Cambridge A Level Economics 9708 — 2024 May/June Paper 1 · Variant 1

Question 1

1 A worker earns $40 per hour. Rather than work, she decides to visit a museum for three hours. The visit costs a total of $40. What is the opportunity cost of visiting the museum? A $40 B $80 C $120 D $160

Accepted Answer

C

Question 2

2 The nature of a typical car assembly plant has changed. The industry has fewer firms, operates on larger sites and has more automated machinery. How is this change most likely to have affected the relative use of factors of production in the industry? increased relative use decreased relative use A capital and enterprise labour and land B enterprise and labour land and capital C labour and land capital and enterprise D land and capital enterprise and labour

Accepted Answer

D

Question 3

3 Which item would be least likely to be classed as land? A fertilisers B fisheries C forests D coal

Accepted Answer

A

Question 4

4 Why does the concept of scarcity apply to the use of fossil fuels? A Demand fluctuates according to price changes. B Supply is insufficient to meet demand. C Their use is restricted because of harmful pollution. D They are being replaced by renewable energy sources.

Accepted Answer

B

Question 5

5 An economist knows the current point at which an economy operates within its production possibility curve. What can the economist conclude about this economy? A its degree of self-sufficiency B its international competitiveness C its level of output of two goods D its rate of economic growth

Accepted Answer

C

Question 6

6 An increase in which factor is likely to cause a shift to the left of the demand curve for cinema movies? A expenses for the heating system in the cinema B payments charged by movie scriptwriters C the cost of transport to the cinema D taxes on the incomes of cinema operators

Accepted Answer

C

Question 7

7 Four firms supply the market. The market supply is 50 units at $20 and 100 units at $40. The table shows the market share of each firm at the two prices. Which firm does not have a normal upward-sloping supply curve? % market share % market share at $20 at $40 A 10 10 B 20 50 C 30 20 D 40 20

Accepted Answer

D

Question 8

8 Which statement is correct? A Demand for an inferior good has a positive relationship to income and a negative relationship to price. B Demand for an inferior good has a negative relationship to income and a negative relationship to price. C Demand for a normal good has a positive relationship to income and a positive relationship to price. D Demand for a normal good has a negative relationship to income and a positive relationship to price.

Accepted Answer

B

Question 9

9 In which row are both statements correct? consumer surplus producer surplus A the value that consumers gain from the difference between the consuming a good over and above the actual revenue received by firms for a value that would have been gained from good and the profit maximising revenue consuming the next best alternative B the value that consumers gain from the difference between the price received consuming a good over and above by firms for a good or service and the the price paid price at which they would have been prepared to supply that good C the value that consumers gain from the difference between the actual revenue consuming a good over and above received by firms for a good and the profit the price paid maximising revenue D the value that consumers gain from the difference between the price received consuming a good over and above the by firms for a good and the price at which value that would have been gained from they would have been prepared to supply consuming the next best alternative that good

Accepted Answer

B

Question 10

10 A firm calculates that the income elasticity of demand for its product is –3.0. What can be deduced from this information? A In a period of economic growth, its total revenue should increase. B In a period of economic recession, its total revenue should increase. C It has few substitutes so it should increase its price to increase total revenue. D It has many substitutes so it should decrease price to increase total revenue.

Accepted Answer

B

Question 11

11 The diagram shows the demand and supply curves for the global air cargo market. The initial equilibrium is at point X. What would the new equilibrium be if there is a global recession and an increase in fuel costs? price S2 S1 A S3 D X B C D1 D3 D2 O quantity

Accepted Answer

D

Question 12

12 A government gives free food to poor households in a community. What is this food an example of? A a free good B a public good C a demerit good D a normal good

Accepted Answer

D

Question 13

13 A government wishes to raise the incomes of farmers without raising the price of food to consumers. Which policy should it use? A a maximum price below the market price for food B a minimum price below the market price for food C a payment of a subsidy to farmers to produce food D a release of government food stocks onto the market

Accepted Answer

C

Question 14

14 Governments in market economies give different reasons for intervening in the operation of an economy. Which reason given is a normative statement? A Average incomes have failed to keep pace with price rises during the past year. B Energy prices have increased by more than 50% during the past year. C The distribution of incomes has become more unfair during the past year. D The poorest 10% of households have suffered the greatest fall in average real income during the past year.

Accepted Answer

C

Question 15

15 The table illustrates macroeconomic data for an economy. All figures are in $ billions. What is the equilibrium real output? consumption government investment exports imports real output expenditure expenditure A 110 100 50 10 20 100 B 120 100 60 20 30 200 C 140 100 70 30 40 300 D 160 100 80 40 50 430

Accepted Answer

C

Question 16

16 A country’s net national income (NNI) is less than its gross national income (GNI). What does this mean? A incomes earned overseas were less than incomes sent overseas B inflation has been accounted for in NNI but not in GNI C the country’s exports decreased D there has been a net depreciation in the value of the country’s fixed capital assets

Accepted Answer

D

Question 17

17 Asha is currently unemployed. She has been offered a job but has decided to decline the offer and search for a better paid job. Which type of unemployment is this? A cyclical B frictional C seasonal D structural

Accepted Answer

B

Question 18

18 A major trading nation, country X, is in equilibrium at the full employment level of real output. There is then a recession in its main international markets. What are the most likely consequences of this change for country X? rate of inflation unemployment A decrease decrease B decrease increase C unchanged decrease D unchanged increase

Accepted Answer

B

Question 19

19 Why would a fall in a country's average price level cause its aggregate demand curve to slope downwards? A It leads to an increase in interest rates. B It reduces the real value of money balances. C It makes the country’s goods cheaper relative to foreign goods. D It leads to the expectation of further price falls.

Accepted Answer

C

Question 20

20 To counter deflation a central bank uses expansionary monetary policy. What is likely to result? A a higher cost of borrowing B an increase in aggregate demand C an appreciation of the exchange rate D an increase in government debt

Accepted Answer

B

Question 21

21 Which statement about government budget surpluses and deficits is the most accurate? A A surplus implies that the balance of payments is in surplus. B A surplus implies that the government is spending too much money. C A deficit implies that the economy is in decline. D A deficit implies that the national debt is increasing.

Accepted Answer

D

Question 22

22 What is most likely to decrease if a government uses expansionary fiscal policy? A a balance of payments deficit B cyclical unemployment C the level of wages D the rate of inflation

Accepted Answer

B

Question 23

23 Sweden had a change in its Consumer Prices Index (CPI) of –0.6%. Which combination of policies might its government use to restore price stability? A increase interest rates and increase indirect taxes B increase interest rates and reduce government spending C reduce government spending and increase income tax D reduce interest rates and increase government spending

Accepted Answer

D

Question 24

24 What is a disadvantage of operating a floating exchange rate system? A It makes it difficult to prioritise domestic economic policy aims. B It makes the prices of internationally traded goods less predictable. C It means that the government must keep significant foreign currency reserves. D It requires continuous government intervention in currency markets.

Accepted Answer

B

Question 25

25 What is not an example of protectionism? A export subsidies B import subsidies C quotas D tariffs

Accepted Answer

B

Question 26

26 Countries X and Y both produce goods M and N. They decide to specialise and trade freely in the goods. Under which conditions are the gains from specialisation and free trade likely to be smallest? mobility of factors of mobility of factors of production between production between goods M and N countries X and Y A high high B high low C low high D low low

Accepted Answer

C

Question 27

27 The terms of trade for a country increased from 100 to 120. Which statements are correct? 1 The terms of trade have deteriorated. 2 Fewer exports are needed to buy the same quantity of imports. 3 The balance of payments must improve. A 1 and 2 B 1 only C 2 and 3 D 2 only

Accepted Answer

D

Question 28

28 The table shows the number of Turkish lira (TRY) which can be exchanged for one US dollar (USD) in 2016 and 2021. date exchange rate July 2016 1 USD = 2.83 TRY July 2021 1 USD = 8.15 TRY What is the most likely cause of the change in the price of Turkish lira between 2016 and 2021? A a sustained fall in the demand for Turkish imports B a sustained fall in Turkish government debt as a percentage of GDP C a sustained rise in Turkish interest rates D a sustained rise in Turkish inflation

Accepted Answer

D

Question 29

29 The table shows the current account of a balance of payments for January 2021. $m exports of goods 15 000 imports of goods 17 000 services credit 2 500 debit 2 000 primary income credit 100 debit 1 000 secondary income balance 60 What is the current account balance? A a deficit of $2340m B a deficit of $2000m C a surplus of $2340m D a surplus of $2000m

Accepted Answer

A

Question 30

30 Which policy would not be an argument for the use of import tariffs? A They are an effective way of raising revenue. B They improve the balance of payments on a current account. C They improve a nation’s terms of trade in a bilateral agreement. D They may lead to retaliation by trading partners.

Accepted Answer

D

Cambridge A Level Economics 9708 — 2024 May/June Paper 1 · Variant 1

Question paper12 pages

Mark scheme3 pages

Questions as text

Q1 · A worker earns $40 per hour

Q2 · The nature of a typical car assembly plant has changed

Q3 · Which item would be least likely to be classed as land?

Q4 · Why does the concept of scarcity apply to the use of fossil fuels?

Q5 · An economist knows the current point at which an economy operates within its production…

Q6 · An increase in which factor is likely to cause a shift to the left of the demand curve…

Q7 · Four firms supply the market

Q8 · Which statement is correct?

Q9 · In which row are both statements correct?

Q10 · A firm calculates that the income elasticity of demand for its product is –3.0

Q11 · The diagram shows the demand and supply curves for the global air cargo market

Q12 · A government gives free food to poor households in a community

Q13 · A government wishes to raise the incomes of farmers without raising the price of food to…

Q14 · Governments in market economies give different reasons for intervening in the operation…

Q15 · The table illustrates macroeconomic data for an economy

Q16 · A country’s net national income (NNI) is less than its gross national income (GNI)

Q17 · Asha is currently unemployed

Q18 · A major trading nation, country X, is in equilibrium at the full employment level of real…

Q19 · Why would a fall in a country's average price level cause its aggregate demand curve to…

Q20 · To counter deflation a central bank uses expansionary monetary policy

Q21 · Which statement about government budget surpluses and deficits is the most accurate?

Q22 · What is most likely to decrease if a government uses expansionary fiscal policy?

Q23 · Sweden had a change in its Consumer Prices Index (CPI) of –0.6%

Q24 · What is a disadvantage of operating a floating exchange rate system?

Q25 · What is not an example of protectionism?

Q26 · Countries X and Y both produce goods M and N

Q27 · The terms of trade for a country increased from 100 to 120

Q28 · The table shows the number of Turkish lira (TRY) which can be exchanged for one US dollar…

Q29 · The table shows the current account of a balance of payments for January 2021

Q30 · Which policy would not be an argument for the use of import tariffs?

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