2N FM

Sanjay is a risk taker and sets up a restaurant in Chennai. Sanjay works for the business as a chef. He leases the restaurant building from Raghav and employs him to serve the customers. Which income is earned by Sanjay and Raghav?

• A

• B

• C

• D

A government reduces social security spending by $10 bn in order to increase defence spending by $10 bn. What is this an example of?

• expansionary fiscal policy

• market forces

• price stability

• reallocation of resources

The table shows the maximum production possibilities for goods and services for a country. The country originally produced only goods but now produces 20 million units of services and continues to operate at maximum production possibility. What is the opportunity cost for this country?

• 20 million units of goods

• 100 million units of goods

• 20 million units of services

• zero

What is included in macroeconomics?

• the causes of a change in the price of one product

• the causes of a market failure

• the causes of determinants of price elasticities of supply

• the causes of economic growth

What is an advantage of a market economy in the allocation of resources?

• It ensures that all consumers are willing to pay the same price.

• It fixes prices based on costs of production.

• It guarantees suppliers will make a profit.

• It indicates the relative demand for goods and services.

Which characteristics of a product will cause market failure?

• Information about the product is known equally by consumers and producers.

• The consumption of the product has no external benefits.

• The product is non-rival and non-excludable.

• The production of the product has no external costs.

The diagram shows the market equilibrium E for product X with a downward sloping demand curve and an upward sloping supply curve. The price of a substitute good falls. Into which area of the diagram would the market equilibrium for product X move?

• Area A

• Area B

• Area C

• Area D

The table shows the supply schedule for a good. What is the price elasticity of supply when price increases from $1 to $3?

• 0.5

• 0.66

• 1.5

• 2.0

Which function does a central bank provide for the general public?

• accepting deposits

• issuing banknotes

• making loans

• providing overdrafts

What might cause a rise in wages?

• a more elastic supply of labour

• an increase in the size of the labour force

• improved fringe benefits for workers

• the introduction of a national minimum wage