CIE A LEVELS ECONOMICS AS LEVEL MCQ’S

1. Which of the following is a basic economic question?

a) How to maximize profits?

b) What to produce?

c) How to reduce inflation?

d) How to balance the budget?

2. Which of the following is NOT a characteristic of a command economy?

a) Central planning

b) Private ownership of resources

c) Government control of prices

d) Limited consumer choice

3. A decrease in the supply of a good will lead to a(n):

a) Increase in price and increase in quantity demanded.

b) Increase in price and decrease in quantity demanded.

c) Decrease in price and increase in quantity demanded.

d) Decrease in price and decrease in quantity demanded.

4. If the demand for a good is perfectly inelastic, then:

a) Quantity demanded is very sensitive to price changes.

b) Quantity demanded is not sensitive to price changes.

c) Quantity demanded increases with a price increase.

d) Quantity demanded decreases with a price increase.

5. Income elasticity of demand measures:

a) The responsiveness of quantity demanded to a change in price.

b) The responsiveness of quantity1 demanded to a change in income.

c) The responsiveness of quantity2 demanded of one good to a change in the price of another good.

d) The responsiveness of quantity supplied to a change in price.

6. Which of the following is an example of a positive externality?

a) Pollution from a factory

b) Education

c) Noise from an airport

7. A minimum wage set above the equilibrium wage will lead to:

a) Increased employment.

b) Unemployment.

c) Increased demand for labor.

d) Decreased supply of labor.

8. Which of the following is a potential drawback of government intervention in markets?

a) Increased efficiency.

b) Reduced consumer surplus.

c) Reduced producer surplus.

d) Creation of black markets.

9. Which of the following is a function of the money market?

a) To trade stocks and shares.

b) To facilitate short-term lending and borrowing.

c) To regulate international trade.

d) To manage government debt.

10. Which of the following is a potential consequence of deflation?

a) Increased consumer spending.

b) Increased investment.

c) Debt deflation.

d) Increased economic growth.

11. Which of the following is a potential cause of unemployment?

a) Increased aggregate demand.

b) Technological change.

c) Increased inflation.

d) Increased government spending.

12. Which of the following is a potential benefit of contractionary fiscal policy?

a) Increased economic growth.

b) Reduced inflation.

c) Increased unemployment.

d) Increased government debt.

a) Increased productivity.

b) Time lags and uncertainty.

c) Reduced inflation.

d) Increased government revenue.

14. Which of the following is a characteristic of a monopolistic competitive firm?

a) It is a price taker.

b) It produces a homogeneous product.

c) It faces barriers to entry.

d) It engages in non-price competition.

15. Which of the following is a potential benefit of a monopoly?

a) Increased consumer choice.

b) Economies of scale.

c) Reduced prices for consumers.

d) Increased innovation.

16. Structural unemployment is caused by:

a) A decline in aggregate demand.

b) A mismatch of skills and job opportunities.

c) Seasonal variations in demand.

d) Workers moving between jobs.

17. Which of the following is a component of the financial account?

a) Trade in goods.

b) Trade in services.

c) Foreign direct investment.

d) Primary income.

18. A managed float exchange rate system is characterized by:

a) Exchange rates fixed by the government.

b) Exchange rates determined by market forces.

c) Government intervention to influence exchange rates.

d) No government intervention.

19. Which of the following is a potential benefit of a current account surplus?

b) Increased domestic investment.

c) Depreciation of the domestic currency.

d) Reduced foreign reserves.

20. Which of the following is a potential benefit of a customs union?

a) Increased trade barriers between member countries.

b) Increased trade creation.

c) Reduced trade diversion.

d) Increased protection for domestic industries.

21. Which of the following is a potential consequence of a quota?

a) Increased government revenue.

b) Increased consumer choice.

c) Higher prices for consumers.

d) Increased efficiency.

22. Which of the following is a potential benefit of a free trade area?

a) Increased protection for domestic industries.

b) Increased trade between member countries.

c) Reduced competition.

d) Increased government revenue from tariffs.

23. Which of the following is a potential consequence of income inequality?

a) Increased social stability.

b) Reduced poverty.

c) Political instability.

d) Increased economic growth.

24. Which of the following is a potential benefit of foreign aid?

a) Increased dependency.

b) Improved infrastructure.

c) Increased corruption.

d) Reduced economic growth.

25. Which of the following is a characteristic of a developed economy?

a) High levels of poverty.

c) High dependence on primary sector activities.

d) Low levels of technological advancement.

26. Which of the following is a potential obstacle to economic development?

a) High levels of savings.

b) High levels of investment.

c) Corruption.

d) Strong legal institutions.

27. Which of the following is a potential consequence of unsustainable development?

a) Increased resource depletion.

b) Increased living standards.

c) Increased economic growth.

d) Increased innovation.

28. Which of the following is a potential drawback of multinational corporations (MNCs) in

a) Increased access to technology.

b) Increased competition for domestic firms.

c) Exploitation of labor.

d) Increased capital inflow.

29. Which of the following is a potential consequence of deregulation?

a) Increased government control.

b) Increased efficiency.

c) Reduced competition.

d) Increased prices for consumers.

30. Which of the following is a potential benefit of globalization?

a) Increased income inequality.

b) Increased cultural homogenization.

c) Increased access to markets.

d) Increased environmental damage.