Cambridge A Level Economics 9708 — 2024 Oct/Nov Paper 1 · Variant 2

Question 1

1 The production possibility curve for a country is shown. manufactured goods O agricultural goods What can be determined from the diagram? A the consumers’ preferred combination of output B the level of economic growth C the opportunity cost of manufactured goods in terms of agricultural products D the preference for present consumption rather than future consumption

Accepted Answer

C

Question 2

2 In a clothing business, after specialisation, real output per worker increased in the first six months but then output per worker began to fall. What might be the most likely reason for the reduction in productivity? A An increase in output per worker in the long run depends on an increase in pay. B An increase in output per worker requires more capital. C Specialisation means workers lose skills. D Workers get bored if they are repeating the same work.

Accepted Answer

D

Question 3

3 A wine producer and bottler wanted to expand its production significantly. To finance the expansion it offered investors discounts on restaurant meals if they bought 2000 shares in the company. Which factors of production are most likely to be involved in this expansion? A labour, land, capital and enterprise B labour, land and capital only C enterprise and land only D enterprise only

Accepted Answer

A

Question 4

4 Which statement is positive? A All taxes should be proportional to income. B A progressive tax is a fair tax. C Greater equality of income is desirable. D Income inequality is decreasing.

Accepted Answer

D

Question 5

5 The diagram shows the change in a country’s production possibility curve from PQ to PR. P public goods O Q R private goods What increases as a result of the change from PQ to PR? A the price of private goods B the price of public goods C the opportunity cost of private goods D the opportunity cost of public goods

Accepted Answer

D

Question 6

6 The graph shows the demand and supply curves for an industry. S2 S1 price D1 O quantity What would cause a shift in the supply curve from S1 to S2? A an increase in the number of firms in the industry B an increase in the number of workers employed C an increase in the productivity of the workforce D an increase in the wage rates paid to workers

Accepted Answer

D

Question 7

7 A firm produces a good using a very labour-intensive process. There is an increase in the price of the good. Under which conditions will the supply of the firm’s good be most price elastic? nature of the level of labour employed unemployment in by the firm the economy A skilled high B skilled low C unskilled high D unskilled low

Accepted Answer

C

Question 8

8 What is most likely to cause the demand curve of an inferior good to shift to the right? A a rise in consumers’ incomes B a rise in income tax C a rise in sales tax D a rise in the price of a complement

Accepted Answer

B

Question 9

9 The diagram shows four supply curves. Which curve has a price elasticity of supply of 1 for all levels of quantity supplied? A B C price D O amount supplied per period

Accepted Answer

A

Question 10

10 The diagram shows a shift of the supply curve in a market from S1 to S2. S2 price $ S1 P2 s t P1 u v w D z O quantity How will the consumer surplus and producer surplus change? consumer surplus producer surplus A decreases by s increases by s + u – t B decreases by s increases by u + v – w C decreases by s + t increases by s + t – v D decreases by s + t increases by s + z – v

Accepted Answer

D

Question 11

11 Good X has a substitute, good Y, and a complement, good Z. The price of good Y decreases and the price of good Z increases. Why might the equilibrium price of good X remain unchanged? A Producers of good X adopt new technology. B Producers of good X receive a subsidy. C Some firms stop production of good X. D The tax on the production of good X is cut.

Accepted Answer

C

Question 12

12 In the diagram, S1 and S2 are the supply curves for an agricultural product in years 1 and 2 respectively. D is the demand curve in years 1 and 2. In year 1, the government purchased an amount necessary to ensure that the price was OP. S1 S2 price (year 1) (year 2) P D O W X Y Z quantity The price is held at OP in year 2. How much more must the government buy in year 2 than it bought in year 1? A WZ B XY C XZ D YZ

Accepted Answer

D

Question 13

13 Inequality in an economy can be categorised as either income inequality or wealth inequality. What is most likely to cause greater wealth inequality than income inequality? A an increase in indirect taxation B an increase in the value of property C a reduction in the minimum wage D a reduction in the rate of interest paid on savings

Accepted Answer

B

Question 14

14 A product with infinite elasticity of supply has sales of 1000 units a week at a price of $1 per unit. Price elasticity of demand is 1.5 over the relevant range. The government imposes a tax of 10%. What will be the government’s weekly tax revenue from this product? A $15 B $85 C $100 D $150

Accepted Answer

B

Question 15

15 The table shows the values of Consumer Prices Index (CPI) and a worker’s salary in 2022 and 2023. CPI 2022 100 CPI 2023 110 worker’s salary 2022 $20 000 worker’s salary 2023 $25 000 What is the real value of the worker’s salary in 2023 compared with 2022? A $18 182 B $22 727 C $25 000 D $27 500

Accepted Answer

B

Question 16

16 An economy experiences rising unemployment due to incomes falling as a result of a virus pandemic. How would this unemployment be classified? A cyclical B frictional C seasonal D structural

Accepted Answer

A

Question 17

17 What is likely to move an economy’s aggregate demand curve to the right? A a fall in income equality B a fall in incomes abroad C a fall in the exchange rate D a fall in the government budget deficit

Accepted Answer

C

Question 18

18 Which items have to be added to and subtracted from Gross Domestic Product at market prices to calculate the value of Gross Domestic Product at basic prices? A capital consumption and net property income from abroad B expenditure taxes and capital consumption C net property income from abroad and subsidies D subsidies and expenditure taxes

Accepted Answer

D

Question 19

19 In an economy with an interest rate of 4% per annum, the rate of inflation falls from 5% to 3% per annum. What will be a benefit of this fall? A Menu costs will fall to zero. B People on fixed incomes will be better off in real terms. C Savers will gain in real terms. D The purchasing power of the currency will rise.

Accepted Answer

C

Question 20

20 What is an example of a macroeconomic policy? A encourage the consumption of merit goods B reduce pollution in the steel industry C maintain general price stability D reduce unemployment in the service sector

Accepted Answer

C

Question 21

21 Which supply-side policy is likely to lower real output before raising it? A increased spending on early years education B increased spending on infrastructure C reduced import barriers D subsidies to exporters

Accepted Answer

C

Question 22

22 An economy is in equilibrium at point E on the diagram. The government reduces its expenditure on defence. Which point on the diagram shows the new equilibrium? AS1 AS2 price level P1 E A B P2 C P3 D AD1 P4 AD2 AD3 O Y1 Y2 Y3 national income

Accepted Answer

A

Question 23

23 The number of people employed in a country and the level of unemployment both decrease. What could explain this? A net inward immigration B an increase in the level of unemployment benefits C an increase in the age at which state pensions are payable D an increase in the number of university students

Accepted Answer

D

Question 24

24 Which circumstances would most help a firm to gain from a depreciation of the exchange rate? A It sells mainly abroad and relies on domestic suppliers for inputs. B It sells mainly abroad and relies on foreign suppliers for inputs. C It sells mainly in its home market and relies on domestic suppliers for inputs. D It sells mainly in its home market and relies on foreign suppliers for inputs.

Accepted Answer

A

Question 25

25 A country has a floating exchange rate. Its current account on the balance of payments moves from a surplus to a deficit. Which rate is likely to increase in the short run as a consequence of this worsening of its current account? A economic growth rate B exchange rate C interest rate D unemployment rate

Accepted Answer

D

Question 26

26 Which policy is most likely to reduce a balance of payments deficit without causing inflation? A decreased import quotas B depreciation of currency C higher interest rates D decreased import tariffs

Accepted Answer

C

Question 27

27 The table shows the average price of exports and imports. Which combination of changes in export prices and import prices could result in a country’s terms of trade increasing from 100 to 110? the average price the average price of exports of imports A falls by 5% rises by 5% B remains unchanged rises by 10% C rises by 5% falls by 5% D rises by 10% remains unchanged

Accepted Answer

D

Question 28

28 What is not an example of protectionism? A the European Union (EU) requiring goods imported into member states to meet safety standards B the Pakistan government increasing the rate of goods and services tax (GST) on some exported goods from 2% to 5% C the Nigeria government banning the import of packaged sugar D the US imposing a 35% tariff on tyres imported from China

Accepted Answer

B

Question 29

29 Turkey imported $220 million worth of goods and services. Turkey exported $12 million worth of goods and services during the same period. Its net income was –$15 million. What is Turkey’s current account balance? A –$223 million B –$217 million C +$208 million D +$247 million

Accepted Answer

A

Question 30

30 The table shows the exchange rate for national currencies per US dollar. Which currency has the smallest percentage appreciation against the US dollar between 2019 and 2020? 2019 2020 A 6.91 6.90 B 70.4 74.1 C 14.4 16.5 D 0.99 0.94

Accepted Answer

A

Cambridge A Level Economics 9708 — 2024 Oct/Nov Paper 1 · Variant 2

Question paper12 pages

Mark scheme3 pages

Questions as text

Q1 · The production possibility curve for a country is shown

Q2 · In a clothing business, after specialisation, real output per worker increased in the…

Q3 · A wine producer and bottler wanted to expand its production significantly

Q4 · Which statement is positive?

Q5 · The diagram shows the change in a country’s production possibility curve from PQ to PR

Q6 · The graph shows the demand and supply curves for an industry

Q7 · A firm produces a good using a very labour-intensive process

Q8 · What is most likely to cause the demand curve of an inferior good to shift to the right?

Q9 · The diagram shows four supply curves

Q10 · The diagram shows a shift of the supply curve in a market from S1 to S2

Q11 · Good X has a substitute, good Y, and a complement, good Z

Q12 · In the diagram, S1 and S2 are the supply curves for an agricultural product in years 1…

Q13 · Inequality in an economy can be categorised as either income inequality or wealth…

Q14 · A product with infinite elasticity of supply has sales of 1000 units a week at a price of…

Q15 · The table shows the values of Consumer Prices Index (CPI) and a worker’s salary in 2022…

Q16 · An economy experiences rising unemployment due to incomes falling as a result of a virus…

Q17 · What is likely to move an economy’s aggregate demand curve to the right?

Q18 · Which items have to be added to and subtracted from Gross Domestic Product at market…

Q19 · In an economy with an interest rate of 4% per annum, the rate of inflation falls from 5%…

Q20 · What is an example of a macroeconomic policy?

Q21 · Which supply-side policy is likely to lower real output before raising it?

Q22 · An economy is in equilibrium at point E on the diagram

Q23 · The number of people employed in a country and the level of unemployment both decrease

Q24 · Which circumstances would most help a firm to gain from a depreciation of the exchange…

Q25 · A country has a floating exchange rate

Q26 · Which policy is most likely to reduce a balance of payments deficit without causing…

Q27 · The table shows the average price of exports and imports

Q28 · What is not an example of protectionism?

Q29 · Turkey imported $220 million worth of goods and services

Q30 · The table shows the exchange rate for national currencies per US dollar

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