Feb/March 2025

What counts as the factor of production called land?

The factors of production

What role does a central bank perform for the general public?

Money and banking

When wage rates are higher, a person would rather work fewer hours than earn more income. Which curve represents this?

Workers

In some countries, the number of trade union members has fallen substantially. Who belongs to trade unions?

Trade unions

What is the most likely factor that would encourage a business to expand internally?

Firms’ costs, revenue and objectives

A car-wash firm employs 3 workers. Prior to specialisation, each worker washed 5 cars per day. Following specialisation, 30 cars per day are washed. What is the percentage increase in productivity?

Firms and production

The diagram illustrates a firm’s fixed costs, variable costs and total costs. What is the firm’s total variable cost when output reaches 100 units?

Firms’ costs, revenue and objectives

The table gives the firm’s average revenue at different output levels. As output increases, what happens to total revenue?

Firms’ costs, revenue and objectives

What does the term government budget mean?

Fiscal policy

A government chooses to raise defence spending and cut direct taxes. What kind of policy is this?

Fiscal policy

Governments may use monetary policy, for example by raising the rate of interest. What is one effect of a higher rate of interest?

Monetary policy

An economics graduate decides to take a job in a bank instead of teaching economics, which would have been the next best alternative. What cost is incurred because of this decision?

Opportunity cost

The table presents how the working population is divided among different sectors of an economy, measured in millions (m), across two years. What conclusion can be drawn from this information?

Workers

Which type of government measure would increase the geographic mobility of labour?

Workers

Which action taken by employers is most likely to lower long-term economic growth?

Economic growth

The table gives the weights assigned to different categories of goods in a Consumer Prices Index (CPI) for two years. What conclusion can be drawn from the table when year 1 is compared with year 2?

Inflation and deflation

The table presents the Human Development Index (HDI) values for two countries. What could account for the difference between the HDI values?

Differences in economic development between countries

Even in wealthy countries, some people still live in relative poverty. What is the most likely reason for this?

Poverty

The diagram presents population figures for a country in 1950, 2005 and 2050. What conclusion can be drawn from the diagram?

Population

A country possesses substantial oil reserves. It chooses to make a broad variety of products instead of concentrating on oil production. What is not an acceptable reason for supporting this decision?

International specialisation

The US imposes a 25% tariff on Chinese steel to safeguard jobs in the US steel industry. In which circumstance would this policy be most effective?

Globalisation, free trade and protection

What action could a central bank take to prevent its country’s currency from losing value?

Foreign exchange rates

The diagram illustrates an original production possibility curve, $\text{PPC}_1$. What is most likely to have brought about the shift of the production possibility curve from $\text{PPC}_1$ to $\text{PPC}_2$?

Production possibility curve (PPC) diagrams

A government wants to cut the surplus on the current account of its balance of payments. Which policy is most likely to bring this about?

Current account of balance of payments

Which of the following is an example of microeconomics?

Microeconomics and macroeconomics

When deciding how resources are allocated within an economy, there are three key questions to resolve. Which option is not part of one of the three key questions?

The nature of the economic problem

The diagram illustrates the demand and supply curves for a good. The market is at equilibrium at point $X$. What would the new equilibrium position be if there was a successful advertising campaign for the good and a rise in the cost of raw materials?

Price determination

The price elasticity of demand for smartphones is believed to be $-2.0$. A manufacturer decides to reduce prices by $10\%$. What will be the impact of this price change?

Price elasticity of demand (PED)

What is one feature of a market economic system?

Market economic system

A government plans to construct a new road through a forest. What would count as an external cost of this?

Market failure

Read the source material closely before you answer Question 1. Source material: Population, household spending and poverty in Romania From 1990 to 2022, Romania’s population dropped from 23 million to 19 million. Over this same period, both the birth rate and the death rate declined. Some workers from other countries, including Sri Lanka and Vietnam, moved to live in Romania. However, more Romanian workers left the country to work and live mainly in other European countries. If the Romanian economy keeps expanding at its relatively high rate, fewer people may leave and more immigrants may be drawn in. Recent economic growth has been driven largely by rises in household spending. Romanians have become wealthier, more optimistic about the future and have experienced low interest rates. In April 2022, the Romanian Government set a maximum price for electricity. Romanians spend a relatively large share of their income on electricity and on food. Table 1.1 shows selected countries’ GDP per head and average spending on food as a percentage of total household spending. The poor are especially affected by changes in electricity prices and food prices. Romania has a relatively high level of poverty. To reduce poverty, some economists have suggested that the government should attract more foreign multinational companies (MNCs) to Romania. More MNCs may influence poverty because of the possible effects on unemployment and prices. Another way to reduce poverty would be to encourage more women to work. The proportion of women in Romania who work or look for work has fallen in recent years. Whether women join the labour force is influenced by a range of factors. These include social attitudes, female education and whether childcare facilities and part-time work are available.

Population

South Korea makes use of both economic goods and free goods. Its output includes products with both elastic and inelastic supply. The country is constructing what is expected to become the world’s first floating city, with an estimated cost of $180bn. This is intended to deal with rising sea levels brought about by climate change. Governments use several policies to cut greenhouse gases, which contribute to climate change, including banning the burning of wood for home heating.

The role of government

Estonia uses its factors of production across a variety of industries, such as education. In 2022, the nation faced a shortage of teachers. To draw workers in from other industries, the government raised teachers’ wages. Two further industries in Estonia are building and clothing. Estonia’s firms were affected in 2022 when the government increased the money supply.

The factors of production

Nigeria operates a mixed economic system. In January 2023, Nigeria recorded unemployment of 33%, creating several costs. Its inflation rate of 22% produced various effects on firms in the country. During 2022 and at the beginning of 2023, Nigerians raised their demand for foreign currency.

Employment and unemployment

Finland is a high-income country that usually records a larger value of exports than imports. It has a strong commercial banking sector that has expanded its lending in recent years. The country has an ageing population, with over a quarter of people aged above 65. In 2022, Finland’s Government ran a budget deficit, with government spending higher than tax revenue.

Supply-side policy