Cambridge A Level Economics 9708 — 2017 Oct/Nov Paper 1 · Variant 1

Question 1

1 A teacher asks four students to fill in the gaps in the following sentence. ‘A positive economic statement is .«..1«« statement that ««2«« be tested using factual evidence, whereas a normative economic statement is ««3«« statement that ««4«« be tested using factual evidence.’ The students’ answers are shown in the table. Which student is correct? 1 2 3 4 A an objective can a subjective cannot B an objective cannot a subjective can C a subjective can an objective cannot D a subjective cannot an objective can

Accepted Answer

A

Question 2

2 From 1990 to 2000 each of the countries listed below changed towards a market economy through privatisation programmes. private sector share (% of GDP) (ratio of private enterprise earnings to GDP) 1990 1995 2000 Czechia 10 70 80 Hungary 20 60 80 Romania 15 45 60 Slovakia 10 60 80 What can be concluded about the rates of privatisation? A Czechia initially made the fastest change. B Hungary made the least overall change. C Romania made the greatest overall change. D Slovakia made the steadiest change.

Accepted Answer

A

Question 3

3 Farmers using traditional methods lack access to finance and often employ family members on a part-time basis. If working practices in agriculture could be improved, how would this be likely to be shown on the production possibility curve? R manufactured goods T S O agricultural goods A by a movement from R to T B by a movement from S to R C by a movement from S to T D by a movement from T to R

Accepted Answer

C

Question 4

4 Which types of good are distinguished from one another by the presence or absence of opportunity cost? A demerit and merit goods B economic and free goods C inferior goods and normal goods D private and public goods

Accepted Answer

B

Question 5

5 What could cause a shift in the supply curve of good X and a movement along its supply curve? shift in the supply curve movement along the supply curve A a change in consumer preferences an increase in the price of a substitute good B a decrease in factor productivity the imposition of a tax on good X C an increase in the price of a an increase in factor productivity complementary good D an increase in the wage rates a change in consumer preferences in the industry

Accepted Answer

D

Question 6

6 A supply curve is represented by the equation, quantity supplied = 10 + 5P, where P = the price of the product. Which price rise would cause the quantity supplied to double? A $1 to $2 B $1 to $3 C $1 to $4 D $1 to $5

Accepted Answer

C

Question 7

7 Along which axis can the market demand curve be aggregated from individual demand curves? A both the horizontal and vertical axis B the horizontal axis only C the horizontal or the vertical axis but not both D the vertical axis only

Accepted Answer

B

Question 8

8 The table shows the price of a good and total expenditure on the good during specific periods when the market is in equilibrium. price total expenditure period ($) ($) 1 12 96 000 2 5 40 000 3 8 64 000 4 10 80 000 5 4 32 000 What can be deduced from this data? A The good has constant opportunity cost. B The good is an inferior good. C The price elasticity of demand is equal to one. D The price elasticity of supply is equal to zero.

Accepted Answer

D

Question 9

9 The Chinese government relaxed controls on private house ownership. Private house ownership rose sharply, replacing demand for apartments rented from the state. What would have been most likely to happen to private house prices and the rents of apartments? private house prices apartment rents A decrease decrease B decrease increase C increase decrease D increase increase

Accepted Answer

C

Question 10

10 What might explain a simultaneous increase in both price and quantity traded in the market for a normal good? A the removal of an effective maximum price on the good B technological progress in the production of the good C the imposition of a tax on the good D the granting of a subsidy to producers of the good

Accepted Answer

A

Question 11

11 The diagram shows the demand and supply curves for parking spaces in a hospital car park. S price P D O number of spaces The managers decide to rely on the price mechanism to allocate parking spaces at the hospital. What is required for this to work? A Alternative means of transport must be provided for those unable to afford price OP. B A survey will be needed to find out the amount users are willing to pay. C The capacity of the car park will need to be expanded. D The price charged for parking spaces must be OP.

Accepted Answer

D

Question 12

12 The diagram shows a market for a good which is supplied partly from domestic production and partly from imports. Sh represents domestic supply and Sm represents imports. Sh price Sm D O R T V quantity What will be the level of consumption and the associated quantity of imports? consumption quantity of imports A OT RT B OT OT C OV RT D OV RV

Accepted Answer

D

Question 13

13 The diagram shows the market for computers in Pakistan. W supply price Y X demand O Z quantity Which areas represent consumer surplus and consumer expenditure? consumer consumer surplus expenditure A WXY OXY B WXY OXYZ C WYO OXYZ D WYO OYZ

Accepted Answer

B

Question 14

14 The diagram shows the market for labour. At which level would an effective minimum wage rate have to be set? labour supply wage rate A B C D labour demand O quantity of labour employed

Accepted Answer

A

Question 15

15 What is an accurate statement about a production subsidy? A It causes demand for the good to increase so the demand curve shifts to the right. B It enables firms to supply more so the supply curve shifts to the left. C It is financial assistance to firms from the government to help increase output. D It is money taken from firms by the government to reduce harmful side effects of production.

Accepted Answer

C

Question 16

16 The diagram shows the market supply and demand curves for an agricultural product. The government guarantees producers a price of at least OX for their output, but allows the market price to be freely determined by demand and supply. supply price U X Y Z V W demand O S T quantity Which area in the diagram represents the total subsidy payments made by the government to producers? A UYTS B UYZW C XUWV D XYZV

Accepted Answer

D

Question 17

17 How will transfer payments to low-income families, funded by a mix of direct taxation and indirect taxation, affect the total level of consumption? A The change in the level will be uncertain. B The level will fall. C The level will remain unchanged. D The level will rise.

Accepted Answer

A

Question 18

18 The table shows the annual percentage change in the output per worker employed for four nationalised industries before and after privatisation. nationalised before after industry privatisation privatisation railways –4% 2% electricity supply 7% 9% shipbuilding 4% –1% telecommunications 6% 6% What can be concluded from the table about the effect of privatisation? A Employment fell in the railway industry. B Employment was unchanged in the telecommunications industry. C Output was greatest in the electricity supply industry. D Workers became less efficient in the shipbuilding industry.

Accepted Answer

D

Question 19

19 In its recent budget a government increased defence expenditure and the amount spent on training to increase the productivity of the workforce. The initial equilibrium point is shown by X on the aggregate demand, AD, and aggregate supply, AS, diagram. What would be the equilibrium point after these changes? AS3 AS1 B price level AS2 X A C D AD3 AD1 AD2 O real output

Accepted Answer

C

Question 20

20 The table shows a country’s consumer price index for March and April 2015. consumer price index March 2015 151.3 April 2015 148.6 Which statement correctly describes what happened between these two months? A There was a decrease in the annual rate of inflation. B There was a decrease in real interest rates. C There was an increase in the purchasing power of money. D There was an increase in the standard of living.

Accepted Answer

C

Question 21

21 What would be likely to increase inflation in an economy? A an increase in consumer saving B an increase in interest rates C an increase in labour productivity D an increase in taxes on imports

Accepted Answer

D

Question 22

22 In 2014 a rich foreign businessman bought a UK football club. What would have been the immediate effect of such an investment? A a fall in the demand for footballers in the UK B a fall in the earnings of footballers in the UK C an inflow in the UK balance of payments D an inflow in the UK balance of trade

Accepted Answer

C

Question 23

23 Australia’s spending on imports falls and, at the same time, investment abroad by Australian firms declines. Which diagram shows the immediate effect of these changes on the market for the Australian dollar? A B price of D price of S1 S D Australian D1 Australian S dollars dollars P P1 P1 P D S1 D D1 S S O Q1 Q O Q1 Q quantity of quantity of Australian dollars Australian dollars C D price of D S S1 price of D1 S1 Australian D1 Australian S D dollars dollars P P1 P1 P D1 S D S1 S1 D1 S D O Q O Q quantity of quantity of Australian dollars Australian dollars

Accepted Answer

B

Question 24

24 An economy’s terms of trade rose from the base year of 100 to 110. Which changes in the export price index and the import price index would have caused this? export price import price index change index change A 0 –10 B 0 +10 C +10 0 D +20 +10

Accepted Answer

C

Question 25

25 The introduction of the euro as the common currency of much of Western Europe created a powerful economic group. What is least likely to have been the intention? A faster economic growth in the region B greater labour mobility and employment in the region C more international trade within the region D more international trade with non-members

Accepted Answer

D

Question 26

26 Country X has a comparative advantage in producing wheat and country Y in producing cars. However, the countries choose not to specialise and trade. What is a valid reason for this behaviour? A The cost of transport is high relative to the opportunity cost differences between the countries. B The exchange rate lies within the countries’ opportunity cost ratios. C There is immobility of factors of production between the countries. D Trade is based on absolute rather than comparative advantage.

Accepted Answer

A

Question 27

27 What is not an example of protectionism? A a ban on the imports of chicken products B import tariffs on agricultural products C maximum supermarket food prices D strict health and safety requirements

Accepted Answer

C

Question 28

28 The government of a country plans to cut income tax rates. The initial equilibrium for the country is represented by point X on the diagram. Which new equilibrium point would an economist predict as the result? AS2 price A AS1 level B D X C AD3 AD1 AD2 O real national income

Accepted Answer

B

Question 29

29 If an economy has a floating exchange rate, which policy could have an expansionary effect on national income with the smallest reduction of a current account surplus on the balance of payments? A a reduction in income tax rates B a reduction in interest rates C government subsidies to individuals wanting loans for house purchases D increased government spending on transport infrastructure

Accepted Answer

B

Question 30

30 Which combination of fiscal and monetary policies is most likely to be effective in the short run for tackling deflation in a closed economy? fiscal policy monetary policy A increasing the budget deficit reducing the interest rate B increasing the budget deficit reducing the money supply C reducing the budget deficit reducing the interest rate D reducing the budget deficit reducing the money supply

Accepted Answer

A

Cambridge A Level Economics 9708 — 2017 Oct/Nov Paper 1 · Variant 1

Question paper16 pages

Mark scheme3 pages

Questions as text

Q1 · A teacher asks four students to fill in the gaps in the following sentence

Q2 · From 1990 to 2000 each of the countries listed below changed towards a market economy…

Q3 · Farmers using traditional methods lack access to finance and often employ family members…

Q4 · Which types of good are distinguished from one another by the presence or absence of…

Q5 · What could cause a shift in the supply curve of good X and a movement along its supply…

Q6 · A supply curve is represented by the equation, quantity supplied = 10 + 5P, where P = the…

Q7 · Along which axis can the market demand curve be aggregated from individual demand curves?

Q8 · The table shows the price of a good and total expenditure on the good during specific…

Q9 · The Chinese government relaxed controls on private house ownership

Q10 · What might explain a simultaneous increase in both price and quantity traded in the…

Q11 · The diagram shows the demand and supply curves for parking spaces in a hospital car park

Q12 · The diagram shows a market for a good which is supplied partly from domestic production…

Q13 · The diagram shows the market for computers in Pakistan

Q14 · The diagram shows the market for labour

Q15 · What is an accurate statement about a production subsidy?

Q16 · The diagram shows the market supply and demand curves for an agricultural product

Q17 · How will transfer payments to low-income families, funded by a mix of direct taxation and…

Q18 · The table shows the annual percentage change in the output per worker employed for four…

Q19 · In its recent budget a government increased defence expenditure and the amount spent on…

Q20 · The table shows a country’s consumer price index for March and April 2015

Q21 · What would be likely to increase inflation in an economy?

Q22 · In 2014 a rich foreign businessman bought a UK football club

Q23 · Australia’s spending on imports falls and, at the same time, investment abroad by…

Q24 · An economy’s terms of trade rose from the base year of 100 to 110

Q25 · The introduction of the euro as the common currency of much of Western Europe created a…

Q26 · Country X has a comparative advantage in producing wheat and country Y in producing cars

Q27 · What is not an example of protectionism?

Q28 · The government of a country plans to cut income tax rates

Q29 · If an economy has a floating exchange rate, which policy could have an expansionary…

Q30 · Which combination of fiscal and monetary policies is most likely to be effective in the…

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