economics

1. which action would not raise the quality of the particular factor of production?
a capital — operating a machine continuously at full capacity
b_ enterprise — providing risk management advice
c land — increasing the use of fertilisers
d labour — making apprenticeships and training compulsory

2 during a period of deflation an economy's aggregate monetary demand falls.
which function of money explains this fall?
a ameasure of value
b  amedium of exchange
c_ astandard for deferred payment
d_astore of value

3 what will usually result if production is divided into separate processes that are assigned to
different people?
lower output | more repetitive
lower costs
per worker tasks
a no no no
b no yes yes
cc yes no no
d yes yes yes

4 the diagram shows a production possibility curve.
good y co
2 good x
which combination is correct?
opportunity cost of opportunity cost of
producing more of producing more of
good y good x
a decreases decreases
b decreases increases
cc increases decreases
d increases increases

5 a government wishes to ensure adequate flood defences are provided in its coastal areas.
which action is most likely to be undertaken only by the government?
a building the defences
b_ designing the defences
c financing the defences
d_ maintaining the defences

6 consumer surplus exists in the market for rice.
what does this mean?
a consumers benefit from rice production more than producers.
b consumer demand for rice exceeds supply.
c some consumers would be willing to pay more than the market price for rice.
d_ the production of rice exceeds the supply.

7 the diagram shows the demand curve and supply curve for a product.
is)
‘ x
price
¥
w
d
(6)
z quantity
which area represents producer surplus?
a owyz minus owy
b owyz minus oyz
c oxyz minus oyz
d oxyz minus wxy

8 the diagram shows the relationship between total expenditure and price for three products, 1, 2
and 3.
1
2
price
3
(e)
total expenditure
which curves represent the products with price-elastic and unitary price-elastic demand?
[| teste [uty
a 1 2
b 2 3
cc 3 1
d 3 2

9 what causes an inelastic market supply curve for an agricultural crop such as wheat?
a agovernment decision to import crops at times of shortage
ban efficient use of fertilisers causing crop production to rise
c the storage of excess production for future sale
d the very long time required to produce additional output

10 the diagrams show the effect of a change in the market for good x on the market for good y.
s, ss; s,
price rn price
d, ‘dz di
o quantity o quantity
good x good y

what can be concluded about the goods?

a xand y are complements.

b= xand y are in joint supply.

c xand vy are substitutes.

d_ y isa derived demand from x.

11. the final of a major sports event is held in a stadium which has a fixed capacity of 40000 people.
the price for a seat is set at p-, but when the tickets go on sale all tickets are sold very quickly
with many disappointed people unable to buy a ticket.

which diagram best represents this?
a b
is} is}
rice rice
pp p[ xn pp
p_|-----------------}-----»
d d
= 40000 e 40000
quantity quantity
cc d
- ss
. pipencsnggannssnnny i
price i price
i) ,
= 40000 e 40000
quantity quantity

12 which product has the lowest price elasticity of demand?
price rises by quantity demanded
5 falls by
va (%)
a 0 10
b 5 5
cc 10 5
d 10 0

13 the market for a product is initially in equilibrium.
which combination of changes will cause the price of the product to rise and the quantity sold
to fall?
a adecrease in demand that is larger than a decrease in supply
b  adecrease in demand that is smaller than a decrease in supply
c_ anincrease in demand that is larger than an increase in supply
d_anincrease in demand that is smaller than an increase in supply

14 the diagram shows two demand curves and two supply curves. the initial equilibrium is at h.
price
iu k
q quantity

which combinations of shifts in the demand and supply curves would result in a change in the
equilibrium position from h to k?
a anincrease in demand and an increase in supply
b_anincrease in demand and a decrease in supply
c adecrease in demand and an increase in supply
d  adecrease in demand and a decrease in supply

15 in 2009, the australian government made a payment of $900 to those who earned less than
$100 000 per year.
how would this payment best be described?
a neutral
b_ progressive
c proportional
d_ regressive

16 the market for good z is in equilibrium with 1000 units sold at a price of $10. the government
pays a subsidy of $2 per unit to producers of good z.
under which conditions will the total spending by the government on the subsidy be smallest?
price elasticity of price elasticity of
demand for good z supply for good z
a <1 <1
b <1 >1
cc >1 <1
d >1 >1

17 if an industry is currently state-owned and state-run, what does not represent a reason for it
being privatised?
a decisions will no longer be taken with political considerations in mind.
b_ the benefits of merit goods will be taken into account in decision-making.
c_ its owners would have more incentive to make it operate profitably.
d_ there will be greater incentives for managers to introduce modern technology.

18 vwvnat does the incidence of an indirect tax on a product refer to?
a the proportion of the tax paid by the consumer relative to the producer
b_ the reduction in output as a result of the imposition of the tax
c_ the revenue the tax generates for the government
d_ the increase in the hidden economy as a result of tax evasion after the tax is imposed

19 a government wishes to influence the price of a good. it introduces a maximum price, pmax, and a
minimum price, pmin-
the diagram shows these prices relative to the current market price p.
; ss
price
p i, ee bao
= eee aan
d

o quantity
what can be concluded from the diagram?
a both the maximum and the minimum price will be effective.
b_ only the maximum price will be effective.
c only the minimum price will be effective.
d_ the market price will continue to operate.

20 a government removes the tariff on a product, as shown.
: d domestic supply
price
p! jseeeeseeoe
py} --- ~~ 2 -t---------------- world supply with tariff
pgpe 4 a aa at gal <i ll supply without tariff
s pop ob tt domestic demand
o vw xx y z
quantity
what will be the change in domestic production?
a areduction of wv
b- areduction of xv
c  areduction of xw
d = areduction of zy

21 an economy is initially in equilibrium.
which combination of events will definitely cause an increase in the general price level of the
economy and a decrease in its real output?
aggregate short-run
demand aggregate supply
a decreases decreases
b decreases unchanged
cc increases decreases
d unchanged decreases

22 the government of a country changes from a balanced budget to a budget deficit.
from which point along the country’s long-run aggregate supply curve (lras) will this change
cause the largest increase in employment without creating inflationary pressure?
lras
price
level
d
cc
a b
o real output

23 the price and volume indexes of a country’s imports and exports are shown in the table, for
year 2 [year 1 = 100].
year 2 price index year 2 volume index
er
what is the country’s terms of trade index for year 2?
a 90.9 b 97.8 cc 110.0 d 111.0

24 what is a certain outcome on an aggregate demand and aggregate supply diagram of an
increase in factor productivity?
a downward shift of the aggregate demand curve
b downward shift of the aggregate supply curve
c  anupward shift of the aggregate demand curve
d  anupward shift of the aggregate supply curve

25 trade in services is a component of the current account of the balance of payments.
what is an example of a trade in services?
a_ development aid for foreign countries
b_ export revenue from primary commodities
c_ income from foreign tourists
d_ income from overseas investments

26 which statement about changing price levels is correct?
a anyone on a fixed income has rising real income during deflation.
b government revenue from indirect taxes falls during inflation.
c_ producers prefer deflation to inflation.
d_ savers prefer index-linked savings when there is deflation rather than inflation.

27 what would be likely to decrease inflation in an economy?
a adecrease in consumer saving
b  adecrease in unemployment
c_anincrease in labour productivity
d_anincrease in taxes on imports
a a a a

28 which change in economic circumstances is most likely to lead to a reduction in the rate of
domestic inflation in an economy?
a adepreciation in the currency
bareduction in the productivity of labour
c aworldwide recession
d_anincrease in direct taxes to finance increased welfare payments

29 a country is currently experiencing deflation. it has a large national debt that is greater than its
annual real income.
which combination of policies is most likely to increase the general price level without adding to
the national debt?
fiscal policy monetary policy

a decrease the budget deficit decrease the money supply

b decrease the budget deficit increase the money supply

cc increase the budget deficit decrease the money supply

d increase the budget deficit increase the money supply

30 which government action will conflict with the named economic target?
ee
a lower price inflation lower exchange rate
b more consumer spending lower interest rates
cc more equal incomes lower indirect tax rate
d reduced import levels smaller trade quotas

Solve 9708_w22_qp_13