Cambridge A Level Economics 9708 — 2024 Oct/Nov Paper 1 · Variant 1

Question 1

1 Which statement is a normative statement? A The annual rate of inflation in Malaysia increased from 2.8% in May 2022 to 3.4%. B The annual rate of inflation was 3.4% in Malaysia, lower than the 7.7% annual rate of inflation for Thailand. C The Malaysian Central Bank raised interest rates from 2.0% to 2.25% on 6 July 2022. D The rise in interest rates in Malaysia in July 2022 is expected to only have a small impact on the rate of inflation.

Accepted Answer

D

Question 2

2 A firm operating in country S moved its existing capital equipment to a larger factory in country T. It also installed more of the same equipment and increased the size of its workforce. From the evidence provided, what must be true? A The firm is operating in the long run. B The firm is operating in the very long run. C The firm’s division of labour has increased. D The firm’s supply curve has shifted to the left.

Accepted Answer

A

Question 3

3 Which statement is not correct? A Addictive drugs are regarded as demerit goods because users are unaware of the full damage they do. B Air is regarded as a free good because its use has no opportunity cost. C National defence is regarded as a public good because one citizen ‘consuming’ it reduces the amount of it available to others. D Visits to a doctor are regarded as private goods partly because they are rival.

Accepted Answer

C

Question 4

4 The diagrams show production possibility curves. Which diagram shows constant opportunity costs? A B consumer consumer goods goods O capital goods O capital goods C D consumer consumer goods goods O capital goods O capital goods

Accepted Answer

A

Question 5

5 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 6

6 In a particular year, 12 000 units of a good are sold at $1 per unit. In a later year, 14 000 units are sold at $1.20 per unit. If consumer tastes have remained constant, what could account for the change between the two years? A a decrease in the price of raw materials used by producers B an increase in the price of a substitute good C an increase in the rate of tax imposed on producers D the formation of a monopoly in the production of the good

Accepted Answer

B

Question 7

7 What is most likely to cause an increase in the consumer surplus in the market for a normal good? A an increase in consumer incomes B an increase in the number of substitute goods C an increase in the price of a complementary good D an increase in the price of the good

Accepted Answer

A

Question 8

8 The table shows Lee’s and Yim’s price elasticity of demand for restaurant meals and cinema tickets. Lee Yim restaurant meals –1.2 –0.8 cinema tickets –0.7 –1.3 There is a rise in the price of restaurant meals and a fall in the price of cinema tickets. What can be concluded after these price changes? A Restaurant owners will receive more income. B Lee will spend more money on both cinema tickets and restaurant meals. C Yim will spend more money on both cinema tickets and restaurant meals. D Cinema owners will receive less income.

Accepted Answer

C

Question 9

9 What is not held constant when aggregating individual firms’ supply curves to give the short-run market supply curve? A the number of firms in the industry B the price of the product C the prices of factors of production D the state of technology

Accepted Answer

B

Question 10

10 Which elasticity would a shortage of skilled workers affect? A cross elasticity of demand B income elasticity of demand C price elasticity of demand D price elasticity of supply

Accepted Answer

D

Question 11

11 D1D1 shows an individual’s initial demand curve for public transport. D1 price of public transport D2 D1 O quantity of public transport What would cause the demand curve to shift to D2D1? A The cost of running the individual’s car rises. B The individual is banned from driving. C The price of public transport rises. D The quality of public transport declines.

Accepted Answer

D

Question 12

12 Which government action would be identified as the direct provision of goods and services? A increasing road maintenance because of poor weather conditions B making payments to low-income families with elderly dependents C subsidising firms in order to encourage them to increase their output D taxing firms because they have been emitting damaging fumes

Accepted Answer

A

Question 13

13 A specific tax is imposed on a product for which the elasticity of supply is zero. Which statement is correct? A The burden of this tax will fall entirely on consumers. B The burden of this tax will fall entirely on suppliers. C The burden of this tax will fall mainly on consumers. D The burden of this tax will fall mainly on suppliers.

Accepted Answer

B

Question 14

14 A government wishes to intervene in a free market to allocate healthcare at the socially optimal level. Which combination correctly identifies the reason for government intervention in the healthcare market? healthcare healthcare provision of consumption in a production in a information in a free market free market free market A overconsumption overproduction too little B overconsumption underproduction too much C underconsumption underproduction too little D underconsumption overproduction too much

Accepted Answer

C

Question 15

15 The table shows the Consumer Prices Index (CPI) for a country. year CPI 2008 100 2009 104 2010 102 2011 105 2012 108 2013 111 Which statement about the period 2008 to 2013 is correct? A Prices increased each year. B Prices increased fastest in 2011. C The rate of inflation was 2% in 2010. D The smallest rise in prices was in 2013.

Accepted Answer

D

Question 16

16 What is most likely to cause the price level to rise? An increase in A productivity of labour. B raw material prices. C income taxes. D subsidies paid to producers.

Accepted Answer

B

Question 17

17 What is most likely to increase a country’s circular flow of income? A Its budget deficit increases. B Its imports increase. C Its interest rates increase. D Its exchange rate increases.

Accepted Answer

A

Question 18

18 A country with a constant population experiences a 5% increase in its nominal GDP during a year. In which situation will average living standards be most likely to have increased during the year? A if government takes action to ensure there is no increase in unemployment B if inflation during the year is 3% C if there is no increase in real national income D if there is no redistribution of income

Accepted Answer

B

Question 19

19 Which combination correctly identifies the necessary information to construct an accurately labelled graph of a normal short-run aggregate supply curve (SRAS)? gradient of the horizontal x-axis vertical y-axis SRAS curve A negative quantity price level B positive real output price level C positive real output price D positive price level real output

Accepted Answer

B

Question 20

20 A government makes two changes to income tax. 1 The individual tax-free income allowance is increased. 2 The marginal rate of income tax is decreased. How will these changes affect aggregate demand and aggregate supply in the economy? aggregate aggregate demand supply A decrease increase B decrease unchanged C increase increase D increase unchanged

Accepted Answer

C

Question 21

21 Which supply-side policy is most likely to decrease a government’s budget deficit? A cutting tax rates on company profits B cutting unemployment benefits C raising spending on education and training D raising tax-free income tax allowances

Accepted Answer

B

Question 22

22 Which combination of fiscal and monetary policies would certainly be expansionary? government money taxes spending supply A decrease decrease decrease B decrease increase decrease C increase decrease increase D increase increase increase

Accepted Answer

C

Question 23

23 The central bank of a country raises interest rates to reduce the general price level. When is this policy likely to have the biggest impact? position of the economy responsiveness of on its production possibility aggregate demand to curve (PPC) diagram interest rate changes A below the PPC high B below the PPC low C on the PPC high D on the PPC low

Accepted Answer

C

Question 24

24 The table shows the trade in goods and services for an economy between 2019 and 2021. trade in goods year and services ($ millions) 2019 –1000 2020 –3000 2021 –4000 What would have most likely caused the change from 2019 to 2021? A increasing domestic unemployment B increasing domestic rate of income tax C increasing domestic inflation D increasing import tariffs

Accepted Answer

C

Question 25

25 A government subsidises training to improve the skills of workers in the industrial sector of an economy. What is the most likely effect on the current account of the balance of payments? A exports fall B exports rise C imports fall D imports rise

Accepted Answer

B

Question 26

26 Using all their resources efficiently, country X can produce 6 million tonnes of wheat or 2 million tonnes of steel whilst country Y can produce 4 million tonnes of wheat or 1 million tonnes of steel. Based on this information, what does the theory of comparative advantage suggest? A Country X should produce only steel. B Country X will not gain from international trade. C Country Y has no comparative advantage. D Country Y will not gain from international trade.

Accepted Answer

A

Question 27

27 Countries X and Y are trade partners. An increase in which economic indicator in country Y is most likely to cause a fall in the exchange rate of country X? A economic growth B inflation rate C money supply D trade barriers

Accepted Answer

D

Question 28

28 Which transaction is not recorded in the current account? A aid received from the government of another country B exports of raw materials C investments by a foreign company D payments of dividends to an overseas investor

Accepted Answer

C

Question 29

29 A government decides to place a tariff on imports of raw materials. Which statement about the impact of the tariff is correct? A It will increase costs of production for domestic firms. B It will increase consumer surplus for domestic consumers. C It will reduce government revenue. D There will be a fall in the price of imports and a rise in the demand.

Accepted Answer

A

Question 30

30 In which situation will a country’s terms of trade improve? A Its imports rise in value less than its exports. B Its imports rise in volume less than its exports. C The price of its imports rises by less than the prices of its exports. D The value of its external payments rises by less than the value of its external receipts.

Accepted Answer

C

Cambridge A Level Economics 9708 — 2024 Oct/Nov Paper 1 · Variant 1

Question paper12 pages

Mark scheme3 pages

Questions as text

Q1 · Which statement is a normative statement?

Q2 · A firm operating in country S moved its existing capital equipment to a larger factory in…

Q3 · Which statement is not correct?

Q4 · The diagrams show production possibility curves

Q5 · Farmers using traditional methods lack access to finance and often employ family members…

Q6 · In a particular year, 12 000 units of a good are sold at $1 per unit

Q7 · What is most likely to cause an increase in the consumer surplus in the market for a…

Q8 · The table shows Lee’s and Yim’s price elasticity of demand for restaurant meals and…

Q9 · What is not held constant when aggregating individual firms’ supply curves to give the…

Q10 · Which elasticity would a shortage of skilled workers affect?

Q11 · D1D1 shows an individual’s initial demand curve for public transport

Q12 · Which government action would be identified as the direct provision of goods and services?

Q13 · A specific tax is imposed on a product for which the elasticity of supply is zero

Q14 · A government wishes to intervene in a free market to allocate healthcare at the socially…

Q15 · The table shows the Consumer Prices Index (CPI) for a country

Q16 · What is most likely to cause the price level to rise?

Q17 · What is most likely to increase a country’s circular flow of income?

Q18 · A country with a constant population experiences a 5% increase in its nominal GDP during…

Q19 · Which combination correctly identifies the necessary information to construct an…

Q20 · A government makes two changes to income tax

Q21 · Which supply-side policy is most likely to decrease a government’s budget deficit?

Q22 · Which combination of fiscal and monetary policies would certainly be expansionary?

Q23 · The central bank of a country raises interest rates to reduce the general price level

Q24 · The table shows the trade in goods and services for an economy between 2019 and 2021

Q25 · A government subsidises training to improve the skills of workers in the industrial…

Q26 · Using all their resources efficiently, country X can produce 6 million tonnes of wheat or…

Q27 · Countries X and Y are trade partners

Q28 · Which transaction is not recorded in the current account?

Q29 · A government decides to place a tariff on imports of raw materials

Q30 · In which situation will a country’s terms of trade improve?

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