Test cope 01216010 FORM TP 2021058 MAY/UNE 2021 CARIBBEAN EXAMINATIONS COUNCIL CARIBBEAN SECONDARY EDUCATION CERTIFICATE® EXAMINATION ECONOMICS Paper 01 — General Proficiency T hour 15 minutes 18 MAY 2021 ( READ THE FOLLOWING INSTRUCTIONS CAREFULLY. 1. This test consists of 60 items. You will have 1 hour and 15 minutes to answer them, 2. In addition to this test booklet, you should have an answer sheet. 3. Each item in this test has four suggested answers lettered (A), (B),(C), (D). Read each item you are about to answer and decide which choice is best. 4. Onyouranswer sheet, find the number which corresponds to your item and shade the space having the same letter as the answer you have chosen. Look at the sample item below. Sample Item Economics may be described as a ‘social science’ Sample Answer because it deals with (A) the economy @2@O@® (B) the environment (C) human behaviour (D) production and consumption The best answer to item is “human behaviour”, so (C) has been shaded, 5. If you want to change your answer, erase it completely before you fill in your new choice. 6. When you are told to begin, turn the page and work as quickly and as carefully as you can. If you cannot answer an item, go on to the next one, You may return to that item later, DO NOT TURN THIS PAGE UNTIL YOU ARE TOLD TO DO SO. Copyright © 2020 Caribbean Examinations Council All rights reserved, 01216010/MSICSEC 2021 Agape Learning Hub - hitps:/linktr.ee/agapelearninghubos In economics, the excess of human wants over existing resources is known as (A) greed (By scarcity (©) opportunity cost (D) economic decline An ‘economy’ is BEST described as JA) asystem of production, distribution ‘and consumption (B) system where suppliers produce all the goods and services needed by consumers (©) the utilization of resources by ‘manufacturers to produce goods and maximize profits (D) a system whereby all the goods and services used by citizens of a country are provided by the government Item_3 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. Sugar o F c Bauxite Point X on the diagram above represents (A) economic growth (B) unemployed resources (©) anefficient combination (D) an unattainable combination (01216010/MS/CSEC 2021 4 ‘An outward shift in the production possibility curve can be caused by an (A) _ increase in wages (B) increase in imports (© improvement in technology (D) improvement in the standard of living Economics is classified as a social science (B) natural science (© __ physical science (D) _ business science ‘Which of the following actions is LEAST likely to be among a government's potential economic decisions regarding businesses? (49 Increasing retirement benefits (B) Passing minimum wage legislation (©) Regulating the emission of toxic waste (D) Identifying areas where businesses should be located ‘tem Z refers to the following information Which relates to a manufacturing company. Total fixed cost $10 000 Total cost 350 000 Output 100 units ‘The average variable cost is (A) $ 100 @ 8 400 (Cc) $1000 (D) $4000 GO ON TO THE NEXT PAGE.Large firms can achieve savings in U1. unit costs as a result of advertising and packaging. These kinds of economies of scale can be classified as (A) financial (B) technical marketing (D) managerial tem 9 refers to the following table which shows units of labour and total output. 2. Units of Labour] Total Output 6 372 i 455 8 496 9 331 i0 580 9. How many units of labour produce the HIGHEST average product of labour? (a) 6 1B. (yr 7 © 8 © 9 10. Which of the following pairs of activities, in a country falls under the tertiary sector? (AY Banking and tourism 14. (B) Tourism and agriculture (©) Banking and construction (D) Manufacturing and fishing 01216010/MB/CSEC 2021 An advantage of a planned economic system is that (A) consumers have a wider variety of goods (B) workers are more motivated and diligent (©) firms havea greater incentive to be efficient ®) there is usually a more equitable distribution of wealth Production can be defined as the (A) _ interaction between buyers and sellers (BY transformation of inputs into outputs (©) pricing of resources according to ‘demand (D) economic relationship between ‘output and input Which of the following items is NOT an example of a primary product? (A) Gold (8B) Banana (@ Fumiture (D) Crude oi The economic system where major economic decisions are made by private individuals and businesses is known as a (AQ free market economy (B) planned economy (©) controlled economy (D) subsistence economy GO ON TO THE NEXT PAGE Agape Leaming Hub - httpsi/inktr.ee/agapelearinghub15. 16. A normal supply curve for farm produce will slope upwards if farmers (A) pass on increased costs to customers GH) axewilling to produce more as price increases (C) increase their profit margins as price increases (D) are willing to increase supply as demand increases Which of the following market supply ‘curves shows that the price elasticity of supply is unitary? P cy) s @) () (01216010/MI/CSEC 2021 7. 18. DP {em 17 refers to the following diagram ‘which shows the price of Good X and the ‘quantity of Good X demanded. Price o Quantity ‘The movement of the demand curve of Good X from D to D, results from an increase in the (A) _ price of Good X income of consumers (C) price ofa complement (D) cost of inputs used to produce Good X lem 18 refers to the following diagram which shows the price of an item and the quantity demanded and supplied before and after the item is subsidized. S is the supply curve before a subsidy is granted. Quantity As a result of the granting of the subsidy, itis expected that the (A) price will increase supply will increase (C) supply will decrease (D) demand will decrease GO ON TO THE NEXT PAGE,19, A government reduces tax on carrots. This causes the price of carrots to fall by 50%. Quantity ‘demanded then rises by 50%. The price elasticity of demand for carrots in this case is ~ 0 ® 04 7 @) 25 Item 20 refers to the following table which shows the price of a product, the quantity demanded (QD) and quantity supplied (QS). Price] QD | QS (8) | Units) | (Units) 10 8 20 8 12 16 6 14 4 16 12 2 29. 8 20. At which of the following prices are there shortages in the market? (A S2and s4 (B) S4and $6 (© Sand $8 (D) $8and $10 21. Suppliers of manufactured goods respond faster to price changes than suppliers of agricultural goods MAINLY because (A) agricultural goods have lower demand (8) agricultural goods take longer to produce (C) manufactured goods are cheap to produce (D) manufactured goods are subject to quality control regulations 22, An increase in the price of flour is MOST likely to be followed by an immediate (A) tise in the quantity supplied of flour (BY fallin the quantity demanded of flour (C) rise in the quantity demanded for bread (D) fallin the quantity demanded for bread GO ON TO THE NEXT PAGE 0121601 0/MJ/CSEC 2021 Agape Learning Hub - https:/inktr.ee/agapeleamninghub23, 24, 28. 27. Price elasticity of supply refers to the responsiveness of the quantity supplied to a change in A) price (B) taste (©) income (D) demand ‘The supply curve will shift to the left if (A) income falls (B) costs of production fall 42) costs of production rise (D) technology is introduced Which of the following market structures has the GREATEST control over setting a Monopoly (B) Oligopoly (©) Perfect competition (D) — Monopolistie competition Which of the following features is a characteristic of a monopoly? (A) Freedom of entry and exit 4B} Many buyers and one seller (© Buying and selling of homogenous products (D) Perfect knowledge of market conditions: Which of the following is usually a ‘consequence of retrenchment in a country? (A) Reduction in erime rates (B) Increased standard of living ‘+427 A fall in the standard of living (D) Equality in income distribution 0121601 0/MICSEC 2021 28. 29. 30. jem 28 refers tothe following information about a type of market structure. Mayanka Ltdisselling good in competition with a few other companies in Country X. All the firms know each others’ prices. Before Christmas, Mayanka Ltd raised the price of its good, hoping to make higher profits. None of the other competing firms for this product raised their prices. After Christmas, Mayanka Ltd lowered the price of the same good with the hope of boosting its sales. All the other competing firms reduced the price of the same good by the same margit ‘What type of market structure does the above scenario illustrate? Br Oligopoly (B) Monopoly (©) Perfect competition (D) — Monopolistie competition A pure public good can be described as (A) excludable zero-priced (©) diminishable (D) complimentary According to economic theory, ‘second hand’ cigarette smoke is an example of a (A) merit good ®) private good (© __ postive externality (DPF vegniveexterality GO ON TO THE NEXT PAGE31. 32, 33. 34. as as ae ‘The term ‘money supply’ refers to the total stock of money in an economy at any moment (B) total asset base of the institutions in the financial sector (©) amount of money traded in the foreign exchange market (D) total amount of gold, silver and other precious metals in reserve Which ofthe following scenarios represents the formal sector? (A) Emma babysits her neighbour's children to earn pocket money. (B) Sandra formally organizes a meeting turn with eight of her neighbours, (©) The village vagrantcollects bottles from the neighbourhood and takes them to a recycling plant. (Pf The recycling plant deposits the money earned on a daily basis on its account at a local bank, Which of the following financial instruments, are issued by the central bank on behalf of the government? Treasury bills , (B) Corporate bonds (C) Equity securities (D) Shares on the stock exchange Which of the following is a function of the commercial bank? (A) Printing currencies ‘Accepting deposits (C)__ Fixing import quotas (D) Fixing currency exchange rates 0121601 0/MJICSEC 2021 35. 36. 37. ‘Item 35 refers to the following diagram, Financial sector Loanable Savings! funds for deposit investment! spending Firms! households ‘The diagram BEST describes the (A) functions of the central bank (B) flow of deposits into the financial sector (©). flow of funds into the household sector (DY role that the financial sector performs for customers ‘The MAIN objective of acredit union is to (A) encourage ‘summer’ spending (B) _ provide credit to government agencies encourage thrift among its members (D) provide investment funds for companies ‘The government of Country K has been accumulating a fiscal deficit without any surpluses for the past three years. This situation may be referred to as Country K’s (A) interest rate SPF national debt (C) foreign surplus (D) national budget GO ON TO THE NEXT PAGE ‘Agape Learning Hub - https:/inktr.ee/agapelearninghub39. 40. 4. ‘Some Caribbean countries are experiencing. a lack of industrialization, a low standard of living and a high population growth rate. Which of the following terms BEST describes the economies of these countries? (A) Advanced (B) Advancing (C) Developed (Dy Developing Which of the following are ways of calculating national income? 2. 1, Income method TI Elasticity method IIL Expenditure method (A) Land tonly {By Land Il only (©) Wand itl only (D) i, Wand I The type of unemployment which is usually experienced by workers in the hotel industry is known as (A) cyclical seasonal (©) frictional (D) structural With all other things being equal, which of the following will NOT lead to cost-push inflation when increased? (A) Price of oil (B) Price of luxuries 1 (C) Wages and salaries (§P) Total demand in the economy (01216010/MI/CSEC 2021 Item 42 refers to the following table which shows manufacturing output as a share of gross domestic product (GDP) for four countries: W, X, Y and Z. ‘Country Year ow) x [2 1 2 (%) | (%) | (%) | (%) 1990 | 28 | 40 | 29 | 29 2000 [ 23 | 34 | 26 | 28 2010 | 19 [ 31 | 21 [23 The table shows that ALL countries experienced (A) a decline in the gross domestic product (B) adeclineinthesale of manufactured products (©) an inerease in employment in the ‘manufacturing sector relative to ‘gross domestic output a decline in manufacturing output relative to gross domestic product 2) tem 43 refers to the following diagram which shows the simple circular flow of income for an economy. Firms Households ‘The nominal flow labelled Y refers to (A) savings (B)__ investment JET factor incomes (D) factors of production GO ON TO THE NEXT PAGE44, 45. Which of the following statements BEST describes a fiscal deficit? (A) Government revenues are greater than government subsidies. (B) Government revenue exceeds government borrowing. (©) Government spending equals government revenue. 4 Government spending exceeds government revenue. Which of the following BEST defines the term “tariff”? (A) Thecommontax levied on countries within a region (B) The amount of subsidies received by local exporters SA The tax levied on imports entering acountry (D) The amount of goods that can be imported into @ country A country has a comparative advantage in the production of a commodity when it (A) canproduce more ofthatcommodity than any other country (B) _ hasa larger share of the market for that commodity than any other country can produce that commodity at a lower opportunity cost than any other country (D) accounts fora greater percentage of global sales of that commodity than any other country GS 0121601 0/MJICSBC 2021 47. 48, 49, Country A is experiencing a balance of payments deficit. Which of the following measures would the government MOST likely use to reduce the deficit in the short- term? (A) Reduce the volume of exports to other countries. (B) Engage intrade with other low-cost producers of goods. (©) Increase the importation of goods from other countries. JI Impose restrictions on goods imported from other countries. ‘The amount of net exports in an economy is given as -$10M. This indicates that the value of exports is (A) zero (B) equal to imports SEF less than imports (D) greater than imports Item 49 refers to the following table which shows the current account section of Country M’s balance of payments for the year 2017. Ttem Ss), Invisible imports 50 Invisible exports, 80 Visible imports 70 Visible exports 32 ‘Whatis Country M’s balance of merchandise trade? Be -S38M (B) $20M (© -$8M ©) S48M GO ON TO THE NEXT PAGE Agape Leaming Hub - https:/inktr.ee/agapeleaminghub50, The currency of a country may appreciate 54. in value if (A) the demand for its imports rises 4%) the demand for its exports rises (©) ___ its balance of trade deficit rises (D) _ its balance of payments deficit rises 55. ‘SL. The terms of trade of Country X is 150. This is considered to be (A) neutral (B) inadequate er favourable (D) unfavourable 52. A ‘quota’ is defined as a 56. (A) tax on the goods imported (B) limit on the price charged for imports (© limit on the amount of goods exported wt limit on the amount of goods imported 53, Which ofthe following scenarios represents a bilateral agreement? De ®) © ©) Ste ‘An agreement between Jamaica and Cuba ‘An agreement between St. Vincent ‘and the Grenadines ‘An agreement between USA, Caribbean and Mexico An agreement between Trinidad ‘and each of the other Caribbean islands 0121601 0/MJ/ICSEC 2021 “The acronym FDI, in economics, means (A) _ Foreign direct income __B) Foreign direct investment (c) Fixed domestic investment (D) _ Floating domestic investment Which ofthe following organizations has adopted a single currency to facilitate trade and the movement of people among. its ‘member countries? eo BU (B) FTAA (© CSME (D) CARICOM In theory, open competition on a world scale facilitates (A)__ high levels of dependency on tourism (B) increases in trade unions’ negotiating power (©) government manipulation of market outcomes PY the development of a competitive ‘advantage based on price Which of the following is NOT a characteristic of Caribbean countries? (A) High debt burden (B) High levels of unemployment (C)__Low level of capital formation (DY Major producers of manufactured goods GO ON TO THE NEXT PAGE59. sie Which of the following factors has led to the rapid expansion in e-commerce? Yr The emergence of the Internet (B) The increase in levels of income (©) Therise in inflationary pressures (D) The formation of regional groupings Which of the following occurrences is NOT a benefit of trade liberalization to consumers? (A) A decline in the prices of goods and services. 22%) An increase in the prices of goods and services (©) Greater access to a variety of goods and services (D) reduction in the cost of providing goods and services Which of the following is MOST likely to lead to foreign direct investment to the Caribbean region? Globalization (B) Specialization (©) Trade unionism (©) Currency fluctuation END OF TEST IF YOU FINISH BEFORE TIME IS CALLED, CHECK YOUR WORK ON THIS TEST. ‘Agape Leaming Hub - httpsi/linktr.ee/agapeleaminghub 0121601 0/MIICSEC 2021CANDIDATE'S RECEIPT INSTRUCTIONS TO CANDIDATE: 1. Fillin all the information requested clearly in capital letters. restcove:|o]1]2]1]6]o]1]o suBiecr, ECONOMICS ~ Paper 01 PROFICIENCY: GENERAL REGISTRATION NUMBER: FULL NAME: — - (BLOCK LETTERS) Signature: agape learning hub oe Date : Ensure that this sli hand in this booklet. detached by the Supervisor or Invi itor and given to you when you Keep it in a safe place until you have received your results. INSTRUCTION TO SUPERVISOR/INVIGILATO) Sign the declaration below, detach this slip and hand it to the candidate as his/her receipt for this booklet collected by you. : Thereby acknowledge receipt of the candidate's booklet for the examination stated above. 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