6. Which one of the following statements referring to the price mechanism is correct?
High prices can ration demand for scare goods and services.
Films are unable to influence the market demand for their products.
Producers and consumers take account of externalities.
High prices are always associated with hight profits for producers.
7. Choice is an important element in the basic economic problem because
incomes are distributed unequally.
high demand leads to high prices.
limited resources have alternative uses.
wants increase with income.
8. Which one of the following is NOT an example of the use of government fiscal policy? A change in
the size of the budget deficit.
a tax imposed on imports of goods and services.
interest rates.
government spending on National Health service.
9. What are goods provided by the government for people who are deemed to need them called?
Negative externalities.
Demerit goods.
Merit goods.
Positive externalities.
10. In a market based economy the scarcity of factors of production means that
inflation is inevitable.
the economy cannot achieve economics growth every year.
consumers must inevitably consider the opportunity cost of their choices.
the economy cannot produce on its production possibility frontier.
11. Which one of the following is a positive economics statement?
The extent of income inequality in the United Kingdom has increased over the last 30 years.
The national minimum wage rate should be increased to £5 per hour for all workers.
Nurses working the National Health service should be on a maximum working week of 50 hours per week.
The rate of unemployment is too high.
12. The level of capital investment spending by private sector businesses tends to vary ______ with interest rates and ______ with business confidence
negatively, positively
positively, negatively
positively, positively
negatively, negatively
13. An increase in imports of consumer goods is most likely to have been caused by a
rise in household disposable income.
rise in direct taxation.
fall in the exchange rate.
rise in household saving.
14. What are the pure public goods?
Street lights, Flood defences and Lighthouses.
Education and Health care.
Merit and Demerit goods.
Capital goods.
15. A decision by the government to introduce and expansionary fiscal policy would be less likely to succeed in reducing unemployment if a country had
a high level of cyclical unemployment and spare capacity.
a high marginal propensity to import.
a high level of business and consumer confidence.
a fixed exchange rate.
16. Which one of the following is a measure of productivity?
the annual percentage increase in production.
output divided by employment.
the quantity of capital equipment used divided by its price.
the total amount of output produced each month.
17. The price elasticity of supply of a product will depend on
the extent to which the product is advertised.
the availability of factors of production.
whether the product is a luxury or a necessity.
the incomes of consumers.
18. Non- excludability is where:
people can stop others from using the good.
no one can be excluded from the benefiting of a good.
people can be excluded from benefiting of a good.
the free market left alone fails to deliver an efficient allocation of resources.
19. economics is primarily concerned with the study of
allocating scare resources to satisfy unlimited wants.
determining how the government should allocate resources.
how to make more effective use of resources through reducing wants.
how new wants and economic resources are produced.
20. If the short run aggregate supply curve is perfectly elastic, an increase in aggregate demand brought about by a rise in demand for exports is most likely to cause an increase in