2

Whieh of the following

esoribes a 'free good'? statenents BEST Why da consumers have to make choices
arnong the goods nnd services that thcy
A) A good that is given away by a purchase?
retailer to promote the sale of Their war1ts are scurce and their
(A)
another good resources arelimited.
(B) One which gives no satisfaction
to (B) Their resources are insufficient to
consumers satisfy all their wants.
(C) Onewhichhas aninfinite elasticityof. (C) Theirresources increasernore rapidly
spply than their wants.
D) A good whose opportunity cost is Theyreceivemostoftheir goods arid
(D)
services at no cost.

Which of the following statements

describes an "economy'?
BEST 5. Inanattempt to increase the efficiency ofits
staff, management asigns specific tasks to
each worlker. This is an example of
A systein where suppliers produce
all the goods and services needed
by the consumers
TA) specialisation
.. B) progress
(B) A system where all the goods and
(C)
services used by citizens of a
productivity
country are provided by the
(P) entrepréneurialability
governent
(C The utilization of resources to .,'
Ttem refers to theabie,below which
produce goods and services to
meet the needs and wants. of
provides information onthreesimilar goods,
X,Y and Z
society
(D) The utilization of resources by
manufacturers to produce goods Good Pricas.)
and maximise profits 10

Sita and Peter are planning to buy a new Z

hoiise. Äl of fhë following factors should
tffect the couple's decision EXCEPT Consumers buy more of Goodz'becauseof
(CA)
3) theirjointmonthly income
itslówerprice.
(P) the possibility of ajobpromotion for 6. Which of the following factors will cause
Peter consumers to buy less ofGood Z?
(C) the acquisitiou of a new home by
Sita'sbest friend (A) Anincrease in the supply ofgood Z
(D) the high cost ofrenting their
current E) Animposition ofa 100percenttax on
home
goadZ.
The placement of a 100 per cent
().
subsidy on goodZ
(D) The advertiserment of good Z as an

impressionalgood

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10/F2008
 3
7. A student has a daily allowance of$20 with Jiem10 refers to the diagram below. Sis the
which he can purchasechickenand chips ot supply curve heforea subsidy is givenand SS
ahamburger, butNOTboth. Ifhepurchases isthe supply curveafterthe subsidy is given.
the chicken and chips, what ivill be the
economic cost oflhis decision?
Price
(A) The hamburgerhegivesup S Supply before subsidy
(B) The price ofthe chicken and
chips SS
(C) Theprice ofthehamburger Supply afier subsidy
(D) The satisfaction he
gets from the
chicken and chips
SS

Item8 refers to the diagram below which Quantity

shows the
production possibility curve for
twogoods: shoes and shirts.
10,Asaresultofthegrantingofthesubsidy,itis
èxpected that
Shoes
(A) Supplywillincrease
(8)supply willdeorease
(C) demandwilldecrease.
D) price will increase

L Prices ofgoods in marketeconomies fluctu

ate whileprices ofgoods in planned econ0
pSirts
mies tend to be fixed. The MOST likely
reason forthis difference is that inthe market
Atwhat point in the diagram are resources econorny
Lmderemployed?
(A) W (A) buyers and sellers determine prices
(B) producers areneverefficient
(C (C) profits are lower
(D) Z D there arehigherunemployment levels

9. Which ofthe following factorsmay cause an 12. Ina commercial bank,

wages and salaries are
outwardshiftinaptoductionpossibility curve7 paid to ALLofthefollowing EXCEPT
(A) Anincrease in wages (A) bank tellers and
supervisors
(B) Anincrease inprices (B) shareholders ofthe bank
(C) An increase in trade (C) investmeat managers in the bank
Animprovementintechnology (P) maintenance workers èmployed by
the bank

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THE NEXTPAGE
 Ltem13 refers to the following statemcnt.
ILom16 refers to the diagram below which
shows the productíon possibility of an
Expenditure-reducing measures may be cconomy that produces bananas and oranges.
implemented to improve a country's current
accountbalanceon its Balance ofPayments.
Orangcs
:3. Which of the following CANNOT be
considered an expenditure-reducing
measure?

(A) Devaluationof thecurency

(B) A credit squeeze
C) Grantingofexport subsidies
(D) Impositionofimportcontrols BananasS

16. IfOXis the amount ofbananas produced,

Ttoms14-15 referto the follöwirig diagram whatistheämoün oforanges produced?
which illustrates the fow of goods and
services, factors ofproduction and money OY
eamed and spent. OY
B)
(C)
(D) OY

17. Whichofthe followingisNOTanexarnple of

a factor ofproductioninacommercialbank?
HH FIRM
(A Sharcholders ofthe bank
B) Special savings account for students
The building
The bank'svault

IF T refers to goods and services, then S

refers to 18 SamandJackstartedacateringbusiness. They
organised thefactorsofproductionand pooled
expenditure theirfinancial resources toproduce the goodss
(B) wages and services: What factors of production
(C) rent shouldSam and Jackbe dlassified as?
profit
(A) Workers
(B) Investors
IF V includes interest and proft, then U (C) Entrepreneurs
represents the flow of D) Managers
A) factorsofproduction
(B) goods and money
(C) services and moneyY
(D) services and investment

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216010/F2008
 5

19. Which ofthe followingis NOT considered a IV

factorofproduction in the bauxite industry7 tem24 refers to the diagrarms 1, 1, Ifl and
below which show FOUR market supply
curves.
(A) The land on which themineis located
(B) A worker employed to work in the
mine I P
A company thatuses thèmineral S
(D) A person who invests capital' in
miningoperations

20. Whichofthe following wouldNOThaye to

change for a planned economy to becomea
marketeconomy?
A) Thetypeofgovemmentinthe cointry
(B) Themethod ofallocatingresources
C The price of goods in the private Q
sector
D) The ownership of resources by the
state sector

21 Inwhichofthefollowiug ecenie systems

does the. state ow ALL ho factors, of
productionEXCEPTlabqur?
A) Aplanned economny
(B) A market economy
(C) Amixedeconomy
(D) Asubsistence economy

22 Accordingto economic theory; second-hand

cigarette sinoke is an example ofa
24. Which diagram shows the market
curve supply
(A) private gódd where price elasticity of supply is
(B) positiveextemality unitary?
(C) negativeextermality
(P) meritgood (A)
(B) II
(C)
23. All of the D)
following features are
characteristic of perfect
EXCEPT competition
(A) manybuyers and one seller
(B) freedom ofentry and exit
(C) sellingof homogeneous products
perfect knowledge of market
conditions

01216010/F 2008 GO ON TO
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 - 6-

25. Which of the following conditions is 28. Ifacountry has an 'inprovementin the terms
UNLIKBLY to occur when there is market of trade' it means that
failure? the country has a surplus of foreign
(A)
(A) Adeoline in sooial welfare currency.
the value ofthecountry's importsis
(B) An increase in poverty throughout (B)
theeconomy greater thanits exports..
Increasing levels of unemployment the country can purchase more
(C)
among skilled and unskilled labour importsthan proviously with the

D) Adequate amounts ofallgoods and samequantum ofexports.

the country cannot purchase more
services for consumers (D)
imports.
* ' '********

26. In which of the following'situations will a

normal supply curve for farmproduce slope 29. Atreasury billis aninstrument for short-term
upwards from left to right?
**
borrowing*by* *:

(A) Famers' profitmargins increase as (A) publiccompanies

price increases. B) governiments

B) Farmers arewilling to inarease supplýy (C) insurancecompanies

as demandincreases porterN

(C Farmers pass on increased cost to

t,
consuneTS.
One ofthe functions ofthe Central Bankis
D) Farmers arewillingtoproducemore 30.
as price increases. to

CA) provide businesses withcapital

Towhichofthe following does the ten legal B) provide aidto countries inneed
27.
tender' refer? acceptdepositsfrommembers ofthe
public
declares nanagetheissue oftreasury bills
Money that government
mlist be'accepted if offered as
'

settlementofdebt-
JoeBrownsdllshisproduce atthemarket and
(B) Moneythathas no direct backing of 31.
gokd", saveshis money untilhehas enoughtobuyya
--
C)~ , As_ets-hat-can-be-converted tractor. Whichofthe following functions is
mediately întö'skröwnamoust moneyperiorming inthiscase?
. ofmoney
ww
(P) Assets which only perform the (A) Unitofaccount
function ofa store ofwealth (B) Store ofvalue
(C) Standard ofdeferred payment
D) Mediumofexchange

32. Which of the following is NOT a financial

institutioninan economy?

(A) Share market

(B) Development Bank
(C) Creditunion
D Trade union
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n191En1n/c70N
 7
33. Which of the following is
regarded as an
invisible exportonthe Balanceof 37. Whichofthe following financial instrurnents
of CountryX? Paymehts are issued by the Government?
CA) A citizen of CountryX (A) Trcasury bonds
a vehiclefrom a foreignpurchases
country,
(B) Corporate bonds
(B) A citizen from a C) Equity securities
foreign country
receives dividends (D) Shares on the'stock exchange
from
investment in a companyhis in
Country X. .

(C) A citizenfrom
Country Xreceives Ttem 38 refers to the table below which
shows the rate of inflation and the average
interestpayments from investment
ina bankin aforeign percentage increase in wages over a four-
(D) A tourist country.
from a foreign yearperiod
visits and' spends country
Country X. money in. YEAR RATEOE WAGE
20
INFLATION (%) INCREAS ES (%)
20
34 Country B had an increase 2005 20
in foreigrmdirect investment.of $300 000 000 2006 10
of the Balance: Inwhichsection 2007
of Payments will this
transaction berecorded? . "

38.
.
(A) Visible trade account Inwhichyearwas the increaseinreal wages
..(B) Balance oftrade account greatest?
Invisible trade account
(D) Capital account (A) 2004
B) 2005
(C) 2006
35. The ability to turn an asset (D) 2007
d o s s or delay is known as into cash without
.
39. Which ofthe
durability following
likelytoreduceinflation?measures
is MOST
B) licquidity
. . portability
, divis+bility (A) Increasingbank lending
(B)
(C) Increasingimportduties
Reducing govemment expendiire
fountry A is (D) Reducing direct taxation
experiencing a, balance of
payments deficit.
Which of the
4neasures sbould ittake to reduce following
in the short-term? the deficit

A) Engage in trade with other low cost

B) producersofgoods,
Imposerestictionsongoods imported
fomother countries.
C) Increase the
* (D)
importation ofgoods.
Reduce the volume of exports to
nfharnunbin
 10-
49 The allocation of resources in a inixed 53. Therestrictionofinternationaltradelhrough
cconomy is determincd by tariffs, embargoes, quotas and exchange
controls is refcrred to as
(A) consumeS only
(B) government only (A) structral adjustrment
C) govermment and producers only (B) globalisation
(D) government, producers and (C) bi-lateral agreement
consumers D)protectionism

50. Which of the following will enable 54. Which ofthe following isNOTafunction of
Caribbean investors to have access to larger Inoney?
capital imports?
. A) Unitof account
(B) Form ofcredit
(A) The Intermational Monetary Fund
Store ofvalue
(B) Specialisation (C)
(C) The World Bank (D) Mediun ofexchange
D) Globalisation
55. The issue of a treasury bond represents aa

Ttem 51 refers to the table below which short-termloan to the govermmenat

shows the 2007 import and export data for
(A)
(B) long-termloan to thegovemnent
Country X. (C) long-term loan to the Central Bank
short-termloan by the Central Bank
D
Index of import prices 100
Index of export prices 120
56. The Central Bank calls for an increase in the
Volume of exports 200
80 reserve requirements from commercial
Volume ofimports banks. How will this affect the operations of

51. What was the 'terms of trade' index for commercial banks?
Country Xin 20077
CA) Their liquidassets willbereduced.
Their ability to create credit will
(A) 0.98 CB)
1.2 increase
(B) Their loans to money markets will
(C) 2.0 (C)
increase.
(P) 120.0 irom
**

D) They will attract less deposits

thepublic.
52. Which of the following is MOST likely to
occurifthereis anincrease in the demand for Which of the following will MOST likely
57.
cameras? resultin a shiftto therightin the supply curve
for flour?
(A) The price ofcameras will fall.
The price of cameras will rise. wheat
B) (A) Incr ased taxation on

(C) Thesupplyofcameras will fall. producers

(P) The priceand supply ofcameraswvill
(B) Inereased advertising by wheat
remain the sam0. producers
Goveomentsubsidies to wheat fams
AC) use of
(D) Legislation to limit the
pesticides by wheatproducers

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 - 11 -

Items 58- 59 refer to the

which presents data on the following tabla 60. Large firma achieve savingsinunitcosts ftom
and price of supply, demand advertising or packaging. Thisis aresult of
potatoes. which of the following cconomies ofscale?
Price of Market Market
potatoes demand (A) Financial
supply ()
(S) (000 kg) (000 kg) Marketing
700 (C) Managerial
100
(D) Technical
500
200
12 350 350
16 200
530
20 100 700

58. What is the equilibrium price?

(A) 4
(B)
(C) S12
(D) $16

59.
Ifsupplyincreasedby
be
300000kg,whatwould
theNEW equilibrium price7
(A) S8
(B) $12
(C S16
(D) $20

IF YOUFINISH BEFORE TIME IS CALLED, CHECK YOUR WORK ON THIS TEST.

012.16010/F 2008