Free CXC Economics Paper 1 May/June 2018 past paper from 2018. Includes a worked answer key. Open the PDF, take a timed test, and study with AI on Caribbean AI.
Answer keys are free on Caribbean AI. View the answers to every past-paper question at no cost - no payment needed - with step-by-step worked solutions and instant AI marking available on Premium.
CSEC Economics Paper 1 May/June 2018 - Free CXC Past Paper with Answers
Free CXC Economics Paper 1 May/June 2018 past paper from 2018. Includes a worked answer key. Open the PDF, take a timed test, and study with AI on Caribbean AI.
Opening the interactive papers…
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
Which of the following pairs of activities in a country falls under the tertiary sector?
Banking and tourism
Tourism and agriculture
Banking and construction
Manufacturing and fishing
Trade liberalization can be defined as
an increase in trade deficit
an increase in trade surplus
the removal of trade barriers
trading between many countries
'Globalization' may be MOST accurately defined as the
movement of technology and financial markets worldwide
integration of financial services, technology and commodity markets worldwide
international trade of goods and services including skilled workers
movement of tangible and intangible goods among countries
Item 5 refers to the following diagram which shows the relationship between the production of Good X and Good Y by a certain country using all its resources. Good X 0 Good Y
What name is given to the curve represented above?
Demand curve
Market supply curve
Individual supply curve
Production possibility curve
Country X allows the foreign exchange market 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
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.
Point X on the graph represents
economic growth
unemployed resources
an efficient combination
an unattainable combination
In an attempt to increase the efficiency of its staff, management assigns specific tasks to each worker. This is an example of
progress
productivity
specialization
entrepreneurial ability
Choice is the MOST important issue in economics because
incomes are not evenly distributed
most countries have a low per capita income
resources are scarce relative to consumers' wants
money is scarce in relation to a country's resources
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
Which of the following is LEAST likely to affect the efficiency of labour?
Firm's profitability
Worker motivation
Level of technology
Education and training
Item 12 refers to the following table which shows government spending as a percentage of gross domestic product for four countries, W, X, Y and Z.
The economic system of Country X is MOST likely
mixed
planned
subsistence
free market
The term 'money supply' refers to the
total stock of money in an economy at any moment
amount of money traded in the foreign exchange market
total amount of gold, silver and other precious metals in reserve
total asset base of the institutions in the financial sector
Fred earns his money by occasionally doing jobs such as painting, repairing and cleaning, while Wilma earns her money from occasional babysitting.
In which sector would Fred and Wilma's activities be located?
Formal
Foreign
Informal
Financial
Price elasticity of supply refers to the responsiveness of the quantity supplied to a change in
price
taste
income
demand
If Company X is engaged in the cutting of trees to obtain lumber which is then used by Company Y to make furniture, to which sector of the economy does Company X belong?
Public
Primary
Tertiary
Secondary
The movement of the demand curve of Good X from D to D, 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
According to economic theory, 'second hand' cigarette smoke is an example of a
merit good
private good
positive externality
negative externality
Which of the following is a component of a country's balance of payments account?
Countries from which goods are imported
The value of imports and exports
The value of government expenditure
The number of commercial banks in the country
Which of the following financial instruments are issued by the central bank on behalf of the government?
Treasury bills
Corporate bonds
Equity securities
Shares on the stock exchange
The MAIN objective of a credit union is to
encourage summer spending
encourage thrift among its members
provide credit to government agencies
provide investment funds for companies
Item 22 refers to the following curves which show the demand for some products.
Which of the curves above indicates that demand for the product is perfectly elastic?
I
II
III
IV
‘Resources, both human and physical, are required to produce goods’. The statement above MOST accurately describes
productivity
entrepreneurship
factors of production
need for resources
Item 24 refers to the following diagram which shows the demand for and supply of grapes.
What is the equilibrium price and quantity demanded?
p, and q,
p, and q,
p, and q,
p, and q,
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 price increases
are willing to increase supply as demand increases
increase their profit margins as price increases
Country A is experiencing a balance of payments deficit. Which of the following measures can Country A take to reduce the deficit in the short term?
Reduce the volume of exports.
Increase the importation of goods.
Engage in trade with other low-cost producers of goods.
Introduce measures to reduce the level of imports.
Item 27 refers to the following information which relates to a manufacturing company.
The average variable cost is
$ 100
$ 400
$1 000
$4 000
Item 28 refers to the following table which shows the rate of inflation and the average percentage increase in wages over a four-year period.
| Year | Rate of Inflation (%) | Wage Increase (%) |
|---|---|---|
| 2014 | 5 | 20 |
| 2015 | 10 | 20 |
| 2016 | 10 | 5 |
| 2017 | 15 | 5 |
In which year was the increase in real wages the GREATEST?
2014
2015
2016
2017
Which of the following statements BEST defines the term 'tariff'?
The amount of goods that can be imported into a country
The tax that is levied on imports entering a country
The common tax levied on countries within a region
The amount of subsidies received by local exporters
At which of the following prices are there shortages in the market?
$2 and $4
$4 and $6
$6 and $8
$8 and $10
What is the total cost when three units are produced?
$125
$130
$155
$190
Using the theory of comparative advantage, which of the good(s) above should Country P produce?
Mobile phones only
Microwave ovens only
Mobile phones and microwave ovens
Neither mobile phones nor microwave ovens
Which of the following production possibility curves correctly illustrates the information above?
Capital goods axis, Consumer goods axis, with points labelled O, X, Y, Z. Point X is on the vertical axis, Point Z is on the horizontal axis, and Point Y is outside the curve. The curve is bowed outwards from the origin.
Capital goods axis, Consumer goods axis, with points labelled O, X, Y, Z. Point X is on the vertical axis, Point Z is on the horizontal axis, and Point Y is inside the curve. The curve is bowed outwards from the origin.
Capital goods axis, Consumer goods axis, with points labelled O, X, Y, Z. Point X is on the curve, Point Y is outside the curve, and Point Z is inside the curve. The curve is bowed outwards from the origin.
Capital goods axis, Consumer goods axis, with points labelled O, X, Y, Z. Point X is inside the curve, Point Y is outside the curve, and Point Z is on the curve. The curve is bowed outwards from the origin.
The functions of a central bank do NOT include
issuing notes and coins
providing loans to the public
managing foreign exchange rates
maintaining the foreign currency accounts of the government
A pure public good can be described as
rivalrous
zero-priced
diminishable
non-excludable
The diagram BEST describes the
functions of the Central Bank
flow of deposits into the financial sector
role that the financial sector performs for customers
flow of funds into the household sector
Which of the following economic situations is NOT characteristic of Caribbean countries?
High debt burden
High levels of unemployment
Low levels of capital formation
Major producers of manufactured goods
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
price of the chicken and chips
satisfaction he gets from the burger
satisfaction he gets from the chicken and chips
A government reduces tax on carrots. This causes the price of carrots to fall by 50%. Quantity demand then rises by 50%. The price elasticity of demand for carrots in this case is
0
0.4
1
2.5
Which of the following measures would MOST likely reduce inflation?
An increase in bank lending
An increase in import duties
A reduction in direct taxation
A reduction in government expenditure
The amount of net exports in an economy is given as -$10 M. This indicates that the value of exports is
zero
equal to imports
less than imports
greater than imports
In economics, the excess of human wants over existing resources is known as
greed
scarcity
opportunity cost
economic decline
The relationship between price and quantity demanded of a normal good is described as
direct
a shift
inverse
indirect
Large firms can achieve savings in unit costs as a result of advertising and packaging. These kinds of economies of scale can be classified as
financial
technical
marketing
managerial
A country has a comparative advantage in the production of a commodity when it
can produce more of that commodity than any other country
can produce that commodity at a lower opportunity cost than any other country
has a larger share of the market for that commodity than any other country
accounts for a greater percentage of global sales of that commodity than any other country
A firm produces 29 pairs of high quality leather shoes at a fixed cost of $20 000 and a variable cost of $9 000. On producing the 30th pair, the new total cost rises to $30 000. What is the marginal cost of the 30th pair?
$ 1 000
$ 9 000
$20 000
$29 000
In theory, open competition on a world scale facilitates
high levels of dependency on tourism
increases in trade unions' negotiating power
government manipulation of market outcomes
the development of a competitive advantage based on price
Which of the following will contribute to a surplus in the balance of trade of a country?
The value of imports is greater than the value of exports.
The value of exports is greater than the value of imports.
The volume of exports is greater than the volume of imports.
The volume of imports is greater than the volume of exports.
Which of the following is NOT a determinant of a shift in demand for laptop computers?
Income
Price of laptop computers
A preference for desktop computers
A rise in the price of desktop computers
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
Country M's economy was booming then suddenly it begins to experience low demand for goods and services. This led to the closure of companies and businesses, rising unemployment and falling standards of living.
Which of the following terms BEST describes the situation experienced by Country M?
A recession
A revaluation
An externality
A disequilibrium
Mr Akah takes a loan from his bank and invests it in a sugar cane plantation where he employs 100 workers. In economic terms, the reward that Mr Akah hopes to earn from this business is known as
wage
profit
salary
interest
The economic system where major economic decisions are made by private individuals and businesses is known as
free market
planned economy
controlled economy
subsistence economy
Which of the following factors should entrepreneurs consider when deciding what goods to produce?
I. Cost of resources II. Level of inflation III. Availability of resources
I and II only
I and III only
II and III only
I, II and III
The ability to turn an asset into cash, without loss or delay, is known as
liquidity
durability
portability
divisibility
Which of the following products is NOT considered to be primary?
Bauxite
Banana
Furniture
Petroleum
Item 57 refers to the following table which shows the current account section of a country's balance of payments for the year 2016.
| Item | ($M) |
|---|---|
| Invisible imports | 50 |
| Invisible exports | 80 |
| Visible imports | 70 |
| Visible exports | 32 |
What is this country's balance of merchandise trade?
-$38 M
$20 M
$38 M
$48 M
Which of the following activities is NOT a function of the International Monetary Fund?
Fostering global monetary cooperation
Settling trade disputes between countries
Promoting the financial stability of countries
Assisting countries with balance of payments deficit difficulties
Which of the following occurences is NOT a benefit of trade liberalization to consumers?
A decline in the prices of goods and services
Greater access to a variety of goods and services
An increase in the prices of goods and services
A reduction in the cost of providing goods and services
Item 60 refers to the following table which shows manufacturing output as a share of gross domestic product (GDP) for four countries, A, B, C and D.
| Year | Country | |||
|---|---|---|---|---|
| A | B | C | D | |
| 1990 | 28% | 40% | 29% | 29% |
| 2000 | 23% | 34% | 26% | 28% |
| 2012 | 19% | 31% | 21% | 23% |
The table shows that ALL countries experienced
a decline in gross domestic product
a decline in the sale of manufactured products
an increase in employment in the manufacturing sector
a decline in manufacturing output