WHALES AS Economics Prep 2

An economist knows the current point at which an economy is operating within its production possibility curve. What can the economist judge from this knowledge about the economy? 

A its degree of self-sufficiency 

B its international competitiveness 

C its level of output of two goods 

D its rate of economic growth 

• A

• B

• C

• D

Abdul earns $50 000 a year working as a teacher. He owns a house valued at $250000 and has shares worth $20 000. He has a current bank account with a balance of $1500 and $200 in his wallet. In his house there is a jar containing $100, which he has saved to spend on his forthcoming holiday. What is the value of Abdul’s liquid assets? 

A $200 

B $300 

C $1800 

D $21 500

• A

• B

• C

• D

Which type of good is healthcare? 

A demerit 

B free 

C merit 

D public

• A

• B

• C

• D

Which is a normative statement? 

A If interest rates fall consumption is likely to increase. 

B If interest rates fall consumption will definitely increase. 

C Interest rates and consumption are usually inversely related. 

D The rate of interest should be reduced.

• A

• B

• C

• D

In a free market there is a surplus of a good. Which change would cause the market to come to an equilibrium? 

A a decrease in demand 

B a fall in price 

C a government minimum price 

D an increase in supply   

• A

• B

• C

• D

What is most likely to increase the quantity of houses supplied? 

A a policy to help house buyers on modest incomes 

B a restriction on the level of rent that can be charged 

C a rise in the tax on materials used for building houses 

D the removal of a subsidy to house builders

• A

• B

• C

• D

 The diagram shows two demand curves and two supply curves for a product. Which equilibrium point is most likely to represent the long-run equilibrium in the market?

• A

• B

• C

• D

The diagram shows an economy’s production possibility curve.
It has been employing its resources in the ratio of 80% consumer goods production and 20% capital goods production.

What will be the result if it decides to double its output of capital goods? 

A a gain of 20 capital goods 

B a gain of 40 capital goods 

C a loss of 200 consumer goods 

D a loss of 600 consumer goods 

• A

• B

• C

• D

Which comment relating to the introduction of charges for previously free medical treatment is normative?

 A Fewer people will be able to afford treatment. 

B It will be unfair on lower income groups. 

C Richer citizens will pay the higher charges. 

D Workers’ health and productivity will fall.

• A

• B

• C

• D

The demand for a product is affected by a number of influences. What will cause a movement along its demand curve? 

A a rise in consumers’ income 

B a rise in the popularity of the product 

C a rise in the population 

D a rise in the price of the product

• A

• B

• C

• D