IGCSE Economics Paper 1 - Gr. 10

A government decides to increase the wages paid to the employees of state-owned enterprises. What will increase immediately, as a result of this decision?

• Government expenditure

• A budget surplus

• Unemployment

• Unsold goods and services

A government wishes to increase agricultural output. It gives farmers the tools to irrigate the farmers’ fields. Which factors of production are provided by the farmers?

• capital and enterprise

• enterprise and labour

• labour and land

• land and capital

In what type of economy, are most workers employed by the government?

• Free enterprise

• Market

• Mixed

• Planned

The diagram shows a production possibility curve (PPC) for a country. The country moved from position X to position Y on the PPC. What is the most likely reason for this change?

• Firms have decided to increase investment in technology.

• New economic resources have been discovered in the country.

• The government has brought about an increase in living standards.

• The government has encouraged long-term economic growth.

Which of the following is a macroeconomic aim of the government?

• A fall in national output

• High unemployment

• Imports exceeding exports

• Price stability

Which of the following could increase a country’s productive potential?

• An improvement in education

• A reduction in the retirement age

• Retention of worn out machinery by firms

• Migration of workers to other countries

A company produces an electric car that can be driven much further than other electric cars without needing recharging. The car does not emit the dangerous fumes that petrol cars do. The batteries that power the car are very expensive and the company is building a huge factory to produce batteries more cheaply.

Which concepts can be applied to the above statement?

• external costs and mixed economy

• private costs and economies of scale

• public sector and market failure

• average cost and mergers

which of the following is most likely to increase demand in the economy?

• A reduction in government expenditure

• A reduction in the rate of interest

• A rise in a budget surplus

• A rise in income tax

A government needs to decide how much to fine firms for causing the external costs of air pollution in industrial areas.

Which external cost would be the most difficult to measure in monetary terms?

• the expenditure on additional healthcare

• the discomfort associated with breathing

• the loss of earnings due to illness

• the medical research into respiratory disease

A government is keen to reduce employment. Which measure would not increase public expenditure?

• A cut in income tax

• A reduction in the retirement age

• A rise in the school leaving age

• A subsidy to firms to encourage their expansion