production 6 $2 and $4
(B) $4 and $6
(c) $6 and $8
29. The term 'money supply'refers to the (D) $8 and $10

(A) total amount of gold, silver and

other precious metals in reserve Item 31 refers to the following table which
(B) total asset base of the institutions shows production costs of three units of a
in the financial sector product.
(c) amount of money traded in the
/-, foreign exchange market Total Fixed Marginal Total
Units
(D) total stock of money in an economy Cost ($) Cost ($) Cost ($)
at a given moment I 100 25 125
2 130
L,L,A
5 60 I

31 What is the total cost when three units

are produced?

(A) $l 25
(B) $l 30
(c) $lss
rv)' $ 190

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01216010/F 2016
 -E-

Item 32 refers to the following information 33 A coulttty faccs tlrc ftrllowirrg ;rlotlrrc:tiorr
which relates to the cost of output of a combinations:
product.
X = production with uneryployed resources
:
Y unattainable production combination
Z : efficient production combination
Output Level Total Cost
100 l0 000
l0l r0 500 Which of the following production
possibility curves (PPCs) correctly
32 The marginal cost is illustrates the information above?
-/
,(A) $ soo (A) Capital
(B) $lo 000 goods

(c) $lo loo x

(D) $lo soo Y

o 7, Consumer
goods

(B) . CaPital
goods

.Y
o Consumer
goods

(C) CaPltal
goods

.Y
x

oZ

o' Consumer
goods

goods

oY

oX
o Consumer
goods

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 -9-

34 The functions of a central bank do NOT Items 36-37 refer to the fo llowing diagram
include which shows the demand and supply
curves for Good X. D, and S, represent
(A) issuing of notes and coins the original respective demand and supply
tq\ providing loans to the public curves.
(c) managing foreign exchange rates
(D) maintaining the foreign currency D2
accounts of the government
D sr

Item 35 refers to the following table which P

shows the market demand and supply at
Pr
given prices.
.D2
Po

Price of Market Market

P2
Potato per Demand Supply
s, s2
Ks ($) (000 kg) (000 kg)
4 700 100 0 x
-'& s00 200
Ytz) 350 350 36. What is the ORIGINAL equilibrium price?
l6 200 530
20 r00 700 Po
P
35. The equilibrium price is (c) P,
(D) P3
(A) $4
$8
B
(D)
$12
$16
37. Holding the supply curves fixed, a shift
in the demand curve ONLY from D,D, to
D,D, will cause the original equilibrium
price to

(A) fallfrom P3 to Po
(B) fall from Po to P,

I
(c) rise from Pr to P,
rise from Po to P,

38. A student has a daily allowance of $20 with

which he can purchase chickert and chips
or a burger, but NOT both. If he put'chases
the chicken and chips, the opportunity cost
of his decision will be the
d'- i
\111/ burger he gave up
(B) satisfaction lre gets from burger
(C) price of the chicken and chips
(D) satisfaction he gets from the
chicken and chips

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39 A government reduces tax on carrots. This 44. The relationship between price and quantity
causes the price of carrots to fall by 50o/o. demanded ofa normal good is described as
Quantity demanded then rises by SD!/p.The
price elasticity of demand for carrots in this (A) direct
a shift
case is

(A)
&
(D)
inverse
indirect

p
0
0.4
I
2.5 45 A countrv has a comoarative advantase in
the production offfimmodity when it

40 The measure that is MOST likely to reduce (A) canproducemoreofthatcommodity

inflation is than any other country

(A)
(B)
an increase in bank lending
an increase in import duties
a reduction in direct taxation
0
(C)
can produce that commodity at a
lower opportunity cost tfran any
other country \
has a larger share of the market for
a reduction in government that commodity than any other
@ expenditure country
(D) accountsforagreaterpercentageof
global sales of that commodity
4t The amount of net exports in an economy than any other country
l .j
is given as -$10m. This indi"6ates that the
7 ,(.L
value of exports is L U
46. A firm produces 29 pairs of high q
(A) zero leather shoes at a fixed cost of$20 000 and
(E equal to imports a variable cost of
$9 000. On pr6ducing
@) less than imports the 30th pair, the-new total cost rises to
(D) greater than imports $30 000 ..-)
.J
,I
c'IL'
What is the marginal cost of the 30th paii?
42. In economics, the excess of human u'ants
over existing resources is known as $ 1000
$ 9000
greed (c) $20 000
ffi
'(e)
scarcity
opportunity cost
(D) $29 000

(D) economic decline

47 In theory, open competition on a world
scale facilitates
43 Large firms can achieve savings in
unit costs as a result of advertising and (A) high levels of dependency on
packaging. These kinds of economies of tourism
scale can be classified as (B) increases in trade unions'
negotiating power
(A) financial government manipulation of
'
/'CI\ technical market outcomes
KC) ) marketing (D) the development of a competitive
D' managerial advantage based on price
i
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Z.A1 niE /)n 1 (
^1.1
 - ll -

t-,

48 Which ofthe following isNOTa determinant 52. The economic system where major
of a shift in demand for laptop computers? economic decisions are made by private
individuals and businesses ii known as a
Income
W
(c)
Price of laptop computers
A preference for desktop computers
.g9/free market
(B) planned economy
(D) A rise in the price of desktop (C) controlled economy
computers (D) subsistence economy

49 Which of the following factors will 53. Production can be defined as the
contribute to a surplus on the balance of
trade of a country? (A) interaction between buyers and

sf
sellers
w{ The value of exports is greaterthan
the value of imports.
transformation
outputs
of inputs into
(B) The volume of exports is greater (c) pricing of resources according to
than the volume of imports. demand
(c) The volume of imports is greater (D) economic relationship between
than the volume of exports. output and input
(D) The value of imports is greater than
the value of exports.
54 Which ofthe following measures is LEAST
likely to be used to reduce iniports?
50 The currency of a country may appreciate
in value if there is an increase in (A) Tariff
(B) Quota
(A)
pr-
the demand for its imporls
the demand for its exports
-{w
(D)
Subsidy
Embargo
(c) its balance of trade deficit
(D) its balance of payments deficit
55. A pure public good can be described as

51 When an economy which was once (A) diminishable

booming suddenly starts to experience low
demand for goods and services, leading
ry
(c)
zero-priced
excludable
to companies and businesses closiag (D) rivalrous
down, rising unemployment and falling
standards of living, the country is said to
be experiencing 56. Which ofthe following isNOTan example
of a primary product?
*A\ a recession
(B) a revaluation (A) Banana
(C) an externality (B) Bauxite
(D) a disequilibrium
@f Furniture
(D) Crude oil

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01216010/F 2016
!
-t2-

Item 57 refers to the following table Item 60 refers to the following table which
which shows the current account section shows manufacturing output as a share of
of a country's balance of payments for the gross domestic product (CDP) for four
year 2014. countries: W, X, Y andZ.

Item ($M) Country

Invisible imports
Invisible eiports
*50
80
\ \'r
')/J' Year w
(%)
x
("/")
Y
("/")
Z
("/"\
Visible imports
Visible exports
-ex I

2000
990 28
23
40
34
29
26
29
28

57 What is this country's balance of 2010 l9 3l 2t 23

merchandise trade?

@
(B)
_S38 M
$20 M
60 The table shows that ALL countries
experienced
(c) $38 M
(D) (A) a decline in the gross domestic
$48 M
product
(B) a decline in the sale of manufactured
58. Which of the following is NOT a function products
of the International Monetary Fund? (cl an increase in employment in the
manufacturing sector
(A) Fostering global monetary @f a decline in manufacturing output

6(c)
cooperation
Settling trade disputes between
countries
Promoting the financial stability of
,'l'( O
as a share
product
of gross domestic
L'/

countries
(D) Assisting countries with balance of
payments defi cit diffi culties

59 The restriction of international trade

through tariffs, embargoes, qubtas and
exchange controls is referred to as

w
4c>
globalization
protectionism
a bilateralagreement
(D) structural adjustment

END OF TEST

IF YOU FINISH BEFORE TIME IS CALLED, CHECK YOUR WORK ON THIS TEST.