t.

Which ofthe following rewards accrues to Item 5 refers to the following diagram
the factor of production called lcapital'? which shows afirm's total fixed cost (TFC),
total variable cost (TVC) and total cost
(A) Rent (rc).
(B) Profit
(C) Wage (000) Cost

(D) Interest

2. An 'economy' is BEST described as a

system where

(A) suppliers produce all the goods

and services needed by the
consumers
(B)
3 all the goods and services used
by the citizens of a country are
provided by the government
(C) resources are used by manufacturers 5. The firm's total variable cost at 100 units
of output is
N to produce goods and maximize
profits
K (D) resources are used to produce (A) l0 000
goods and services to meet the (B) 15 000
.l$ needs and wants of society (c) 20 o0o
(D) 25 000

Which of the following pairs of activities

in a count4l falls under the tertiary sector? 6. The economic system of MOST Caribbean
$ (A)
countries can be described as

U (B)
Banking and tourism
Tourism and agriculture (A) mixed
(C) Banking and construction (B) planned
(D) Manufacturing and fishing (C) traditional
(D) free market

4. Astudent has a daily allowance of$20 with

which he can purchase chicken and chips
or a burger, but NOT both. If he purchases
the chicken and chips, the opportunity cost
of his decision will be the

(A) burger he gave up

(B) price of the chicken and chiPs
(c) satisfaction he gets from burgers
(D) satisfaction he gets from the
chicken and chips

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0r216010/F 2015
 Item 7 refers::tolthe fottowing diagram Item l0 refers to the following table which
wh ich i | ustrates'the production possi bi I ity
| shows a country's gross domestic product
frontier for an,eioncimy that is capable of (GDP) for a five-year period.
producing bauxite and sugar in different
combinations. Year GDP($1\{)
2009 372
20r0 455
20tl 496
2012 53r
20t3 s80
:\
ip \
.-.]-..--...--
10. During the period 2009-2013, the GDP of
i this country

(A) declined
(B) increased
7. Point X on the graph represents (c) fluctuated
(D) remained constant
(A) economic growth
(B) unemployed resources
(C) an efficient combination 11. An advantage of a planned economic
(D) an unattainable combination system is that

(A) there is usually a more equitable

E. The burden of an excise duty falls distribution of wealth
ENTIRELY on the consumer if the (B) firms have a greater incentive to be
efficient
(A) supply curve is perfectly elastic (c) workers are more motivated and
(B) demand curve is perfectly elastic
diligent
(C) demand curve is perfectly inelastic (D) consumers have a wider variety of
(D) supply curve is perfectly inelastic goods

9. An outward shift in a production possibility t2. Economic choices are made because
curve can be caused by an
(A) people's needs exceed their wants
(A) increase in wages (B) resources are unlimited and
(B) increase in prices
people's wants are limited
(c) increase in imports (c) resources are scarce while people's
(D) improvement in technology
wants are unlimited
(D) people may not always have the
money to conduct business

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0t2t60t0tF 2015
13. In an attempt to increase the efficiency of 17. A firm produces 29 pairs of high quality
its staff, management assigns specific tasks leather shoes at a fixed cost of$20 000 and
to each worker. This is an example of a variable cost of $9 000. On producing
the 30th pair, the new total cost rises to
(A) progress $30 000.
(B) productivity
(C) specialization What is the marginal cost of the 30th pair?
(D) entrepreneurial ability
(A) $ l 000
(B) $ e 000
14. In a commercial bank, wages and salaries (c) $20 oo0
are NOT paid to (D) $2e 000

(A) shareholders ofthe bank

(B) bank tellers and supervisors 18. One ofthe problems associated with barter
(C) investment managers of the bank is that
(D) maintenance workers employed by
the bank (A) it requires the use of coins
(B) it is a cause of market failure
(C) surplus output can be exchanged
15. One example of a'good'is (D) it requires double coincidence of
wants
(A) an extra lesson at school
(B) a loan approval by a bank
(C) a bottle of soda water 19. Which ofthe following isNOTan example
(D) a beauty makeover at a spa of a factor of production in a commercial
bank?

16. Prices of goods in market economies (A) The building

fluctuate while prices of goods in planned (B) The bank's vault
economies tend to be fixed. The MOST (C) Shareholders of the bank
likely reason for this difference is that in (D) Special savings accounts for
the market economy students

(A) profits are lower

(B) producers are never efficient 20. A government reduces tax on carrots. This
(C) buyers and sellers determine prices causes the price of carrots to fall by 50Yo.
(D) there are higher unemployment Quantity demanded then rises by 50%. The
levels price elasticity ofdemand forcarrots in this
case is

(A) 0
(B) 0.4
(c) I
(D) 2.5

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01216010/F 201s

/
21. Open competition on a worldwide scale Item 26 refers to the following table which
facilitates shows the market demand and supply of
potatoes at given prices.
(A) high levels of dependence on
tourism Price of Market Market
(B) increases, in trade unions' Potatoes Demand Supply
negotiating power ($) (000 kg) (000 kg)
(C) government manipulation of 4 700 100
market outcomes 500 200
8
(D) the development of comparative
l2 350 350
advantage
l6 200 530
20 r00 700

22. Money is long-lasting, easy to carry 26. What is the equilibrium price?
around and can be changed into smaller
denominations. Which of the following (A) $4
characteristics ofmoney are being described (B) $8
above? (c) $12
(D) $16
(A) Durability, portability, liquidity
(B) Durability,scarcity,uniformity
(C) Durability, portability, divisibility
27. 'Globalization' may be MOST accurately
(D) Portability, uniformity,divisibility defined as the

(A) movement of technology and

23. Which of the following features is NOT a
financial markets worldwide
characteristic of perfect competition? (B) movementoftangibleandintangible
goods among countries
(A) Freedom of entry and exit (C) international trade of goods and
(B) Many buyers and one seller services including skilled
(C) Knowledge of market conditions workers
(D) Selling of homogeneous products (D) integration of financial services,
technology and commodity
markets worldwide
24. Which of the following is usually a
consequence of widespread retrenchment
in a country? 28. If company X is engaged in the cutting of
trees to obtain lumber which is then used
(A) Reduction in crime rate by Company Y to make furniture, to which
(B) Increased standard of living
sector of the economy does Company X
(C) A fall in the standard of living belong?
(D) Equality in income distribution
(A) Public
(B) Primary
25. A pure public good can be described as (C) Tertiary
(D) Secondary
(A) excludable
(B) zero-priced
(C) diminishable
(D) complimentary

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01216010/F 20t5
29. Whichofthefollowingfinancialinstruments 33. Joe Brown first sells his produce at the
' are issued by the central bankon behalfof market and then saves his money until he
the government? has enough to buy a tractor. Which of the
following functions is money performing
(A) Treasury bills in the second case?
(B) Corporate bonds
(C) Equity securities (A) Store of value
(D) Shares on the stock exchange (B) Unit of account
(C) Medium of exchange
(D) Standard of deferred payment
30. When injections of capital are greaterthan
withdrawals, national income will
34. Which ofthe following isNOT a function
(A) increase of the financial sector?
(B) decrease
(C) remain constant (A) Providing a safe place for saving
(D) be in equilibrium (B) Preventing liquidity within the
economy
(C) Facilitating payments for goods
Item 31 refers to the following diagram and services
which shows the circular flow of income. (D) Making credit available to
households and firms

r +i Househlds i - r
Ill '----r 35. If Country X has a comparative advantage
X, rPayment in the production of computers over
I I for
goods Country Y then
' and sen'ices
l..l (A) Country X will export all its
L- J computers
-l_Flrms ,t+ (B) X nor Country
neither Country
Y should specialize in the
31. Line X represents payment production of computers
(C) the opportunity cost of producing
(A) for goods taken on credit computers is higher in Country
(B) to the factors of production X than in Country Y
(C) of taxes to the government (D) the opportunity cost of producing
(D) to financial institutions for loans computers is lower in Country X
. than in Country Y

32. When a financial asset is described as

liquid, it means that

(A) it is a weak financial asset

(B) its price or value fluctuates often
(C) it can easily be converted into cash
(D) it is not acceptable as a medium of
exchange

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012160r0/F 2015
 36. Which of the following,is NOT a financial ltem 39 refers to the following table which
institution in, an, eConomy? shows the flow of money in an economy.
:.-:

(A) Trade union ,

x Y
(B) Credit union
I Borrowers Savers
(C) Commercialbank
(D) Development bank II Savers Borrowers
fI III Lenders Borrowers
IV Borrowers Lenders
(
T

37. Which of the following statements BEST

' describes a fiscal deficit? 39. The flow labelled III represents
(A) Government revenue exceeds (A) loanable funds
government borrowing (B) national income
(B) Government revenues are greater (c) goods and services
than subsidies (D) factors of production
(C) Government spending equals
- govemment revenue
(D) Government spending exceeds 40. 'Resources, both human and physical, are
government revenue required to produce goods'.

Ihe statement above MOST accurately

38. Fred earns his money by occasionally describes
doing jobs such as painting, repairing and
cleaning while Wilma earns her money (A) ' productivity
from occasional babysitting. (B) entrepreneurship
(C) factors of production
In which sector would Fred and wilma's (D) factors of productivity
activities be located?

(A) The formal sector 41. Which of the following is NOT a service?
(B) The foreign sector
(C) The informalsector (A) Education
(D) The financial sector (B) Health care
(C) Motorcycle
(D) Hairdressing

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01216010tF 20t5
 Item42referstothefollowlngtablewhich 45. Which of the following situations would
shows the rate of inflation and theaverage lead to an improvement in a country's terms
percentage increase, in wages over afour- of trade?
year period.
I. Export prices rise and import prices
Year Rate of Wage fall
Inflation fncrease II. Exportpricesrisefasterthanimport
(o/") (%) prices
20tr 5 20 III. Importprices rise fasterthan export
prices
2012 IO 20
2013 IO 5 (A) I only
2014 l5 5 (B) I and II only
(C) I and III only
42. In which yearwas the increase in real wages (D) II and III only
thc GREATEST?

' (A) 20ll 46. The terms of trade of Country X is 150.

(B) 2012 This is considered to be
(c) 2013
(D) 2014 (A) neutrat
(B) inadequate
(C) favourable
43. which of the following is Nor a (D) unfavourable
characteristic of Caribbean countries?

(A) High debt burden 47. The International Monetary Fund (lMF)
(B) High levels of unemployment functions as a
(C) Low levels of capitalformation
(D) Major producers of manufactured (A) human rights organizatibn
goods (B) regulatory authority for
international trade
(C) large, multinational corporation
44. Which of the following is NOT a benefit maximizing its efficiency
of internationaltrade? through globatization
(D) financial institution that provides
(A) A larger market size strategic guidance to countries
(B) A wider variety of products to ensure financial stability
(C) lncreased efficiency of localfirms
(D) Increased dependency on other
countries

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012160t0/F 2015
48. One imporant objective,of CARICOM is 52. Which of the following is NOT
to a 'determinant of demand' for laptop
computers?
(A) improve standafds of living
beginning with smaller states (A) lncome
(B) encourage the economic (B) Price of laptops
development of its members (C) Atax on laptops
(C) maximizemultinationalefficiency (D) Preference for desktop computers
through globalization
(D) provide strategic guidance to
countries to ensure financial 53. The central bank calls for an increase in
stability the reserve requirements of commercial
banks. How will this affect the operations
of commercial banks?
49. Ifa country can produce 20 units ofproduct
X or l0 units of product Y the opportunity (A) Their liquid assets will be reduced-
cost of I unit of product Y is (B) Their ability to create credit will
increase-
(A) 0.1 units of product X (C) Their loans to money markets will
(B) I unit of product X increase.
(C) 2 units of product X (D) They will attract less deposits from
(D) 2.5 units of Product X the Public.

50. Which of the following phrases BEST 54. The restriction of international trade
explains the term 'tariff? through tariffs, embargoes, quotas and
exchange controls is referred to as
(A) The amount of subsidies received
by local exPorters (A) globalization
(B) The level of tax that is levied on (B) protectionism
imports entering a country (C) a bilateral agreement
(C) The amount of goods that can be (D) structural adjustment
imPorted into a country
(D) The common ta:c levied by countries
on member countries within a 55. Country A is experiencing a balance of
region payments deficit. Which of the following
measures could be taken to reduce the
deficit in the short-term?
51. Which of the following will contribute
to a surplus on the balance of trade of a (A) Reduce the volume of exPorts to
other countries.
country?
(B) Engage in trade with other low-cost
producers ofgoods.
(A) The value ofexports is greaterthan
the value of imPorts' (C) Increase the importation of goods
(B) The value of imports is greaterthan
from other countries.
the value of exPorts' (D) lmpose restrictions on goods
(C) The volume of exports is greater imPorted from other countries'
than the volume of imPorts'
(D) The volume of imports is greater
than the volume of exPorts'

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0r215010/F 2015
 56- Which of the following is MOST likely 59. One example of an 'entrepreneur' is
' to lead to greater international investment

(A) Grobarization [3] :;:ffi;::H,

(B) Specialization (D) airline
an
(C) Trade unionism "rlroy""
(D) Currency fluctuation
60. Which of the following is NOT a benefit
of trade liberalization to consumers?
57. Which of the following are ways of
calculating national income? (A) Prices of goods and services will
decline.
I. Income method (B) There will be greater access to a
II- Elasticity method variet5r of goods and services.
III. Expenditure method (C) Cost of providing goods and
services will be lower-
' (A) I and II only (D) Prices of goods and services witl
(B) I and III only increase.
(C) II and III onty
(D) I, II and III

58. The acronym 'FDI'stands for

(A) Foreign Direct Income

(B) Foreign Direct Investment
(C) Fixed Domestic Investment
(D) Floating Domestic Investment

END OF TEST

IF YOU FINISH BEFORE TIME IS CALLED, CI{ECK YOI'R WORK ON THIS TEST.

0t216010/F 2015