Free CXC Economics Paper 1 May/June 2009 past paper from 2009. Includes a worked answer key. Open the PDF, take a timed test, and study with AI on Caribbean AI.
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CSEC Economics Paper 1 May/June 2009 - Free CXC Past Paper with Answers
Free CXC Economics Paper 1 May/June 2009 past paper from 2009. Includes a worked answer key. Open the PDF, take a timed test, and study with AI on Caribbean AI.
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Every question from this paper as text. See the answers and worked solutions. Questions are the property of the Caribbean Examinations Council; Caribbean AI is not affiliated with CXC.
Why do consumers have to make choices among the goods and services that they purchase?
Their wants are scarce and their resources are limited.
Their resources are insufficient to satisfy all their wants.
Their resources increase more rapidly than their wants.
They receive most of their goods and services at no cost.
An 'economy' is BEST described as
a system where suppliers produce all the goods and services needed by the consumers
a system whereby all the goods and services used by citizens of a country are provided by the government
the utilization of resources to produce goods and services to meet the needs and wants of society
the utilization of resources by manufacturers to produce goods and maximize profits
Items 3-4 refer to the following diagram which illustrates the flow of goods and services, factors of production and money earned and spent. S U HH T V FIRM
If U refers to goods and services, then S refers to
expenditure
wages
rent
profit
If V includes interest and profit, then T represents the flow of
factors of production
goods and money
services and money
services and investment
Which of the following combinations gives a similar measurement of the national income? I. Income method II. Central bank method III. Output method IV. Expenditure method
I and II only
II and III only
I, II and IV only
I, III and IV only
An economy produces two goods, namely sugar and bauxite. What name is given to the curve which shows the maximum amount of bauxite that can be produced for every given amount of sugar?
Market supply curve
Demand curve
Production possibility curve
Individual supply curve
A student 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 burger he gave up
the price of the chicken and chips
the price of the burger
the satisfaction he gets from the chicken and chips
Item 8 refers to the diagram below which shows the production possibility curve for two goods: shirts and shoes.
At what point in the diagram are resources underemployed?
W
X
Y
Z
Which of the following factors may cause an outward shift in a production possibility curve?
An increase in wages
An increase in prices
An increase in trade
An increase in the use of technology
Item 10 refers to the diagram below. S is the supply curve before a subsidy is given and Ss is the supply curve after the subsidy is given.
As a result of the granting of the subsidy it is expected that
supply will increase
supply will decrease
demand will decrease
price will increase
Which of the following is MOST likely to immediately affect the supply of labour?
Improving worker productivity
Increasing the demand for labour
Improving the efficiency of workers
Increasing the length of the work week
In a commercial bank, wages and salaries are paid to ALL of the following EXCEPT
bank tellers and supervisors
shareholders of the bank
investment managers in the bank
maintenance workers employed by the bank
In which of the following economic systems does the state own ALL the factors of production EXCEPT labour?
A mixed economy
A market economy
A planned economy
A subsistence economy
Which of the following will enable Caribbean investors to have access to larger capital imports?
The International Monetary Fund
Specialisation
The World Bank
Globalisation
Sam and Jack started a catering business. They organized the factors of production and pooled their financial resources to produce the goods and services. What factors of production should Sam and Jack be classified as?
Workers
Investors
Entrepreneurs
Managers
Joe uses one plot of land and 65 seedlings to do his farming. Each seedling costs $8 and he rents the land for $200. The cost of the land represents his
average cost
fixed cost
marginal cost
variable cost
Which of the following is NOT an example of a factor of production in a commercial bank?
Shareholders of the bank
The building
Special savings account for students
The bank's vault
Item 18 refers to the table below which provides information on three similar goods, X, Y and Z.
| Good | Prices ($) |
|---|---|
| X | 10 |
| Y | 8 |
| Z | 3 |
Consumers buy more of Good Z because of its lower price.
Which of the following factors will cause consumers to buy less of Good Z?
An increase in the supply of good Z
An imposition of a 100 per cent tax on good Z
The placement of a 100 per cent subsidy on good Z
The advertisement of good Z as an impressional good
Which of the following is NOT considered a factor of production in the bauxite industry?
The land on which the mine is located
Workers employed to work on the mine
Companies that use bauxite
Persons who invest their capital to carry out mining operations
Which of the following features are characteristic of a fully planned economy?
I. All wages are equal. II. Goods do not have prices. III. There are no private shareholders. IV. The profit motive does not exist.
III only
IV only
II and III only
III and IV only
A public good can be described as
diminishable
excludable
zero-priced
rivalrous
The type of unemployment which is USUALLY experienced by workers in the hotel industry is known as
frictional
seasonal
structural
cyclical
All of the following features are characteristic of perfect competition EXCEPT
many buyers and one seller
freedom of entry and exit
selling of homogeneous products
perfect knowledge of market conditions
Which of the following is an example of fixed capital?
Bank balance
Cash
Machinery
Raw material
In which of the following situations will a normal supply curve for farm produce slope upwards from left to right?
Farmers' profit margins increase as price increases.
Farmers are willing to increase supply as demand increases.
Farmers pass on increased cost to consumers.
Farmers are willing to produce more as price increases.
According to economic theory, second-hand cigarette smoke is an example of a
private good
positive externality
negative externality
merit good
All things being equal, an increase in the supply of a good will result in
an increase in price and quantity traded
a fall in price and an increase in the quantity traded
a decrease in price and quantity traded
a rise in revenue and a fall in quantity traded
Which of the following will NOT occur when there is market failure?
A decline in social welfare
An increase in poverty throughout the economy
Increasing levels of unemployment among skilled and unskilled labour
Adequate amounts of all goods and services for consumers
In an attempt to increase the efficiency of its staff, management assigns specific tasks to each worker. This is an example of
specialisation
progress
productivity
entrepreneurial ability
Choice is the MOST important issue in economics because
money is scarce in relation to a country's resources
most countries have a low per capita income
resources are scarce relative to consumers' wants
incomes are not evenly distributed
Joe Brown sells his produce at the market and saves his money until he has enough to buy a tractor. Which of the following functions is money performing in this case?
Unit of account
Store of value
Standard of deferred payment
Medium of exchange
Which of the following is NOT a financial institution in an economy?
Share market
Development Bank
Credit union
Trade union
Which of the following is regarded as an invisible import on the Balance of Payments of Country X?
A citizen of Country X visits a foreign country and spends money in that country.
A citizen of a foreign country receives dividends from his investment in a company in Country X.
A citizen of Country X receives interest payments from investment in a bank in a foreign country.
A citizen of Country X purchases a vehicle from a foreign country.
Country B had an increase of $300 000 000 in foreign direct investment. In which section of the Balance of Payments will this transaction be recorded?
Visible trade account
Balance of trade account
Invisible trade account
Capital account
The ability to turn an asset into cash without loss or delay is known as
liquidity
durability
portability
divisibility
Country A is experiencing a balance of payments deficit. Which of the following measures should it take to reduce the deficit in the short-term?
Impose restrictions on goods imported from other countries.
Engage in trade with other low-cost producers of goods.
Increase the importation of goods from other countries.
Reduce the volume of exports to other countries.
Items 37-38 refer to the table below, which provides data on costs of production at different levels of output.
| Output (Units per day) | Total Cost $ |
|---|---|
| 0 | 1500.00 |
| 1 | 1700.00 |
| 2 | 1800.00 |
| 3 | 1950.00 |
What is the total fixed cost?
$ 200
$1500
$1950
$6950
The marginal cost (MC) of production at output level of 3 units is
$ 50
$ 150
$ 650.
$1950
Which of the following factors will MOST likely cause a fall in a country's exchange rate under a flexible exchange rate regime?
An increased demand for its imports
An increased demand for its exports
An increased inflow of capital
A reduced rate of domestic inflation
Item 40 refers to the table below which shows the rate of inflation and the average percentage increase in wages over a four-year period.
Year Rate of Inflation Wage Increases (%) 2004 5 20 2005 10 20 2006 10 5 2007 15 5
In which year was the increase in real wages GREATEST?
2004
2005
2006
2007
Which of the following measures is MOST likely to reduce inflation?
Increasing bank lending
Increasing import duties
Reducing government expenditure
Reducing direct taxation
Some developing countries try to achieve economic growth with less governmental participation. This is MOST likely to be achieved through increased
private investment
public expenditure
state planning
trade barriers
Which of the following items would NOT appear in the current account of the Balance of Payments account?
The export of goods to another country
The use of local banking services by a foreign company
Payment of dividends by a foreign company
Establishment of a steel industry by a foreign company
Bargain Supermarket increased the price of its name brand tissue by 65% and sales fell by 115%.
How should the price elasticity of demand for Bargain's tissue be categorised?
Unitary elastic
Elastic
Inelastic
Cross elastic
Which of the diagrams BEST illustrates the circular flow of income in an economy consisting of households, firms and financial institutions?
I
II
III
IV
This diagram BEST represents
the 'poverty trap'
diseconomies of scale
foreign direct investment
a problem faced by all CARICOM countries
Which of the following features is NOT characteristic of Caribbean economies?
High levels of unemployment
Major production of manufactured goods
Low levels of capital formation
A high debt burden
Trade liberalization should result in several benefits to consumers. Which of the following does NOT represent a benefit to consumers?
There will be greater access to a variety of goods and services.
Cost of providing goods and services will be lower.
Prices of goods and services will be reduced.
Prices of goods and services will increase.
Which of the following situations will result in a surplus on the balance of trade of a country?
Volume of exports is greater than the volume of imports.
Volume of imports is greater than the volume of exports.
Value of exports is greater than the value of imports.
Value of imports is greater than the value of exports.
Which of the following is MOST likely to occur if there is an increase in the demand for cameras?
The price of cameras will fall.
The price of cameras will rise.
The supply of cameras will fall.
The price and supply of cameras will remain the same.
Item 51 refers to the table below which shows manufacturing output as a share of Gross Domestic Product for four countries.
YEAR COUNTRY A COUNTRY B COUNTRY C COUNTRY D 1960 28% 40% 29% 29% 1980 23% 34% 26% 28% 1990 19% 31% 21% 23%
What trend is common to ALL countries shown in the table?
There was an increase in employment in the manufacturing sector.
There was a decline in the Gross Domestic Product.
There was a decline in the sale of manufactured products.
There was a decline in manufacturing output as a share of Gross Domestic Product.
In 2007, Country X imported 20% more than it did in the previous year. This resulted in arrears in its Balance of Payments (BOP) account. As a result, Country X had to borrow from the International Money Fund. In addition, its Gross Domestic Product declined because the currency had been devalued.
reduction in borrowing by commercial banks
consequences of a BOP deficit
increased spending in an economy
factors causing a BOP deficit
The restriction of international trade through tariffs, embargoes, quotas and exchange controls is referred to as
structural adjustment
globalisation
bilateral agreement
protectionism
Which of the following statements BEST describes globalisation?
International trade of goods and services including skilled workers
Movement in technology and financial markets worldwide
The integration of financial services, technology and commodities markets worldwide
Movement of tangible and intangible goods enhanced by growth in the computer industry
The issue of a treasury bond represents a
short-term loan to the government
long-term loan to the government
long-term loan to the Central Bank
short-term loan by the Central Bank
The Central Bank calls for an increase in the reserve requirements of commercial banks. How will this affect the operations of commercial banks?
Their liquid assets will be reduced.
Their ability to create credit will increase.
Their loans to money markets will increase.
They will attract less deposits from the public.
At which point will production be MOST efficient?
P
Q
R
S
Items 58-59 refer to the following table.
Price of potatoes ($) Market demand (000 kg) Market supply (000 kg) 4 700 100 8 500 200 12 350 350 16 200 530 20 100 700
What is the equilibrium price?
$4
$8
$12
$16
If supply increased by 300 000 kg what would be the NEW equilibrium price?
$8
$12
$16
$20
Large firms achieve savings in unit costs from advertising or packaging. This is a result of which of the following economies of scale?
Financial
Marketing
Managerial
Technical