Feb/March 2023

In country Z, the birth rate has fallen. In the short run, which variable will be affected?

Population

What is one function of commercial banks?

Money and banking

The table presents expenditure in the leisure sector of a country in $1995$, $1999$ and $2005$. What conclusions can be drawn from the table?

Living standards

The graphs illustrate the supply of labour in four occupations. Which graph indicates that, once income rises above a certain level, people choose leisure over work?

Workers

What is likely to occur within a country if its government issued more work permits to doctors from other countries?

Workers

Which of the following is not a benefit of belonging to a trade union for a worker?

Trade unions

What is likely to happen to a firm that grows in order to benefit from economies of scale?

Firms’ costs, revenue and objectives

The table presents a firm’s total fixed costs and total variable costs at different output levels. What occurs as output increases?

Firms’ costs, revenue and objectives

Which features are present in a monopoly?

Market structure

What does deflation mean?

Inflation and deflation

What effect is most likely from an expansionary monetary policy?

Monetary policy

The diagram illustrates the options available to an individual between leisure time and earnings. The person chooses a job that provides more leisure time. What is the opportunity cost to the individual of moving from position Y to position X?

Opportunity cost

Historically, governments have introduced policies in an effort to bring a recession in their country to an end and raise economic growth. Which combination of policies is most likely to do this?

The macroeconomic aims of government

The table gives taxes as a percentage of Gross Domestic Product (GDP) for four countries. Using this data, which country had the largest percentage of direct taxation as a percentage of GDP?

Fiscal policy

As a nation develops economically, what is most likely to occur?

Differences in economic development between countries

Which government policy would be most likely to decrease structural unemployment?

Employment and unemployment

A government aims to keep inflation within the range of $2\%$ to $3\%$. The diagram illustrates the inflation rate across a four-year period. What can be deduced from the diagram?

Inflation and deflation

A town contains a population of $20\,000$. Its birth rate is $25$ per thousand and its death rate is $15$ per thousand. The number of people entering and leaving the town is exactly equal. What will the population be after one year?

Population

What is most likely to be present in a high-income economy?

Differences in economic development between countries

The table gives data for a country’s real GDP in one specific year. A quarter means a period of three months. By the close of which quarter had the economy gone into recession?

Economic growth

What does the term quota mean in international trade?

Globalisation, free trade and protection

What is one benefit of a floating exchange rate for an economy?

Foreign exchange rates

A student described opportunity cost as ‘the next best option given up when a course of action is chosen’. Explain why this description is not adequate.

Opportunity cost

The table gives details from a country’s current account in its balance of payments. What is the balance on the country’s current account?

Current account of balance of payments

The market for a good was initially in equilibrium. Then a change happened that led to a new equilibrium, with the good having a higher price and a smaller quantity bought and sold. Which change would have caused this?

Price determination

What would cause a movement along the demand curve for a product?

Demand

In a year with large rises in the demand for new cars, a lot of used cars also entered the market. The diagrams illustrate demand and supply for new cars and used cars. In each case, the initial equilibrium point was at E. What will the new equilibrium point be in each market?

Price determination

A government imposes an indirect tax on a good that has price-elastic demand. What will be the outcome?

Price elasticity of demand (PED)

The price elasticity of demand for cigarettes is estimated at $0.5$. The government puts in place a tax on cigarettes in order to lower consumption. By what percentage must the price of cigarettes increase to cut consumption by $10\%$?

Price elasticity of demand (PED)

The diagram illustrates the demand for bread and the supply of bread. The government sets a maximum price $P_1$. What is the most likely immediate consequence of this?

Price determination

Study the source material carefully before you answer Question 1. Source material: Shifts in US macroeconomic performance and policy From 2009 to 2019, US real GDP rose in every year. This happened because of, among other factors, low interest rates, land reclamation and a larger labour force. The higher level of US output brought several benefits, although some workers became unemployed. This occurred because some industries grew while others shut down. Income also was distributed more unevenly and pollution rose. Over this period, US exports and imports both increased. Later in the period, the expansion of trade with China, a major US trading partner, was influenced by rises in US tariffs on some Chinese imports. These rises were expected to affect the US current account balance, output and tax revenue. The US exports a variety of products to China, including ice cream. China is the world’s largest consumer of ice cream, purchasing a third of all ice cream consumed. Chinese consumers sometimes buy chocolate to eat with ice cream. In 2019, the price of chocolate went up. In 2020, US macroeconomic performance altered. The country’s price level increased more slowly, mainly because consumer expenditure fell and workers’ bargaining power weakened. The country’s real GDP decreased and unemployment increased. These changes affected US macroeconomic policy. US government spending rose sharply as shown in Table 1.1. The US central bank, the Federal Reserve, announced in September 2010 that it would permit the inflation rate to rise and would not raise the interest rate. In the past, central banks have tried to keep the inflation rate low because of the effects inflation can have on, for example, investment, exports, the distribution of income and tax revenue. The Federal Reserve said that it wanted to increase economic growth, which can raise income per head, employment and tax revenue.

Economic growth

Vietnam has a large number of female entrepreneurs. Some of these firms have expanded and now compete with foreign multinational companies (MNCs) and public sector firms. The Vietnamese government encourages MNCs to establish themselves in Vietnam as a host country. It also intervenes in the economy to promote the consumption of merit goods.

Firms

By 2019, India had become the largest producer of sugar in the world. In India, sugar cane is cultivated by many mostly low-income farmers. They sell sugar cane to mills, and those mills turn the sugar cane into sugar. Compared with growing it, processing the sugar cane is more capital-intensive. The Indian government fixes a minimum price for sugar cane and subsidises the export of sugar.

Fiscal policy

Safiye Ali became Turkey’s first female doctor in 1923. By 2020, women made up 40% of Turkish doctors. During this period, labour productivity rose. Turkey also saw progress in technology, a shift in the current account balance on its balance of payments, and a substantial rise in population size.

Workers

Serbia ranks as the world’s second largest producer of raspberries, and raspberries have elastic demand. The economic problem is encountered by consumers when they purchase raspberries. Only a small number of raspberry farm workers belong to trade unions. By 2020, trade union membership in Serbia had dropped to 20% of all workers. In that same year, Serbia had a larger number of state pensioners than workers.

Trade unions