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UNIVERSITY OF CAMBRIDGE
INTERNATIONAL EXAMINATIONS
International General
Certificate of Secondary Education
Economics
Paper 1 Multiple Choice
May/June 2007 Time : 1 hour
1 What is an example of the
factor of production ‘capital’?
A a truck
B a truck driver
C a truck driver’s savings
D a truck driver’s wage
2 What makes specialisation
easier?
A the imposition of taxation
B the protection of trade
C the system of barter
D the use of money
3 In a market economy, who
determines the allocation of resources?
A central authorities only
B firms only
C consumers and firms only
D central authorities and
firms only
4 A government is faced with
the choice of raising taxation or cutting public spending.
Of what is this an example?
A conservation of resources
B monetary policy
C opportunity cost
D substitution of factors
5 Each country of Southern
Africa has a mixed economy.
Which statement about a mixed
economy is correct?
A The government employs most
primary sector workers.
B The government owns all
major secondary sector industries.
C The government owns the
transport network.
D The government provides
public and merit goods.
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6 When will a trade union be
most effective in pursuing its members' interests?
A The economy is in recession
with rising unemployment.
B The employers have few
orders for the product.
C The government passes a law
to increase competition in the labour market.
D The members' wages make up
a small part of total costs.
7 What is the main advantage
that a public limited company has over a private limited
company?
A It operates in the public
sector.
B Its shares can be sold on
the stock exchange.
C It is managed by a
director.
D Its shareholders have
limited liability.
8 What is the function of a
stock exchange?
A It enables shareholders to
sell their shares.
B It fixes fair prices for
shares.
C It promises to buy unsold
shares.
D It sets the number of
shares.
9 A French company employs
French people, is located only in France, sells shares on the
stock
exchange but uses other firms
to transport its products to other countries.
What type of company is this?
A a co-operative
B a private company
C a public company
D a multi-national
10 A demand curve for a
product shows the relationship between its price and
A cost of production.
B population changes.
C the income of the consumer.
D the quantity of the product
consumed.
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11 The following was printed
in a magazine.
More soft drinks are being
consumed than ever before by the 16 – 34 age group. Schweppes,
the
drink manufacturers, claim
that over 45 per cent of their soft drinks are now being
consumed
without alcohol as people
switch away from alcoholic spirits.
How would this change be
represented on a demand and supply diagram for soft drinks?
A decrease in demand
B decrease in supply
C increase in demand
D increase in supply
12 In many countries, the
price of personal computers has fallen while the quantity sold
has risen.
What is the most likely
reason for these changes?
A Advertising campaigns for
computers increased.
B Computer production
technology improved.
C Computer software became
cheaper.
D Real incomes rose.
13 Australian mines are among
the world’s largest suppliers of uranium but the mines are
contaminating Australia’s
natural environment. It is recommended that the mining
companies
install new equipment which
causes less pollution.
If this is done, how would it
be represented on a demand and supply diagram for uranium?
demand curve supply curve
A shift to left no change
B shift to right shift to
left
C no change shift to left
D shift to left shift to
right
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14 The diagram shows the
demand and supply of places in independent (private) schools
which
charge fees. The equilibrium
position is X.
The costs of independent
(private) schools rise. Also a report is issued which states
that
Government schools achieve
very good examination results.
What is likely to be the new
equilibrium position?
price
quantity
A
X
B
D
C
O
15 Which group is likely to
save the largest proportion of its income?
A employed workers
B retired people
C school students
D unemployed workers
16 What is not included in a
person’s stock of wealth?
A a gold watch
B annual income
C an oil painting
D company shares
17 Which asset is the most
illiquid?
A cash
B money order
C government bonds
D a house
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18 The graph shows women’s
wages as a percentage of men’s wages in year 1 and year 2.
percent
85
80
75
70
65
60
55
27 30 35 40 45 50 55 60 62
age
year 2
year 1
Which statement is shown by
the graph to be true?
A Younger women earn more
than older women.
B Women’s wages remain
roughly the same between the ages of 40–50.
C In year 2, all women were
earning more than men.
D In year 2, women were
earning a higher percentage of men’s wages than in year 1.
19 Which service is most
likely to be supplied by a small business?
A banking
B dental treatment
C heart surgery
D rail travel
20 A British firm, Dyson,
moved production of its vacuum cleaners from the UK to
Malaysia.
Why might it have made this
change?
A average costs would fall
B average revenue would rise
C market share would fall
D transport costs would rise
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21 What is a fixed cost of
production?
A the commission paid to
sales staff
B the cost of using the
telephone
C the interest paid on a bank
loan
D the money spent on repairs
22 What is not equal to the
average revenue?
A the price of each unit
B the profit from each unit
C the revenue from each unit
D the total revenue divided
by output
23 The information below
refers to an economy for a financial year.
Government expenditure = $2
866 million
Government revenue = $1 940
million
What was the budget balance
of the Government in that year?
A $926 million in deficit
B $4 806 million in deficit
C $926 million in surplus
D $4 806 million in surplus
24 A local tax will usually
be
A raised by a central
government.
B used to provide a national
road network.
C different from region to
region.
D raised by using import
tariffs.
25 A government establishes a
body to control monopolies and mergers.
Who is this intended to
protect?
A consumers
B foreign investors
C multi-nationals
D the government
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26 Frictional unemployment
occurs when
A workers are temporarily
between jobs.
B there is a general fall in
total demand.
C certain major industries go
into economic decline.
D new technology reduces the
need for labour.
27 What is a reason for
collecting national income statistics?
A to calculate population
changes
B to compare standards of
living
C to fix exchange rates
D to keep inflation low
28 The table shows the
proportion of the working population in different sectors in
three countries.
country agriculture %
manufacturing % services %
Iran 38 33 29
Nepal 93 2 5
UK 2 42 56
What can be concluded from
the table?
A Iran has fewer people
working in manufacturing than the UK.
B Nepal is a developed
economy.
C Services are more developed
in Iran than Nepal.
D The UK is dependent on
agriculture.
29 In rural areas in
developing countries women often do unpaid work on traditional
activities.
Why might this mean that the
GDP is not a good measure of the standard of living in those
countries?
A The GDP does not include
international trade.
B The GDP only refers to
companies in urban areas.
C The work is not counted in
GDP statistics.
D The work is not
economically important.
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30 The table shows the annual
percentage changes in GDP and consumer prices in selected
countries during a year.
Which country has shown the
biggest rise in real GDP over this period?
country % change in GDP
% change in
consumer prices
A Argentina 5.1 7.3
B India 4.9 4.4
C Malaysia 4.0 1.0
D Philippines 4.5 3.3
31 Two industries in Namibia
are fishing and tourism. The value of the currency of Namibia
fell in
2001.
If there were no other
changes, what resulted from the fall?
A Imported goods in Namibian
shops became cheaper.
B The price of Namibia’s fish
sold in foreign markets became cheaper.
C The volume of Namibia’s
exports decreased.
D Tourists were discouraged
by higher prices in Namibia.
32 The diagram shows the
percentage of the population of Germany aged under 20 and over
60
between 1950 and 2000.
1950 60 70 80 90 2000
34
30
26
22
18
14
under 20
over 60
%
What may be concluded from
the diagram?
A The average age was similar
in 1950 and 2000.
B The dependency ratio was
similar in 1950 and 2000.
C The growth in total
population ceased by 2000.
D The standard of living fell
continuously from 1950.
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33 Which country is likely to
have the lowest standard of living?
birth rate death rate
life
expectancy
infant
mortality
A 25 10 57 24
B 43 31 40 42
C 25 5 72 22
D 36 14 48 56
34 In 2005, world population
had grown to 6.5 billion with an increase of more than 4
billion since
1950.
What is most likely to have
been the cause of this?
A an increase in the death
rate in developed countries
B an increase in the birth
rate in developing countries
C an increase in migration
from developing to developed countries
D an increase in the death
rate in developing countries
35 At the G8 Economic Summit
in 2005, it was decided to cancel much of the debt which
African
countries owed to European
and North American countries.
This will have the same
effect as a transfer of resources from
A developed countries to
developing countries.
B developing countries to
developed countries.
C market economies to planned
economies.
D planned economies to market
economies.
36 A government decides to
reduce the size of the quota on a good.
What is likely to happen?
A The balance of trade will
worsen.
B The good will become
cheaper.
C The government’s revenue
will decline.
D There will be less of the
good imported.
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37 Which combination would
offer increased trade protection for an economy?
domestic subsidies tariffs
A bigger higher
B bigger lower
C smaller higher
D smaller lower
38 Why may it be better to
increase public expenditure while reducing private
expenditure?
A Goods and services which
the market ignores can be provided.
B Government officials are
likely to be more careful spending money than private
individuals.
C The profit motive makes
government departments more efficient than private firms.
D The government is the best
judge of the satisfaction gained from goods and services.
39 Zambia is the fifth
largest producer and the second largest exporter of copper in
the world.
Copper brings Zambia 85 % of
all the money Zambia earns in trade.
What can be concluded from
this?
A Copper prices are high
because Zambia is a large producer.
B Manufacturing production in
Zambia is very diversified.
C Zambia can influence the
world price of copper.
D Zambia produces copper more
cheaply than all other countries.
40 What will result if Europe
reduces trade barriers to increase imports of clothing and
food from
Asia and Africa?
A greater choice for European
consumers
B increased income for
European producers
C lower unemployment in the
European clothing industry
D slower economic growth in
Asia and Africa
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