Free CXC Economics Paper 1 May/June 2017 past paper from 2017. 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 2017 - Free CXC Past Paper with Answers
Free CXC Economics Paper 1 May/June 2017 past paper from 2017. 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.
Which of the following rewards accrues to the factor of production called 'capital'?
Rent
Profit
Wage
Interest
Ana is considering purchasing a new laptop computer. Which of the following factors is LEAST likely to influence her decision?
Her level of income
The price of the laptop computer
The cost of producing the laptop computer
Laptop computer advertisement in the newspapers
Which of the following factors causes money to lose value and become less effective as a medium of exchange?
Inflation
Market Failure
Unemployment
Negative externalities
Which of the following is a primary product?
Truck
Bread
Bauxite
Clothing
Item 5 refers to the following incomplete table which shows production cost of three units of a product.
| Unit | Total Fixed Cost ($) | Marginal Cost ($) | Total Cost ($) |
|---|---|---|---|
| 1 | 100 | 25 | 125 |
| 2 | 130 | ||
| 3 | 60 |
What is the total cost of producing three units of the product?
$125
$130
$155
$190
Which of the following is NOT one of the ways in which governments influence economic decisions of the business?
Increasing retirement benefits
Passing minimum wage legislation
Regulating the emissions of toxic waste
Identifying areas where businesses should be located
Item 7 refers to the following diagram which illustrates the production possibility frontier for an economy that is capable of producing bauxite and sugar in different combinations. Sugar • X Bauxite
Point X on the graph represents
Economic growth
Unemployed resources
An efficient combination
An unattainable combination
A normal supply curve for farm produce will slope upwards, from left to right, if farmers
Pass on increased cost to consumers
Are willing to produce more as prices increase
Increase their profit margins as prices increase
Are willing to increase supply as demand increase
An outward shift in a production possibility curve can be caused by an
Increase in wages
Increase in prices
Increase in imports
Improvement in technology
ABC Ltd. Purchases raw cotton and produces fabric. XYZ Ltd. buys fabric from ABC Ltd. and makes T-shirts which it markets directly to clothing stores. In which sector of economic activities are both firms engaged?
Tertiary
Primary
Quaternary
Secondary
An advantage of a planned economic system is that
there is usually a more equitable distribution of wealth
firms have greater incentive to produce
workers are more motivated and diligent
consumers have a wider variety of goods
The MAIN objective of a credit union is to
Provide scholarships to students
Encourage thrift among its members
Provide credit to government agencies
Provide investment funds for companies
Country X has a very low unemployment rate as most of its citizens work overseas for 6-8 months during the year. This type of unemployment can be classified as
Cyclical
Real wage
Seasonal
Structural
Prices of goods in market economies fluctuate while prices for goods in planned economies tend to be fixed. The MOST likely reason for this difference is that in the market economy,
Profits are lower
Producers are never efficient
There are higher employment levels
Demand and supply forces determine prices
From the diagram below, it can be deduced that
point X was unattainable in Year 2
point X was efficient in Year 1 and Year 2
There was decreasing opportunity cost in Year 1 and Year 2
there was economic growth between Year 1 and Year 2
The government of Country X decides to switch resources from manufacturing to crop production. The opportunity cost of this decision is the
Profit earned by farmers
Reduction of manufacturing
Wages earned by farmers
Rent for the land on which crops are grown
A government reduces taxes on carrots. This causes the price for carrots to fall by 50%. Quantity demanded then rises by 50% The price elasticity of demand for carrots in this case is
0
0.4
1
2.5
Which of the curves above indicates that demand for the product is perfectly elastic?
I
II
III
IV
Which of the following is NOT an example of a factor of production in a commercial bank?
The building
The bank's vault
Shareholders of the bank
Special savings accounts for students
Shinelle spends 0.02% of her monthly income on a particular good. Her demand for this good, in terms of price, can be described as
Elastic
Inelastic
Perfectly elastic
Perfectly inelastic
Open competition on a world wide scale facilitates
High level of dependence on tourism
Increases in trade unions' negotiating power
Government manipulation of market outcomes
The development of comparative advantage
The term 'money supply' refers to the
The total stock of money in an economy at any moment
Amount of money traded in the foreign exchange market
Total assets base of the institutions in the financial sector
Total amount of gold, silver and other precious metals in the reserve
The organization responsible for the regulation and control of the financial sector is the
Treasury
Central Bank
Board of Currency Control
Institute of Monetary Affairs
Which of the following is TRUE about the financial institutions?
They provide insurance protection to speculators
They are free from government interference
They place emphasis on consumer education and national development
They channel funds from those who have saved to those who wish to borrow
A pure public good can be described as
Excludable
Zero-priced
Diminishable
Complimentary
Which of the following is usually a consequence of widespread retrenchment in a country?
Reduction in crime rate
Increase standard of living
A fall in the standard of living
Equality in income distribution
Globalization may be MOST accurately defined as the
Movement of technology and financial markets worldwide
Movement of tangible and intangible goods among countries
International trade of goods and services including skilled workers
Integration of financial services, technology, and commodity markets worldwide
Which of the following is LEAST likely to occur when there is market failure?
A decline in social welfare
An increase in poverty through the country
An increase in the level of unemployment among skilled and unskilled labour
An adequate amount of goods and services for consumers
Governments often put measures in place to control monopolies because monopolies
Set fair prices
Restrict supply
Earn normal profits
Promote consumer sovereignty
Which of the following best defines the term 'protectionism'?
Restriction of imports into the country
Dependency on a primary product for export
Free movement of goods and services among countries
Establishment of a trade bloc among a group of countries
Line X represents payment
Goods taken on credit
To the factor of production
Of taxes to the government
To the financial institutions for loans
The movement of the demand curve Of Good X from D to D₁ results from an increase in
Consumer income
The price of good X
The price of a complement
The cost of inputs used to produce good X
The diagram below shows four supply curves (labeled I, II, III and IV). Which of the following curves shows that price elasticity of supply is unitary?
I
II
III
IV
Which of the following is NOT a function of the financial sector?
Providing a safe place for savings
Preventing liquidity within the economy
Facilitating payments for goods and services
Making credit available to households and firms
Which of the following has led to rapid expansion of e-commerce?
The emergence of the internet
The formation of regional groupings
The increase in the levels of income
The rise in inflationary pressures
Item 36 refers to the following diagram.
The diagram best describes the
Functions of the central bank
Flow of deposit into the financial sector
Role the financial sector performs for customers
Factors of productivity
Which of the following statement best describes a fiscal deficit?
Government revenue exceeds government borrowing
Government revenues are greater than subsidies
Government spending equals government revenue
Government spending exceeds government revenue
Which of the following is an advantage of a market economic system?
There is equality in income
It gives choice to consumers
It reduce pollution and congestion
Price control measures can be effected
Which of the following is a positive effect of 'brain drain' phenomenon for the country of origin?
Sustained growth
Source of remittances
Guaranteed development
Discovery of more talent
"Resources, both human and physical, are required to produce goods and services."
The statement MOST accurately describes
Productivity
Entrepreneurship
Factors of production
Factors of productivity
Country A is experiencing a balance of payment deficit. Which of the following measures would the government MOST likely use to reduce the deficit in the short term?
Reduce the volume of exports to other countries
Engage in trade with other low-cost producers of goods
Increase the importation of goods from other countries
Impose restrictions on goods imported from other countries
The term recession refers to a period of
Increased economic activity
Gradual increase of GDP of a country
National economic prosperity in a country
Temporary economic decline
Item 43 refers to the following economic measures. I. Reducing the bank rate II. Increasing interest rate III. Decreasing money supply
Which of the measures above can be used to reduce inflation?
I and II only
I and III only
II and III only
I, II and III
Which of the following is NOT a benefit of economic integration?
Higher cost of living
Increased productivity
Improved competitiveness of products
Mutual benefits among member countries
Which of the following is a likely DISADVANTAGE of international trade?
Economies of scale
Improved international relations
Increased consumer choice and variety
Stiff competition of local industries
The terms of trade of country X is 150. This is considered to be
Neutral
Inadequate
Favourable
Unfavourable
The currency of a country may appreciate in value if
The demand for its imports rises
The demand for its exports rises
Its balance of trade deficit rises
Its balance of payment deficit rises
The economic system where major economic decisions are made by private individuals and businesses is known as a
Free market economy
Planned economy
Controlled economy
Subsistence economy
Item 49 refers to the following diagram which shows the price of an item and the quantity demanded and supplied before and after the item is subsidized. S is the supply curve before a subsidy is given. Price Po P1 S Ss D 0 Qo Q1 Quantity
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
A country has a comparative advantage in the production of a commodity when it
Can produce more of that commodity than any other country
Has a larger share of the market for that commodity than any other country
Can produce that commodity at a lower opportunity cost than any other country
Accounts for a greater percentage of global sales of that commodity than any other country
Which of the following will contribute to a surplus on the balance of trade of a country?
The value of exports is greater than the value of imports
The value of imports are greater than the value of exports
The volume of exports are greater than the volume of imports
The volume of imports are greater than the volume of exports
Which of the following is referred to as the banker's bank?
The World Bank
The Central Bank
A commercial bank
An investment bank
Country X is obtained an inflow of $300, 000, 000 in foreign direct investment. IN which section of the balance of payments accounts of Country X, will this be recorded?
Capital
Visible trade
Invisible trade
Balance of trade
The restrictions on international trade through tariffs, embargoes, quotas, and exchange controls is referred to as
Globalization
Protectionism
A bilateral agreement
Structural adjustment
The term 'e-commerce' refers to
Ecotourism
Export businesses
Electronic businesses
Economies of scale
Country X allows foreign exchange markets to determine the rate of its domestic currency based on the forces of demand and supply. This type of exchange rate is referred to as
Fixed
Pegged
Floating
Managed
Which of the following is referred to as a withdrawal from the circular flow of income?
Exports
Savings
Investment
Household income
The acronym FDI, in economics, means
Foreign Direct Income
Foreign Direct Investment
Fixed Domestic Investment
Floating Domestic Investment
Item 59 refers to the following table which shows a country's current account of its balance of payment for the year 2015.
| Item | ($M) |
|---|---|
| Invisible imports | 50 |
| Invisible exports | 80 |
| Visible imports | 70 |
| Visible exports | 32 |
What is this country's balance of merchandise trade?
-$38M
$20M
$38M
$48M
If a country can produce 20 units of products X or 10 units of product Y, the opportunity cost of 1 unit of a product Y is
0.1 units of product x
1 unit of product x
2 units of product x
2.5 units of product x