Chapter : 01 Utility and Indifference Curve

Question
1 2024 March P32 Q01 2
2
1 A person buys two pairs of socks.
1 A person buys two pairs of socks.
What does the purchase of the second pair of socks lead to?
What does the purchase of the second pair of socks lead to?
A a decrease in marginal productivity
A a decrease in marginal productivity
B a decrease in marginal utility
B a decrease in marginal utility
C an increase in marginal productivity
C an increase in marginal productivity
D an increase in marginal utility
D an increase in marginal utility
22 2024
What March
does anP32 Q02 curve show?
indifference
2 What does an indifference curve show?
A the amount of two products achievable with given income and prices
A the amount of two products achievable with given income and prices
B the different combinations of two goods that give a consumer equal utility
B the different combinations of two goods that give a consumer equal utility
C the income available to buy the two goods
C the income available to buy the two goods
D the rate at which marginal utility changes as consumption changes
D the rate at which marginal utility changes as consumption changes

3 The table shows the total amount consumers are willing to pay for different quantities of good X
3 The
and table shows
the total the total
external amount
benefits that consumers
arise from are willing to pay for different quantities of good X
2 the consumption of X.
3 2024the
and Jun P31
total Q1 benefits that arise from the consumption of X.
external
1 Which statement about the concept
quantity of of utilityconsumers’
is correct? total external
quantity
good Xof consumers’
willingness to pay total external
benefits
A Diminishing marginal utility means that producers become less efficient the more they
goodunits)
(000 X willingness to pay
($000) benefits
($000)
produce.
(000 units) ($000) ($000)
1 100 20
B If marginal utility is above average utility, average utility must be rising.
1 100 20
C The equi-marginal principle 2 says that a consumer
180 gets equal total 38 satisfaction from each item
purchased. 2 180 38
3 240 54
D Total utility continually rises
3 as the level of 240
consumption rises. 54
4 280 68
4 280 68
2 The diagram shows indifference5 curves I1, I2 and 300
a budget line T. 80
5 300 80
100 social benefit when 5000 units are consumed?
What is the value of the marginal
What is the value of the marginal 90 social benefit when 5000 units are consumed?
A $12 000 Bunits
$32 80
000 C $80 000 D $380 000
A $12 000 B of $32
X 000
70
C $80 000 D $380 000
60
50
40
30 I1
20
I2
10
T
0
0 5 10 15 20 25 30 35 40 45 50
units of Y

Which combination of X and Y gives the consumer maximum satisfaction?

units of X units of Y
 C The equi-marginal principle says that a consumer gets equal total satisfaction from each item
purchased.
D Total utility continually rises as the level of consumption rises.

4 2024 Jun P31 Q2

2 The diagram shows indifference curves I1, I2 and a budget line T.

100
90
units
80
of X
70
60
50
40
30 I1
20
I2
10
T
0
0 5 10 15 20 25 30 35 40 45 50
units of Y

Which combination of X and Y gives the consumer maximum satisfaction?

units of X units of Y

A 100 0
B 70 15
C 50 25
D 20 40

3 A medical team provides vaccinations for children to prevent an outbreak of an infectious

disease.

Why would this be described as a positive externality?

A Additional benefit might be gained as the disease no longer spreads.

B Any kind of medical help will improve the condition of the children.
C No action would be taken unless the medical team intervened.
D The social benefits of vaccination are less than the social costs.

© UCLES 2024 9708/31/M/J/24

 2
5 2024 Jun P32 Q1
1 The table shows the total utility gained by a consumer from the consumption of water.

quantity
2 total
consumed
utility
1 The table shows the total utility gained by/ bottles
a consumer from the consumption of water.

0 0
quantity
total
consumed 1 utility 30
/ bottles
2 40
0 0
3 48
1 30
4 54
2 40
3 5 48 58

4
What can be concluded from this table? 54
5 58
A Marginal utility increases as consumption increases.
WhatThe
B can consumer
be concluded from switch
cannot this table?
expenditure to another product to increase total utility.
A
C Marginal utility increases
The marginal as consumption
utility of the 3rd unit is 8.increases.
B The consumer cannot switch expenditure to another product to increase total utility.
D The marginal utility of the 5th unit is 2.
C The marginal utility of the 3rd unit is 8.

2 D consumer
A The marginal
has utility
$100oftothe 5th unit
spend is 2. products, X and Y.
on two
6 2024 Jun P32 Q2
2 The budgethas
A consumer line$100
shows the on
to spend different possible
two products, combinations
X and Y. of products X and Y that can be
purchased when all the consumer’s income is spent.
The budget line shows the different possible combinations of products X and Y that can be
purchased when all the consumer’s income is spent.
10
product X
10
product X

0
0 20
0
0 20 Y
product
product Y
If the price of product Y increases to $10, what will be the maximum number of units of product X
and
If theproduct
price of Y that the
product consumertocan
Y increases $10,now
whatpurchase?
will be the maximum number of units of product X
and product Y that the consumer can now purchase?
product X product Y
product X product Y
A 5 10
A 5 10
B
B 5
5 20
20
C
C 10
10 1010
D
D 20
20 1010

©© UCLES
UCLES 2024
2024 9708/32/M/J/24
9708/32/M/J/24
 2
7 2024 Jun P33 Q1
1 2
Which statement about the concept of utility is correct?

1 A Diminishing
Which statementmarginal utility
about the means
concept of that
utilityproducers become less efficient the more they
is correct?
produce.
A Diminishing marginal utility means that producers become less efficient the more they
B If marginal utility is above average utility, average utility must be rising.
produce.
C The equi-marginal principle says that a consumer gets equal total satisfaction from each item
B purchased.
If marginal utility is above average utility, average utility must be rising.
C
D The equi-marginal
Total utility continuallyprinciple
rises as says thatofaconsumption
the level consumer gets
rises.equal total satisfaction from each item
purchased.

2 D diagram
The Total utility
shows continually rises
indifference as the
curves I1, Ilevel of consumption rises.
2 and a budget line T.

8 2024 Jun P33 Q2 100

2 90 curves I1, I2 and a budget line T.
The diagram shows indifference
units
80
of X
70100
60 90
units
80
of X 50
40 70
30 60 I1
20 50
I2
10 40
T
0
30 I1
0 5 10 15 20 25 30 35 40 45 50
20
units of Y I2
10
T
Which combination of X and Y gives 0the consumer maximum satisfaction?
0 5 10 15 20 25 30 35 40 45 50
units of X units of Y units of Y
A 100 0
Which combination of X and Y gives the consumer maximum satisfaction?
B 70 15
C units
50 of X units
25 of Y
D
A 20
100 40 0

B 70 15
3 A medical team provides vaccinations for children to prevent an outbreak of an infectious
C
disease. 50 25
D 20 40
Why would this be described as a positive externality?

A Additional benefit might be gained as the disease no longer spreads.

3 A medical team provides vaccinations for children to prevent an outbreak of an infectious
B Any kind of medical help will improve the condition of the children.
disease.
C No action would be taken unless the medical team intervened.
Why would this be described as a positive externality?
D The social benefits of vaccination are less than the social costs.
A Additional benefit might be gained as the disease no longer spreads.
B Any kind of medical help will improve the condition of the children.
C 2024
© UCLES No action would be taken unless 9708/33/M/J/24
the medical team intervened.
D The social benefits of vaccination are less than the social costs.
 E2
E1
2
9 2023 March P32 Q1
I2
1 Utility theory is based on the assumption of the ‘rational consumer’.
I1
What is necessary to act as a ‘rational consumer’?
O G H
choice is good X
access to
addictive independent
complete
What caninformation behaviour
be deduced from the of other
diagram about the price change, the substitution effect and the
income effect? consumers

A no yes
substitution
yes
price change income effect
B yes effect
no no
A
C price of
yesX falls positive
yes positive
no
B
D price of
yesX falls positive
no negative
yes
C price of Y rises negative positive

2 D price
The price
ofofgood
Y rises negative
S is $6 and negative
the price of good T is $8. A consumer’s marginal utility for each
10 good
2023 isMarch
shown.P32 Q4
4 What is likely to help create dynamic efficiency?
marginal utility marginal utility
units
A of competition
Entry barriers are reduced to increase good S in theofmarket.
good T
B Firms are legally bound to1produce where
36price equals marginal
32 cost.
C Taxes on profits are raised
2 to encourage24
firms to produce where
22 price equals average cost.
D Taxes on retained profits are reduced to encourage investment in new technology.
3 18 20
4 9 18
5 04 9
11 2023 March P32 Q5
5 At which level of output is sales maximisation achieved consistent with earning normal profit?
If this consumer wants to maximise total utility, which combination of goods would they consume?

good S good T MC
cost or
A 1 price 1 AC
$
B 2 1
C 3 4
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D 5 5
MR

AR
O A BC D
quantity

6 What is achieved in monopolistic competition in the long run?

allocative supernormal
efficiency profit

A no no
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B no yes
 AR
O A BC D
quantity
12 2023 March P32 Q6

6 What is achieved in monopolistic competition in the long run?

allocative supernormal
efficiency profit

A no no
B no yes
C yes no
D yes yes

7 The world’s largest pharmaceutical companies developed and distributed an effective vaccine to
2
13 combat a dangerous
2023 Jun P31 Q1 virus.
1 What can
What doesbethe marginal with
associated utilitythis
diagram show?
vaccine programme?

A demerit good and negative production externality

B utility and positive consumption externality
imperfect competition
C perfect competition and negative consumption externality
D public good and negative production externality

O
X Y Z quantity

marginal utility

A Total utility becomes negative if the quantity consumed increases from Y to Z.

B Total utility decreases if the quantity consumed increases from X to Y.
C Total utility decreases if the quantity consumed increases from Y to Z.
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D Total utility is maximised at X.

2 The initial allocation of goods between three consumers is shown.

consumer 1 consumer 2 consumer 3 total

2 5 10 17

Which row shows a Pareto improvement in the allocation of goods between consumers?

consumer 1 consumer 2 consumer 3 total

A 2 5 11 18
B 4 5 9 18
C 4 4 10 18
D 6 6 6 18

3 Which assumption in relation to an indifference theory diagram is not correct?

 B Total utility decreases if the quantity consumed increases from X to Y.
A Total utility becomes negative if the quantity consumed increases from Y to Z.
C Total utility decreases if the quantity consumed increases from Y to Z.
B Total utility decreases if the quantity consumed increases from X to Y.
D Total utility is maximised at X.
C Total utility decreases if the quantity consumed increases from Y to Z.
14 2023 Jun P31 Q2
2 D
The Total
initial utility is maximised
allocation of goods at X.
between three consumers is shown.

2 consumer
The initial allocation 1 between
of goods consumer 2 consumers
three consumer 3
is shown. total

2 5 10 17
consumer 1 consumer 2 consumer 3 total
Which row shows a Pareto improvement in the allocation of goods between consumers?
2 5 10 17

consumer
Which row shows a1 Pareto
consumer 2 consumer
improvement 3
in the allocation oftotal
goods between consumers?
A 2 5 11 18
consumer 1 consumer 2 consumer 3 total
B 4 5 9 18
A 2 5 11 18
C 4 4 10 18
B 4 5 9 18
D 6 6 6 18
C 4 4 10 18
D 6 6 6 18
3 Which assumption in relation to an indifference theory diagram is not correct?
15 2023 Jun P31 Q3
A The consumer’s income may change.
3 Which assumption in relation to an indifference theory diagram is not correct?
B The consumer may change their satisfaction-maximising objective.
A The consumer’s income may change.
C The consumers may change their tastes and preferences.
B The consumer may change their satisfaction-maximising objective.
D The relative prices of products may change.
C The consumers may change their tastes and preferences.
D The relative prices of products may change.

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 B the existence of dynamic efficiency
C the existence of positive externalities
D the existence of social benefits

16 2023 Jun P32 Q2

2 The diagram shows an individual’s indifference curve, I1, for apples and pears.

apples

19 Y

X
12
I1

0
0 2 4
pears

What can be concluded from the movement from point X to point Y on this curve?

A The individual can afford more apples than pears.

B The individual has not changed their total utility.
C The individual prefers apples to pears.
D The individual has gained more utility by moving from point X to point Y.

3 What is not necessary for successful price discrimination?

2
17 2023 Jun P33 Q1
A ability to separate markets
1 What does the marginal utility diagram show?
B different price elasticities of demand in each market
C monopoly power
utility
D price leadership

O
X Y Z quantity

marginal utility

A Total utility becomes negative if the quantity consumed increases from Y to Z.

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B Total utility decreases if the quantity consumed increases from X to Y.
C Total utility decreases if the quantity consumed increases from Y to Z.
D Total utility is maximised at X.

2 The initial allocation of goods between three consumers is shown.

consumer 1 consumer 2 consumer 3 total

2 5 10 17

Which row shows a Pareto improvement in the allocation of goods between consumers?
 B 4 5 9 18
C 4 4 10 18
D 6 6 6 18

18 2023 Jun P33 Q3

3 Which assumption in relation to an indifference theory diagram is not correct?

A The consumer’s income may change.

B The consumer may change their satisfaction-maximising objective.
C The consumers may change their tastes and preferences.
D The relative prices of products may change.

2
19 2023 Nov P31 Q1
1 Economists normally assume that the marginal utility from consuming additional goods is positive
and diminishing. 2

1 UCLES
© Economists
What2023 normally
is the effect assume
on total that the of
satisfaction marginal utilityextra
fromunits
9708/33/M/J/23
consuming consuming additional
of the good? goods is positive
and diminishing.
A Total satisfaction falls at a decreasing rate.
What is the effect on total satisfaction of consuming extra units of the good?
B Total satisfaction falls at an increasing rate.
A Total satisfaction falls at a decreasing rate.
C Total satisfaction rises at a decreasing rate.
B Total satisfaction falls at an increasing rate.
D Total satisfaction rises at an increasing rate.
C Total satisfaction rises at a decreasing rate.

2 D Total line
A budget satisfaction rises at
(b–b) shows theancombinations
increasing rate.
of two goods, X and Y, that a consumer can obtain
within a fixed
2023 Nov P31 Q2 income of $60 per week, when the price of Y = $1 and X = $2.
20
2 A budget line (b–b) shows the combinations of two goods, X and Y, that a consumer can obtain
60 bwhen the price of Y = $1 and X = $2.
within a fixed income of $60 per week,
good Y
60 b
good Y

b1 b2 b b3 b4
0
0 10 20 30 45 60
b1 b2 b good
b3 X b4
0
0 10 20 30 45 60
If the price of X rises to $3, what will be the new budget line?
good X
A b–b1 B b–b2 C b–b3 D b–b4
If the price of X rises to $3, what will be the new budget line?

3 A b–b
Which market
1 B b–b
structures are 2contestable?C b–b3 D b–b4

3 perfect
Which market structures aremonopolistic
contestable? pure monopoly
competition competition

A perfect
no monopolistic
no yes
pure monopoly
competition competition
B no yes yes
A no no yes
C yes no no
B no yes yes
D yes yes no
C yes no no
D yes yes no
21 2023 Nov P32 Q1 2

1 The diagram shows the total utility of consumers Y and Z when each consumes bars of
chocolate. 2

1 The diagram shows the total utility of consumers Y and Zconsumer

when each
Y consumes bars of
70
chocolate. 65
total
55
utility 70 consumer Y
45
65
40
total
55 consumer Z
utility
45
20
40
consumer Z
0
20
0 1 2 3 4
number of bars
0
0 marginal
What is the difference in the 1 utility
2 of consumers
3 4 Y and Z when each consumes four
bars of chocolate? number of bars

A
What0 is the difference
B in5 the marginal utility
C 10 D and
of consumers Y 30Z when each consumes four
bars of chocolate?
2 When
A 0 choosing to buyB 5two products, the
C satisfaction
10 gained
D by30 the consumption of different
22 combinations of
2023 Nov P32 Q2 these two products can be represented by an indifference curve.

2 Which
When statement
choosing toabout
buysuch
two an indifference
products, curve diagram
the satisfaction is correct?
gained by the consumption of different
combinations of these two products can be represented by an indifference curve.
A The range of indifference curves shows the combination of products a consumer can
purchase
Which withabout
statement a given income.
such an indifference curve diagram is correct?
B If an indifference curve is a downward-sloping straight line, the principle of diminishing
A The range of indifference curves shows the combination of products a consumer can
marginal utility must be operating.
purchase with a given income.
C Indifference curves never cross, because this means that a consumer would be indifferent
B If an indifference curve is a downward-sloping straight line, the principle of diminishing
between combinations of two goods, even when one combination provides more of each
marginal utility must be operating.
good.
C Indifference curves never cross, because this means that a consumer would be indifferent
D The gap between indifference curves is always constant.
between combinations of two goods, even when one combination provides more of each
good.
3 Negative
D externalities,
The gap such as air curves
between indifference pollution
is due to car
always emissions, can cause damage to people’s
constant.
health in cities.

3 Which response
Negative is mostsuch
externalities, likelyastoair
occur from due
pollution this situation?
to car emissions, can cause damage to people’s
health in cities.
A car manufacturers will automatically bear any external costs
Which
B response
market is will
failure most belikely to occur
resolved whenfrom this costs
private situation?
equal external costs
A
C car
mostmanufacturers will automatically
people will decide to use busesbear any
rather external
than cars costs
B
D market failure
some form will be resolved
of government when private
intervention costs equal
to improve external
economic costs
efficiency
C most people will decide to use buses rather than cars
D some form of government intervention to improve economic efficiency

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© UCLES 2023 9708/32/O/N/23

23 2023 Nov P33 Q1 2

1 The diagram shows the marginal utility (MU) from

2 the consumption of quantities of good X.

1 The diagram shows the marginal 10 utility (MU) from the consumption of quantities of good X.
marginal
utility 8
10
marginal 6
utility 8
4 MU
6
2
4 MU
0
2 0 1 2 3 4 5 6
0 quantity of X
0 1 2 3 4 5 6
What happens to the total utility as consumption of X rises
quantity of X units?
from 1 to 6

A It falls continuously.
What happens to the total utility as consumption of X rises from 1 to 6 units?
B It falls and then rises.
A It falls continuously.
C It rises continuously.
B It falls and then rises.
D It rises and then falls.
C It rises continuously.
D It rises and then falls.
2 An indifference curve is typically drawn with a convex shape.
24 2023 Nov P33 Q2
2 Which economiccurve
An indifference concept explains
is typically the reason
drawn with a for this convex
convex shape. shape?
A allocative efficiency
Which economic concept explains the reason for this convex shape?
B diminishing marginal rate of substitution
A allocative efficiency
C Pareto optimality
B diminishing marginal rate of substitution
D the equi-marginal principle
C Pareto optimality
D the equi-marginal principle
3 What is most likely to increase the principal–agent problem?

A ensuring the actions of agents are known by the managers

3 What is most likely to increase the principal–agent problem?
5
B linking
25 2023 the rewards
Nov P33 Q10 of managers with the profitability of the firm
A ensuring the actions of agents are known by the managers
10 C
Whatremoving
is consistent
fromwith a movement
managers towards Pareto
the opportunity optimality?
to hold shares
B linking the rewards of managers with the profitability of the firm
A when
D negative
preparing externality
contracts that lowers
compelthe utility of
agents to an individual
work in the interest of the principal
C removing from managers the opportunity to hold shares
B when consumption of a good is non-rival
D preparing contracts that compel agents to work in the interest of the principal
C when reallocation of resources can make someone better off without making any other
person worse off
D when trade takes place to make one nation better off at the expense of its trading partner

11 The diagram shows the short-run supply curve and long-run supply curve of labour.

short run
wage
rate
long run
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 5
B It will remain convex to the origin of the diagram. AC2
7 The diagram shows the short-run average cost, SRAC, and long-run average cost, LRAC, curves
C It can intersect other indifference curves at any point.
for a firm producing computers. It usually produces 2000 computers per week. An increase in
demand
D requires
The lower the firm to produce
the indifference curve, the3000 computers
greater per week.
the satisfaction attainable.
26 2024 Nov P31 Q3 AR2 AR1 AR3

3
cost O
A Belgian traffic study concluded that there would be significant
quantity benefits if 10% of car drivers
switched to using motorcycles during peak traffic times.
$
What is the position of the average cost curveSRAC
and the
1 average revenue curve after the takeover?
Which result would be considered a cost of this change? LRAC
100
A average
reduced average
travel times
80
cost revenue SRAC2 SRAC3
B reduced car emissions
A AC1 AR3
C reduced safety standards
40
B AC2 AR1
D reduced 30
traffic queues
C AC2 AR3
D AC30 AR2
2000 3000 4000
27 2024 Nov P31 Q6 output
6 LMN Ltd operates as a relatively small, family-owned producer in an industry dominated by a few
How much
large willproduct
firms. Its the average costs
is unique change
so the in are
owners the confident
long run ifthey
thewill
firmbemakes
able toasell
permanent
enough todecision
to produce
provide them3000
with computers per week?
sufficient revenue to allow a minimum acceptable level of performance for the
firm.
A $20 B $40 C $50 D $60
Other than survival, what is the most likely objective of LMN Ltd?

8 A profit
What is amaximising
characteristic of monopolistic competition?
B profit satisficing
A no barriers to entry
C revenue maximising
B identical products
D sales maximising
© UCLES 2024 9708/31/O/N/24
C price takers
D small number of buyers and sellers
28 2024 Nov P31 Q9
9 What is likely to have its cause in the separation of ownership and control in a firm?

A contestable markets
B diseconomies of scale
© UCLES 2024 9708/31/O/N/24

C principal-agent problem
D prisoner’s dilemma

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 In reality, why is this not the case with some firms in contestable markets?

A Firms cannot recover all fixed costs if they cease operations.

B Firms in the industry all operate at the equilibrium level of output.
6
29 2024 Nov P31 Q10
C Large firms do not have to increase capital to grow.
10 Firms X and Y merge in a horizontal integration.
D Multinational companies always benefit from economies of scale.
What must be true about the industry and the stage of production in which X and Y operate?

7 Which points show where stage

each maximisation
of objective occurs?
industry
production

A different different MC
cost or
B different price same
$ AC
C same different J
D same same
K
H
AR
11 Which government policy would not be classified as regulation?
4
30 2024 Nov P33 Q6 MR
A a ban on cocaine consumption
6 In a perfectly contestable market, entries and exits are cost-free.
O
B compulsory wearing of seatbelts in cars L
quantity
In reality, why is this not the case with some firms in contestable markets?
C licences for the extraction of water from rivers
DA taxation
Firms cannot recover all fixed
of cigarettes
revenue costs if they cease operations.
sales
B Firmsmaximisation
in the industry allmaximisation
operate at the equilibrium level of output.
12 ACgovernment removes
A Large firmsJ do not ahave
subsidy on
L a rural
to increase school
capital to bus service.
grow.
D B Multinational
What L of
is the effect companies K benefit
this on thealways
market for thisfrom economies of scale.
bus service?

A CDeadweightJ loss decreases. K

7 Which points show where each maximisation objective occurs?
B DPrivate marginal
L H
costs increase.
31 2024 Nov P33 Q8
C Private marginal benefit decreases.
MC
8 What is an external economy
cost or of scale?
D Social marginal costs decrease.
price
A cheaper costs from purchasing large quantities of inputs
$ AC
B decreased interest rates on borrowed funds J

C increased labour productivity K

H
D relevant training facilities at a local college AR

MR
O L
quantity

revenue sales
maximisation maximisation
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A J L
B L K
C J K
D L H
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8 What is an external economy of scale?

 5
32 2024 Nov P33 Q9
9 A group of producers enter into an agreement to restrict supply or fix the price of a good.

What does this describe?

A a cartel
B a conglomerate merger
C economies of scale
D horizontal integration

10 What is meant by a four-firm concentration ratio of 25%?

A The largest four firms’ market share totals 25%.

B The largest four firms have a market share of 25% each.
C There are only four firms in the industry.
D The largest firm has a 25% market share.

11 A government decides to use price controls to achieve allocative efficiency in a monopoly market.

Which price would need to be set to achieve allocative efficiency?

MC
price

AC
A
B
C
D

MR D = AR

O Q1 Q2 Q3 Q4
quantity

© UCLES 2024 9708/33/O/N/24 [Turn over

Answers:
1B

2B

3B

4C

5C

6C

7B

8C

9D

10D

11D

12A

13C

14A

15B

16B

17C

18B

19C

20B

21C

22C

23D

24B

25C

26C

27B

28C

29D

30A
31D

32A
 Chapter
Chapter : 02 Resource
: 02 Production, Allocation
Costs and Growth
3
1 2024 March P32 Q04
4 The statement and the table provide information about a production function.
3
The production function represents the amount of ......1...... obtainable from each
4 combination
The statement and theoftable
......2......
provideandinformation
can be used to give
about information
a production about ......3...... .
function.
Which words
The correctly
productioncomplete
function gaps 1, 2 and 3?
represents the amount of ......1...... obtainable from each
combination of ......2...... and can be used to give information about ......3...... .
1 2 3
Which words correctly complete gaps 1, 2 and 3?
A demand labour returns to scale
B 1
demand 2
labour Text 3 profit
normal
A
C demand
output labour
inputs returns to scale
B
D demand
output labour
inputs normal profit
supernormal profit
C output inputs returns to scale
5 Two
D firms selling the same type of inputs
output product find it more efficientprofit
supernormal to merge.
2 2024 combination
Which March P32 Q05 how the merged firm’s average costs of production and demand
describes
5 curve are expected to change?
Two firms selling the same type of product find it more efficient to merge.

Which combination describes

average costs how curve
demand the merged firm’s average costs of production and demand
curve are expected to change?
A fall more elastic
B average
fall costs demand curve
more inelastic
A
C fall
rise more elastic
B
D fall
rise more inelastic
C rise more elastic
6 The
D diagram shows
rise the costs andinelastic
more revenues of a firm operating in an imperfect market.

MC
6 The diagram shows the costs and revenues of a firm operating in an imperfect market.
cost,
6
3 2024 March P32revenue
Q15 AC
MC
15 The diagram shows acost,
perfectly competitive firm’s average product of labour (APL) and marginal
product of labour (MPL) curves.
revenue
AC

wage ($), MR
average AR
product, O W XYZ
marginal MR
output
product AR
(units) W O
W X Y Z level of output. It wishes to produce at the
The firm is currently producing at the profit maximising
sales maximising level of output. output
APL
What would
The firm be the change
is currently in itsatoutput?
producing MPL It wishes to produce at the
the profit maximising level of output.
sales maximising level of output.
A OW to OX B OW to OY C OW to OZ D OY to OZ
What would be the change O in its N output? N N N
1 2 3 4

A 2024
© UCLES OW to OX B OW to OY C OW to OZ
9708/32/F/M/24
workers
D OYemployed
to OZ [Turn over

How many workers will the firm employ at a wage of W?

© UCLES 2024
A ON1 B ON2 9708/32/F/M/24
C ON3 D ON4 [Turn over

16 Which change is likely to result in a decrease in the demand for money?

A a decrease in the use of credit cards by consumers

B a switch from monthly to weekly payments of wages
 B no change increases falls no change
C
A no change
falls increases
falls falls
no change falls
no change
D
B increases
no change increases no change
falls falls
no change
4 2024
C Jun
noP32 Q4
change increases falls falls
4 AD
firm increases its output, starting
increases from zero.
increases no change falls

How will this affect its short-run marginal cost (MC), average total cost (ATC) and average fixed
4 cost
A firm(AFC)?
increases its output, starting from zero.

How will thisMC ATCmarginal costAFC

affect its short-run (MC), average total cost (ATC) and average fixed
cost (AFC)?
A fall then rise fall then rise fall
B MC rise
fall then rise ATC
then fall AFC
rise
C
A rise thenrise
fall then fall fall then rise fall
D
B rise thenrise
fall then fall rise then fall rise
C rise then fall fall then rise fall
5 Assuming
D the
rise absence
then fall ofrise
price controls,
then fall in which
rise industry is an individual firm least likely to be
able to alter the price at which it sells its product?
5 2024 Jun P32 Q5
A air transportation
5 Assuming the absence of price controls, in which industry is an individual firm least likely to be
able hairdressing
B to alter the price at which it sells its product?

A
C air transportation
steel production
B
D hairdressing
wheat farming
C steel production
D wheat farming

6
6 2023 March P32 Q11
11 The diagram shows an industry’s demand for and supply of labour.

wage
rate S

W0

© UCLES 2024 9708/32/M/J/24 D [Turn over

© UCLES 2024 O 9708/32/M/J/24 [Turn over

X Y Z
number
of workers

Initially, the labour market is in equilibrium. The government introduces a minimum wage of OW0.

What will be the effect on the level of employment in the industry?

A a decrease equal to XY
B a decrease equal to XZ
C an increase equal to XY
D an increase equal to YZ

12 The diagram shows the supply curve of labour for two separate markets, X and Y.

X
wage
rate
 C an increase equal to XY
D an increase equal to YZ
7 2023 March P32 Q12
12 The diagram shows the supply curve of labour for two separate markets, X and Y.

X
wage
rate

O
quantity of labour

What explains the difference in the gradients of the labour supply curves?

A Market X has a higher marginal revenue product per worker than Y.

B Market X has a higher percentage of its labour belonging to a trade union than Y.
C Market X has higher labour costs as a percentage of total costs than X.
D Market X has more specific skills and training requirements than Y.

© UCLES 2023 9708/32/F/M/23

8 3
2023 Jun P31 Q4
4 Which type of efficiency is shown by the shift from long-run average cost curve 1 (LRAC1) to
long-run average cost curve 2 (LRAC2)?

price

LRAC1
LRAC2

O
quantity

A allocative
B dynamic
C Pareto
D productive

5 A firm wishes to maximise its revenue.

Which condition must be met to achieve this goal?

A average cost = average revenue

B marginal cost = average revenue
C marginal cost = marginal revenue
D marginal revenue = zero

6 The costs and revenue of four firms operating in a monopolistically competitive market are
shown.
 B marginal cost = average revenue
C marginal cost = marginal revenue
D marginal revenue = zero
9 2023 Jun P31 Q6
6 The costs and revenue of four firms operating in a monopolistically competitive market are
shown.

total total total

firm variable cost fixed cost revenue
$m $m $m
5
W 20 10 15
10 The diagram showsX the demand
40 for and supply
50 of a good80
and the marginal social costs (MSC) for
that good.
Y 300 300 500
Z 600 100 550
MSC
Which firms will continue tocosts,
operate in the short run but will shut down in the long run?
revenue S
A X and W B X and Y C W and Z D Y and Z

x y
© UCLES 2023 9708/31/M/J/23 [Turn over
4 z
10 2023 Jun P31 Q7
7 A firm at its current level of production finds that its short-run marginal cost is less than its
short-run average variable cost.
w this information?
Which conclusion about the firm can be drawn from D
A Average variable cost is constant.
B Average variable cost is falling.O Q
output
C Average variable cost is greater than its average total cost.
Assuming there are no external benefits, which area measures the net social benefit at output
D Average variable cost is rising.
OQ?

8 A
Steelxproducer X takes over
B itsx –main
y competitor,Csteelxproducer
+y Y. D x–y–z
11 2023 Jun XP31
What would Q11
expect to happen to the price elasticity of demand for its product and its long-run
average cost as a result of this takeover?
11 What would definitely result from the divorce of ownership and control?

A price elasticity
decreased long-run
moral hazard
of demand average cost
B the principal agent problem
A decrease decrease
C B greater productive efficiency
decrease increase
D C increased profit maximisation
increase decrease
D increase increase

12 One reason for market failure is the existence of public goods.

9 What is an example of an external cost?
Which policy option is appropriate for addressing such a market failure?
A distribution costs
A
B direct costs
energy provision of the good by the government
B
C provision
labour costsof detailed information to consumers
D
C road congestion
subsidising coststhat currently produce the good
firms
D the adoption of maximum price controls
 3
12 2023 Jun P32 Q4
4 The diagram shows the cost curves of a firm.

What is the level of output below which the firm will shut down in the long run?

3
MC
4 The diagram showscost or curves of a firm.
the cost ATC
price
What is the level of $output below which the firm will shut down in the long run?

MC AVC
cost or ATC
price
$

AVC

O A B C D
quantity

O A B C D
5 Steel producer X takes over its main competitor, steel quantity
producer Y.
13 2023 Jun P32 Q5
5
What would X expect to happen to the average revenue for its product and its long-run average
Steel producer X takes over its main competitor, steel producer Y.
cost as a result of this takeover?
What would X expect to happen to the average revenue for its product and its long-run average
cost as a result of this takeover?
average long-run
revenue average cost
average long-run
revenue average cost
A decrease decrease
A decrease decrease
B decrease increase
B decrease increase
C increase decrease
C increase decrease
D increase increase
D increase increase

66 Whichstatement
Which statement is correct?
is correct?

A
A External
Externalbenefit minus
benefit private
minus benefitbenefit
private equals social
equals benefit.
social benefit.
B Private benefit minus external benefit equals social benefit.
B Private benefit minus external benefit equals social benefit.
C Social benefit minus external benefit equals private benefit.
C Social benefit minus external benefit equals private benefit.
D Social benefit plus private benefit equals external benefit.
D Social benefit plus private benefit equals external benefit.

© UCLES 2023 9708/32/M/J/23 [Turn over

© UCLES 2023 9708/32/M/J/23 [Turn over

 5
14 2023 Jun P32 Q11
11 The table shows how a firm’s total cost changes as more workers are employed.

number of total costs

workers $

1 1200
2 2000
3 2700

What would be the effect of employing a third worker on the firm’s average costs and its marginal
costs?

average costs marginal costs

A decrease decrease
B decrease increase
C increase decrease
D increase increase

12 A government hopes to build an athletics stadium to hold the World Games. The stadium would
have high private and external costs, but it would
3 increase national pride.
15 2023 Jun P33 Q4
4 Why would
Which type itofbeefficiency
difficult toisuse cost-benefit
shown by the analysis
shift fromto long-run
decide whether
averageto cost
buildcurve
the stadium?
1 (LRAC1) to
long-run average cost curve 2 (LRAC2)?
A The materials needed to build the stadium will need to be imported.
B The external costs of clearing land for building will outweigh the private costs.
C The stadium willprice
not be used much for athletics after the World Games.
D The valuation of national pride will be complex to assess.

13 What will lead the demand curve for labour to shift to the right?

A a decrease in the marginal productivity of labour

B a decrease in the wage rate LRAC1
LRAC2
C an increase in the marginal productivity of labour
O
D an increase in the wage rate quantity

A allocative
B dynamic
C Pareto
D productive

5 A firm wishes to maximise its revenue.

Which condition must be met to achieve this goal?

© UCLES
A 2023
average cost = average revenue 9708/32/M/J/23 [Turn over

B marginal cost = average revenue

C marginal cost = marginal revenue
D marginal revenue = zero

6 The costs and revenue of four firms operating in a monopolistically competitive market are
shown.

total total total

firm variable cost fixed cost revenue
$m $m $m
 B marginal cost = average revenue
C marginal cost = marginal revenue
D marginal revenue = zero
16 2023 Jun P33 Q6
6 The costs and revenue of four firms operating in a monopolistically competitive market are
shown.

total total total

firm variable cost fixed cost revenue
$m $m $m

W 20 10
5 15
X the demand
10 The diagram shows 40 for and supply
50 of a good80and the marginal social costs (MSC) for
that good. Y 300 300 500
Z 600 100 550
MSC
Which firms will continue tocosts,
operate in the short run but will shut down in the long run?
revenue
A X and W B X and Y C W and Z D Y and Z S

© UCLES 2023 x
9708/33/M/J/23
y [Turn over
4 z
17 2023 Jun P33 Q7
7 A firm at its current level of production finds that its short-run marginal cost is less than its
short-run average variable cost.

w this information?
Which conclusion about the firm can be drawn from D
A Average variable cost is constant.
B Average variable cost is falling. O Q
output
C Average variable cost is greater than its average total cost.
Assuming
D Averagethere are
variable nois external
cost rising. benefits, which area measures the net social benefit at output
OQ?

8 A xproducer X takes over

Steel B itsx –main
y competitor,Csteelxproducer
+y Y. D x–y–z
18 2023would
What Jun XP33 Q11
expect to happen to the price elasticity of demand for its product and its long-run
average cost as a result of this takeover?
11 What would definitely result from the divorce of ownership and control?
price elasticity long-run
A decreased moral hazard
of demand average cost
B A the principal
decrease
agent problem
decrease
C B greater productive efficiency
decrease increase

D C increased
increase decrease
profit maximisation
D increase increase

12 One reason for market failure is the existence of public goods.

9 What is an example of an external cost?
Which policy option is appropriate for addressing such a market failure?
A distribution costs
A
B direct costs
energy provision of the good by the government
C
B labour costsof detailed information to consumers
provision
D
C road congestion costs
subsidising firms that currently produce the good
D the adoption of maximum price controls
 3
19 2023 Nov P31 Q4
4 The diagram shows a long-run average cost curve (LRAC), and three short-run average cost
curves (SRAC1, SRAC2 and SRAC3) for an individual firm. Each short-run average cost curve
represents a fixed factor of production.

SRAC2
costs SRAC1 SRAC3
LRAC

O L M output

Between levels of output OL and OM, which statement is not correct?

A Average fixed costs are falling.

B Economies of scale are being experienced.
C The law of diminishing returns is operative.
D There are decreasing returns to scale.

5 Which combination of reactions by rivals results in a kinked demand curve for an oligopolist when
a price is changed? 4
20 2023 Nov P31 Q7
7 A copying
Which both a price
combination riseconditions
of cost and a priceisfall
most likely to act as a barrier to entry to a new firm
wanting
B to join
copying an industry?
a price rise and ignoring a price fall
C ignoring a price rise and copying a price fall
fixed costs as minimum efficient
level of
D ignoring both a price rise scale
a proportion of and aof firms
price fallin sunk costs
total costs the industry

6 A is a key condition
What high high price
for effective outputdiscrimination?high
B high low output high
A The product cannot be resold to another consumer.
C low high output low
B The product must be price inelastic.
D low low output low
C The profits from one market can be used to subsidise another market.
D There are low barriers to entry into the market.
8 How is dynamic efficiency represented on a diagram?

A a downward move to the minimum point of a long-run average cost curve

B a downward shift in the long-run average cost curve
C a move from a point inside a production possibility curve to a point on it
D a reduction in marginal revenue so that it equals long-run marginal cost

9 A city council is considering building a passenger terminal at its port so that the city can benefit
from large cruise ships that could then dock
© UCLES 2023
there. It undertakes a cost–benefit analysis.
9708/31/O/N/23 [Turn over
What would be included as an external cost in the city council’s cost–benefit analysis?

A the cost of a ticket for a passenger to travel on a cruise ship

B the cost of fuel to operate the cruise ships
C the costs paid by cruise ships when they dock at the port
D the cost to a fishing fleet of relocating to another port

10 Some multinational oil companies extracting oil in developing countries are now required to repair
the damage they do to the environment.
 3
21 2023 Nov P33 Q4
4 The table shows a firm’s total fixed cost and total variable cost.
3
total fixed total variable
4 The table shows a firm’s totaloutput
fixed cost andcost
total variable cost.
cost
3
$ $
4 The table shows a firm’s total fixed cost and total
total fixedvariable cost.
total variable
1
output 1000
cost 1000
cost
total $
fixed total $
variable
2 1000 2000
output cost cost
1
3 1000
$
1000 $1000
3000
2
4
1 1000
1000
1000 2000
4000
1000
3
2
5 1000
1000
1000 3000
2000
5000
3
4
6 1000
1000
1000 3000
4000
6000
54 1000
1000 4000
5000
What can be concluded from the table?
5 1000 5000
6 1000 6000
A Average fixed cost falls. 6 1000 6000
What can be concluded from the table?
B What
Average fixed cost is constant.
can be concluded from the table?
A
C A Average
Average fixed costcost
variable falls.
falls.
Average fixed cost falls.
B
D Average
Average fixed costcost
variable is constant.
rises.
B Average fixed cost is constant.
C C Average variable
Average variablecost
cost falls.
falls.
5 TheD Average
D diagrams relate
variable
Average tocost
variable industry
cost rises.X. P5 is the original production possibility curve.
rises.
22 2023 average
Nov P33 Q5
costs market for X production possibility
5 5TheThe
diagrams
diagramsrelate
relatetotoindustry X. PP55 isisthe
industry X. theoriginal
original production
production possibility
possibility curve.
curve. curves

price averagecosts
average costs
ATC1 price Dmarket X XS3
marketforfor production
good P6possibility
production possibility
$ $ S4 Y curvescurves
ATC D S3
price ATC 2 price good
price ATC1 1 price D S
S3 good P6 P6 P5
$ $ 4
S4 Y
$ ATC $ Y P7
ATC22
P5
P5 P7
O quantity O quantity O goodPX7
O quantity O quantity O good X
An improvement takes place in manufacturing techniques in industry X.
O quantity O quantity O good X
An improvement
Which takes
changes take place in manufacturing techniques in industry X.
place?
An improvement takes place in manufacturing techniques in industry X.
Which changes take place?
new production
average
Which changes costs
take place? market for X possibility
new productionfrontier
average costs market for X
possibility frontier
A ATC1 to ATC2 S3 to S4 P7
new production
A
average costs
ATC1 to ATC2
market for X
S3 to S4 P7 frontier
possibility
B ATC1 to ATC2 S4 to S3 P6
B ATC to ATC
1 2 S4 to S3 P6
A
C ATC
ATC12 to
to ATC
ATC21 S
S33 to
to S
S44 P
P76
C ATC2 to ATC1 S3 to S4 P6
B
D ATC
ATC12 to
to ATC
ATC21 S
S44 to
to S
S33 P
P67
D ATC2 to ATC1 S4 to S3 P7
C ATC2 to ATC1 S3 to S4 P6
D ATC2 to ATC1 S4 to S3 P7
© UCLES 2023
© UCLES 2023
9708/33/O/N/23
9708/33/O/N/23 [Turn[Turn
over over

© UCLES 2023 9708/33/O/N/23 [Turn over

23 4
2023 Nov P33 Q6
6 The world’s largest coffee restaurant chain purchased a large coffee bean farm in Costa Rica.
The farm has research and development facilities to study specific diseases that devastate the
coffee bean crop.

How is this type of takeover classified?

A horizontal integration
B organic growth
C vertical backward integration
D vertical forward integration

7 Which condition is necessary for a firm to practise third degree price discrimination effectively?
2
24 2024
A All Nov P31 and
consumers Q1 producers must be in the same geographical location.
1 The diagram shows
B Customers must beadivided
total utility curve for
into separate a consumer.
markets for the same product.
2
C Each separate market must have identical price elasticities of demand.
At which point does marginal utility equal zero?
1 The diagram
D Price shows isa required
undercutting total utility curve
to enter for a consumer.
a monopolistic market.

At which point does marginal utility equal zero?

8 total
A traffic study concluded C if 10% of car drivers switched to
that there would be significant benefits
utility
using motorcycles during peak traffic times.

Which benefit of this change C

total would be considered a private benefit?
A faster journeys for utility
those who continued to go by car
B faster journeys for those who switched to motorcycles
B
C increased safety for cyclists
D reduced levels of air pollution for pedestrians
A B D
O
9 quantity
Which conditions are most likely to reduce the accuracy of cost-benefit analysis in decision
making? A D
O
2 What is proportion
a characteristic of an indifference
of external curve?
% of total costs and quantity
25 costs and benefits to total benefits that are in
2024 Nov P31 Q2
A It will
totalremain concave
costs and benefitsto the origin
theof the diagram.
future
2 What is a characteristic of an indifference curve?
B A It will remainhighconvex to the origin ofhigh
the diagram.
A B It will remainhighconcave to the origin oflowthe diagram.
C It can intersect other indifference curves at any point.
B C It will remain lowconvex to the origin ofhigh
the diagram.
D The lower the indifference curve, the greater the satisfaction attainable.
C D It can intersect
low low
other indifference curves at any point.

3 D Belgian
A The lower thestudy
traffic indifference curve,
concluded thatthethere
greater the be
would satisfaction attainable.
significant benefits if 10% of car drivers
switched to using motorcycles during peak traffic times.

3 A Belgian
Which traffic
result wouldstudy concluded athat
be considered costthere
of thiswould be significant benefits if 10% of car drivers
change?
switched to using motorcycles during peak traffic times.
A 2023
© UCLES reduced travel times 9708/33/O/N/23
Which result would be considered a cost of this change?
B reduced car emissions
A reduced travel times
C reduced safety standards
B reduced car emissions
D reduced traffic queues
C reduced safety standards
D reduced traffic queues
26 3
2024 Nov P31 Q4
4 The diagram shows a firm’s long-run average cost curve (LRAC).

LRAC
cost X
7

13 The graph shows the percentage growth in average earnings for an economy.

4 Y
average
wage 2
growth %
0
O output
–2

What could explain the shape –4

of the curve from X to Y?
Jan April
A a decrease in total fixed cost 2024 2024

What is the most likely

B increasing cause
returns to of the pattern shown in the graph?
scale
A
C ainternal
decreasediseconomies
in the supply of of
labour
scale
B a decrease in the interest rate
D more than one factor of production is variable
C an increase in productivity
D an increase in the size of the labour force
27 2024 Nov P31 Q14
14 The table shows the output of chairs at a factory when different numbers of workers are
employed.

number of workers 0 1 2 3 4 5
number of chairs produced 0 7 17 26 34 40

When will diminishing marginal returns to labour set in?

A when the second worker is employed

B when the third worker is employed
C when the fourth worker is employed
D when the fifth worker is employed

© UCLES 2024 9708/31/O/N/24 [Turn over

© UCLES 2024 9708/31/O/N/24 [Turn over

28
2 2
2024 Nov P33 Q1
11 A rational consumer chooses what quantities of two products Y and Z to purchase with a given
A rational consumer chooses what quantities of two products Y and Z to purchase with a given
income.
income.
MUY and MUZ are the additions to total utility that would result if the consumer were to purchase
MUadditional
an Y and MU Z are
unit theproduct.
of each additions to total utility that would result if the consumer were to purchase
an additional unit of each product. 2
PY and PZ are the current prices of the two products.
1 PYrational
A and
Which
PZconsumer
arewould
outcome
the current
chooses prices
representwhat
of the two
quantities
consumer
products.
of two
equilibrium?products Y and Z to purchase with a given
income.
Which
A whenoutcome
MUY = MU would
Z represent consumer equilibrium?
MUY and MUZ are the additions to total utility that would result if the consumer were to purchase
B Y  P
when MUunit
an additional ofY =each  PZ
MUZproduct.
A when MUY = MUZ
C
P when
PZ MU  Pcurrent
Z = MUZ  PY of the two products.
BY and areYthe
when MU Y P = prices
Y MU  PZ Z
D it is not possible to tell from the information available
Which outcome would represent consumer equilibrium?
C when MUY  PZ = MUZ  PY
A when MU = about
MUZ indifference curves is not correct?
2 Which is not Ypossible
D it statement to tell from the information available
29 B when MU  P = MU  P
2024 Nov P33Y
A Indifference Q2 areZ usually
Y
curves Z
convex to the origin of the diagram.
when MUY curves
C Indifference PZ = MU Z  PY
2 Which
B statement about
can indifference
intersect each curves
other. is not correct?
D The
C it is not possible
consumer to tellprefers
always from the information
a higher available
indifference curve to a lower one.
A Indifference curves are usually convex to the origin of the diagram.
D The slope of the indifference curve represents the marginal rate of substitution.
2 B Indifference
Which curves
statement about can intersect
indifference each
curves is other.
not correct?

3 Cfirm
A The consumer
Indifference
increases curves
its always prefers
are usually
production. a higher
convex indifference
to the origin curve to a lower one.
of the diagram.
B
D Indifference
WhenThe slope
will this curves
of in
result the can intersect
indifference
allocative each other.
curve
efficiency? represents the marginal rate of substitution.
C The consumer always prefers a higher indifference curve to a lower one.
A when the cost of producing the last extra unit equals the value the consumers place on it
3 D Theincreases
A firm slope of theitsindifference
production.curve represents the marginal rate of substitution.
B when the cost of producing the last extra unit is at a minimum
30 2024 Nov P33 Q3
C when the total cost of production equals the value that consumers place on the total product
3 When
A will this its
firm increases result in allocative efficiency?
production.
D when the total revenue reaches a maximum
A when
When the
will this costinofallocative
result producing the last extra unit equals the value the consumers place on it
efficiency?

B
A whenthe
when the cost
cost of producing
of producing theextra
the last lastunit
extra unit the
equals is at a minimum
value the consumers place on it
B
C when
whenthe cost
the of producing
total the last extra
cost of production unit is the
equals at a value
minimum
that consumers place on the total product
C
D when
whenthe total
the costrevenue
total of production equals
reaches the value that consumers place on the total product
a maximum
D when the total revenue reaches a maximum

2
31 2024 Nov P32 Q1
1 If consumers aim to maximise their utility, how will they arrange their spending?

A to obtain the same total utility from each commodity

B to obtain the same total utility per $ spent on each commodity
© UCLES 2024 9708/33/O/N/24
C to obtain the same utility from the last unit of each commodity
D to obtain the same utility from the last $ spent on each commodity

2 Which feature of indifference curve theory is most likely to apply in reality?

A The consumer can express preferences between all possible combinations of goods.
© UCLES 2024 9708/33/O/N/24

B The consumer has a limited income to

© UCLES 2024
spend.
9708/33/O/N/24

C The consumer will always behave rationally.

 C to obtain the same utility from the last unit of each commodity
D to obtain the same utility from the last $ spent on each commodity
32 2024 Nov P32 Q2
2 Which feature of indifference curve theory is most likely to apply in reality?

A The consumer can express preferences between all possible combinations of goods.
B The consumer has a limited income to spend.
C The consumer will always behave rationally.
D The consumer will always get positive utility from having more of the goods.

3 Diagrams 1 and 2 show different long-run average cost curves (LRAC).

diagram 1 diagram 2

cost cost LRAC

LRAC
O output O output

Which situations do the two diagrams show?

diagram 1 diagram 2

A falling returns to scale average cost is greater than marginal cost

B falling returns to scale rising returns to scale
C unit cost falls as output increases falling average fixed costs
D unit cost falls as output increases unit cost rises as output increases

© UCLES 2024 9708/32/O/N/24

 B The consumer has a limited income to spend.
C The consumer will always behave rationally.
D The consumer will always get positive utility from having more of the goods.
33 2024 Nov P32 Q3
3 Diagrams 1 and 2 show different long-run average cost curves (LRAC).

diagram 1 diagram 2

cost cost LRAC

LRAC
O output O output

Which situations do the two diagrams show?

diagram 1 diagram 2

A falling returns to scale average cost is greater than marginal cost

B falling returns to scale rising returns to scale
C unit cost falls as output increases falling average fixed costs
D unit cost falls as output increases unit cost rises as output increases

© UCLES 2024 9708/32/O/N/24

Answers:
1C

2B

3C

4A

5D

6A

7D

8B

9B

10B

11B

12C

13C

14A

15B

16B

17B

18B

19D

20A

21A

22A

23C

24C

25B

26B

27B

28C

29B

30A

31D

32B
33D
 B fall more inelastic
C Chapter
rise : 03
more Revenue and Profits
elastic
D rise more inelastic

1 2024 March P32 Q06

6 The diagram shows the costs and revenues of a firm operating in an imperfect market.

MC
cost,
revenue
AC

MR
AR
O W XYZ
output

The firm is currently producing at the profit maximising level of output. It wishes to produce at the
sales maximising level of output.

What would be the change in its output?

A OW to OX B OW to OY C OW to OZ D OY to OZ

© UCLES 2024 3
9708/32/F/M/24 [Turn over
2 2024 Jun P31 Q4
4 The diagram shows the cost and revenue curves for a firm.

Which output level will enable a firm to achieve its objective of maximising its revenue?

MC
price

AC
P1
P2
P3
P4

MR D = AR

O A B C D
quantity

5 Oligopoly firms seek to maximise profits.

How will this affect the pricing behaviour of oligopoly firms involved in a non-collusive market?

A A price is fixed for the product that never changes throughout its life cycle.
B Firms will agree on the level of advertising costs for a new product.
C If one firm raises its price, other firms will maintain their original price to increase their market
share.
D If one firm lowers its price, other firms will increase their price.
 number of weeks of annual leave 5 weeks 10 weeks
average length of working week 48 hours 44 hours
job security low high
3
length of training course to obtain job qualification 1 year 2 years
3 2024 Jun P33 Q4
4 The diagram
What showsbe
can definitely the cost andfrom
deduced revenue curves for a firm.
the table?

AWhich output
Those level willinenable
employed a firmYto
occupation achieve
attach its objective
greater of maximising
importance its revenue?
to job security.
B Those employed in occupation X attach less importance to leisure activities.
MC
C There will be price
more competition for places on training courses to enter occupation X than
occupation Y.
D AC
Occupation Y has more non-pecuniary advantages than occupation X.
P1
P2
14 Which changes in direct Pand
3 3
indirect tax are likely to increase the inequality in the distribution of
P
income in a developed economy?
4

4 Which type of efficiency is shown by the shift from long-run average cost curve 1 (LRAC1) to
long-run average cost curve 2 (LRAC
direct taxes indirect2)?
taxes MR
D = AR
A fall fall
O A B C D
B fall price rise quantity
C rise fall

5 D
Oligopoly firmsrise remain
seek to maximise constant
profits.
4 2023 March P32 Q15
How will this affect the pricing behaviour of oligopoly firms involved in a non-collusive market?
15 A government wishes to reduce the use of cars in cities.
A A price is fixed for the product that never changes throughout its life cycle.
LRAC1
Which policy should be used?
B Firms will agree on the level of advertising costs for a new product. LRAC2
AC aIfdecrease in parking
one firm raises charges
itsOprice, other firms will maintain their original price to increase their market
share. tax on petrol (gasoline) quantity
B lowering
D restricting
A
C If one firmcycling
allocative lowers its price, other firms will increase their price.

B subsidising
D dynamic public transport
6 An economic activity definitely creates a net social benefit when the value of social benefit minus
C Pareto
A a country,
16 In
D private benefit
the topis20%
productive zero.of earners pay 45% in income tax and 25% on sales taxes, and receive
5 5%
2023in Jun
cash P31
B private
benefits.
Q5 is negative.
benefit
5 What
A
C firmiswishes
thecost
social percentage of disposable
toismaximise
positive. its revenue.income for this group?
A
D 30%
social
Which B be55%
cost ismust
condition met to achieve C
negative. 60%
this goal? D 80%

A average cost = average revenue

7 Which assumption is essential for a market to be contestable?
© UCLES
B 2023
marginal cost = average revenue 9708/32/F/M/23 [Turn over
A The market is supplied by a large number of firms.
C marginal cost = marginal revenue
B Firms are free to enter and leave the market.
D marginal revenue = zero
C Firms cannot earn abnormal profits in the short run.

6 D Firms
The costs produce differentiated
and revenue of four goods.
firms operating in a monopolistically competitive market are
shown.

total total total

firm variable cost fixed cost revenue
$m $m $m
© UCLES 2024 9708/33/M/J/24 [Turn over
W 20 10 15
 revenue MC
B dynamic P
C Pareto
D productive
6 2023 Jun P33 Q5

5 A firm wishes to maximise its revenue. AR

MR
5
Which condition must be met to achieve this goal?
O Q
output
7 The diagram cost
A average shows the short-run
= average revenueaverage cost, SRAC, and long-run average cost, LRAC, curves
for a
Which
firm producing
statement
computers.
correctly describes
It usually produces 2000 computers per week. An increase in
the performance of this firm?
B marginal
demand cost
requires = average
the revenue
firm to produce 3000 computers per week.
A
C It is allocatively
marginal cost =efficient.
marginal revenue
B It is making abnormal losses.
D marginal
cost revenue = zero
C $ making abnormal profits.
It is
SRAC1
6 D Itcosts
The is making
and normal profits.
revenue LRACmarket are
of four firms operating in a monopolistically competitive
100
7 shown.
2023 Nov P3280 Q6 SRAC2 SRAC 3
6 A firm changes its aim and chooses to produce where marginal revenue (MR) is zero instead of
where MR is equal to marginal costtotal
(MC). total total
40 firm variable cost fixed cost revenue
Which explanation
30 for this is not correct?
$m $m $m
A The firm wishes to increase sales.
W 20 10 15
B 0
The firm wishes to increase its output.3000
X 2000 40 504000 80
C The firm wishes to reduce prices. output
Y 300 300 500
D The
How firmwill
much wishes to gain more
the average profits.
costs change in the long
Z 600 100 run if the firm
550makes a permanent decision
to produce 3000 computers per week?
Which firms will continue
A 2023
$20 B $40to operate in theCshort
$50run but will shut
D down
$60 in the long run?
© UCLES 9708/32/O/N/23 [Turn over
8 2024 Nov P31 Q8
A X and W B X and Y C W and Z D Y and Z
8 What is a characteristic of monopolistic competition?
© UCLES 2023 9708/33/M/J/23 [Turn over
A no barriers to entry
B identical products
C price takers
D small number of buyers and sellers

9 What is likely to have its cause in the separation of ownership and control in a firm?

A contestable markets
B diseconomies of scale
C principal-agent problem
D prisoner’s dilemma
 3
9 2024 Nov P33 Q4
4 The table shows a firm’s revenue and costs at different levels of output.
3

4 The table shows a output marginal

firm’s revenue and costsaverage
at different marginal average
levels of output.
revenue revenue cost total cost

1 marginal
125 average
125 marginal
90 average
140
output
revenue revenue cost total cost
2 85 105 40 90
1 125 125 90 140
3 45 85 45 75
2 85 105 40 90
4 25 70 95 80
3 45 85 45 75
5 20 60 130 90
4 25 70 95 80
What is the firm’s total supernormal profit at the profit-maximising level of output?
5 20 60 130 90
A –15 B 10 C 30 D 120
What is the firm’s total supernormal profit at the profit-maximising level of output?

5 A –15
Which B a monopolistically
diagram shows 10 Ccompetitive
30 D 120equilibrium?
firm in long-run
10 2024 Nov P33 Q5
A B
5 Which diagram shows a monopolistically competitive firm in long-run equilibrium?

revenue A
MC revenue B MC
/ cost AC / cost AC

revenue MC revenue MC
/ cost AC / cost AC

MR AR MR AR
O Qe output O Qe output
MR AR MR AR
O Qe output O Qe output
C D

revenue C
MC revenue D MC
/ cost AC / cost AC

revenue MC revenue MC
/ cost AC / cost AC

MR AR MR AR
O Qe output O Qe output
MR AR MR AR
O Qe output O Qe output

© UCLES 2024 9708/33/O/N/24 [Turn over

 B Firms in the industry all operate at the equilibrium level of output.
C Large firms do not have to increase capital to grow.
D Multinational companies always benefit from economies of scale.
11 2024 Nov P33 Q7
7 Which points show where each maximisation objective occurs?

MC
cost or
price
$ AC
J

K
H
AR

MR
O L
quantity

revenue sales 5
maximisation maximisation
9 A group of producers enter into an agreement to restrict supply or fix the price of a good.
A J L
What
B does thisLdescribe? K
A C a cartel J K
B D a conglomerate
L merger H

C economies of scale
8 What is an external
D horizontal economy of scale?
integration
12 2024 Nov P33 Q10
A cheaper costs from purchasing large quantities of inputs
10 What is meant by
B decreased a four-firm
interest rates concentration ratio of 25%?
on borrowed funds
A
C The largestlabour
increased four firms’ market share totals 25%.
productivity
B
D The largest
relevant four firms
training have
facilities at aa market share of 25% each.
local college
C There are only four firms in the industry.
D The largest firm has a 25% market share.

11 A government decides to use price controls to achieve allocative efficiency in a monopoly market.

Which price would need to be set to achieve allocative efficiency?

© UCLES 2024 9708/33/O/N/24

MC
price

AC
A
B
C
D

MR D = AR

O
Answers:
1C

2B

3B

4D

5D

6D

7D

8A

9C

10D

11B

12A
 B linking workers’ pay with the profits of the firm to motivate them to raise the profitability of the
firm
CChapter : 04 inPerfect
making full fee payment Market
advance to a lawyer Structures
to motivate him to prepare a legal case well
D offering permanent contracts to give workers job security
1 2024 March P32 Q09 4
9 Company R manufactures steel. Company S produces ships. Company T operates oil tankers.
8 Company V operates
A firm that cruise liners.
raises capital through a share issue has to satisfy both shareholders’ expectations and
management aims. The management aims to produce at a non-profit maximum output.
Which statement is correct?
Which
A If R strategy
takes overwould
S, this necessarily
is an exampleprevent thisvertical
of forwards aim? integration.
B
A Iffixing
S takes over V,
output this is MC
where an example
= MR inofthe
backwards vertical integration.
long run
C If T takes over S, this is an example of diversification.
B operating price discrimination to maximise revenue
D If V takes over S, this is an example of horizontal integration.
C rewarding shareholders more than returns to innovation
D separating
10 There are two firms ownership andFirm
in an industry. control of the
X faces firm It can either act independently or work
a choice.
with its rival. If it acts independently its profit could be $900 a week but it could be only $400 a
2 2024depending
week Jun P31onQ9 what its rival does. If it works with its rival the joint profit of the two firms
together would be
9 A major UK chemical firm$1400, $700was
each. It has no
bought byknowledge
its rival, aofDutch
what the rival’s policy
chemical firm.will be.
Which concept describes this situation?
What definitely occurred when the Dutch firm bought the UK firm?
A contestable market
A a partnership
B kinked demand curve
B economies of scale
C principal agent problem
C prisoner’s
D horizontal integration
dilemma

D increased profits

10 Which statement is correct for a firm classed as a natural monopoly?

4
3 2024 Jun P32 Q6
A It will always operate in the public sector and earn normal profits.
6 A firm has the choice between five levels of output. The table shows the total cost and total
revenue of producing
B It will have highat barriers
each output level. The
to entry andfirm
be could sell whatever
the dominant output it produces.
producer.
© UCLES 2024 9708/32/F/M/24
C It will easily benefitoutput
from external economies
total cost of scale.
total revenue
units $ $
D It will have higher average costs than a monopolistically competitive firm.
1000 8 000 10 000
2000 12 000 18 000
11 The government can use policies to try and reduce the environmental damage caused by the
3000 created 19
amount of rubbish (garbage) by000 24 000
firms and households.
4000 23 000 28 000
Which policy to reduce rubbish is most likely to lead to government failure?
5000 25 000 25 000
A an incentive payment for firms who reduce the levels of rubbish
The firm decides to produce 4000 units.
B a tax on the amount of rubbish a firm or household creates
What is the firm’s aim?
C an advertising campaign about the problems created by rubbish
A to maximise profit
D togovernment
B grants to firms researching how to safely dispose of rubbish
maximise sales
C to maximise revenue
D to minimise average costs

7 The diagram shows the costs and benefits of producing steel in a free market.

MSC
cost,
benefit MPC
R
X
T
Y
Z U
© UCLES 2024 S
9708/31/M/J/24
 A increased preference on the part of consumers for distinctive non-standardised products
nationalised industries before and after privatisation.
C
B the absence in
reductions of the
effective barriers
rate of to the
interest entry ofbypotential
charged competitors
commercial banks
D the existence of decreasing before
returns to scale after
nationalised
C the absence of effective barriers to the entry of potential
privatisation competitors
privatisation
industry
4 2024 Jun P32 Q9 % %
D the existence of decreasing returns to scale
9 A market structure railways
in which a small number of –4
firms face competition
2
from potential entrants.

What does this describe?

electricity supply 7 9
9 A market structure in which a small number of firms face competition from potential entrants.
A shipbuilding
a contestable market 4 –1
What does this describe?
telecommunications 6 6
B a monopoly
A monopolistic
What
C acan
contestable market
be concluded about the effect of privatisation?
competition
B
A
D a monopoly
Employment
perfect fell in the railway industry.
competition
B
C Employment wascompetition
monopolistic unchanged in the telecommunications industry.
10 C
What is an was
Output example of backward
greatest vertical
in the electricity integration?
supply industry.
D perfect competition
5 2024
D
A Jun P32
Workers
a bakery Q10
became
buying less efficient
a wheat farmin the shipbuilding industry.

10 B a car
What manufacturer
is an example ofbuying a car vertical
backward showroom integration?
13 Most workers in a country are employed in the manufacturing sector where they are paid a fixed
C arate
wage vineyard buying an apple orchard
per hour.
A a bakery buying a wheat farm
D two rival supermarkets joining together
What will lead to an increase in the net advantage of workers currently employed in the
B a car manufacturer buying a car showroom
manufacturing sector?
C government
11 A
A aareduction
vineyard in buying
wants an apple
to introduce
working hours aorchard
policy that will reduce the pollution caused by the production
available
of a good.
D
B atwo
shiftrival
in thesupermarkets joining
country’s economy together
to the service sector
Which
C policy would
a subsidised not
lunch is make
made use of market forces?
available 4
A government
11 D a quota
an increaseto limit the
inwants
the production
of jobsofavailable
to introduce
number the good that will reduce the pollution caused by the production
a policy
6 8 A
of firm
a
2024 that
good. raises
Jun P32toQ14 capital through a share issue has to satisfy both shareholders’ expectations and
B a regulation ban the production of the good
management aims. The management aims to produce at a non-profit maximum output.
14 When will a profit-maximising firm employ the optimum number of workers?
Which
C policy
a tax on thewould not make
production of theuse
goodof market forces?
Which strategy would necessarily
A when the average revenue product of prevent this aim?
labour equals the average cost of hiring workers
D
A aatradable
quota topollution
limit thepermit systemof
production forthe
producers
good of the good
BA when
fixingtheoutput
marginal revenue
where MCproduct
= MR of in labour equals
the long runthe average cost of hiring workers
B a regulation to ban the production of the good
C when the marginal revenue product of labour equals the marginal cost of hiring workers
B operating price discrimination to maximise revenue
C when
D a taxthe
onmarginal
the production of the good
revenue product of labour equals the trade union supplied cost of workers
C rewarding shareholders more than returns to innovation
D a tradable pollution permit system for producers of the good
D separating ownership and control of the firm

7 2024 Jun P33 Q9

9 A major UK chemical firm was bought by its rival, a Dutch chemical firm.

What definitely occurred when the Dutch firm bought the UK firm?

A a partnership
©
© UCLES 2024
UCLES 2024 9708/32/M/J/24
9708/32/M/J/24 [Turn over
B economies of scale
C horizontal integration
D increased profits

©10 Which
UCLES 2024 statement is correct for a firm classed as a natural monopoly?
9708/32/M/J/24 [Turn over

A It will always operate in the public sector and earn normal profits.
B It will have high barriers to entry and be the dominant producer.
C It will easily benefit from external economies of scale.
D It will have higher average costs than a monopolistically competitive firm.

11 The government can use policies to try and reduce the environmental damage caused by the
 B The individual has not changed their
4 total utility.

7 C
WhatThe individual
can be prefers
done to help apples moral
to overcome to pears.
hazard?

D
A The individual
charging the samehas gainedpremium
insurance more utility by moving
to all people in the from
same point X to point Y.
age group
8 2023 Jun P32 Q3
B designing insurance contracts so that the insurance company and client share any loss

3 What is not
C giving necessary
unconditional for successful
financial support to price
banks discrimination?
to protect jobs
D guaranteeing jobs for bank managers to provide a sense of security
A ability to separate markets

8
B different price elasticities of demand in each market
Which action would produce a positive externality of production?
2
C monopoly power
A A child is vaccinated against measles.
1 What does the marginal utility diagram show?
D Aprice
B leadership
consumer donates products to a local food bank.
C A firm rebuilds a local road when constructing its new factory.
D A government paysutility
a subsidy to firms producing cars.
9 2023 Jun P32 Q9
9 A privately owned sole supplier of gas operates in an unregulated market with high barriers to
entry and exit.

Which row is most likely to indicate the economic efficiency resulting from the firm’s position in
this market?

O
productive allocative X dynamic Y Z quantity
efficiency efficiency efficiency
© UCLES 2023 9708/32/M/J/23
A no no no marginal utility

A B Total utility
no becomes no
negative if theyes
quantity consumed increases from Y to Z.
C no yes yes
B Total utility decreases if the quantity consumed increases from X to Y.
D yes no yes
C Total utility decreases if the quantity consumed increases from Y to Z.

10 D Total utility
A government is maximised
increases at X. that patents offer to inventors of new products and
the protection
processes.
10 2023 Jun P33 Q2
Which barriers to entry into an industry are higher as a result of this increase?
2 The initial allocation of goods between three consumers is shown.
A cost barriers
B legal barriers consumer 1 consumer 2 consumer 3 total

C market barriers 2 5 10 17
D physical barriers
Which row shows a Pareto improvement in the allocation of goods between consumers?

consumer 1 consumer 2 consumer 3 total

A 2 5 11 18
B 4 5 9 18
C 4 4 10 18
© UCLES 2023 9708/32/M/J/23

D 6 6 6 18

3 Which assumption in relation to an indifference theory diagram is not correct?

A The consumer’s income may change.

B The consumer may change their satisfaction-maximising objective.
C The consumers may change their tastes and preferences.
D The relative prices of products may change.
 C 4
ignoring a price rise and copying a price fall
7 Which
D combination
ignoring of cost
both a price riseconditions is fall
and a price most likely to act as a barrier to entry to a new firm
wanting to join an industry?
11 2023 Nov P31 Q6
6 What is a fixed
key condition
costs as for effective
minimum price discrimination?
efficient
level of
a proportion of scale of firms in
A The product cannot be resold to another consumer. sunk costs
total costs the industry2
B The product must be price inelastic.
1 A diagram shows
The high the marginal utility
high (MU)
output high of quantities of good X.
from the consumption
C The profits from one market can be used to subsidise another market.
B high low output high
10
D There are low marginal
barriers to entry into the market.
C low 8 high output low
utility
D low 6 low output low
4 MU
12 2023 Nov P31 Q8
8 2
How is dynamic efficiency represented on a diagram?
0
A a downward move to the minimum
0 1 point
2 of a
3 long-run
4 average
5 6 cost curve
quantity of X
B a downward shift in the long-run average cost curve
What
C ahappens to the
move from total utility
a point inside asaconsumption of X rises from
production possibility 1 to
curve to6aunits?
point on it
A
© UCLES Ita falls
D 2023 continuously.
reduction in marginal 9708/31/O/N/23
revenue so that it equals long-run marginal cost [Turn over
B It falls and then rises.

9 C It rises
A city continuously.
council is considering building a passenger terminal at its port so that the city can benefit
4
13 from large cruise
2023
D It Nov P32then
rises and
ships that could then dock there. It undertakes a cost–benefit analysis.
Q7 falls.
7 A firm operating in the airline industry uses third degree price discrimination.
What would be included as an external cost in the city council’s cost–benefit analysis?
2 Which
An condition is
indifference mostislikely
curve to allow
typically this with
drawn to happen?
a convex shape.
A the cost of a ticket for a passenger to travel on a cruise ship
A Consumers are able to buy cheaply and then sell the product at a higher price.
Which economic concept explains the reason for this convex shape?
B the cost of fuel to operate the cruise ships
B Price elasticity of demand is the same for all consumers in the market.
A allocative efficiency
C
C the firm
The costs paid
faces by cruise
a perfectly ships
elastic whencurve.
demand they dock at the port
B diminishing marginal rate of substitution
D
D the firm
The costisto a fishing
able to keep fleet of relocating
the different to another
market segments port
separate.
C Pareto optimality
8 D
Whatthe equi-marginal
is not an exampleprinciple
of a moral hazard?
10 Some multinational oil companies extracting oil in developing countries are now required to repair
14 2023
the Nov with
A damage
People P33a Q3
they do torisk
higher theofenvironment.
unemployment are more likely to undertake training.
3 What is most
B People likely
with freeto increase
dental the less
care are principal–agent
likely to take problem?
care of their teeth with good oral hygiene.
What best describes the total costs incurred by the oil companies in such circumstances?
A
C ensuring theinsurance
People with actions of agents
against carare known
theft by the
are more managers
likely to park their car in high crime areas.
A external costs
D
B People the
linking withrewards
unemployment benefits
of managers are
with theless likely to undertake
profitability of the firm retraining if they become
B unemployed.
private costs plus external costs
C removing from managers the opportunity to hold shares
C social costs plus external costs
9 D preparing
In recent years,contracts
the fuel that
costcompel agents
of operating a to
jetwork in the
aircraft hasinterest of Over
declined. the principal
the same period,
improved
D design
social costshas led private
plus to much costs
quieter aircraft.

How would this affect the marginal private cost (MPC) and the marginal external cost (MEC) of air
travel?

A a downward shift of both the MPC and the MEC curves

B a downward shift of the MPC curve and a movement left along the MEC curve
C a movement left along both the MPC and the MEC curves
D a movement left along the MPC curve and a downward shift of the MEC curve
© UCLES 2023 9708/31/O/N/23

10 Firm K operates in a competitive market. Firm L is a monopsony employer. Both firms are
operating at an equilibrium level of output.
© UCLES 2023 9708/33/O/N/23

Trade unions are introduced with the result that wages in each firm are increased.

What is the likely effect on each firm if trade unions enter the labour market?
 B organic growth
C vertical backward integration
D vertical forward integration
15 2023 Nov P33 Q7

7 Which condition is necessary for a firm to practise third degree price discrimination effectively?

A All consumers and producers must be in the same geographical location.

B Customers must be divided into separate markets for the same product.
C Each separate market must have identical price elasticities of demand.
D Price undercutting is required to enter a monopolistic market.

8 A traffic study concluded that there would be significant benefits if 10% of car drivers switched to
using motorcycles during peak traffic times.

Which benefit of this change would be considered a private benefit?

A faster journeys for those who continued to go by car

B faster journeys for those who switched to motorcycles
C increased safety for cyclists
D reduced levels of air pollution for pedestrians

9 Which conditions are most likely to reduce the accuracy of cost-benefit analysis in decision
making?

proportion of external % of total costs and

costs and benefits to total benefits that are in
total costs and benefits the future

A high high
B high low
C low high
D low low

© UCLES 2023 9708/33/O/N/23

Answers:
1A
2C
3C
4A
5A
6C
7C
8D
9B
10A
11A
12B
13D
14C
15B
 7
Chapter : 05 Imperfect Competition
In which market structure is dynamic efficiency least likely to occur?

A oligopoly
B monopolistic competition 4
1 2024 March P32 Q07
C monopoly
7 In which market structure is dynamic efficiency least likely to occur?
D perfectly competitive
A oligopoly 4

7
8 B which
In monopolistic
Which market
type competition
structure
of employment iscontract
dynamicisefficiency least
most likely likely to occur?
to overcome the principal agent problem?

C
A monopolymonthly salaries of waiters in a restaurant to decrease their dependence on tips
oligopoly
increasing
from customers
B
D monopolistic competition
perfectly competitive
B linking workers’ pay with the profits of the firm to motivate them to raise the profitability of the
C monopoly
firm
8 D
C perfectly
Which
making competitive
typefull
offee
employment contracttoisamost
payment in advance lawyerlikely to overcome
to motivate the principal
him to prepare agent
a legal case problem?
well
2 2024 March
D P32 Q08
A offering permanent
increasing contracts
monthly to give
salaries of workers
waiters job
in security
a restaurant to decrease their dependence on tips
8 Which type of employment contract is most likely to overcome the principal agent problem?
from customers
9 A increasing
Company monthly salaries
R manufactures steel.ofCompany
waiters inS aproduces
restaurant to decrease
ships. Company their dependence
T operates on tips
oil tankers.
B from
linking
Company
workers’ pay with the profits of the firm to motivate them to raise the profitability of the
customers
V operates cruise liners.
firm
B linking workers’ pay with the profits of the firm to motivate them to raise the profitability of the
Which statement is correct?
C firm
making full fee payment in advance to a lawyer to motivate him to prepare a legal case well
A making
C If R takes
fullover S, this is an
fee payment exampleto
in advance ofaforwards
lawyer tovertical
motivateintegration.
him to prepare a legal case well
D offering permanent contracts to give workers job security
B
D If S takes
offering over V, this
permanent is an example
contracts to give of backwards
workers vertical integration.
job security
3
C If T takes over S, this is an example of diversification.
9 Company R manufactures steel. Company S produces ships. Company T operates oil tankers.
94
The Ifdiagram
Company
D
Company V takes shows
over the
RVmanufactures
S,
operates
cost
thiscruise
andexample
issteel.
an revenue
Company
liners. ofcurves for a integration.
S produces
horizontal firm.
ships. Company T operates oil tankers.
Company V operates cruise liners.
3 2024 output
Which March P32
level will Q10
enable a firm to achieve its objective of maximising its revenue?
Which
10 Which
There are
statement
statement
two firms
is correct?
is correct?
in an industry. Firm X faces a choice. It can either act independently or work
with its rival. If it acts independently its profit could be $900 a week but it could be only $400 a
A IfIfdepending
A
week RRtakes
takes over
over S, this
onS,what
this is isexample
andoes.
itsanrival example
of
If forwards
it works with itsMC
of forwards
vertical vertical
rival the integration.
integration. joint profit of the two firms
together would be price $1400, $700 each. It has no knowledge of what the rival’s policy will be.
B IfIfSStakes
B takes over
over V, this
V, this is anisexample
an example of backwards
of backwards vertical integration.
vertical integration.
Which conceptoverdescribes this AC
C
C IfIfTTtakes
takes over S, this is ansituation?
S,Pthis isexample
an example of diversification.
of diversification.
1
A
D contestable
If V takes over market
S, thisP2 is an example of horizontal integration.
D If V takes over S,P3this is an example of horizontal integration.
B kinked demand curve P4
10 C
There are twoagent
principal firmsproblem
in an industry. Firm X faces a choice. It can either act independently or work
10 with
There its are
rival.two
If it firms in an industry.
acts independently Firm
its profit
MRX faces a choice. D
could be $900 a week It but
caniteither
could be actonlyindependently
$400 a or work
week
D depending
prisoner’s on
dilemma what its rival does. If it works with its rival the = AR
joint
with its rival. If it acts independently its profit could be $900 a week but it could be only $400 a profit of the two firms
together would be $1400,
week depending on what $700its each. It has
rival does.no knowledge of with
what the rival’s the
policy will profit
be.
O A B If
C it works
D its rival joint of the two firms
together would be $1400,
Which concept describes this situation?
$700 each. It has no knowledge of what the rival’s policy will be.
quantity
4 2024
Which
A Jun P31
concept
contestable Q5
describes
market this situation?
5 Oligopoly firms
B seekcurve
to maximise profits.
A kinked demand
contestable market
Howprincipal
C will this affect
agent the pricing behaviour of oligopoly firms involved in a non-collusive market?
problem
B kinked demand curve
D
A prisoner’s dilemma
A price is fixed for the product that never changes throughout its life cycle.
C 2024
© UCLES principal agent problem 9708/32/F/M/24
B Firms will agree on the level of advertising costs for a new product.
D prisoner’s dilemma
C If one firm raises its price, other firms will maintain their original price to increase their market
share.
D If one firm lowers its price, other firms will increase their price.

6 An economic activity definitely creates a net social benefit when the value of social benefit minus
© UCLES
A 2024
private benefit is zero. 9708/32/F/M/24

B private benefit is negative.

C social cost is positive.
© UCLES 2024 9708/32/F/M/24
D social cost is negative.
 B private benefit is negative.
C social cost is positive.
D social cost is negative.
5 2024 Jun P31 Q7
4
7 Which assumption is essential for a market to be contestable?
8 A
A firm that
The raisesiscapital
market through
supplied a share
by a large issueof
number has to satisfy both shareholders’ expectations and
firms.
management aims. The management aims to produce at a non-profit maximum output.
B Firms are free to enter and leave the market.
Which strategy would necessarily prevent this aim?
C Firms cannot earn abnormal profits in the short run.
A fixing output where MC = MR in the long run
D Firms produce differentiated goods.
B operating price discrimination to maximise revenue
C rewarding shareholders more than returns to innovation
4
6 2024 Jun P31 ownership
D separating Q8 and control of the firm
8 A firm that raises capital through a share issue has to satisfy both shareholders’ expectations and
management
© UCLES 2024 aims. The management aims to produce at a non-profit maximum output.
9708/31/M/J/24 [Turn over
9 A major
Which UK chemical
strategy firm wasprevent
would necessarily bought byaim?
this its rival, a Dutch chemical firm.

What
A definitely
fixing occurred
output where MC =when
MR inthe
the Dutch
long runfirm bought the UK firm?
B
A operating price discrimination to maximise revenue
a partnership
C rewarding shareholders more than returns to innovation
B economies of scale
D separating ownership and control of the firm
C horizontal integration
9 D major
A increased profits
UK chemical firm was bought by its rival, a Dutch chemical firm.

7 2024definitely
What Jun P31 Q10 when the Dutch firm bought the UK firm?
occurred
10 A
Which statement is correct for a firm classed as a natural monopoly?
a partnership

A
B It will always
economies operate in the public sector and earn normal profits.
of scale
C
B horizontal integration
It will have high barriers to entry and be the dominant producer.
D increased profits
C It will easily benefit from external economies of scale.
D It will have higher average costs than a monopolistically competitive firm.
10 Which statement is correct for a firm classed as a natural monopoly?

A It will always operate in the public sector and earn normal profits.
11 The government can use policies to try and reduce the environmental damage caused by the
B It will have high barriers to entry and be the dominant producer.
amount of rubbish (garbage) created by firms and households.
C It will easily benefit from external economies of scale.
Which policy to reduce rubbish is most likely to lead to government failure?
D It will have higher average costs than a monopolistically competitive firm.
A an incentive payment for firms who reduce the levels of rubbish
11 The government can use policies to try and reduce the environmental damage caused by the
B a tax
amount on the(garbage)
of rubbish amount of rubbish
created a firm
by firms orhouseholds.
and household creates
C anpolicy
Which advertising
to reducecampaign about
rubbish is most thetoproblems
likely created by
lead to government rubbish
failure?
D
A government
an grantsfortofirms
incentive payment firmswho
researching how to
reduce the levels of safely
rubbishdispose of rubbish
B a tax on the amount of rubbish a firm or household creates
C an advertising campaign about the problems created by rubbish
D government grants to firms researching how to safely dispose of rubbish

© UCLES 2024 9708/31/M/J/24

 4 The diagram shows the cost and revenue curves for a firm.
C to maximise revenue
Which output level will enable a firm to achieve its objective of maximising its revenue?
D to minimise average costs
8 2024 Jun P32 Q7
MC
7 The diagram shows the costs and benefits of producing steel in a free market.
price

MSC AC
cost,
P1 3
benefit
P2 MPC
P R
4 The diagram shows the cost and3 X
revenue curves for a firm.
P4 T
Y
Which output level will enable a firm to achieve its objective of maximising its revenue?
Z U
S
MR D = AR
MC
price
O A B C D MPB = MSB
AC
quantity
P1 O M N
P2
P3 output
5 Oligopoly firms seek Pto4 maximise profits.
Which area measures the deadweight loss of economic welfare?
How will this affect the pricing behaviour
MRCof oligopoly firms involved in a non-collusive market?
A RTS B RUS TUS D =DAR YTUS
A A price is fixed forO the product that never changes throughout its life cycle.
A B C D
B Firms will agree on the level of advertising costsquantity
for a new product.
9 2024
C If Jun P33raises
one firm Q5 its price, other firms will maintain their original price to increase their market
5 share.
Oligopoly firms seek to maximise profits.

D will
How If one
thisfirm
affectlowers its price,
the pricing other
behaviour of firms willfirms
oligopoly increase their
involved in aprice.
non-collusive market?

A A price is fixed for the product that never changes throughout its life cycle.
6 An economic
B activity
Firms will agree definitely
on the creates a costs
level of advertising net social benefit
for a new when the value of social benefit minus
product.
C
© UCLES Ifprivate
A 2024one firmbenefit
raises its
is price,
zero. other firms will maintain their original price to increase their market
9708/32/M/J/24
share.
B Ifprivate
D one firmbenefit is negative.
lowers its price, other firms will increase their price.
C social cost is positive.
6 An economic activity definitely creates a net social benefit when the value of social benefit minus
D social cost is negative.
10 2024 Junbenefit
A private P33 Q7is zero.
B private benefit is negative.
7 Which assumption is essential for a market to be contestable?
C social cost is positive.
A The market is supplied by a large number of firms.
D social cost is negative.
B Firms are free to enter and leave the market.
7 C Firms
Which cannotis earn
assumption abnormal
essential profits
for a market in the
to be short run.
contestable?

A
D The market
Firms is supplied
produce by a large number
differentiated goods. of firms.
B Firms are free to enter and leave the market.
C Firms cannot earn abnormal profits in the short run.
D Firms produce differentiated goods.

© UCLES 2024 9708/33/M/J/24 [Turn over

© UCLES 2024 9708/33/M/J/24 [Turn over

 B operating price discrimination to maximise revenue
C rewarding shareholders more than returns to innovation
4
11 2024 Jun P33 ownership
D separating Q8 and control of the firm
8 A firm that raises capital through a share issue has to satisfy both shareholders’ expectations and
management aims. The management aims to produce at a non-profit maximum output.
9 A major UK chemical firm was bought by its rival, a Dutch chemical firm.
Which strategy would necessarily prevent this aim?

What
A definitely
fixing occurred
output where MC =when
MR inthe Dutch
the long runfirm bought the UK firm?
B
A operating price discrimination to maximise revenue
a partnership
C rewarding shareholders more than returns to innovation
B economies of scale
D separating ownership and control of the firm
C horizontal integration
9 D major
A increased profits
UK chemical firm was bought by its rival, a Dutch chemical firm.

12 2024 Jun P33

What definitely Q10 when the Dutch firm bought the UK firm?
occurred
10 A
Which statement is correct for a firm classed as a natural monopoly?
a partnership

A
B It will always
economies operate in the public sector and earn normal profits.
of scale
C
B horizontal integration
It will have high barriers to entry and be the dominant producer.
D increased profits
C It will easily benefit from external economies of scale.
D It statement
10 Which will haveishigher
correctaverage
for a firm costs than
classed as aanatural
monopolistically
monopoly? competitive firm.

A It will always operate in the public sector and earn normal profits.
11 The government can use policies to try and reduce the environmental damage caused by the
3 dominant
B It will have high barriers to entry and be the producer.
13 2023 March
amount of P32
rubbish Q3
(garbage) created by firms and households.
3 C diagram
The It will easily benefit
shows the from
effectexternal economies
of a price of scale.
change on an individual consumer’s equilibrium, moving
Which
from E policy
1 to E 2. to reduce rubbish is most likely to lead to government failure?
D It will have higher average costs than a monopolistically competitive firm.
A an incentive payment for firms who reduce the levels of rubbish
11 The government can use
Y policies to try and reduce the environmental damage caused by the
B a tax
amount on thegood
of rubbish amount
(garbage) of rubbish
created a firm
by firms andorhouseholds.
household creates
F
C anpolicy
Which advertising
to reducecampaign about
rubbish is most thetoproblems
likely created by
lead to government rubbish
failure?
D
A government
an grantsfortofirms
incentive payment firmswho
researching how to
reduce the levels of safely
rubbishdispose of rubbish
E2
B a tax on the amount of rubbish a firm or household creates
E1
C an advertising campaign about the problems created by rubbish
I2
D government grants to firms researching how to safely dispose of rubbish
I1

O G H
good X

What can be deduced from the diagram about the price change, the substitution effect and the
income effect?
© UCLES 2024 9708/33/M/J/24
substitution
price change income effect
effect
© UCLES 2024 9708/33/M/J/24
A price of X falls positive positive
B price of X falls positive negative
C price of Y rises negative positive
D price of Y rises negative negative

4 What is likely to help create dynamic efficiency?

A Entry barriers are reduced to increase competition in the market.

B Firms are legally bound to produce where price equals marginal cost.
 C yes no
D yes yes

14 2023 March P32 Q7

7 The world’s largest pharmaceutical companies developed and distributed an effective vaccine to
combat a dangerous virus.

What can be associated with this vaccine programme?

A demerit good and negative production externality

B imperfect competition and positive consumption externality
C perfect competition and negative consumption externality
D public good and negative production externality

5
15 2023 March P32 Q8
8 A landlord owns a house which is rented to tenants. The tenants are required to pay the
electricity and water bills. The landlord is required
5 to decorate and repair damage to the house
and its gardens.
8 A landlord owns a house which is rented to tenants. The tenants are required to pay the
What is not
electricity an water
and example of The
bills. the principal-agent problem?
landlord is required to decorate and repair damage to the house
and its gardens.
A The tenants forget to switch off a tap when filling a bath and water overflows, damaging the
© UCLES 2023 9708/32/F/M/23
floor.
What is not an example of the principal-agent problem?
B The tenants have a party and their guests cause damage to the interior of the house.
A The tenants forget to switch off a tap when filling a bath and water overflows, damaging the
C floor.
The tenants leave the lights and the TV on when they go out for an evening meal.
B
D The tenants have a party
park their carand their
in the guestsdamaging
garden, cause damage to the
the grass andinterior of the house.
the surrounding hedge.
C The tenants leave the lights and the TV on when they go out for an evening meal.
9 The The
D result of a cost-benefit
tenants analysis
park their car in the of a proposed
garden, government
damaging the grassroad-building project ishedge.
and the surrounding that there
will be a positive net social benefit of $50 million.
16 2023 March P32 Q9
9 Why might of
The result thea government
cost-benefit not proceed
analysis of awith the project?
proposed government road-building project is that there
will be a positive net social benefit of $50 million.
A The project would not be profitable for a private firm.
Why might
B The the government
project not
would cause proceed
negative with the project?
externalities.
A
C The project
There would
is limited not be
capital profitable
available forfor a private firm.
government projects.
B
D The project
There wouldwould cause
be more whonegative
lost thanexternalities.
gained.
C There is limited capital available for government projects.
10 If
D theThere
marginal cost
would beofmore
a good
whoislost
lower than
than its price, allocative efficiency has not been achieved.
gained.
What is likely to remedy this situation?
10 If the marginal cost of a good is lower than its price, allocative efficiency has not been achieved.
production of price of
What is likely
the to remedy this situation?
good the good

A decreaseof
production decrease
price of
B the good
decrease the good
increase
A
C decrease
increase decrease
B
D decrease
increase increase
C increase decrease
D increase increase
 C Average variable cost is greater than its average total cost.
D Average variable cost is rising.
17 2023 Jun P31 Q8
8 Steel producer X takes over its main competitor, steel producer Y.

What would X expect to happen to the price 2elasticity of demand for its product and its long-run
average cost as a result of this takeover?
1 Economists normally assume that the marginal utility from consuming additional goods is positive
4
and diminishing.
price elasticity long-run
7 A firm at of
its demand average
current level of cost finds that its short-run marginal cost is less than its
production
What is the effect on total satisfaction of consuming extra units of the good?
short-run average variable cost.
A decrease decrease
A Total satisfaction falls at a decreasing rate.
Which
B conclusion
decreaseabout the firm can be drawn from this information?
increase
B Total satisfaction falls at an increasing rate.
A C Average variable cost is constant.
increase decrease
C Total satisfaction rises at a decreasing rate.
B D Average variable cost is falling.
increase increase
D Total satisfaction rises at an increasing rate.
C Average variable cost is greater than its average total cost.
9 What
D is an example
Average variableofcost
an external
is rising.cost?
2 A budget line (b–b) shows the combinations of two goods, X and Y, that a consumer can obtain
18 2023
within aJun
fixedP33
A distribution Q8of $60 per week, when the price of Y = $1 and X = $2.
income
costs
8 Steel producer X takes over its main competitor, steel producer Y.
B energy costs 60 b
What wouldcosts
C labour X expect to happen
good Y to the price elasticity of demand for its product and its long-run
average cost as a result of this takeover?
D road congestion costs
price elasticity long-run
of demand average cost

A decrease decrease
B decrease increase b1 b 2 b b3 b4
0
C increase decrease
0 10 20 30 45 60
D increase increase good X

If the price of X rises to $3, what will be the new budget line?
9 Whatb–b
A is an example B
of anb–b
external cost? C b–b3 D b–b4
1 2

19 2023
A Nov P31
distribution Q3
costs
3 Which
B market
energy structures are contestable?
costs
C labour costs
perfect monopolistic
pure monopoly
D road congestion costs competition
competition

A2023
© UCLES no no yes
9708/31/M/J/23

B no yes yes
C yes no no
D yes yes no

© UCLES 2023 9708/31/O/N/23

© UCLES 2023 9708/33/M/J/23

 B Economies of scale are being experienced.
C The law of diminishing returns is operative.
D There are decreasing returns to scale.
20 2023 Nov P31 Q5
5 Which combination of reactions by rivals results in a kinked demand curve for an oligopolist when
a price is changed?

A copying both a price rise and a price fall

B copying a price rise and ignoring a price fall
C ignoring a price rise and copying a price fall
D ignoring both a price rise and a price fall

6 What is a key condition for effective price discrimination?

3
21 2023
A The Nov P32cannot
product Q4 be resold to another consumer.
4 TheThe
B merger of two
product large
must firms inelastic.
be price in the Singapore market supplying taxis and private hire vehicles
resulted in a single firm with 80% of the market. 3 The remaining 20% of the market consisted of
C The profits
thousands from one market
of independent can be used to subsidise another market.
taxi drivers.
4 TheThere
D mergerareoflow
twobarriers
large firms in the
to entry intoSingapore market supplying taxis and private hire vehicles
theeffectively
market.
Which statement
resulted in a singlebest describes
firm with 80% what has
of the market. Theoccurred in the
remaining 20%market
of thestructure?
market consisted of
thousands of independent taxi drivers.
A The market has become monopolistically competitive.
Which
B The statement bestchanged
market has describes what
from an has effectively
oligopoly occurred in the market structure?
to a monopoly.
A
C The market
The market has
has changed
become monopolistically competitive.
from perfect competition to an oligopoly.
B
D The
The market
market has changed
remains from an oligopoly to a monopoly.
an oligopoly.
C The market has changed from perfect competition to an oligopoly.
5 The The
D diagram
marketshows
remainstheancost and revenue curves of a profit-maximising, monopolistically
oligopoly.
competitive firm in long-run equilibrium.
2023
22© UCLES 2023Nov P32 Q5 9708/31/O/N/23 [Turn over
5 The diagram shows the cost and revenue curves of a profit-maximising, monopolistically
competitive firm in long-run equilibrium.
costs, AC
revenue MC

P AC
costs,
revenue MC

AR
MR
O Q AR
output
MR
Which statement correctly describes
O the performance
Q of this firm?
output
A It is allocatively efficient.
Which
B It isstatement correctly losses.
making abnormal describes the performance of this firm?

A
C It is
It is making
allocatively efficient.
abnormal profits.
B
D It
It is
is making abnormal
making normal losses.
profits.
C It is making abnormal profits.
6 A
D firm
It ischanges
making its aim and
normal chooses to produce where marginal revenue (MR) is zero instead of
profits.
where MR is equal to marginal cost (MC).

6 Which explanation
A firm changes its for
aimthis
andischooses
not correct?
to produce where marginal revenue (MR) is zero instead of
where MR is equal to marginal cost (MC).
A The firm wishes to increase sales.
Which
B The explanation
firm wishesfortothis is not its
increase correct?
output.
A
C The firm wishes
The firm wishes to
to reduce
increaseprices.
sales.
B
D The firm
The firm wishes
wishes to
to gain
increase
moreitsprofits.
output.
C The firm wishes to reduce prices.
 4
23 2024 Nov P31 Q5
5 The diagram shows the average revenue (AR) and average cost (AC) curves for a firm X that
manufactures electronic goods.

Firm X then completes a takeover of firm Y that supplies its component parts making them
cheaper. The original average revenue and average cost curves of firm X are AR1 and AC1.

price
AC3

AC1

AC2

AR2 AR1 AR3

O quantity

What is the position of the average cost curve and the average revenue curve after the takeover?

average average
cost revenue

A AC1 AR3
B AC2 AR1
C AC2 AR3
D AC3 AR2

6 LMN Ltd operates as a relatively small, family-owned producer in an industry dominated by a few
large firms. Its product is unique so the owners are confident they will be able to sell enough to
provide them with sufficient revenue to allow a minimum acceptable level of performance for the
firm.

Other than survival, what is the most likely objective of LMN Ltd?

A profit maximising
B profit satisficing
C revenue maximising
D sales maximising

© UCLES 2024 9708/31/O/N/24

Answers:
1D
2B
3D
4C
5B
6A
7B
8A
9C
10B
11A
12B
13B
14B
15C
16C
17A
18A
19D
20C
21B
22D
23B
 outcome from the privatisation of train and bus services?
A
fewerare
Chapter : 06 Labour Market
An indirect tax equal to external costs is imposed on cigarettes and the demand falls.
A Limits destinations served by trains and buses
B placed on a trade union’s restrictions that increase labour mobility.
B Price
C lower fares on bread are removed which allow a free market to operate.
controls
D
C Tariffs
moreare imposedservices
frequent on imported goods
to all which cause the Gini coefficient to increase.
destinations
1 2024 March P32 Q14
D more people employed in public transport services
14 What would shift the marginal revenue product curve for workers producing electric vehicles to
the right?

13 A
What will cause
a decrease a household
in the tovehicles
price of petrol be caught in the poverty trap?
B
A aAdecrease in theearns
household productivity of electric
less than vehicles workers
the international poverty line of $2.15 per person per day.
C an increase in the price of electric vehicles
B A household spends more than it earns in a month.
D an increase in the wage rate of electric vehicles workers
C A household’s earnings rise at a lower rate than the rise in inflation.
D An extra dollar earnt by a household causes a greater loss in government benefit payments.
2 2024 Jun P31 Q14
14 What will cause an outward shift in the demand for labour curve?

A a decrease in the top rate of income tax

B an increase in the demand for the final product
© UCLES 2024 9708/32/F/M/24 [Turn over
C an increase in subsidies to firms
D an increase in the size of the working population .

6
3 2024 Jun P31 Q15
15 The diagram shows what happens when the employees of a profit-maximising monopsonist
employer form a trade union and successfully negotiate a wage rate of OWT.

MCL
wage
rate SL

W2
WT
W1

MRPL = DL

O Q1 Q3 Q2 Q4
employment

What is the effect of the new wage rate on employment?

A It falls from OQ2 to OQ1.

B It falls from OQ2 to OQ3.
C It rises from OQ1 to OQ3.
© UCLES 2024 9708/31/M/J/24 [Turn over
D It rises from OQ1 to OQ4.

16 A world financial crisis was partly linked to the actions of commercial banks.

Which actions of the commercial banks could have led to the financial crisis?

A being subject to tight controls by the central bank over credit creation
B holding reserves above the reserve ratio agreed with the central bank
 A Employment fell in the railway industry.
B Employment was unchanged in the telecommunications industry.
C Output was greatest in the electricity supply industry.
D Workers became less efficient in the shipbuilding industry.
4 2024 Jun P32 Q13
13 Most workers in a country are employed in the manufacturing sector where they are paid a fixed
wage rate per hour.

What will lead to an increase in the net advantage of workers currently employed in the
manufacturing sector?

A a reduction in working hours available

B a shift in the country’s economy to the service sector
C a subsidised lunch is made available
D an increase in the number of jobs available

14 When will a profit-maximising firm employ the optimum number of workers?

7
5 A
2024 Jun
when theP32 Q15
average revenue product of labour equals the average cost of hiring workers
15 B
Thewhen
diagram shows revenue
the marginal the labour market
product for farm
of labour workers
equals in New
the average costZealand.
of hiring workers
C when the marginal revenue product of labour equals the marginal cost of hiring workers
D wage product of labour equals the trade union supplied cost of workers
when the marginal revenue
supply of
rate F
labour

G
K

J
demand for
labour
© UCLES 2024 O H
9708/32/M/J/24

quantity of labour

Which areas represent the economic rent and transfer earnings of the farm workers?

economic transfer
rent earnings

A GFK GHOJ
B GHOJ GJK
C GJK GJF
D GJK GHOJ

16 What is not a function of a commercial bank?

A to help firms raise finance

B to hold cash on deposit for firms
C to lend money to households
D to provide savings accounts

17 In 2020 in a country, the unemployment rate of the 16–64 age group seeking work was 4.0%.

The employment rate for this group in the same period was 76.6%.

What can be concluded from this?

 B A household spends more than it earns in a month.
C A household’s earnings rise at a lower rate than the rise in inflation.
D An extra dollar earnt by a household causes a greater loss in government benefit payments.
6 2024 Jun P33 Q14
7
14 What will cause an outward shift in the demand for labour curve?
13 The table shows the main characteristics of employment in two occupations.
A a decrease in the top rate of income tax
occupation X occupation Y
B an increase in the demand for the final product
average annual wage $100 000 $60 000
C an increase in subsidies to firms
number of weeks of annual leave 5 weeks 10 weeks
D an increase in the size of the working population
average length of working week 48 hours 44 hours
job security low high
length of training course to obtain job qualification 1 year 2 years
6
7 2024 Jun P33 Q15
15 What can definitely
The diagram shows bewhat
deduced from the
happens table?
when the employees of a profit-maximising monopsonist
employer form a trade union and successfully negotiate a wage rate of OWT.
A Those employed in occupation Y attach greater importance to job security.
B Those employed in occupation X attach less importance to leisure activities.
MCL
C wage competition for places on training courses to enter occupation X than
There will be more
occupation Y. rate SL

D Occupation Y has more non-pecuniary advantages than occupation X.

14 Which changes in direct and indirect tax are likely to increase the inequality in the distribution of
income in a developed economy?
W2
WT
direct taxes W1 indirect taxes

A fall fall
MRPL = DL
B fall rise
C rise O fall Q1 Q3 Q2 Q4
D rise remain constant employment

What is the effect of the new wage rate on employment?

15 A government wishes to reduce the use of cars in cities.
A It falls from OQ2 to OQ1.
Which policy
B It falls should
from OQ2be used?
to OQ 3.

A
C aIt decrease
rises frominOQ
parking charges
1 to OQ 3.
© UCLES 2024 9708/33/M/J/24 [Turn over
B
D lowering tax OQ
It rises from on petrol
1 to OQ(gasoline)
4.

C restricting cycling
16 D
A world financialpublic
subsidising crisis transport
was partly linked to the actions of commercial banks.
8 2023 Marchof P32
Which actions Q16
the commercial banks could have led to the financial crisis?
16 In
A a country, the top
being subject to 20% of earners
tight controls by pay 45% in bank
the central income taxcredit
over and 25% on sales taxes, and receive
creation
5% in cash benefits.
B holding reserves above the reserve ratio agreed with the central bank
What is the percentage of disposable income for this group?
C taking excessive risks by demanding insufficient security from borrowers
A 30% B 55% C 60% D 80%
D widening the gap in favour of a bank’s assets over liabilities

17
© What
UCLES 2023is most likely to result from a decrease in the natural rate of unemployment?
9708/32/F/M/23 [Turn over

A a decrease in government expenditure on goods and services

B a decrease in the level of government payments to the unemployed
C a decrease in trade union membership
D a decrease in interest rates
 quantity of labour
B decrease increase
What is the difference between the wage the monopsonist wishes to pay and the wage received
by C
labour? increase decrease
A DW1W3 B W1W2
increase C W2W3
increase D W2W4
9 2023 Jun P31 Q15
15 Economics textbooks state that labour is a derived demand for a firm in imperfect competition.
12 A government hopes to build an athletics stadium to hold the World Games. The stadium would
haveishigh
How private curve
the demand and external
for labourcosts, but it would increase national pride.
derived?

A
Whybywould
multiplying
it be the average
difficult physical
to use product by
cost-benefit the average
analysis revenue
to decide whether to build the stadium?
B by multiplying the average physical product by the marginal revenue
A The materials needed to build the stadium will need to be imported.
C by multiplying the marginal physical product by the marginal cost
B The external costs of clearing land for building will outweigh the private costs.
D by multiplying the marginal physical product by the marginal revenue
C The stadium will not be used much for athletics after the World Games.
D The valuation of national pride will be complex to assess.
10 2023 Jun P32 Q13
13 What will lead the demand curve for labour to shift to the right?

A a decrease in the marginal productivity of labour

© UCLES 2023 9708/31/M/J/23
B a decrease in the wage rate
C an increase in the marginal productivity of labour
D an increase in the wage rate

6
11 2023 Jun P32 Q14
14 The production schedule indicates how total output increases as up to five workers are employed
per week.

employment total product

of workers (units)

0 0
1 6.0

© UCLES 2023 2 13.0

9708/32/M/J/23 [Turn over
3 21.0
4 27.5
5 33.5

What is the marginal product when the average product per worker equals 7.0 units?

A 6.0 units B 6.5 units C 7.0 units D 8.0 units

15 What is likely to cause a more equal distribution of income in the long run?

A a reduction in the top rate of taxation

B an increase in government spending on education and training
C an increase in unemployment
D privatisation of the education sector
 6

13 In 2020, the governor of California issued an order to ban the sale of new vehicles from 2035 that
are powered by petrol or diesel fuel. 7
12 2023 Jun P32 Q16
16 Which type are
Immigrants of government policy
awarded entry is this?
points according to their ability to fulfil criteria set by the Canadian
Government. A new Express Entry system for the immigration of skilled workers was introduced.
A a nudge
The diagram shows the change in the relative importance or weighting given to these criteria
B a permit to pollute
between the old and new systems.
C nationalisation
Criteria weighting (%) for skilled worker immigration
D regulation
skill transferability
100
work a
14 The diagram illustrates experience
monopsony labour market in which the %
government has imposed a
minimum wage. adaptability 80
age
MCL 60
education
W4 40
wage rate language S = ACL
20
Wjob
3 offer
0
old Express
W2 system Entry minimum wage
system

What can be concluded fromWthe

1 diagram?

A Canada intended to maintain the same level of skilled immigrantsDunder

= MRPboth systems.
B Canada wanted a smallerOnumber ofQhighly
2 Q1
educated Q3
skilled immigrants.
C quantity
Certainty of employment for skilled immigrants was of labour
made the main criterion.
D Skilled
What is theimmigrants
difference needed
betweento the
have fewerthe
wage years of work experience
monopsonist wishes tothan
paypreviously.
and the wage received
by labour?
17 A
A government
W1W3 imposes
B a maximum
W1W2 price for
C electricity.
W2W3 D W2W4
13 2023 statement
Which Jun P33justifying
Q15 this measure might be considered valid on economic grounds?
15 Economics textbooks state that labour is a derived demand for a firm in imperfect competition.
A It will encourage electricity suppliers to invest in additional capacity.
How
B Itiswill
theincrease
demandthe
curve for labour
incentive derived? to conserve energy.
for consumers
C
A Itbywill prevent the
multiplying themonopolistic exploitation
average physical of consumers.
product by the average revenue
D
B Itbywill prevent the
multiplying therationing
averageofphysical
electricity through
product bypower cuts. revenue
the marginal
C by multiplying the marginal physical product by the marginal cost
18 Which statement best describes demand-induced investment?
D by multiplying the marginal physical product by the marginal revenue
A It is spending on capital goods by firms because the rate of growth in demand for final goods
and services increases.
B It is spending on capital goods by firms because the cost of borrowing has fallen.
C It is spending on capital goods by firms because they want to access new technology to
improve the output per worker.
D It is spending on new capital goods by firms replacing old and obsolete capital goods.

© UCLES 2023 9708/33/M/J/23

© UCLES 2023 9708/32/M/J/23 [Turn over
 A government intervention leading to a less efficient allocation of resources
11 Which statement intervention
B government is not an example
leadingoftogovernment
a net loss offailure?
economic welfare
A
C a less
government intervention leading to an efficient
increase allocation of
in consumer resources
surplus
B
D government intervention leading to a net loss
social of exceeding
costs economic welfare
social benefits
14 2023
C Nov P31
government Q12 leading to an increase in consumer surplus
intervention
12 D
The government
diagram shows the demand
intervention for and
leading supplycosts
to social of labour.
exceeding social benefits

wage for and supply of labour.

12 The diagram shows the demand SL
W1 4
X
wage We SL
7 A firm operating in the airline industry uses thirdZ degree price discrimination.
W1 Y
Which condition is most likely to allow this X to happen? DL
We
Z
A Consumers are able to buy cheaply Yand then sell the product at a higher price.
O N N1
B Price elasticity of demand is the same for2all consumers inDthe market.
quantity L
C The firm faces a perfectly elastic demand curve. of labour
O N2 N1
D The firm is able to keep the different
The government announces a minimum wage market of segments
W1. quantityseparate.
of labour
Which area represents the increase in the economic rent of workers who will continue to be
8 What is
employed not an example
at the minimum of a moral
wage? hazard?
The government announces a minimum wage of W1.
A People with a higher risk of unemployment are more likely to undertake training.
A X area represents
Which B the
Y increase in C the X +Y
economic rent ofD workers
X + Y +who
Z will continue to be
B People with free dental
employed at the minimum wage? care are less likely to take care of their teeth with good oral hygiene.
C firm
13 A
A XPeople with with
is faced insuranceY againstofcar
Ba shortage theft
C are
labour. +more
Y likely
ItX decides to DparkXtheir
to introduce + its
Y+ car
Z in training
own high crime areas.for
scheme
school leavers.
15 2023
D PeopleNovwith P31unemployment
Q13 benefits are less likely to undertake retraining if they become
Which unemployed.
13 A firm effect is this
is faced most
with likely to have
a shortage on theItfirm?
of labour. decides to introduce its own training scheme for
school leavers.
A a decrease in the number of workers it employs
9 In recent years, the fuel cost of operating a jet aircraft has declined. Over the same period,
Which
B
improvedeffect
a decreaseis this
design most
inhas
the likely to have
productivity
led to much of itson
quieter the firm?
workforce
aircraft.
A an
C a decrease
increase in
in the number
the the of workers
geographical it employs
mobility of its labour
How would this affect marginal private cost (MPC) and the marginal external cost (MEC) of air
travel?
B
D a decrease in the productivity of its workforce
shift of the supply curve for its labour to the right
A
C a downward
an increase inshift
theof both the MPC
geographical and the
mobility MEC
of its curves
labour
14 What
B aais
D likely
downward
shift to result
of the supplyif acurve
shift of government
the MPC curve
for its introduces
andtoa the
labour aright
new regressive
movement tax?MEC curve
left along the
A
C Aggregate
a movementdemand will both
left along increase.
the MPC and the MEC curves
14 What
B aismovement
likely to result
D Employment if a government
opportunities
left along the will
MPC introduces
increase.
curve a new regressive
and a downward tax?MEC curve
shift of the
16 2023
C Nov equality
A Income P32
Aggregate Q10
demand
will will increase.
improve.
10 BDFirmEmployment
K operates
Tax in
willaincrease.
competitive
revenuesopportunities market. Firm L is a monopsony employer. Both firms are
will increase.
operating at an equilibrium level of output.
C Income equality will improve.
Trade unions are introduced with the result that wages in each firm are increased.
D 2023
© UCLES Tax revenues will increase. 9708/31/O/N/23 [Turn over
What is the likely effect on each firm if trade unions enter the labour market?

© UCLES 2023 firm K 9708/31/O/N/23firm L [Turn over

A employment will decrease employment will decrease

B employment will decrease employment will increase
C employment will increase employment will decrease
D employment will increase employment will increase

© UCLES 2023 9708/32/O/N/23

 5
17 2023 Nov P32 Q11
11 A backward-sloping supply curve of labour is one where, beyond a certain point, the supply of
labour 5
A backward-sloping
11 A decreases as thesupply
demand for labour
curve rises.
of labour is one where, beyond a certain point, the supply of
labour
B increases as the demand for labour rises.
A
C decreases as the demand
wages rise. for labour rises.
B
D increases as the demand
wages rise. for labour rises.
C decreases as wages rise.
12 What is the economic
D increases result
as wages rise.of a universal basic income (UBI)?
18 2023 Nov P32 Q12
reduces the improves
12 What isincentive
the economic result of a equality
to work universal basic income (UBI)?

A no the
reduces no
improves
B incentive
noto work equality
yes 5
A
C no
yes no
10 What is consistent with a movement towards Pareto optimality?
B
D no
yes yes
A when negative externality lowers the utility of an individual
C yes no
B when consumption of a good is non-rival
13 Which
D combination
yes of fiscal policyyes measures would be most effective in reducing income
inequality?
C when reallocation of resources can make someone better off without making any other
person worse off
13 Which combination of of fiscal policy measures would be most effective in reducing income
D whentop rates
trade takes place to make
indirect
value
one nation
taxes
of state
better off at the expense of its trading partner
inequality?
income tax benefits
19 2023 Nov P33 Q11
A increase
top rates increase increase
11 The diagram showsofthe short-run supply curve
value
andoflong-run
state supply curve of labour.
indirect taxes
B income tax
increase reduce benefits
increase
A
C increase
reduce increase increase
reduce
short run
wage
B
D increase
reduce rate reduce increase
reduce
C reduce increase reduce long run

D reduce reduce reduce

Y
Z
D
O quantity of labour

Which area turns from economic rent in the short run to transfer earnings in the long run?

A X B X+Y C Y D Y+Z

12 Which policies might a government introduce to increase the marginal productivity of labour?

tax allowances
better
for capital
education
goods
© UCLES 2023 9708/32/O/N/23 [Turn over
A no no
B2023
© UCLES no yes 9708/32/O/N/23 [Turn over
C yes no
D yes yes

13 What is most likely to increase relative poverty in a country?

A increasing means-tested benefit levels

 O quantity of labour

Which area turns from economic rent in the short run to transfer earnings in the long run?

A X B X+Y C Y D Y+Z
20 2023 Nov P33 Q12
12 Which policies might a government introduce to increase the marginal productivity of labour?

tax allowances
better
for capital
education
goods

A no no
B no yes
C yes no
D yes yes

13 What is most likely to increase relative poverty in a country?

A increasing means-tested benefit levelsAnswers:

B increasing the power of trade unions
1C
C making the tax system more progressive
2B
D removing the national minimum wage
3C
4C
© UCLES 2023 9708/33/O/N/23 [Turn over

5D
6B
7C
8C
9D
10C
11D
12C
13D
14A
15D
16B
17C
18D
19C
20D
 production
B different same
A
C Chapter
different
same : 07different
Government Intervention
different
B
D different
same same
same
1 2024
C Nov same
P31 Q11 different
D government
11 Which same policy would
samenot be classified as regulation?

A a ban on cocaine consumption

11 Which government policy would not be classified as regulation?
B compulsory wearing of seatbelts in cars
A
C alicences
ban on for
cocaine consumption
the extraction of water from rivers
5
B
D compulsory wearing of seatbelts in cars
taxation of cigarettes
9
CA group of producers enter into an agreement to restrict supply or fix the price of a good.
licences for the extraction of water from rivers
AWhat
12 D does thisofdescribe?
government
taxation removes
cigarettesa subsidy on a rural school bus service.
2 2024 Nov P31 Q12
A a cartel
What is the effect of this on the market for this bus service?
12 AB government
a conglomerate merger
removes a subsidy on a rural school bus service.
A Deadweight loss decreases.
C economies of scale
What is the effect of this on the market for this bus service?
B Private marginal costs increase.
D horizontal integration
A
C Deadweight loss benefit
Private marginal decreases.
decreases.
10 B
WhatPrivate
D Social marginal
is meant costsconcentration
by a four-firm
marginal costs increase. ratio of 25%?
decrease.
CA Private marginal
The largest benefit
four firms’ decreases.
market share totals 25%.

DB The largest
Social four firms
marginal have
costs a market share of 25% each.
decrease.
C There are only four firms in the industry.
D The largest firm has a 25% market share.
3 2024 Nov P33 Q11
11 A government decides to use price controls to achieve allocative efficiency in a monopoly market.

Which price would need to be set to achieve allocative efficiency?

MC
price

AC
A
B
C
D

MR D = AR
© UCLES 2024 9708/31/O/N/24
O Q1 Q2 Q3 Q4
quantity
© UCLES 2024 9708/31/O/N/24
 C the income available to buy the two goods
D the rate at which marginal utility changes as consumption changes
4 2024 March P32 Q03
3 The table shows the total amount consumers are willing to pay for different quantities of good X
and the total external benefits that arise from the consumption of X.

quantity of consumers’ total external

good X willingness to pay benefits
(000 units) ($000) ($000)

1 100 20
2 180 38
3 240 54
4 280 68
5 300 80

What is the value of the marginal social benefit when 5000 units are consumed?

A $12 000 B $32 000 C $80 000 D $380 000

5
5 2024 March P32 Q11
11 A government wishes to use market forces to remove a negative externality in the consumption
of a good. 5

11 A government
Which policy is wishes
likely totobeuse
themarket forces to remove a negative externality in the consumption
most effective?
of a good.
A It should provide information about the undesirable side-effects of the good.
Which policy is likely to be the most effective?
B It should give producers a subsidy, to allow consumers to purchase the product more
A It cheaply.
should provide information about the undesirable side-effects of the good.
C
B It
It should
shouldimpose an indirectatax
give producers on consumers,
subsidy, to allowtoconsumers
reduce consumption to the
to purchase thesocially
productefficient
more
level.
cheaply.
© UCLES
D 2024 9708/32/F/M/24
C It should not
It should interfere
impose at all, to
an indirect taxallow the free market
on consumers, to generate
to reduce maximum
consumption efficiency.
to the socially efficient
level.
D government
12 A It should not interfere
decides to at all, to a
replace allow the free
private market
company to generate
with maximumtoefficiency.
its own company collect household
6 waste.
2024 March P32 Q12
12 A government
Why could suchdecides to justified?
action be replace a private company with its own company to collect household
waste.
A Waste collection is a public good.
Why could such action be justified?
B Costs of waste collection are bound to be lower if paid out of local taxes.
A Waste collection is a public good.
C Private companies are always less efficient than government companies.
B Costs of waste collection are bound to be lower if paid out of local taxes.
D Private companies might put profits before customer needs.
C Private companies are always less efficient than government companies.
D Private
13 What companies
is a failure might putmicroeconomic
of government profits before customer needs.
intervention?

A An indirect tax equal to external costs is imposed on cigarettes and the demand falls.
13 What is a failure of government microeconomic intervention?
B Limits are placed on a trade union’s restrictions that increase labour mobility.
A An indirect tax equal to external costs is imposed on cigarettes and the demand falls.
C Price controls on bread are removed which allow a free market to operate.
B Limits are placed on a trade union’s restrictions that increase labour mobility.
D Tariffs are imposed on imported goods which cause the Gini coefficient to increase.
C Price controls on bread are removed which allow a free market to operate.
D Tariffs
14 What wouldare imposed
shift on imported
the marginal goods
revenue whichcurve
product causefor
theworkers
Gini coefficient
producing to increase.
electric vehicles to
the right?

A a would
14 What decrease
shiftinthe
the marginal
price of petrol vehicles
revenue product curve for workers producing electric vehicles to
the right?
B a decrease in the productivity of electric vehicles workers
A a decrease in the price of petrol vehicles
 C Private companies are always less efficient than government companies.
D Private companies might put profits before customer needs.
7 2024 March P32 Q13
13 What is a failure of government microeconomic intervention?

A An indirect tax equal to external costs is imposed on cigarettes and the demand falls.
B Limits are placed on a trade union’s restrictions that increase labour mobility.
C Price controls on bread are removed which allow a free market to operate.
D Tariffs are imposed on imported goods which cause the Gini coefficient to increase.

14 What would shift the marginal revenue product curve for workers producing electric vehicles to
10
8 the
2024right?
March P32 Q29
29 A
The aLorenz curves
decrease in in theprice
the diagram showvehicles
of petrol different distributions of income and of wealth.

B a decrease in the productivity of electric vehicles 100

workers
C an increase in the price of electric vehicles % of income
or % of wealth
D an increase in the wage rate of electric vehicles workers

1
2

4
3
0
0 100
% of households

At first, income in a country is more equally distributed than wealth.

© UCLES 2024 9708/32/F/M/24 [Turn over
In a period, the distribution of income becomes more unequal but the distribution of wealth
becomes more equal.

Which movement would show the effects of these changes on the distribution of income and
wealth within the country?

distribution of income distribution of wealth

A shift from curve 1 to curve 2 shift from curve 4 to curve 3

B shift from curve 2 to curve 1 shift from curve 3 to curve 4
C shift from curve 3 to curve 4 shift from curve 2 to curve 1
D shift from curve 4 to curve 3 shift from curve 1 to curve 2

30 What is likely to happen in a developing country as it becomes more developed?

A A lower percentage of people will go to university.

B Average life expectancy will rise.
C The rate of population growth will increase.
D The tertiary sector will decline in importance.
8 A firm that raises capital through a share issue has to satisfy both shareholders’ expectations and
C
management 50aims. The management
25 aims to produce at a non-profit maximum output.
MR D = AR
D 20 40
Which strategy would necessarily prevent this aim?
9 2024 Jun P31 Q3 O A B C D
A fixing output where MC = MR in the long run
3 A medical team provides vaccinations for children to prevent quantity
an outbreak of an infectious
B operating price discrimination to maximise revenue
disease.
C rewarding
Why thisshareholders
wouldfirms be described more than returns
as a profits.
positive to innovation
externality?
5 Oligopoly seek to maximise
D separating ownership and control of the firm
A Additional
How benefit
will this affect themight bebehaviour
pricing gained asof the diseasefirms
oligopoly no longer spreads.
involved in a non-collusive market?
B Any
A kind offixed
A price medical help will improve the condition of the children.
9 A major UK ischemical forfirm
the product
was thatbynever
bought changes
its rival, throughout
a Dutch chemicalits life cycle.
firm.
C No action would be taken unless the medical team intervened.
B Firms will agree on the level of advertising costs for a new product.
What definitely occurred when the Dutch firm bought the UK firm?
D The
C If onesocial
firm benefits
raises itsofprice,
vaccination are less
other firms than the social
will maintain costs. price to increase their market
their original
A a partnership
share.
B
D economies of scale
If one firm lowers its price, other firms will increase their price.
10 2024
C Jun P31
horizontal Q6
integration
© UCLES 2024 9708/31/M/J/24

6 An economic
D increasedactivity
profits definitely creates a net social benefit when the value of social benefit minus

A private benefit is zero.

10 Which statement is correct for a firm classed as a natural monopoly?
B private benefit is negative.
A
C It will always
social cost is operate
positive.in the public sector and earn normal profits.
B
D It will have
social cost high barriers to entry and be the dominant producer.
is negative.
C It will easily benefit from external economies of scale.
7 Which
D assumption
It will is essential
have higher average for a market
costs than a to be contestable?
monopolistically competitive firm.
11 2024 Jun P31isQ11
A The market supplied by a large number of firms.
11 The government can use policies to try and reduce the environmental damage caused by the
B Firms
amount are free (garbage)
of rubbish to enter and leaveby
created thefirms
market.
and households.
C Firms cannot earn abnormal profits in the short run.
Which policy to reduce rubbish is most likely to lead to government failure?
D Firms produce differentiated goods.
A an incentive payment for firms who reduce the levels of rubbish
B a tax on the amount of rubbish a firm or household creates
C an advertising campaign about the problems created by rubbish
D 2024
© UCLES government grants to firms researching how to safely dispose of rubbish
9708/31/M/J/24 [Turn over

5
12 2024 Jun P31 Q12
12 What would supporters of a nationalised public transport service expect to be the most likely
outcome from the privatisation of train and bus services?

A fewer destinations served by trains and buses

B lower fares
C more frequent services to all destinations
© UCLES 2024 9708/31/M/J/24

D more people employed in public transport services

13 What will cause a household to be caught in the poverty trap?

A A household earns less than the international poverty line of $2.15 per person per day.
B A household spends more than it earns in a month.
C A household’s earnings rise at a lower rate than the rise in inflation.
D An extra dollar earnt by a household causes a greater loss in government benefit payments.

14 What will cause an outward shift in the demand for labour curve?

A a decrease in the top rate of income tax

 5

8 3 to survive?
What is likely to make it more difficult for a small firm
13 2024 Jun P32 Q3
3 A increased
Which preference
combination on the
of costs part
and of consumers
benefits forto
will lead distinctive non-standardised
an increase in net social products
costs?
B reductions in the rate of interest charged by commercial banks
private benefits external benefits private costs external costs
C the absence of effective barriers to the entry of potential competitors
D A the existence
falls falls
of decreasing returns to scale no change no change
B no change increases falls no change
9 A market
C structure in which a smallincreases
no change number of firms face competition
falls from potential falls
entrants.

What
D does this describe?
increases increases no change falls
A a contestable market

4 B a monopoly
A firm increases its output, starting from zero.
5
14 2024 Jun P32competition
Q8
C monopolistic
How will this affect its short-run marginal cost (MC), average total cost (ATC) and average fixed
8 What is likely to make it more difficult for a small firm to survive?
costperfect
(AFC)?
D competition
A increased preference on the part of consumers for distinctive non-standardised products
MC ATC AFC
10 What is an example
B reductions of rate
in the backward vertical
of interest integration?
charged by commercial banks
A A bakeryfall then rise wheatfall then rise fall
C athe absencebuying
of a
effectivefarm
barriers to the entry of potential competitors
B B carfall then rise buyingriseathen fall rise
D athe manufacturer
existence of decreasing car showroom
returns to scale
C C a vineyard
rise then fall an apple
buying fall then rise
orchard fall

9 D D two rival
A market rise then fall
supermarkets
structure in which rise then
joining fall
together
a small number of firms rise face competition from potential entrants.
15 2024 Jun P32 Q11
What does this describe?
511 A government
Assuming thewants to introduce
absence of pricea controls,
policy thatinwill reduce
which the pollution
industry caused by the
is an individual firmproduction
least likely to be
of
A a good.
a contestable market
able to alter the price at which it sells its product?
B a monopoly
Which policy would not make use of market forces?
A air transportation
C
A amonopolistic
quota to limitcompetition
the production of the good
B hairdressing
D
B aperfect competition
regulation to ban the production of the good
C steel production
C a tax on the production of the good
D wheat farming
10 D
What is an example
a tradable of permit
pollution backward vertical
system integration?
for producers of the good

A a bakery buying a wheat farm

B a car manufacturer buying a car showroom
C a vineyard buying an apple orchard
D two rival supermarkets joining together

11 A government wants to introduce a policy that will reduce the pollution caused by the production
of a good.

Which policy would not make use of market forces?

A 2024
© UCLES a quota to limit the production of the good
9708/32/M/J/24 [Turn over
B a regulation to ban the production of the good
C a tax on the production of the good
D a tradable pollution permit system for producers of the good

© UCLES 2024 9708/32/M/J/24 [Turn over

 D Total utility continually rises as the level of consumption rises.

2 The diagram shows indifference curves I1, I2 and a budget line T.

6
16 2024 Jun P32 Q12
100
90
12 The table shows the annual percentage change in the output per worker employed for four
units and after privatisation.
nationalised industries before 80
of X
70
60 before after
nationalised 3
privatisation privatisation
50
industry
% %
4 The diagram shows the cost and40revenue curves for a firm.
railways 30 –4 I12
Which output level will enable a 20 firm to achieve its objective of maximising its revenue?
electricity supply 7 I9
2
10
T
shipbuilding 0 4 –1
MC
0 5 10 15 20 25 30 35 40 45 50
price
telecommunications 6 6
units of Y
What can be concluded about the effect of privatisation? AC
Which combination of X P and
1
Y gives the consumer maximum satisfaction?
A Employment fell in the P2 railway industry.
units of X Punits
3 of Y
B Employment was unchangedP4 in the telecommunications industry.
A 100 0
C Output was greatest in the electricity supply industry.
B 70 15 MR
D Workers became less efficient in the shipbuilding industry. D = AR
C 50 25
O A B C D
D workers20
13 Most in a country are40employed in the manufacturing sector where they are paid a fixed
quantity
17 wage
2024rate
Jun per hour.
P33 Q3
3 A medical
What teamto provides
will lead vaccinations
an increase for advantage
in the net children to ofprevent an currently
workers outbreak employed
of an infectious
in the
5 Oligopoly
disease. firmssector?
manufacturing seek to maximise profits.

How
Whyawill
A thisthis
reduction
would affect
in the pricing
beworking behaviour
hours
described as positiveofexternality?
aavailable oligopoly firms involved in a non-collusive market?

A
A aA
B priceinisthe
shift
Additional fixed formight
the economy
country’s
benefit product that never
to the
be gained as changes
service
the throughout
sector
disease no its life cycle.
longer spreads.
B
B aFirms
C willof
subsidised
Any kind agree onisthe
lunch
medical level
made
help of advertising
willavailable
improve costs forofathe
the condition newchildren.
product.
C
D
C anIfNoone firm would
increase
action raises its
in thebe price,unless
number
taken other
of jobsfirms will maintain
available
the medical their original price to increase their market
team intervened.
share.
D The social benefits of vaccination are less than the social costs.
D If will
14 When oneafirm lowers its price,
profit-maximising other
firm firmsthe
employ willoptimum
increasenumber
their price.
of workers?
18 2024 Jun P33 Q6
A when the average revenue product of labour equals the average cost of hiring workers
6 An economic activity definitely creates a net social benefit when the value of social benefit minus
B 2024
© UCLES when the marginal revenue product of9708/33/M/J/24
labour equals the average cost of hiring workers
A private benefit is zero.
C when the marginal revenue product of labour equals the marginal cost of hiring workers
B private benefit is negative.
D when the marginal revenue product of labour equals the trade union supplied cost of workers
C social cost is positive.
D social cost is negative.

7 Which assumption is essential for a market to be contestable?

A The market is supplied by a large number of firms.

B Firms are free to enter and leave the market.
C Firms cannot earn abnormal profits in the short run.
© UCLES 2024 9708/32/M/J/24
D Firms produce differentiated goods.

© UCLES 2024 9708/33/M/J/24 [Turn over

 C It will easily benefit from external economies of scale.
D It will have higher average costs than a monopolistically competitive firm.
19 2024 Jun P33 Q11
11 The government can use policies to try and reduce the environmental damage caused by the
amount of rubbish (garbage) created by firms and households.

Which policy to reduce rubbish is most likely to lead to government failure?

A an incentive payment for firms who reduce the levels of rubbish

B a tax on the amount of rubbish a firm or household creates
C an advertising campaign about the problems created by rubbish
D government grants to firms researching how to safely dispose of rubbish
2

1 Utility theory is based on the assumption of the ‘rational consumer’.

20 5
2024isJun
What P33 Q12
necessary to act as a ‘rational consumer’?
12 What would supporters of a nationalised public transport service expect to be the most likely
outcome from the privatisation of train and buschoice is
services?
access to
addictive independent
A fewercomplete
destinations served by trains and buses
behaviour of other
information
consumers
B lower fares
C A more frequent
© UCLES 2024
no services to yes
all destinations yes
9708/33/M/J/24
B yes no no
D more people employed in public transport services
C yes yes no
D will cause
13 What yes a household tono
be caught in theyes
poverty trap?
21 2023 March P32
A A household Q2
earns less than the international poverty line of $2.15 per person per day.
2 The price of good S is $6 and the price of good T is $8. A consumer’s marginal utility for each
B A household spends more than it earns in a month.
good is shown.
C A household’s earnings rise at a lower rate than the rise in inflation.
marginal utility marginal utility
units
D An extra dollar earnt by a household causes a greater loss in government benefit payments.
of good S of good T

1 36 32
14 What will cause an outward shift in the demand for labour curve?
2 24 22
A a decrease in the top rate of income tax
3 18 20
B an increase in the demand for the final product
4 9 18
C an increase in subsidies to firms
5 0 9
D an increase in the size of the working population
If this consumer wants to maximise total utility, which combination of goods would they consume?

good S good T

A 1 1
B 2 1
C 3 4
D 5 5
 C There is limited capital available for government projects.
D There would be more who lost than gained.
22 2023 March P32 Q10
10 If the marginal cost of a good is lower than its price, allocative efficiency has not been achieved.

What is likely to remedy this situation?

production of price of
the good the good

A decrease decrease
B decrease increase
C increase decrease
D increase increase

7
23 2023 March P32 Q13
13 The table shows the main characteristics of employment in two occupations.
7
occupation X occupation Y
13 The table shows the main characteristics of employment in two occupations.
average annual wage $100 000 $60 000
number of weeks of annual leave occupation
5 weeks X occupation
10 weeks Y
average annualof
average length wage
working week $100 000
48 hours $60
44 000
hours
number
job of weeks of annual leave
security 5 weeks
low 10 high
weeks
average
length of length ofcourse
training workingtoweek
obtain job qualification 48 hours
1 year 44 hours
2 years
© UCLES 2023 9708/32/F/M/23 [Turn over
job security low high
What can definitely be deduced from the table?
length of training course to obtain job qualification 1 year 2 years
A Those employed in occupation Y attach greater importance to job security.
What can definitely be deduced from the table?
B Those employed in occupation X attach less importance to leisure activities.
A
C Those employed
There will in occupation
be more competitionY for
attach greater
places on importance to jobto
training courses security.
enter occupation X than
B occupation Y.
Those employed in occupation X attach less importance to leisure activities.
D
C Occupation Y has
There will be moremore non-pecuniary
competition advantages
for places than courses
on training occupation
to X.
enter occupation X than
occupation Y.
14 Which changes in
D Occupation direct
Y has andnon-pecuniary
more indirect tax are likely to increase
advantages the inequality
than occupation X. in the distribution of
income in a developed economy?
24 2023 March P32 Q14
14 Which changes
directin direct and indirect
taxes indirecttax are likely to increase the inequality in the distribution of
taxes
income in a developed economy?
A fall fall
B direct taxes
fall indirect
risetaxes
A
C fall
rise fall
fall
B
D fall
rise remainrise
constant
C rise fall
15 A D rise
government wishes remain
to reduce constant
the use of cars in cities.

Which policy should be used?

15 A government wishes to reduce the use of cars in cities.
A a decrease in parking charges
Which policy should be used?
B lowering tax on petrol (gasoline)
A
C a decreasecycling
restricting in parking charges
B
D lowering taxpublic
subsidising on petrol (gasoline)
transport
C restricting cycling
16 In
D a subsidising
country, thepublic
top 20% of earners pay 45% in income tax and 25% on sales taxes, and receive
transport
 D Average variable cost is rising.
C level of real GNP per head
8 Steel
D producer
size X takes over its main competitor, steel producer Y.
of population
25 2023 March P32 Q29
What would X expect to happen to the price elasticity of demand for its product and its long-run
average cost
29 What is an as a result
example of anofexpenditure-switching
this takeover? policy?

A an increase in income tax rates

price elasticity long-run
of demand average cost
B an increase in interest rates
C A an increase
decrease
in tariff rates decrease
D B an increase
decrease increase
in the supply of money
C increase decrease
D
30 Labour fromincrease increase
low-income countries often migrates to high-income countries and finds jobs.
26 2023 Jun P31 Q9
How would such a movement of labour be likely to affect the economic growth and the pressure
9 on wage
What rises
is an in the high-income
example of an externalcountry?
cost?

A distribution costs pressure on

economic growth
B energy costs wage rises

C A labour costs
decrease decrease

D B road congestion
decrease costs increase
C increase decrease
D increase increase
27 5
2023 Jun P31 Q10
10 The diagram shows the demand for and supply of a good and the marginal social costs (MSC) for
that good.

MSC
costs,
revenue S

x y
z

w D

O Q
© UCLES 2023 9708/31/M/J/23 output

Assuming there are no external benefits, which area measures the net social benefit at output
OQ?

A x B x–y C x+y D x–y–z

© UCLES 2023 9708/32/F/M/23

11 What would definitely result from the divorce of ownership and control?

A decreased moral hazard

B the principal agent problem
C greater productive efficiency
D increased profit maximisation

12 One reason for market failure is the existence of public goods.

Which policy option is appropriate for addressing such a market failure?

 C greater productive efficiency
D increased profit maximisation
28 2023 Jun P31 Q12
12 One reason for market failure is the existence of public goods.

Which policy option is appropriate for addressing such a market failure?

A direct provision of the good by the government

B provision of detailed information to consumers
C subsidising firms that currently produce the good
D the adoption of maximum price controls

6
29 2023 Jun P31 Q13
13 In 2020, the governor of California issued an order to ban the sale of new vehicles from 2035 that
are powered by petrol or diesel fuel. 6

13 Which type
In 2020, theofgovernor
government policy isissued
of California this? an order to ban the sale of new vehicles from 2035 that
are powered by petrol or diesel fuel.
A a nudge
Which type of government policy is this?
B a permit to pollute
A
C a nudge
nationalisation
© UCLES 2023 9708/31/M/J/23 [Turn over
B
D a permit to pollute
regulation
C nationalisation
14 D
The regulation
diagram illustrates a monopsony labour market in which the government has imposed a
minimum wage.
30 2023 Jun P31 Q14
MCL
14 The diagram illustrates a monopsony labour market in which the government has imposed a
minimum wage.
W4
wage rate MCL S = ACL
W34
wage rate S = ACL
W2 minimum wage
W3

W12 minimum wage

D = MRP
WO1 Q2 Q1 Q3
quantity of labour= MRP
D

O Q2 Q1 Q
What is the difference between the wage the monopsonist wishes to3 pay and the wage received
by labour? quantity of labour

A Wis
What 1Wthe B between
3 difference W1W2 the wageCtheWmonopsonist
2W3 D Wto
wishes 2Wpay
4 and the wage received
by labour?

15 Economics
A W1W3 textbooksBstate
W1that
W2 labour is C
a derived
W2W3demand for
D a firm
W2W in4 imperfect competition.

How is the demand curve for labour derived?

15 Economics textbooks state that labour is a derived demand for a firm in imperfect competition.
A by multiplying the average physical product by the average revenue
How is the demand curve for labour derived?
B by multiplying the average physical product by the marginal revenue
A
C by multiplying
by multiplying the
the marginal
average physical
physical product
product by
by the
the average
marginalrevenue
cost
B
D by
by multiplying
multiplying the
the average
marginal physical
physical product
product by
by the
the marginal
marginal revenue
revenue
C by multiplying the marginal physical product by the marginal cost
D by multiplying the marginal physical product by the marginal revenue
 India. MC
cost or ATC
D price
Norway is likely to have a higher percentage of tax generated from indirect taxes and
privately funded
$ pensions than India.
31 2023 Jun P31 Q17
AVCto correct a
17 A reason for government intervention in the workings of the economy is to attempt
market failure. Sometimes, though, government failure may occur.

What is not a possible reason for government failure?

A Governments may have to make decisions on the basis of out-of-date information.

B Governments may make decisions that reduce negative externalities.
C The extent of the market failure may be difficult to judge.
D When circumstances O A mayBbe unable
change, a government C toDrespond quickly.
quantity

2
5
32 Steel producer
2023 Jun P32XQ1
takes over its main competitor, steel producer Y.
1 Studies show that some dentists replace patients’ teeth more often than is necessary.
What would X expect to happen to the average revenue for its product and its long-run average
cost
Whichasfactor
a result of this
helps takeover?
to explain why excessive dental treatment may take place?

A the existence
averageof asymmetric information
long-run
revenue average cost
B the existence of dynamic efficiency
© UCLESA decrease
C 2023
the existence of positive decrease
9708/31/M/J/23
externalities [Turn over

B decrease increase
D the existence of social benefits
C increase decrease

2 D diagram
The increase increase
shows an individual’s indifference curve, I1, for apples and pears.
33 2023 Jun P32 Q6

6 Which statement is correct?

apples
A External benefit minus private benefit equals social benefit.
19 Y
B Private benefit minus external benefit equals social benefit.
C X
Social benefit minus external12benefit equals private benefit.
I1
D Social benefit plus private benefit equals external benefit.

0 4
34 2023 Jun P32 Q7 0 2 4
pears
7 What can be done to help to overcome moral hazard?
What can be concluded from the movement from point X to point Y on this curve?
A charging the same insurance premium to all people in the same age group
A
B The individual
designing can afford
insurance more
contracts soapples
that thethan pears.company and client share any loss
insurance
B
C The individual
giving has not
unconditional changed
financial theirtototal
support banksutility.
to protect jobs
© UCLES 2023 9708/32/M/J/23 [Turn over
C
D The individualjobs
guaranteeing prefers apples
for bank to pears.
managers to provide a sense of security
D The individual has gained more utility by moving from point X to point Y.
8 Which action would produce a positive externality of production?

3 What
A A is notisnecessary
child vaccinatedfor successful
against price discrimination?
measles.
B
A A consumer
ability donates
to separate products to a local food bank.
markets
C
B A firm rebuilds
different price aelasticities
local road of
when constructing
demand in eachits new factory.
market
D
C A government
monopoly pays a subsidy to firms producing cars.
power
D price leadership
9 A privately owned sole supplier of gas operates in an unregulated market with high barriers to
 D A government pays a subsidy to firms producing cars.
C giving unconditional financial support to banks to protect jobs
9 D privately
A guaranteeing jobssupplier
owned sole for bank managers
of gas toinprovide
operates a sense market
an unregulated of security
with high barriers to
35 2023 Jun
entry and P32 Q8
exit.

8 Which
Whichrow is most
action likely
would to indicate
produce the economic
a positive efficiency
externality resulting from the firm’s position in
of production?
this market?
A A child is vaccinated against measles.
productive allocative dynamic
B A consumer
efficiency donates 5
products to aefficiency
efficiency local food bank.
11 The
C A table shows
A firm no how aa firm’s
rebuilds local total
roadcost
no whenchanges
noas more its
constructing workers
new are employed.
factory.
7
D B A government
no no
pays a subsidy firmsyes
to of
number producing
total costs cars.
16 Immigrants
C are
no awarded entry points
yes workers according
yes to$ their ability to fulfil criteria set by the Canadian
Government. A new Express Entry system for the immigration of skilled workers was introduced.
9 A Dprivately yes no
owned sole supplier of yes 1200
1 gas operates in an unregulated market with high barriers to
36 The
entrydiagram
and shows
exit. the change in the relative importance or weighting given to these criteria
2023 Jun
between theP32 Q10new systems. 2
old and 2000
10 A government increases the protection
3 thethat patents
2700offer to inventors of new products and
Which row is most likely to indicate
processes. economic efficiency resulting from the firm’s position in
this market? Criteria weighting (%) for skilled worker immigration
What would
Which be to
barriers the effect
entry ofan
into employing
industry a third
are worker
higher as aon the firm’s
result of thisaverage costs and its marginal
increase?
costs? skill transferability
productive
A cost barriers allocative dynamic
efficiency efficiency efficiency 100
average costswork experience
marginal costs
B legal barriers %
adaptability 80
A
A no
decrease no
decrease no
C market barriers age
B decrease increase 60
D Bphysical barriers
no no
education
yes
C increase decrease 40
C no yes yes
D increase increase
language
D yes no yes 20
37 2023 Jun P32 Q12 job offer
12 A government hopes to build an athletics stadium to hold the World Games. 0 The stadium would
old Express
10 have
A government increases
high private and external the protection
costs, but it wouldthat patents
increase offer
national to inventors of new products and
pride.
processes. system Entry
system
Why would it be difficult to use cost-benefit analysis to decide whether to build the stadium?
Which
© UCLES barriers
2023
A The materialstoneeded
entry into an the
to build industry arewillhigher
9708/32/M/J/23
stadium asbea imported.
need to result of this increase?
What can be concluded from the diagram?
A The
B costexternal
barriers
costs of clearing land for building will outweigh the private costs.
A Canada intended to maintain the same level of skilled immigrants under both systems.
C
B The stadium
legal will not be used much for athletics after the World Games.
barriers
B Canada wanted a smaller number of highly educated skilled immigrants.
D The valuation of national pride will be complex to assess.
C market barriers
C Certainty of employment for skilled immigrants was made the main criterion.
D Skilled
D physical barriers needed to have fewer years of work experience than previously.
immigrants
13 What will lead the demand curve for labour to shift to the right?
38 2023 Jun P32in Q17
A a decrease the marginal productivity of labour
17 A
B government
a decrease imposes a maximum
in the wage rate price for electricity.

Which
C an statement
increase in justifying thisproductivity
the marginal measure of might be considered valid on economic grounds?
labour
D
A an increase
It will in the wage
encourage rate suppliers to invest in additional capacity.
electricity
B It will increase the incentive for consumers to conserve energy.
C 2023
© UCLES It will prevent the monopolistic exploitation of consumers.
9708/32/M/J/23

D It will prevent the rationing of electricity through power cuts.

18 Which statement best describes demand-induced investment?

A It is spending on capital goods by firms because the rate of growth in demand for final goods
and services increases.
© UCLES 2023 9708/32/M/J/23 [Turn over
B It is spending on capital goods by firms because the cost of borrowing has fallen.
C It is spending on capital goods by firms because they want to access new technology to
improve the output per worker.
 C increase decrease
D increase increase
39 2023 Jun P33 Q9
9 What is an example of an external cost?
5
A distribution costs
10 The diagram shows the demand for and supply of a good and the marginal social costs (MSC) for
that good. costs
B energy
C labour costs
MSC
D costs,
road congestion costs
revenue S

5 y
40 2023 Jun P33 Q10 x
10 The diagram shows the demand for and supply of azgood and the marginal social costs (MSC) for
that good.

MSC
costs, w D
revenue S

O y Q
x output
z
Assuming there are no external benefits, which area measures the net social benefit at output
OQ?

A x B x–y w C x+y D D x–y–z

O Q
11 What
© UCLES would definitely result from the divorce
2023 outputand control?
of ownership
9708/33/M/J/23

A decreased
Assuming moral
there are hazard benefits, which area measures the net social benefit at output
no external
OQ?
B the principal agent problem
A x B x–y C x+y D x–y–z
C greater productive efficiency
D increased
11 What profitresult
would definitely maximisation
from the divorce of ownership and control?
41 2023
A Jun P33
decreased Q12
moral hazard
12 B
Onethe
reason for agent
principal market failure is the existence of public goods.
problem
C greater
Which productive
policy efficiency
option is appropriate for addressing such a market failure?
D increased profit maximisation
A direct provision of the good by the government
B reason
12 One provision of detailed
for market failureinformation to consumers
is the existence of public goods.
C subsidising
Which firms
policy option that currently
is appropriate produce such
for addressing the good
a market failure?
D
A the adoption
direct provision of
of maximum
the good byprice controls
the government
B provision of detailed information to consumers
C subsidising firms that currently produce the good
D the adoption of maximum price controls
 6
42 2023 Jun P33 Q13
13 In 2020, the governor of California issued an order to ban the sale of new vehicles from 2035 that
are powered by petrol or diesel fuel. 6

13 Which type
In 2020, theofgovernor
government policy isissued
of California this? an order to ban the sale of new vehicles from 2035 that
are powered by petrol or diesel fuel.
A a nudge
Which type oftogovernment
B a permit pollute policy is this?

A
C a nudge
nationalisation
7
B
D a permit to pollute
regulation
16 C
The nationalisation
diagram shows the Lorenz curves for Norway (N) and India (I).
14 D
The regulation
diagram illustrates a monopsony labour market in which the government has imposed a
minimum wage. 100
43 2023 Jun P33 Q14
cumulative
14 The diagram illustrates MCL
a monopsony labour line of in which the government has imposed a
market
percentage
minimum wage. of income perfect equality
W 4
wage rate MCL S = ACL
W3
W N
4
wage rate S
I = ACL
W2 minimum wage
W3

W12 0 minimum wage

0 100
D = MRP
cumulative percentage
WO1 Q2 Q of householdsQ
1 3

quantity D = MRP
of labour
What can be concluded from a comparison of the Lorenz curves?
O Qindirect Qtaxes
What is the
A India is difference
more likelybetween
to havethe wage
lower 2 the monopsonist
1 public Q
and awishes to3 pay and
sector the wage
education received
system than
by labour?
Norway. quantity of labour
B
A W India
1W3is more likely toWhave
1W2 a progressive
B between income tax system and means tested benefits than
What is the difference the wageCtheWmonopsonist
2W3 D W
wishes 2W4
to pay and the wage received
Norway.
by labour?
C Norwaytextbooks
15 Economics is more state
likely to have a progressive tax systema and public sectorcompetition.
pensions than
A W 1W3
India. B W1that W2 labour is C
a derived
W2W3demand for D firm
W2Win4
imperfect

How is the demand

D Norway curve
is likely for labour
to have derived?
a higher percentage of tax generated from indirect taxes and
15 Economics textbooks state that labour
privately funded pensions than India. is a derived demand for a firm in imperfect competition.
A by multiplying the average physical product by the average revenue
44 How
2023is Jun P33 Q17
the demand curve for labour derived?
B by multiplying the average physical product by the marginal revenue
17 A reason for government intervention in the workings of the economy is to attempt to correct a
A
C by multiplying
market the marginal
average
failure. Sometimes, physical
physical
though, product
product by
government by the
the average
failure marginal
may revenue
cost
occur.
B by multiplying the marginal
D average physical
physical product
product by
by the
the marginal
marginal revenue
revenue
What is not a possible reason for government failure?
C by multiplying the marginal physical product by the marginal cost
A Governments may have to make decisions on the basis of out-of-date information.
D by multiplying the marginal physical product by the marginal revenue
B Governments may make decisions that reduce negative externalities.
C The extent of the market failure may be difficult to judge.
D When circumstances change, a government may be unable to respond quickly.

© UCLES 2023 9708/33/M/J/23

© UCLES 2023 9708/33/M/J/23

 A
C a downward
move from move
agovernment pointtoinside
the minimum
a intervention a leadingpoint possibility
production of a long-run average
curve to coston
a point curve
A to a less efficient allocation ofit resources
B
D a
a downward
reduction inshift in the revenue
marginal long-run so
average
that it cost
equalscurve
long-run marginal cost
B government intervention leading to a net loss of economic welfare
45 C a move
2023 Nov from
P31aQ9
point inside a production possibility curve to a point on it
C government intervention leading to an increase in consumer surplus
9 D city
A a reduction
council is in marginal revenue
considering buildingso
a that it equals
passenger long-run
terminal at marginal cost
its port so that the city can benefit
from large cruise ships that could then dock there. It undertakes a cost–benefit
D government intervention leading to social costs exceeding social benefits analysis.

9 A city would
What councilbeisincluded
considering
as anbuilding
externala cost
passenger terminal
in the city at its
council’s port so thatanalysis?
cost–benefit the city can benefit
from large cruise ships that could then dock there. It undertakes a cost–benefit analysis.
12 A
Thethe diagram
cost of shows
a ticket the
for ademand
passenger fortoand supply
travel of labour.
on a cruise ship
What would be included as an external cost in the city council’s cost–benefit analysis?
B the cost of fuel to operate the cruise ships
A
C the cost ofpaid
the costs a ticket for a passenger
by cruise wage
ships whentothey
travel on at
dock a cruise
the portship SL
B
D the
the cost
cost of
to fuel to operate
a fishing fleet ofthe cruise
W1 ships
relocating to another port
C the costs paid by cruise ships when they X dock at the port
We
10 Some
D themultinational oil companies
cost to a fishing extracting
fleet of relocating Z port
oil in developing
to another countries are now required to repair
the damage they do to the environment. Y
46 2023 Nov P31 Q10
DL
10 Some multinational
What best describesoilthe
companies
total costsextracting oil the
incurred by in developing countries
oil companies are
in such now required to repair
circumstances?
the damage they do to the environment.
A external costs O N2 N1
What best describes the total costs incurred by the oil companies in such circumstances?
B private costs plus external costs quantity
A of labour
C external costs
social costs plus external costs
B
Theprivate
D social costsplus
government
costs plusprivate
external
announces costs
a minimum wage of W1.
costs
C social costs plus external costs
Which area represents the increase in the economic rent of workers who will continue to be
D social costs
employed plus
at the private costs
minimum wage?

A X B Y C X+Y D X+Y+Z
5
47 2023 Nov P31 Q11
13
11 A firm
Which
© UCLES
is faced with a shortage of 9708/31/O/N/23
2023 statement is not an example of
labour. It decides
government to introduce its own training scheme for
failure?
school leavers.
A government intervention leading to a less efficient allocation of resources
Which
© UCLES 2023 effect is this most likely to have on the firm?
9708/31/O/N/23
B government intervention leading to a net loss of economic welfare
A a decrease in the number of workers it employs
C government intervention leading to an increase in consumer surplus
B a decrease in the productivity of its workforce
D government intervention leading to social costs exceeding social benefits
C an increase in the geographical mobility of its labour
D adiagram
12 The shift of shows
the supply curve forfor
the demand its and
labour to the
supply of right
labour.
48 2023 Nov P31 Q14
14 What is likely to result if a government introduces a new regressive tax?
wage SL
A Aggregate demand will increase. W1
B Employment opportunities will increase. X
We
C Income equality will improve. Z
Y
D Tax revenues will increase. DL

O N2 N1
© UCLES 2023 9708/31/O/N/23 quantity [Turn over
of labour

The government announces a minimum wage of W1.

Which area represents the increase in the economic rent of workers who will continue to be
employed at the minimum wage?

A X B Y C X+Y D X+Y+Z
49 6
2023 Nov P31 Q15
15 Which government policy to counter the effects of income inequality is correctly matched with one
6
of its advantages and one of its disadvantages?

15 Which government policy

policyto counter the effects of income
advantage of inequality
policy is correctly matched
disadvantage with one
of policy
of its advantages and one of its disadvantages?
A food subsidies for the poor targets those in need high administrative costs
B policy
higher national minimum wage advantage of policy
encourages skill training disadvantage
higher budgetofdeficit
policy
7
A
C food subsidies
provision of freeforchild
the care
poor targets those
increases in need
employability high administrative
disincentive costs
to work
18 The
B diagram
D highershows a closed
national
universal economy
minimum
monetary wage in which
benefits savesthe
onfull
encourages employment
skill training level
bureaucracy of income
higher
reduced is mobility
budget
labour Y F.
deficit
C provision of free child care increases employability disincentive to work
J
D which
16 Under universal monetary will
aggregate
circumstances benefits savesthe
a subsidy from bureaucracybeAD
on government reduced
most labourif mobility
beneficial there are
externalities from producing
demand, good X? K
50 2023 Nov P31 Q16 C
consumption
16 Under which circumstances
externality caused will a subsidy from the
price elasticity of government
L be most beneficial if there are
externalities from producing
by good X good X?
demand of good X

A negative
externality caused <1
price elasticity of
B by
negativeX
good demand>1 of good X

A
C negative
positive <1
<1
B negative
45°>1
D positive >1
O M N YF
C positive <1
income
17 What
D might decrease
positive if a closed economy
>1 with a government sector decides to allow
international
Which distancetrade?
measures the deflationary gap?

17 A
What components of aggregate
A JKmight decrease B JLif a expenditure
closed economy
C NYFwith a government
D MYF sector decides to allow
international trade?
51 B2023 number
Nov of P31injections
Q19 into the circular flow of income
A
19 C components
number
Which of aggregate
policyoftoleakages
counter expenditure
from the
climate circularisflow
change of income
considered to be regulatory rather than market based?
B
D number
value of of
theinjections
economy’s intomultiplier
the circular flow of income
A the introduction of carbon taxes on pollution
C number of leakages from the circular flow of income
B the operation of tradable pollution permits
D value of the economy’s multiplier
C the provision of government subsidies
D the setting of industrial emission standards

20 Which cause of economic growth is most likely to ensure that the growth is sustainable?

A deregulation of industrial production that uses mineral resources and fossil fuel
B increased government spending on environmental education, financed through taxes on
harmful goods
C increased trade barriers on imports to protect domestic jobs and incomes
D reduced planning regulations to encourage construction in areas of natural beauty

21 In all major towns in a country, a government adopts a policy of opening centres where job
vacancies are advertised.
© UCLES 2023 9708/31/O/N/23
Which type of unemployment is the government aiming to reduce with this policy?

A cyclical
© UCLES 2023 9708/31/O/N/23
B frictional
C regional
D seasonal

© UCLES 2023 9708/31/O/N/23 [Turn over

 chocolate.
D reduction in income taxes increases consumer spending, with
increased demand
consumer Y for exports
70
65
52 2023 Nov P31 total
Q24
55
24 The Laffer curveutility
shows expected tax revenues at different tax rates.
45
40
consumer Z
R1
tax 20 R2
revenue
0
0 1 2 3 4
number of bars

What is the difference in the marginal utility of consumers Y and Z when each consumes four
bars of chocolate?

A 0 B 5 0 C 10 50 D60 30
tax rate / %
2 When choosing to buy two products, the satisfaction gained by the consumption of different
An increase in
combinations the tax
of these rate
two abovecan
products 50% is expectedby
be represented toan
decrease tax curve.
indifference revenue.

What
Whichis the reason
statement forsuch
about this?
an indifference curve diagram is correct?

A
A decreased
The incentive
range of for emigration
indifference curves shows the combination of products a consumer can
purchase with a given income.
B decreased incentive for tax evasion
B If an indifference curve is a downward-sloping straight line, the principle of diminishing
marginal utility must befor
operating. 4
C increased incentive people to work
7 CA firm operating in
Indifference the airline
curves neverindustry
cross, uses third degree
because price discrimination.
D increased incentive for people to work this means
fewer hoursthat a consumer would be indifferent
between combinations of two goods, even when one combination provides more of each
Which condition is most likely to allow this to happen?
good.
D
A The gap between
Consumers indifference
are able curvesand
to buy cheaply is always constant.
then sell the product at a higher price.
53 2023 Novelasticity
B Price P32 Q3 of demand is the same for all consumers in the market.
3 Negative externalities, such as air pollution due to car emissions, can cause damage to people’s
C The firm faces a perfectly elastic demand curve.
health in cities.
© UCLES 2023 9708/31/O/N/23
D The firm is able to keep the different market segments separate.
Which response is most likely to occur from this situation?

8 A car
What is manufacturers
not an examplewill
of automatically bear any external costs
a moral hazard?
B market failure will be resolved when private costs equal external costs
A People with a higher risk of unemployment are more likely to undertake training.
C most people will decide to use buses rather than cars
B People with free dental care are less likely to take care of their teeth with good oral hygiene.
D some form of government intervention to improve economic efficiency
C People with insurance against car theft are more likely to park their car in high crime areas.
D People with unemployment benefits are less likely to undertake retraining if they become
unemployed.
54 2023 Nov P32 Q9
9 In recent years, the fuel cost of operating a jet aircraft has declined. Over the same period,
© UCLES 2023
improved design has led to much quieter 9708/32/O/N/23
aircraft.

How would this affect the marginal private cost (MPC) and the marginal external cost (MEC) of air
travel?

A a downward shift of both the MPC and the MEC curves

B a downward shift of the MPC curve and a movement left along the MEC curve
C a movement left along both the MPC and the MEC curves
D a movement left along the MPC curve and a downward shift of the MEC curve

10 Firm K operates in a competitive market. Firm L is a monopsony employer. Both firms are
operating at an equilibrium level of output.

Trade unions are introduced with the result that wages in each firm are increased.
 6
55 2023 Nov P32 Q14
14 At present, motorists who drive their cars within area 1 on the map pay a daily congestion charge
of $8.

X
4

6 The world’s largest coffee restaurant chain purchased a large Y coffee bean farm in Costa Rica.
The farm has research and development facilities4 Z to study specific diseases that devastate the
coffee bean crop.
6 The world’s largest coffee restaurant chainareapurchased
1 a large coffee bean farm in Costa Rica.
The farm
How is thishas
typeresearch and classified?
of takeover development facilities to study specific diseases that devastate the
coffee bean crop.
A horizontal integration area 2
How is this type of takeover classified?
B organic growth
A horizontal integration
C
Whichvertical backwardwould
car journeys integration
decrease in number if the congestion charge area were extended to
B organic
include areagrowth
2?
D vertical forward integration
C
A vertical
journeysbackward
from pointintegration
X to point Z
7 D
B vertical
Which forward
condition
journeys integration
is necessary
from point for a Yfirm to practise third degree price discrimination effectively?
X to point
C All
A journeys
consumersfrom point Y to point must
and producers Z be in the same geographical location.
7 Which condition is necessary for a firm to practise third degree price discrimination effectively?
D Customers
B journeys from point
must be Z to point
divided Y separate markets for the same product.
into
A All consumers and producers must be in the same geographical location.
C Each separate market must have identical price elasticities of demand.
15 B Customers
What is most likelymust
tobe divided
lead to an into separate
increase markets
in the size of for
thethe sameincome?
national product.
D Price undercutting is required to enter a monopolistic market.
56 2023
C a Nov
A Each fall in P33
separate Q8
interestmarket
rates onmust haveaccounts
savings identical price elasticities of demand.

8 D Price
B traffic
A undercutting
a fallstudy
in theconcluded
prices ofis imported
required
that thereto enter be
goods
would a monopolistic market.if 10% of car drivers switched to
significant benefits
using motorcycles during peak traffic times.
C a decrease in government spending
8 Which
A trafficbenefit
study ofconcluded
this change thatwould
there be
would be significant
considered benefits
a private if 10% of car drivers switched to
benefit?
D anmotorcycles
using increase in during
direct taxes
peak traffic times.
A faster journeys for those who continued to go by car
Which benefit of this change would be considered a private benefit?
16 B
Which government
faster journeys policy
for thoseis most
who likely to improve
switched occupational mobility?
to motorcycles
A faster journeys for those who continued to go by car
A increased
C decreasedsafetyincome fortax rates
cyclists
B faster journeys for those who switched to motorcycles
B reduced
D increased government
levels spending
of air pollution for on education and training
pedestrians
C increased safety for cyclists
C increased government spending on infrastructure
D
9 Which reduced levelsare
conditions of air pollution
most likelyfor pedestrians
D increased subsidies to firms to to reduce
employ the leavers
school accuracy of cost-benefit analysis in decision
making?
57 2023 Nov P33 Q9
9 Which conditions are most likely to reduce the accuracy of cost-benefit analysis in decision
making? proportion of external % of total costs and
costs and benefits to total benefits that are in
total costs and benefits the future
proportion of external % of total costs and
A costs and benefits to
high total benefits
highthat are in
total costs and benefits the future
B high low
A high high
C low high
B high low
D low low
C2023
© UCLES low high
9708/32/O/N/23

D low low

© UCLES 2023 9708/33/O/N/23

© UCLES 2023 9708/33/O/N/23

58 6
2023 Nov P33 Q14
14 Which policy is not designed to correct a market failure?
6
A government provision of healthcare
14 Which policy
B price is noton
controls designed to correct a market failure?
large firms
A
C government
regulations toprovision of healthcare
limit smoke pollution
B
D price controls
introducing on large
import firms
quotas
C regulations to limit smoke pollution
15 To
D control the cost
introducing of living,
import quotasgovernments have sometimes imposed a maximum price on certain
goods that is below the free market price.
59 2023 Nov P33 Q15
What
15 To is often
control thean undesirable
cost side effect of have
of living, governments such asometimes
policy? imposed a maximum price on certain
goods that is below the free market price.
A accelerating general inflation
What
B anisincrease
often an in
undesirable sidenormal
profits above effect profits
of such a policy?

A
C accelerating general
an increase in inflation
the stocks of unsold goods held by firms
B
D an increaseofinthe
shortages profits
goodabove normal profits
C an increase in the stocks of unsold goods held by firms
16 When is an increase
D shortages in national income most likely to induce an increase in investment
of the good
spending?

A when
16 When firmsincrease
is an have spare production
in national capacity
income most likely to induce an increase in investment
spending?
B when firms use labour-intensive production
A
C when
when firms have spare
the increase production
in income capacity
is regarded as permanent
B
D when
when firms use labour-intensive
the increase production
in income is regarded as temporary
C when the increase in income is regarded as permanent
17 What is a function
D when of money?
the increase in income is regarded as temporary
A It can be divided into small units.
17 What
B It is a function
can be easilyofcarried.
money?

A
C It can
It is be dividedofinto
a standard small payment.
deferred units.
B
D It
It can be easily
is widely carried.
accepted.
C It is a standard of deferred payment.
18 A
D pandemic encourages
It is widely accepted. many workers in developed countries to work from home, leading to a
closure of city centre businesses such as coffee shops and retailers.

If this
18 A way of encourages
pandemic working continues
many after the in
workers pandemic, what
developed is the most
countries likelyfrom
to work result?
home, leading to a
closure of city centre businesses such as coffee shops and retailers.
A Frictional unemployment will decrease.
If
B thisThe
way of working continues
geographical mobility ofafter thewill
labour pandemic, what is the most likely result?
increase.
A
C Frictional unemployment
Structural unemployment will
will decrease.
increase.
B
D The geographical
Voluntary mobilitywill
unemployment of labour will increase.
increase.
C Structural unemployment will increase.
D Voluntary unemployment will increase.
© UCLES 2023 9708/33/O/N/23

© UCLES 2023 9708/33/O/N/23

Answers

1D
2B
3C
4B
5C
6D
7D
8A
9A
10C
11B
12A
13A
14C
15B
16D
17A
18C
19B
20A
21B
22C
23D
24B
25C
26D
27B
28A
29D
30B
31B
32A
33C
34B
35C
36B
37D
38C
39D
40B
41A
42D
43B
44B
45D
46B
47C
48D
49A
50D
51D
52D
53D
54A
55B
56B
57A
58D
59D
 A the level of unemployment benefit
B
Chapter : 08 Circular Flow
wage
S
of Income
the militancy of trade unions 1

C the national minimum wage

S2
W
D the participation on training courses
1 2024 Nov P31 Q19
D
19 A consumer has an income of $1000 per week. The consumer spends 80% of this on goods and
services. O N
number of workers
Following an increase in the consumer’s income to $1200 per week, consumption increases to
$900 per week.
What would be the effect on transfer earnings and economic rent of a change in the supply curve
from
WhichS1statement
to S2? is correct?

A The average
transfer propensity to consume does not change.
economic
earnings rent
B The initial average propensity to consume is 5.
C A The marginal
fall propensity
falls
to consume is 0.5.
D B The marginal
fall propensity
rises
to consume is 2.
C rise rises
D table shows
20 The rise data aboutfalls
the population of a country.
2 2024 Nov P33 Q15
total population 2 000 000
15 Which combination of policies is most likely to increase the number of low-paid workers caught in
the poverty trap? labour force 1 200 000
number of people employed 900 000
individual’s proportion of all
tax-free allowancenumberbenefits
of people unemployed
that are 300 000
for income tax means-tested
What is the rate of unemployment?
A decrease increase
A 25% B 33% C 60% D 75%
B decrease decrease
C increase increase
21 What is not an aim of macroeconomic policy?
D increase unchanged
A economic development
B exchange rate stability
16 A website compares the prices of groceries.
C Pareto optimality
Which function of money is illustrated by this?
D satisfactory balance of payments
A medium of exchange
B standard of deferred payment
C store of value
D unit of account

© UCLES 2024 9708/31/O/N/24 [Turn over

© UCLES 2024 9708/33/O/N/24 [Turn over
3 2024 Nov P33 Q19 9

19 Households in an economy change their consumption behaviour causing the consumption curve
to shift from C1 to C2.

C1
consumption 12
spending C2
27 During a year, a country’s national income in money terms increased by 5%, prices increased by
4% and the total population increased by 2%.

What was the approximate change in real income per head?

A a decrease of 1%
O disposable income
B a decrease of 2%
C
Whatan increase
has of to
happened 1%autonomous consumption and the marginal propensity to consume?

D an increase of 2%
autonomous marginal propensity
consumption to consume

28 What
A is most likely to result fromdecreased
decreased foreign direct investment in a developing economy?

A B an improvement
decreased in the developing
increased
economy’s trade balance
C increased decreased
B an increase in the developing economy’s net investment income
D increased increased
C a reduction in the developing economy’s government tax revenue

20 D
How awould
reduction in wage
decreasing levels
interest in be
rates themost
developing economy
likely to reduce unemployment?
4 2024 Nov P33 Q29
A by decreasing the borrowing costs of business
29 The diagram shows an economy’s Lorenz curve (VW).
B by decreasing the government’s budget deficit
C by increasing the foreign exchange
100rate of the currency W
45°
D by increasing the opportunity%
cumulative cost of spending
of income

area Y

area Z
V
0 100
cumulative % of population

How is the Gini coefficient for the economy calculated?

A Y B Y C Z D Z
YZ Z Y YZ
© UCLES 2024 9708/33/O/N/24 [Turn over
 France UK
youth total youth total
unemployment unemployment unemployment unemployment
7
5 (%)
2024 March P32 Q19 (%) (%) (%)
19 Over the period of a year, nominal national income increased by 2%, inflation was 3% and
2001
population increased by19.2
1%. 8.7 12.0 5.2
2005 22.1 10.1 12.5 4.8
Which statement is correct?

What
A can
Real be concluded
income decreasedfrom theper
by 2% table?
head.
B
A Real income increased by 1% per head.
France and the UK experienced the same trends in unemployment.
C Real income increased by 4% per head.
B France had a higher number of unemployed people than the UK.
D There was no change in real income per head.
C The UK used a different definition of unemployment from France.
D The
20 What UK to
is likely was
bemore successful
the most effective than
policyFrance in controlling
to reduce unemployment.
inflation caused by a rapid rise in import
6 prices?
2024 Jun P31 Q19
19 A a decrease
What in the domestic
is a necessary rate ofofinterest
assumption the Keynesian
8 multiplier model?
B a decrease in the rate of income tax
A increasing
18 Which averagetopropensity
statement relating to save
unemployment benefits provided by a government is not valid?
C an increase in trade tariffs on imports
A
B They allow
flexible firms
costs andtoprices
dismiss workers as unemployment benefits provide support to
D unemployed
a revaluationworkers.
of the exchange rate
C full employment of resources
B They force firms to raise wages to encourage workers to work rather than relying on
D unemployment
open
21 Which benefits.
economies
macroeconomic policy objective will not apply to a government in a closed economy?
C They provide a safety net to workers which might reduce their efforts to find a suitable job.
A achieving a low and steady rate of inflation
20 D
TheThey
B tableincrease
shows
achieving
government
theequal
a more
spending
relationship and force
between
income distribution
it to raise
inflation andtaxes.
unemployment in Germany from 2019 to
2022.
7 2024 Jun P32 Q19
C achieving a surplus on the balance of payments
19 Country X has a marginal propensity to consume (MPC) of 0.7. Its marginal propensity to save
D achieving
(MPS), a sustainable
marginal rate(MRT)
rate of taxation 2019
of economic
and 2020
growth propensity
marginal 2021 (MPM)2022
to import are each 0.1.

inflation:
What is likely to lead to the annual
biggest increase in the national
–1.9 –1.6income multiplier?
2.7 2.6
variation its
22 A government increases (%)budget deficit to spend money on infrastructure development. It
A a 5%this
finances increase in themoney.
by printing MPC together with a 5% fall in the MRT
unemployment
B
Howais5%
thisincrease in the
policyrate toMPM
(%)
likely affecttogether with6.4
a 5% main
the government’s
6.1
the MRT 5.7 policy objectives?
fall inmacroeconomic 5.2
C a 5% increase in the MPS together with a 5% fall in the MPM
Some higherargue that inflation rates are at their lowest when the rate of unemployment is low.
theories
D a 5% increase
economic in the MRTlower lower
together with a 5% fall in the MPS
unemployment inflation
growth
Which year contradicts this expectation to the greatest extent?
20 The
A diagrams
less show
likely the performance
less likely of an economy using different measures.
more likely
A 2019 B 2020 C 2021 D 2022
B less likely more likely less likely
LRAS trend
GDP
goods C more likely pricelikely
more less likely real
level GDP X
D more likely more likely more likely

AD
O services O X O year
© UCLES 2024 real9708/31/M/J/24
output [Turn over
If an economy is currently at point X on each diagram, what is the most likely conclusion that can
© UCLES 2024
be made based on this evidence? 9708/32/F/M/24 [Turn over

A Prices will increase significantly as the economy grows in the near future.
B Supply-side policies would be the best option to encourage economic growth.
C The economy is currently experiencing a deflationary gap.
D There are shortages of skilled labour throughout the economy.
 7

18 The table gives the percentage (%) rates of youth unemployment and total unemployment in
France and the UK in 2001 and 2005.

11
8 2024 Jun P32 Q28 France UK
28 A multinational companyyouth
(MNC) buys a manufacturing
total firm in a developing
youth country thattotal
produces
goods for the developing country’s domestic consumers. The MNC then exports machinery and
unemployment unemployment
raw materials that it needs to the developing country.
unemployment unemployment
(%) 10
(%) (%) (%)
What is the most likely consequence of this foreign direct investment (FDI) by the MNC on the
25 balance
Which 2001
cause of economic
of payments 19.2
of the growth would
developing involve the least cost
8.7
country? 12.0for present and5.2
future generations
of a country’s population?
2005 22.1 10.1 12.5 4.8
current account financial account
A increased exploitation of a country’s mineral resources
What
A canimproves
be concluded from the table?
improves
B investment financed by borrowing from abroad
AB investment
C Franceimproves
andfinanced worsens
the UK experienced
by high ratesthe
of same trends
domestic in unemployment.
savings
C worsens improves
B technological
D France had a innovations
higher number of unemployed
in production people than the UK.
processes
D worsens worsens
C The UK used a different definition of unemployment from France.
26 D table
Which
29 The The UK was
additional
gives more successful
components
information may
about the than France
be included
population inwhen
of threecontrollinginunemployment.
measuring
countries economic
a given year. development that are
not included in measures of economic growth?
9 2024 Jun P33 Q19
birth rate death rate infant mortality % of population
19 What is a necessary perassumption
1000 of the
per 1000Keynesian multiplier
rate per 1000 model?
under 16
changes in
level of real income
the distribution
A increasing average 12
propensity
Singapore poverty to4 save per capita 5 18
of GDP
Hongcosts
B flexible Kong and prices
15 6 8 20
A no no yes
China 20 9 28 38
C full employment of resources
B no yes no
Which
D openconclusion can be drawn about the countries in the table in that year?
economies
C yes yes no
A China had the highest percentage of children who died in infancy.
D yes yes yes
20 BThePeople
table in
shows
Hong the
Kongrelationship between inflation and unemployment in Germany from 2019 to
lived the longest.
2022. March P32 Q27
10 2023
C Singapore had the largest number of people aged over 16.
27 D
Which curve is shown in the diagram?
The population of Singapore was expected
2019 to fall in2020
the next five2021
years. 2022
inflation: annual
30 During a certain period, income
a country –1.9 –1.6 2.7 2.6
variation (%) with a constant population expands its output per head. It also
inequality
experiences a significant increase in river and atmospheric pollution.
unemployment
In the absence ofrate other changes, which6.4
any (%) 6.1 show a decrease
measure would 5.7 5.2 standards?
in living

A Gross Domestic Product per head

Some theories argue that inflation rates are at their lowest when the rate of unemployment is low.
B Gross National Product per head

Which
C yearDevelopment
Human contradictsIndex O
this expectation to the greatest extent?
income per capita
D Measure of Economic Welfare
A 2019 B 2020 C 2021 D 2022
A Kuznets curve
B Laffer curve
C Lorenz curve
D Phillips curve

© UCLES 2024 9708/32/M/J/24

© UCLES 2024 9708/33/M/J/24 [Turn over

 7
Bno longer works in a town centre coffee shop because fewer people are buying goods in the
town centre since a pandemic
16 Immigrants are awarded entry points according to their ability to fulfil criteria set by the Canadian
Government.
C A new
cannot move Express
with the firmEntry system
that has for thebecause
relocated immigration of skilleddemand
of changing workersforwas
its introduced.
products
D
The has manyshows
diagram skills and
theischange
waiting in
to the
decide whichimportance
relative job might be
orthe most suitable
weighting given to these criteria
11 between the old and new systems.
2023 Jun P31 Q20
20 In the diagram, OP is Criteria
the equilibrium
weightinglevel of income
(%) for and OQ
skilled worker is the full employment level of
immigration
income in a closed economy.
skill transferability

expenditure 100
work experience
%
adaptability V 80
age
U 60C + I + G
education T C+I
R 40C
language 20
job offer45°
9 0
old Express
O P Q
21 What is the most effective policy a system
governmentEntry
could introduce to reduce frictional
unemployment? system income

A
Whatcut
is
canwelfare spendinggap?
thebedeflationary
concluded on benefits
from the diagram?
B
A improve
Canada information
PQ about
B to RV
intended jobthe
maintain vacancies
C level
same TV of skilled immigrants
D UV under both systems.
C
B reduce
Canadatax rates a smaller number of highly educated skilled immigrants.
wanted
D
C raise interest
Certainty rates
of employment for skilled immigrants was made the main criterion.
12 2023 Jun P31 Q22
D Skilled immigrants needed to have fewer years of work experience than previously.
22 In a closed economy with no government sector, when will an increase in investment spending
generate the largest increase in equilibrium national income?
17 A government imposes a maximum price for electricity.
A when households have a high level of autonomous consumption
© UCLES 2023 9708/31/M/J/23
Which statement justifying this measure might be considered valid on economic grounds?
B when households have a high level of compulsory saving
A
C It will encourage
when householdselectricity
have a highsuppliers to invest
marginal in additional
propensity capacity.
to consume
B
D It will increase
when the have
households incentive formarginal
a high consumers to conserve
propensity energy.
to save
C It will prevent the monopolistic exploitation of consumers.
23 Which combination
D It will of rationing
prevent the policies isofmost likely to
electricity increase
through output?
power cuts.
13 2023 Jun P32 Q18
fiscal policy monetary policy
18 Which statement best describes demand-induced investment?
A decrease budget deficit decrease interest rates
A It is spending on capital goods by firms because the rate of growth in demand for final goods
B and services
decreaseincreases.
budget deficit increase interest rates

B C It is spending
increase on
budget deficit
capital decrease
goods by firms interest
because ratesof borrowing has fallen.
the cost
C D It is spending
increase budget deficit
on capital goods byincrease interest they
firms because rateswant to access new technology to
improve the output per worker.
D country
24 A It is spending on new capital
is a net importer goodsoil
of oil. World byprices
firms replacing
have risenold andthe
over obsolete
year. capital goods.

Assuming that all other factors remain the same, how is this likely to affect inflation, trade balance
© UCLES 2023
and unemployment in this country? 9708/32/M/J/23 [Turn over

inflation trade balance unemployment

A decrease no change increase

B increase improve decrease
C increase worsen increase
D decrease no change decrease
 in
B low-income countries? countries to undertake capital projects for supplies of clean water
enabling low-income
through financial aid
A assisting low-income countries to overcome foreign exchange shortages by writing off debts
C hiring mainly labour from low-income countries to build infrastructure in the Middle East
B enabling low-income countries to undertake capital projects for supplies of clean water
D through
reducingfinancial
exports aid
of fuels to low-income countries to lower pollution of the environment
14 2023
C Junmainly
hiring P32 labour
Q20 from low-income countries to build infrastructure in the Middle East
20 D
An open economy
reducing hasofinjections,
exports J, into the countries
fuels to low-income circular flow of income
to lower and of
pollution withdrawals, W.
the environment

20 An open economy has injections, W

injections and J, into the circular flow of income and withdrawals, W.
withdrawals
W
injections and 8S T
J
withdrawals
18 A government wishes to support growth in the R economy’s fishing industry.
S T
O
Which policy is likely to achieve sustainable growth J
Q inEthe fishing industry?
R national income
A giving more modern fishing boats with larger nets to workers who fish for a living
O
B
If thepaying bonus payments
full employment level offor larger income
national isQOQ,
fish catches toEwhat
workers who fishthe
represents for inflationary
a living gap?
national income
C
A setting
QE up a fishBcooperative
RT so thatCworkers
SR who fish for D a ST
living receive a higher price for
the fish that they catch
If the full employment level of national income is OQ, what represents the inflationary gap?
D subsidising the building of a fish farm in order to encourage workers who fish for a living to
21 Which QEcondition
A switch will produce the highestC value
SR of the national income multiplier in an open
from sea B RT
fishing D ST
economy with a government sector?
15 2023 Jun P32 Q21
A high
21 Four
Which average will
condition and produce
marginal the
tax rates
highest for
value of the
19 citizens have each been unemployed the past six national
months. income multiplier in an open
economy with a government
B high marginal propensity to save sector?
Which citizen would not be characterised as being structurally unemployed?
A
C low highlevel
average and marginal
of autonomous tax rates
consumption
A worked as a coal miner but coal-fired power stations are now being closed and is not willing
B
D to high marginalpropensity
lowretrain
marginal propensitytotoimport
save
C low level of autonomous consumption
B no longer works in a town centre coffee shop because fewer people are buying goods in the
22 Which
D townlowtype of unemployment
centre
marginal since tocan
a pandemic
propensity be classified as voluntary?
import
C
A cannot
cyclicalmove with the firm that has relocated because of changing demand for its products
22 D
Which
B has type of unemployment
many
frictional can be
skills and is waiting classified
to decide as voluntary?
which job might be the most suitable
16 A2023 Jun P33 Q20
cyclical
C structural
20 In
B the diagram, OP is the equilibrium level of income and OQ is the full employment level of
frictional
D technological
income in a closed economy.
C structural
D technological
expenditure
© UCLES 2023 9708/32/M/J/23
V

U C+I+G
© UCLES 2023 9708/32/M/J/23
T C+I
R C

45°
O P Q
income

What is the deflationary gap?

A PQ B RV C TV D UV
 A A cut welfare
food subsidies
spendingfor
onthe poor
benefits targets those in need high administrative costs

B B improve
higher national minimum
information about jobwage encourages skill training
vacancies higher budget deficit
C provision of free child care increases employability disincentive to work
C reduce tax rates
D universal monetary benefits saves on bureaucracy reduced labour mobility
D raise interest rates
17 2023 Jun P33 Q22
16 In
22 Under whicheconomy
a closed circumstances
with nowill a subsidy sector,
government from the government
when be mostinbeneficial
will an increase investmentif there are
spending
externalities
generate thefrom producing
largest increasegood X?
in equilibrium national income?

A whenexternality
households have a high price
caused level elasticity
of autonomous
of consumption
by good X demand of good X
B when households have a high level of compulsory saving
C A when households
negative have a high marginal
<1 propensity to consume
B negative >1
D when households have a high marginal propensity to save
C positive <1
D combination
23 Which positive >1to increase output?
of policies is most likely
18 2023 Nov P31 Q17 6
fiscal policy monetary policy
17 What might decrease if a closed economy with a government sector decides to allow
14 international
AtApresent, motorists who drive
trade?budget
decrease deficittheir cars within area
decrease 1 on rates
interest the map pay a daily congestion charge
of $8.
A B components
decrease of budget deficit
aggregate expenditure increase interest rates

B C number
increase budgetinto
of injections deficit
the circulardecrease interest rates
flow of income
X
C D number
increase budgetfrom
of leakages deficit
the circularincrease interest rates
flow of income
D value of the economy’s multiplier Y
Z
24 A country is a net importer of oil. World oil prices have risen over the year.
area 1
Assuming that all other factors remain the same, how is this likely to affect inflation, trade balance
8
19 and
2023unemployment
Nov P31 Q22 in this country?
area 2
22 What is theinflation
basic assumption underlying theunemployment
trade balance
accelerator theory?

A A Investment depends onno

decrease the level of business
change confidence.
increase
Which car journeys would decrease in number if the congestion charge area were extended to
B B Investment
include 2? depends on the
areaincrease level of savings.
improve decrease

AC journeys
C increase
Investment
fromdepends
point X to on worsen
the
point Z rate of changeincrease
in national income.
D decrease no change decrease
B
D journeys fromdepends
Investment point X to on
point
theY rate of change of interest rates.
C journeys from point Y to point Z

23 What showsfrom
D journeys the correct
point Z tooutcome
point Y for the policy option?
20 2023 Nov P32 Q15
policy
15 What is most likely to option
lead to an increase in the size of the nationaloutcome
income?

a falldepreciation
A A2023
© UCLES of the
in interest rates exchange
on savings rate encourages
9708/31/O/N/23
accounts more exports, which also
means greater employment
B a fall in the prices of imported goods
© UCLESB
2023 higher interest rates hot money inflows, and [Turn
attracts
9708/33/M/J/23 is an over
C a decrease in government spending
incentive for more consumer spending
D an increase in direct taxes
C decreased government spending more workers will be employed, and
more imports will be bought
16 Which government policy is most likely to improve occupational mobility?
D reduction in income taxes increases consumer spending, with
A decreased income tax rates increased demand for exports
B increased government spending on education and training
C increased
24 The government
Laffer curve spending on
shows expected taxinfrastructure
revenues at different tax rates.
D increased subsidies to firms to employ school leavers

R1
tax R2
revenue
 marginal rate of taxation (MRT) and marginal propensity to import (MPM) for a four-sector
economy.

value

MPC 0.5
7
21 2023 Nov P32 Q17 MPS 0.2
17 The table shows the marginal propensity to consume (MPC), marginal propensity to save (MPS),
marginal rate of taxation (MRT) andMRT 0.2
marginal propensity to import (MPM) for a four-sector
economy. MPM 0.1

What is the size of the multiplier? value

A 1 B 2 MPC
C 5 0.5 D 10
MPS 0.2
18 What is likely to happen when the productive
MRT 6 capacity
0.2 of a free enterprise economy increases
over a long period of time?
MPM 0.1
14 Which policy is not designed to correct a market failure?
A Future generations will be less well-off than present generations.
What
AB is the size provision
government of the multiplier?
of healthcare
Increasing the production of one good cannot be done without decreasing the production of
A another.
1 B 2
B price controls on large firms C 5 D 10

CC regulations
Individuals to
willlimit
have morepollution
smoke choices due to a wider range of consumer goods.
18 What is likely to happen when the productive
per capita capacity
incomes of a free enterprise economy increases
DD introducing
Rising levels of output
import will cause
quotas to equalise.
over a long period of time?
22 2023 Nov P32 Q19
A
19 To Future
Thecontrol generations
accelerator principlewill be less
refers to awell-off than present
relationship betweengenerations.
investment
15 the cost of living, governments have sometimes imposed aand
maximum price on certain
goods that is below
B Increasing the the free market
production price.
of one good cannot be done without decreasing the production of
A the level of GDP.
another.
What is often an
B changes undesirable side effect of such a policy?
in GDP.
C Individuals will have more choices due to a wider range of consumer goods.
AC accelerating generalrates.
the level of interest inflation
D Rising levels of output will cause per capita incomes to equalise.
BD an increase
changes in profitsrates.
in interest above normal profits

19CThean increase in
accelerator the stocks
principle of to
refers unsold goods held
a relationship by firmsinvestment and
between
20DWhat is likely to bethethe effect of an increase in7the budget deficit?
A shortages
the level ofofGDP. good
23 2023
A anNov P33inQ16
increase effective demand
B itschanges
19 In in GDP. census, China reported that the total population was just below 1.4 billion.
2020 population
16 When
The
B an isincrease
birth an
rateincrease
had in national
continued
in unemployment income the
to decline, most likely of
number to those
inducereaching
an increase in investment
retirement age had
C the level
spending?
increased andoftheinterest rates. size of the workforce had decreased.
percentage
C a reduction in inflation
AD when
Which
changes firms
change
in have
interest
of policy
rates.
spare production
would capacity
most quickly sustain China’s economic growth in view of these
D a reduction in the volume of spending
population changes?
B when firms use labour-intensive production
20 What is likely to be the effect of an increase in the budget deficit?
A
C Allow
when more immigration
the increase of labour.
in income is regarded as permanent
BA an increase in effective demand
D Encourage women in
when the increase toincome
leave work to have as
is regarded more children.
temporary
CB Increase
an increase in unemployment
research in technology to improve labour productivity.
DC Tax
aisreduction
17 What athe in of
function
labour inflation
money?
force more to pay for the increasing number of pensions.
24 AD Ita can
2023 reduction
Nov beP33 inQ20
theinto
divided volume
smallofunits.
spending
20 Other
© UCLES
B 2023 things
It can beremaining equal, what will reduce
easily carried. the level of national income in an economy?
9708/32/O/N/23 [Turn over
A
C a fallain
It is plannedofsavings
standard deferred payment.
B
D a fallwidely
It is in the accepted.
marginal propensity to import
C an increase in the average propensity to consume
18 AD pandemic encourages
a reduction many
in the level workers
of defence in developed countries to work from home, leading to a
expenditure
closure of city centre businesses such as coffee shops and retailers.
© UCLES 2023 9708/32/O/N/23 [Turn over
If this way
21 What, of working
according to thecontinues after
accelerator the pandemic,
principle, what
will cause theislevel
the most likely result?
of investment to fall?
A Frictional
a decrease unemployment
in confidence will decrease.
B The geographical
a decrease mobility
in the rate of labour
of growth will increase.
of national income
C Structural
an increaseunemployment
in the price ofwill increase.
capital equipment
D Voluntary
an unemployment
increase will increase.
in the rate of interest
 A a fall in planned savings
B a fall in the marginal propensity to import
C an increase in the average propensity to consume
D a reduction in the level of defence expenditure
25 2023 Nov P33 Q21
21 What, according to the accelerator principle, will cause the level of investment to fall?

A a decrease in confidence
B a decrease in the rate of growth of national income
C an increase in the price of capital equipment
D an increase in the rate of interest

22 What is measured on the vertical axis of the Phillips curve?

A the rate of change of real wages

B the rate of change of take-home pay
C the rate of inflation
D the rate of interest

© UCLES 2023 9708/33/O/N/23 [Turn over

Answers:

1C
2A
3C
4A
5A
6A
7A
8C
9A
10A
11D
12C
13A
14C
15D
16D
17C
18D
19C
20A
21B
22B
23C
24D
25B
 Chapter : 09 Economic Growth and
Sustainability

5
1 2024 Nov P31 Q7 B
7 The diagram shows the short-run average cost, SRAC, and long-run average cost, LRAC, curves
for a firm producing computers. It usually produces 2000 computers per week. An increase in
demand requires the firm to produce 3000 computers per week.

cost
$ 11 1
SRAC
LRAC
100 likely to influence subsequent increases in national income as a result of a
24 What is most
government80
policy of reduced interest rates? SRAC2 SRAC3
A marginal cost
B marginal40efficiency of capital
30
C marginal product
D marginal 0utility 2000 3000 4000
output
25 Which policy to reduce a current account deficit on the balance of payments could be described
How
as anmuch will the average policy?
expenditure-switching costs change in the long run if the firm makes a permanent decision
to produce 3000 computers per week?
A a decrease in government spending
A $20 B $40 C $50 D $60
B a decrease in the exchange rate of the country’s currency

8 C
Whatanisincrease in domestic
a characteristic income taxes
of monopolistic competition?
D an increase in domestic interest rates 11
2 2024
A Nov P31
no barriers Q24
to entry B
24 B
What is most
identical likely to influence subsequent increases in national income as a result of a
products
26 Which components
government arereduced
policy of included in the rates?
interest financial account of the balance of payments?
C price takers
A marginal cost
D smallforeign
numberdirect interest,
of buyers and profits
sellers
investment
B marginal efficiency of capitaland dividends

9 CA marginal
What is likely to have its cause in the separationkey
product of ownership and control in a firm?
B
D marginal utility = included
A contestable markets
C = not included
B diseconomies of scale
25 Which
D policy to reduce a current account deficit on the balance of payments could be described
C principal-agent
as an problem policy?
expenditure-switching
3 2024 Nov P31 Q27 D
DA prisoner’s
a decrease dilemma
in government spending
27 It is often argued that the UN Human Development Index (HDI) is a better indicator of economic
development
B a decrease thaninincome per capita
the exchange ratebecause it adjusts
of the country’s for
currency
AC average hours
an increase in worked byincome
domestic the population.
taxes
BD environmental
an increase in pollution.
domestic interest rates
C inequality in income distribution.
26 DWhich
life components are
expectancy at included in the financial account of the balance of payments?
birth.

foreign direct interest, profits

28 Some conditions for providing and
investment foreign aid to low-income countries can be restrictive.
dividends

A kind of aid fits this description?

Which key
© UCLES 2024 9708/31/O/N/24 [Turn over
A Bfood aid in the event of natural catastrophes such
= included
as severe drought
B Cgrants that are tied to purchasing donor country
= goods
not included

C Dloans that are repaid over a long period at a low rate of interest
D technical assistance using highly skilled worker transfers to provide support
27 It is often argued that the UN Human Development Index (HDI) is a better indicator of economic
development
© UCLES 2024 than income per capita because it adjusts for
9708/31/O/N/24 [Turn over
 12
4 2024 Nov P31 Q29 A
11
29 What is most likely to cause the living standards of a country to rise?
24 Monetary policy does not usually work immediately.
A an increase in the number of doctors
Which time lag is likely to be the least concern to a government whose priority is a rapid
B an increase
domestic impact? in the gold reserves

C
A an time
the increase infor
it takes the number oftopeople
policymakers perthe
recognise house
cause of a problem
B
D the
an time it takes
increase infor
thethemoney
economy to respond to the introduction of the policy
supply
C the time it takes for the foreign exchange rate to respond to the effect of the policy
D the time it takes
30 Globalisation meansto put thegoods
that chosenand
policy measurecapital
services, into place
and labour are traded on a worldwide basis.
5 2024 Nov P33 Q25 A
25 Which combination
The optimum illustratesisthat
level of population eachto trade
deemed be thatpartner
level at can benefit
which whenpera head
real output low-income
is country
trades with
maximised. a high-income country?

The diagram shows the relationship between population size and output per head in a country for
the periods.
two different time low-income country the high-income country
A contracts are not always fulfilled agrees to increase investment in
due to corrupt practices the infrastructure of low-income
Q2 countries
output
output per head year 2
per head
B experiences
Q1 liquidity problems transfers short-term government
that restrict investment output per
loans repayable athead
highyear 1
interest
rates

C multinational
O
companies receives supplies at high prices
P1 P2
repatriate profits from mining from multinationals to meet
population
of rare minerals for export excess demands for rare metals
Which change could not satisfactorily explain the shift from year 1 to year 2?
D supplies seasonal labour to repatriates wages to families
A overcome
Population shortages for
has increased. of seasonal workers
picking fruit crops
B State of technology has improved.
C Stock of capital has increased.
D Volume of productive resources in use has increased.

26 A government wants to reduce the current account deficit on the balance of payments.
12
6 2024
What isNov P33 Q27
an example of an expenditure-reducing policy? A
27 During a year, a country’s national income in money terms increased by 5%, prices increased by
A and
4% a devaluation of the currency
the total population increased by 2%.
B a subsidy on domestic production
What was the approximate change in real income per head?
C a tariff on imports
A a decrease of 1%
D an increase in income taxes
B a decrease of 2%
C an increase of 1%
D an increase of 2%

28UCLES
© What2024is most likely to result from foreign direct investment in a developing economy? [Turn over
9708/33/O/N/24
Permission to reproduce items where third-party owned material protected by copyright is included has been sought and cleared where possible. Every
reasonable effort has been made by the publisher (UCLES) to trace copyright holders, but if any items requiring clearance have unwittingly been included, the
Awill an
publisher improvement
be pleased in theatdeveloping
to make amends economy’s
the earliest possible trade balance
opportunity.

B thean
To avoid increase
issue in theof developing
of disclosure answer-relatedeconomy’s
information tonet investment
candidates, income
all copyright acknowledgements are reproduced online in the Cambridge
Assessment International Education Copyright Acknowledgements Booklet. This is produced for each series of examinations and is freely available to download
at www.cambridgeinternational.org
C a reduction in theafter the live examination
developing economy’sseries.government tax revenue

Cambridge Assessment International Education is part of Cambridge Assessment. Cambridge Assessment is the brand name of the University of Cambridge
D a reduction
Local Examinations Syndicatein(UCLES),
wage levels
which isin the developing
a department economy
of the University of Cambridge.

© UCLES 2024 9708/31/O/N/24

29 The diagram shows an economy’s Lorenz curve (VW).
 13
7 2024 Nov P33 Q30 A
30 The table gives the percentage of employment
9 in the primary, secondary and tertiary sectors in
four countries.
21 What does the accelerator principle state?
Which country is most likely to be a high-income country?
A Consumption is a function of the rate of change of income.
primary secondary tertiary
B Incomesector
is a function of sector
the rate of change of investment.
sector
C % is a function of
Investment %the rate of change
% of income.

D A Investment
15 is a function of
40the rate of interest.
45
B 30 40 30
22 Which
C government
35 aim is least
45 likely to be20achieved using macroeconomic monetary policy
measures?
D 45 35 20
A low unemployment level
B more equal income distribution
C stable exchange rate 8
8 2023 March P32 Q17 B
D steady price level
17 Which combination of circumstances is most likely to lead to an increase in a country’s budget
deficit?
23 A government adopts an expansionary fiscal policy to increase the economic growth rate.
government
total GDP unemployment
Which other main macroeconomic aims is this policy most likely to help?
spending

A decreases rises decreases

full stable current account
B employment
decreases price level
rises no surplus
change
C
A increases falls increases
D
B increases falls no change
C
18 Which
D statement applies to a central bank and to a commercial bank?

9 2023 March P32 Q24 central commercial A

24 Country X decides to devalue its currencybank
to eliminate a bank
balance of payments deficit.

A might
Why issues bank notes
devaluation yeson its macroeconomy?
have a positive effect yes

A B Competitive
lender of the last of
pricing resort yes employment
exports may create yespotential in country X.

B C Foreign
maximises profitmay depreciate theirno
importers yesand reduce any advantage gained by
own currencies
country X.
D receives deposits directly no yes
from the government
C Inelastic demand for imported raw materials may lead to cost inflation in country X.
D Loss of import duties by country X may reduce government backing for trade promotion.
19 What is most likely to be the biggest contribution to sustainable economic growth in a developed
economy?

A a movement of people from rural to urban areas

B an increase in technical training
C an increase in the size of the population
© UCLES
D 2024
rising consumer credit levels 9708/33/O/N/24

© UCLES 2023 9708/32/F/M/23 [Turn over

20 Which policy is likely to increase unemployment?

A an increase in retraining facilities

B a significant increase in indirect taxes
C the imposition of selective import controls
D an increase in the public sector deficit
 10
10 2023 March P32 Q25 D
25 Which cause of economic growth would involve the least cost for present and future generations
of a country’s population?

A increased exploitation of a country’s mineral resources

B investment financed by borrowing from abroad
C investment financed by high rates of domestic savings
D technological innovations in production processes

26 Which additional components may be included when measuring economic development that are
not included in measures of economic growth?8
11 2023 Jun P31 Q18 D
18 A government wishes to support growth in the economy’s fishing industry.
changes in
level of real income
the distribution
Which policy is likely to poverty
achieve sustainableper capita
growth in the fishing industry?
of GDP
A giving more modern fishing boats with larger nets to workers who fish for a living
A no no yes
B paying bonus payments for larger fish catches to workers who fish for a living
B no yes no
C C setting up
yesa fish cooperative
yes so that workers
no who fish for a living receive a higher price for
the fish that they catch
D yes yes yes
D subsidising the building of a fish farm in order to encourage workers who fish for a living to
switch from sea fishing
27 Which curve is shown in the diagram?
19 Four citizens have each been unemployed for the past six months.
8
2023 citizen
12 Which Jun P33wouldQ18not income
be characterised as being structurally unemployed? D
inequality
18 A government wishes to support growth in the economy’s fishing industry.
A worked as a coal miner but coal-fired power stations are now being closed and is not willing
to retrain
Which policy is likely to achieve sustainable growth in the fishing industry?
B no longer works in a town centre coffee shop because fewer people are buying goods in the
A giving more modern fishing boats with larger nets to workers who fish for a living
town centre since a pandemic
B
C cannot move with the firm that O hasfish
paying bonus payments for larger catches to workers who fish for a living
relocatedincome
because
perofcapita
changing demand for its products
C
D setting
has up skills
many a fishand
cooperative
is waiting so that workers
to decide whomight
which job fish for a living
be the mostreceive
suitablea higher price for
A the fish that
Kuznets they catch
curve
D subsidising
B Laffer curve the building of a fish farm in order to encourage workers who fish for a living to
20 In the diagram,
switch OP fishing
from sea is the equilibrium level of income and OQ is the full employment level of
income
C Lorenzin a curve
closed economy.

D Phillips curve
19 Four citizens have each been unemployed for the past six months.
expenditure
V unemployed?
Which citizen would not be characterised as being structurally

A worked as a coal miner but coal-fired power stations are C + I closed

U now being + G and is not willing
to retrain T C + I
B C
no longer works in a town centre coffee shop becauseR fewer people are buying goods in the
town centre since a pandemic
C cannot move with the firm that has relocated because of changing demand for its products
45°
D has many skills and is O waiting to decide which job might be the most suitable
P Q
© UCLES 2023 9708/32/F/M/23 income
20 In the diagram, OP is the equilibrium level of income and OQ is the full employment level of
What
income is in
thea deflationary gap?
closed economy.

A PQ B RV C TV D UV
expenditure
V

U C+I+G
T C+I
R C
 7

18 The diagram shows a closed economy in which the full employment level of income is YF.

7 J
13 2023 Nov P31aggregate
Q18 AD A
demand, K
18 The diagram shows a closed economy in which the full employment level of income is YF.
consumption C
L J
aggregate AD
demand, K
consumption C
L
45°
O M N YF
income

Which distance measures the deflationary gap?

45°
A JK B JL C NYF D MYF
O M N YF
income
19 Which policy to counter climate change is considered to be regulatory rather than market based?
Which distance measures the deflationary gap?
A the introduction of carbon taxes on pollution
A
B JK operation of tradable
the B JL pollution permits
C NYF D MYF
7
C the provision of government subsidies
17 Which
19 The table shows
policy the marginal
to counter propensity
climate changetois consume (MPC),
considered to bemarginal propensity
regulatory to save
rather than (MPS),
market based?
D the setting
marginal rate of industrial
taxation emission standards
(MRT) and marginal propensity to import (MPM) for a four-sector
14 economy.
2023
A theNov P31 Q20
introduction of carbon taxes on pollution B
20 Which
B thecause of economic
operation growth
of tradable is most permits
pollution likely to ensure
value that the growth is sustainable?
A
C deregulation
the provisionofofindustrial production
government that uses mineral
subsidies
MPC 0.5 resources and fossil fuel
B
D increased
the settinggovernment
of industrialspending on
emissionMPS environmental
standards 0.2 education, financed through taxes on
harmful goods
MRT 0.2
C increased trade barriers on imports to protect domestic jobs and incomes
20 Which cause of economic growth is MPM most likely to
0.1ensure that the growth is sustainable?
D reduced planning regulations to encourage construction in areas of natural beauty
A
Whatderegulation
is the size ofof industrial
the production that uses mineral resources and fossil fuel
multiplier?
BA allincreased
21 In government
1 major towns inB a 2 spending
country, Con 5environmental
a government Deducation,
adopts a policy financed
of opening
10 through
centres taxes on
where job
vacancies
harmfularegoods
advertised.
15 2023 Nov P32 Q18 C
CWhatincreased
18 Which type
is likely trade
to barriers
of unemployment
happen whenison
theimports
the to protect
government
productive domestic
aiming toofreduce
capacity jobs
a free and
with thisincomes
enterprisepolicy?
economy increases
over a long period of time?
D cyclical
A reduced planning regulations to encourage construction in areas of natural beauty
A Future generations will be less well-off than present generations.
B frictional
21 C B allIncreasing
In major townsthe production of onea good
in a country, cannot beadopts
government done without
a policydecreasing
of opening the centres
production of
where job
regional
another.
vacancies are advertised.
D seasonal
C Individuals will have more choices due to a wider range of consumer goods.
Which type of unemployment is the government aiming to reduce with this policy?
D Rising levels of output will cause per capita incomes to equalise.
© UCLES
A 2023
cyclical 9708/31/O/N/23 [Turn over

19 B
The frictional
accelerator principle refers to a relationship between investment and
C
A regional
the level of GDP.
D
B seasonal
changes in GDP.
C the level of interest rates.
© UCLES 2023 9708/31/O/N/23 [Turn over
D changes in interest rates.

20 What is likely to be the effect of an increase in the budget deficit?

A an increase in effective demand

B an increase in unemployment
 A low low
B high low
C low high
D high high
16 2023 Nov P32 Q26 B
26 What has not accompanied global economic growth over the last 25 years?

A a depletion of non-renewable resources

B decreased international trade
C growing urbanisation 9

D increased
26 What atmospheric
is a government pollution aim?
macroeconomic

A a fall in the general price level of goods and services

27 When assessing income distribution in an economy, which change in the Gini coefficient
B an increase
suggests in monopoly
that a country regulation
is distributing its income
7 more equally?
17 2023 Nov P33 Q19 A
C
A itslower
has taxes
It2020 moved oncloser
consumer goods
to one.
19 In population census, China reported that the total population was just below 1.4 billion.
The
D
B a Itbirth
has rate
minimum
movedhad
wage continued
for to
closer low to agricultural
paid
zero. decline, theworkers
number of those reaching retirement age had
increased and the percentage size of the workforce had decreased.
C It has moved from negative to positive.
27 Which
Which change
row correctly identifies
of policy wouldthe characteristics
most of a low-income
quickly sustain economy?
China’s economic growth in view of these
D It has moved
population changes?from positive to negative.
dependency
A Allow more immigrationGini
of labour.
coefficient per capita
on the primary
value real income
B sector
Encourage women to leave work to have more children.
C A Increase high
research in technology
high to improve labour
highproductivity.
D B Tax the labour
high force more tohigh
pay for the increasing
low number of pensions.
C high low low
20 Other
D things remaining
low equal, what
highwill reduce the level
low of national income in an economy?
© UCLES 2023 9708/32/O/N/23 [Turn over
18 2023 Nov
A a fall P33 Q28
in planned savings C
28 B
What is the
a fall rolemarginal
in the of the International
propensity Monetary
to import Fund (IMF)?
C
A an increase
to advise in the average
countries that arepropensity to consume
experiencing trade disagreements
D
B atoreduction in theproviding
help charities level of defence expenditure
emergency assistance to countries in need
C to offer short-term assistance to countries with balance of payments problems
21 What, according to the accelerator principle, will cause the level of investment to fall?
D to provide interest-free credit to developing countries for infrastructure purposes
A a decrease in confidence
B a decrease in the rate of growth of national income
C an increase in the price of capital equipment
D an increase in the rate of interest

22 What is measured on the vertical axis of the Phillips curve?

A the rate of change of real wages

B the rate of change of take-home pay
C the rate of inflation
D the rate of interest

© UCLES 2023 9708/33/O/N/23 [Turn over

Answers:
1B
2B
3D
4A
5A
6A
7A

8B
9A
10D
11D
12D
13A
14B
15C
16B
17A
18C
 Chapter : 10 Unemployment

7
1 2024 Nov P31 Q13
13 The graph shows the percentage growth in average earnings for an economy.

4
average
wage 2
growth %
0

–2

–4
Jan April
2024 2024

What is the most likely cause of the pattern shown in the graph?

A a decrease in the supply of labour

B a decrease in the interest rate
C an increase in productivity
D an increase in the size of the labour force

14 The table shows the output of chairs at a factory when different numbers of workers are
employed.

number of workers 0 1 2 3 4 5
number of chairs produced 0 7 17 26 34 40

When will diminishing marginal returns to labour set in?

A when the second worker is employed

B when the third worker is employed
C when the fourth worker is employed
D when the fifth worker is employed

© UCLES 2024 9708/31/O/N/24 [Turn over

 imperfect market.

When there is a fall in the amount of capital invested per worker, the marginal revenue
productivity of labour (MRP) curve shifts from MRP1 to MRP2.
8
2 2024 Nov P31 Q15
15 In the diagram, D represents the long-run demand curve for labour in a firm operating in an
imperfect market. wages

When there is a fall in the amount W1 of capital invested per worker, the marginal revenue
productivity of labour (MRP) curve shifts from MRP1 to MRP2.

W2
wages
MRP1
W1
MRP2
D
WO
2 L1 L2 L3
labour employed
MRP1
How does this shift affect the amount of labour employed in the long run, when wages fall?
MRP2
A It falls from L3 to L2. D
O L1 L2 L3
B It increases from L1 to L2.
labour employed
C It increases from L2 to L3.
How
D Itdoes this shift
remains affect at
the same theL1amount
. of labour employed in the long run, when wages fall?

A It falls from L3 to L2.

16 BWhich statementfrom
It increases about
L1 money
to L2. is correct?
CA ItItincreases
consists solely
from Lof2 to
deposits
L3. held by commercial banks.

DB ItItremains
functionsthe
assame
a medium
at L1.of exchange.
C Its monetary value equals its production costs.
16 Which statementonly
D It operates about money
when thereisiscorrect?
a double coincidence of wants.
3 2024
A Nov P31
It consists Q17
solely of deposits held by commercial banks.
17 In country X, unemployment is rising at the same time as the number of job vacancies is
B It functions as a medium of exchange.
increasing.
C Its monetary value equals its production costs.
What is the most likely reason for this?
D It operates only when there is a double coincidence of wants.
A Economic growth is falling.
B country
17 In Economic growth is rising. is rising at the same time as the number of job vacancies is
X, unemployment
increasing.
C Geographical mobility of labour is rising.
What is the most likely
D Occupational reasonoffor
immobility this?is rising.
labour

A Economic growth is falling.

B Economic growth is rising.
9
4 2024 Nov P31 Q18
© UCLES 2024 9708/31/O/N/24
C Geographical mobility of labour is rising.
18 An increase in which variable affecting labour markets is most likely to reduce the natural rate of
Dunemployment?
Occupational immobility of labour is rising.

A the level of unemployment benefit

B the militancy of trade unions
© UCLES 2024 9708/31/O/N/24
C the national minimum wage
D the participation on training courses

19 A consumer has an income of $1000 per week. The consumer spends 80% of this on goods and
services.

Following an increase in the consumer’s income to $1200 per week, consumption increases to
$900 per week.
 C The marginal propensity to consume is 0.5.
D The marginal propensity to consume is 2.
5 2024 Nov P31 Q20
20 The table shows data about the population of a country.

total population 2 000 000

labour force 1 200 000
number of people employed 900 000
number of people unemployed 300 000

What is the rate of unemployment?

A 25% B 33% C 60% D 75%

21 What is not an aim of macroeconomic policy?

6
6 2024 Nov P33 Q12
A economic development
12 The diagram shows the supply of and the demand for workers in the car manufacturing industry.
B exchange rate stability
A trade union successfully negotiates a wage increase from W1 to W2.
C Pareto optimality
D satisfactory balance of payments S
wage
rate
W2
W1

© UCLES 2024 O 9708/31/O/N/24 [Turn over

L2 L1 L 3
quantity of labour

What is the likely impact on the level of employment?

A fall from L1 to L2
B fall from L3 to L2
C rise from L1 to L3
D rise from L2 to L3

13 A firm buys new machinery which increases the marginal productivity of its workforce.

What will be the resulting impact on the market for labour?

A a shift to the left in the demand curve for labour

B a shift to the right in the demand curve for labour
C a shift to the left in the supply curve of labour
D a shift to the right in the supply curve of labour
 C rise from L1 to L3
D rise from L2 to L3
7 2024 Nov P33 Q13
13 A firm buys new machinery which increases the marginal productivity of its workforce.

What will be the resulting impact on the market for labour?

A a shift to the left in the demand curve for labour

B a shift to the right in the demand curve for labour
C a shift to the left in the supply curve of labour
D a shift to the right in the supply curve of labour

7
8 2024 Nov P33 Q14
14 The diagram represents the market for labour.

wage
S1

S2
W

D
O N
number of workers

What would be the effect on transfer earnings and economic rent of a change in the supply curve
© UCLES 2024 9708/33/O/N/24
from S1 to S2?

transfer economic
earnings rent

A fall falls
B fall rises
C rise rises
D rise falls

15 Which combination of policies is most likely to increase the number of low-paid workers caught in
the poverty trap?

individual’s proportion of all

tax-free allowance benefits that are
for income tax means-tested

A decrease increase
B decrease decrease
C increase increase
D increase unchanged

16 A website compares the prices of groceries.

Which function of money is illustrated by this?

A medium of exchange
B standard of deferred payment
C store of value
 C1
consumption
spending C2
8
9 2024 Nov P33 Q17
17 Two statements about the types of unemployment are shown.

1 You will get unemployment if you pay people not to work, and tax them when
they do. 10
2 An individual is actively seeking work but due to negative economic growth cannot
21 The diagram shows a curve representing
O the relationship between a country’s unemployment
find employment. disposable income
rate and its inflation rate.
Which row best describes the two types of unemployment in these statements?
What has happened to autonomous consumption and the marginal propensity to consume?
1 2
inflation
autonomous marginal propensity
A cyclical rate
consumptionstructural to consume
B voluntary frictional
A decreased decreased
C structural cyclical
B decreased increased
D voluntary involuntary
C increased decreased
D
18 A government increased
decides to cut the rate ofincreased
interest in order to stimulate aggregate demand and
increase employment. O
10 2024 Nov P33 Q20
unemployment
20 Why
Howmight
wouldthis policy not work
decreasing in a recession?
interest rates be most likely to rate
reduce unemployment?
A Business confidence is low.
A by decreasing the borrowing costs of business
WhyIt is
B it likely
leads that this curve only applies in the short run?
to deflation.
B by decreasing the government’s budget deficit
C
A ItAny
leads to an appreciation
attempt to reduce in the exchange rate.
unemployment will increase inflation.
C by increasing the foreign exchange rate of the currency
D
B ItIncreased
leads to a decrease
inflation in the money
actually supply. unemployment.
increases
D by increasing the opportunity cost of spending
C Increased inflation leads to expectations of further inflation.
D Increased inflation reduces real wage rates, which increases the demand for labour.

11 2024 Nov P33 Q22

22 What is the most likely result of a period of negative actual growth?

A an increase in the surplus of the financial account of the balance of payments

B an increase in the deficit of the current account of the balance of payments
C an increase in the rate of inflation
D an increase in the rate of unemployment

23 An economy experiences falling incomes and rising unemployment. The central bank decides to
reduce the rate of interest to stimulate economic activity.

When would such a policy be most likely to succeed?

A when spending by consumers on goods and services is income elastic

© UCLES 2024 9708/33/O/N/24 [Turn over
B when spending by firms on capital goods is interest rate elastic
© UCLES 2024 9708/33/O/N/24
C when the leakage on additional national income is high
D when the overseas demand for exports is price inelastic
Answers:

1D

2B

3D

4D

5A

6A

7B

8D

9D

10A

11D
 A when firms have spare production capacity
What is often an undesirable side effect of such a policy?
B when firms use labour-intensive production
Chapter : 11 Money and Banking
A accelerating general inflation
C when the increase in income is regarded as permanent
B an increase in profits above normal profits
D when the increase in income is regarded as temporary
C an increase in the stocks of unsold goods held by firms
1 2023 Nov P33 Q17
D shortages of the good
17 What is a function of money?

A It can be divided into small units.

16 When is an increase in national income most 10 likely to induce an increase in investment
spending?
B It can be easily carried.
21 The diagram shows a curve representing the relationship between a country’s unemployment
C
rateIt
A is aits
when
and standard
firms haveofrate.
inflation deferred
spare payment.
production capacity
D
B It is widely
when firms accepted.
use labour-intensive production
C when the increase in income is regarded as permanent
inflation
18 A
D pandemic
when theencourages rate workers
increase in many
income in developed
is regarded countries to work from home, leading to a
as temporary
closure of city centre businesses such as coffee shops and retailers.
2 2023 Nov P33 Q17
If this is
17 What way of working
a function continues after the pandemic, what is the most likely result?
of money?
A
A Frictional unemployment
It can be divided willunits.
into small decrease.
B
B The
It cangeographical mobility of labour will increase.
be easily carried.
C
C Structural unemployment
It is a standard of deferredwill O
increase.
payment.
D Voluntary unemployment
D It is widelyunemployment
accepted. will increase.
rate

18 AWhy is it likely
pandemic
© UCLES 2023
that this curve
encourages manyonly applies
workers in in the short countries
developed
9708/33/O/N/23
run? to work from home, leading to a
closure of city centre businesses such as coffee 11shops and retailers.
3 A Any
2024 Nov attempt
P33to Q24
reduce unemployment will increase inflation.

24 IfBthisIncreased
way policy
Monetary of working
doescontinues
inflation actually
not usuallyafter theimmediately.
increases
work pandemic, what is the most likely result?
unemployment.
A
C Frictional
Increased unemployment will decrease. of further inflation.
Which time laginflation leads
is likely to expectations
to be the least concern to a government whose priority is a rapid
domestic
B The impact?
geographical mobility of labour
D Increased inflation reduces real wage willrates,
increase.
which increases the demand for labour.
A Structural
C the time itunemployment
takes for policymakers to recognise the cause of a problem
will increase.
22 D
What is time
the most
B Voluntary
the likely
forresult
itunemployment
takes of
willa increase.
the economy period of negative
to respond actual
to the growth? of the policy
introduction
A
C an increase
the in the
time it takes forsurplus of theexchange
the foreign financial rate
account of the balance
to respond of payments
to the effect of the policy
B
D an
theincrease in the
time it takes to deficit
put theofchosen
the current account
policy measure of the
intobalance
place of payments
© UCLES 2023 9708/33/O/N/23
C an increase in the rate of inflation
25 The
D anoptimum level
increase of rate
in the population is deemed to be that level at which real output per head is
of unemployment
maximised.
4 2024 Nov P33 Q23
Theeconomy
23 An diagram shows the relationship
experiences between
falling incomes andpopulation size and output
rising unemployment. Theper headbank
central in a country
decidesfor
to
two different time periods.
reduce the rate of interest to stimulate economic activity.

When would such a policy be most likely to succeed?

A whenoutput Q2 consumers on goods and services is income elastic

spending by
output per head year 2
B whenper head by firms on capital goods is interest rate elastic
spending Q1
output per head year 1
C when the leakage on additional national income is high
D when the overseas demand for exports is price inelastic

O P1 P2
population

Which change could not satisfactorily explain the shift from year 1 to year 2?

A Population has increased.

B State of technology has improved.
© UCLES 2024 9708/33/O/N/24
C Stock of capital has increased.
D Volume of productive resources in use has increased.

26 A government wants to reduce the current account deficit on the balance of payments.
 B when firms use labour-intensive production
A accelerating general inflation
C when the increase in income is regarded as permanent
B an increase in profits above normal profits
D when the increase in income is regarded as temporary
C an increase in the stocks of unsold goods held by firms
5 2023 Nov P33 Q17
D shortages of the good
17 What is a function of money?

A It can be divided into small units.

16 When is an increase in national income most likely to induce an increase in investment
spending?
B It can be easily carried.
8
C
A It is a standard
when firms haveofspare
deferred payment.
production capacity
17 D
TwoIt
B statements
is widely
when about the types of unemployment
firms accepted.
use labour-intensive production are shown.

C when1the You increase in income

will get is regarded
unemployment if as
youpermanent
pay people not to work, and tax them when
18 A pandemic they do.
encourages many workers in developed countries to work from home, leading to a
D when the increase in income is regarded as temporary
closure of city centre businesses such as coffee shops and retailers.
6 2 An individual is actively seeking work but due to negative economic growth cannot
2023 Nov P33 Q17
find employment.
If this way of working continues after the pandemic, what is the most likely result?
17 What is a function of money?
AWhich row best describes thewill
twodecrease.
types of unemployment in these statements?
A Frictional unemployment
It can be divided into small units.
B
B The It cangeographical
1
be easily mobility of2 labour will increase.
carried.
C
C A Structural unemployment
cyclical
It is a standard will increase.
structural
of deferred payment.
D B Voluntary
D unemployment
voluntary
It is widely will increase.
accepted. frictional
C structural cyclical
18 A pandemic
© UCLESD
2023
encourages many
voluntary workers in
involuntary developed countries to work from home, leading to a
9708/33/O/N/23
closure of city centre businesses such as coffee shops and retailers.
7 2024 Nov P33 Q18
18 IfAthis way of working
government continues
decides afterrate
to cut the the of
pandemic,
interest what is the
in order to most likely aggregate
stimulate result? demand and
increase employment.
A Frictional unemployment will decrease.
WhyThe
B might this policy not
geographical workofinlabour
mobility a recession?
will increase.
A Structural
C Business confidence is low.
unemployment will increase.
B Voluntary
D It leads tounemployment
deflation. will increase.
C It leads to an appreciation in the exchange rate.
D
© UCLES 2023
It leads to a decrease in the money supply.
9708/33/O/N/23

9
8 2024 Nov P32 Q20
20 A country experiences an increase in unemployment due to deficiency of aggregate demand.

What will be the effect of this on tax revenue and government expenditure, assuming that tax
rates and rates of unemployment benefit remain unchanged?

government
tax revenue
expenditure

A decrease increase
B decrease no change
C increase decrease
D no change increase

21 A government is successful in raising the rate of economic growth.

As a result, which other macro-economic aim would it most likely have achieved in the short run?

A balance of payments surplus

© UCLES 2024 9708/33/O/N/24
B higher employment
C lower inflation
D stronger exchange rate

22 Which argument for lowering income tax rates is always valid?

 W1
What is the rate of unemployment?

A 25% B 33% C 60% DMRP L = DL

75%
9 2024 Nov P31 Q21
O Q1 Q3 Q2 Q4
21 What is not an aim of macroeconomic policy?
employment
A economic development
What is the effect of the new wage rate on employment?
B exchange rate stability
A It falls from OQ2 to OQ1.
C Pareto optimality
B It falls from OQ2 to OQ3.
D satisfactory balance of payments
C It rises from OQ1 to OQ3.
D It rises from OQ1 to OQ4.
10 2024 Jun P33 Q16
16 A world financial crisis was partly linked to the actions of commercial banks.

Which actions of the commercial banks could have led to the financial crisis?
© UCLES 2024
5 [Turn over
A being subject to tight controls by the 9708/31/O/N/24
central bank over credit creation
12 What would supporters of a nationalised public transport service expect to be the most likely
B holding
outcome from reserves above
the privatisation of the
trainreserve
and bus ratio agreed with the central bank
services?
C
A taking
fewer excessiveserved
destinations risksby
bytrains
demanding insufficient security from borrowers
and buses
B
D lower fares the gap in favour of a bank’s assets over liabilities
widening
C more frequent services to all destinations

17 D more
What peoplelikely
is most employed in public
to result fromtransport services
a decrease in the natural rate of unemployment?
11 2024 Jun P33 Q13
A a decrease in government expenditure on goods and services
13 What will cause a household to be caught in the poverty trap?
B a decrease in the level of government payments to the unemployed
A A household earns less than the international poverty line of $2.15 per person per day.
C
B Aahousehold
decreasespends
in trade union
more thanmembership
it earns in a month.

D
C Aahousehold’s
decrease in interest
earnings riserates
at a lower rate than the rise in inflation.
D An extra dollar earnt by a household causes a greater loss in government benefit payments.

14 What will cause an outward shift in the demand for labour curve?
12 2024 Jun P32
A a decrease Q21
in the top rate of income tax 9
© UCLES 2024 9708/33/M/J/24
21 B
Which
an row correctly
increase identifies
in the demandtheforcharacteristics of an economy experiencing the liquidity trap?
the final product
C an increase in subsidies to firms
rate of
D an increase
rate of rate of
in the size of the working population
economic
inflation interest
growth

A high high low

B low high low
C low low low
D low low high

22 Which combination of policies would be most likely to bring a country out of recession?

A expansionary fiscal and monetary policy as well as supply-side policies

B expansionary fiscal policy and tight monetary policy
C tight fiscal and monetary policy
D supply-side policies alone
 W1
C GJK GJF
D GJK GHOJ MRPL = DL
13 2024 Jun P32 Q16
O Q1 Q3 Q2 Q4
16 What is not a function of a commercial bank? 6
employment
15 AThe to help firms
Whatdiagram
is the effect
raise
shows a finance
of theperfectly
new wage competitive firm’s average product of labour (APL) and marginal
rate on employment?
product of labour (MPL) curves.
B to hold cash on deposit for firms
A It falls from OQ2 to OQ1.
C to lend money to households
B It falls from OQ($),
wage 2 to OQ3.
D to provide savings accounts
C It rises from average
OQ1 to OQ3.
product,
D It rises from OQ1the
marginal
17 In 2020 in a country, to OQ 4.
unemployment rate of the 16–64 age group seeking work was 4.0%.
14 2024 Jun P31 product
Q16 W
The employment (units)
rate for this group in the same period was 76.6%.
16 A world financial crisis was partly linked to the actions of commercial banks.
What can be concluded from this? APL
Which actions of the commercial banks could have led to the financial crisis?
A 19.4% of the economy is working illegally. MPL
A being subject to tight controls by the central bank over credit creation
B 23.4% of the age group is economically inactive.
B holding reserves above
O the N reserve ratio
N2 agreed with theN3central N
bank
1 4
C 80.6% of the age group is economically active.
C taking excessive risks by demanding insufficient security from borrowers
workers employed
D The data is inaccurate.
D widening the gap in favour of a bank’s assets over liabilities
How many workers will the firm employ at a wage of W?

17 A is 1most likely toBresult

WhatON ONfrom
2 C in
a decrease ONthe D of ON
3 natural rate unemployment?
4

15 2024 March P32 Q16

A a decrease in government expenditure on goods and services
©
16UCLES 2024 change
Which 9708/32/M/J/24
is likely to result in a decrease in the demand for money? [Turn over
B a decrease in the level of government payments to the unemployed
A a decrease in the use of credit cards by consumers
C a decrease in trade union membership
B a switch from monthly to weekly payments of wages
D a decrease in interest rates
C a decrease in interest rates
D an increase in the perceived risks involved in holding government bonds

17 Which combination of factors is most likely

© UCLES 2024
to lead to a decrease in structural unemployment?
9708/31/M/J/24

A a fall in inflation and an increase in lending for low income households

B a fall in real wages and an increase in subsidies for technological improvements
C an increase in tariffs and lower taxes for new businesses
D the introduction of a national minimum wage and better working conditions

18 Why might country X have a higher natural rate of unemployment than country Y?

A There is a higher level of trade unionisation in X.

B There is more training and education in X.
C There are greater incentives to find work in X.
D There is a higher level of job vacancy information in X.
Answers
1C
2C
3C
4B
5C
6C
7A
8A
9C
10C
11D
12C
13A
14C
15B
 population
Which increased
statement by 1%.
is correct?

A Real
Which income decreased
statement is correct?by 2% per head. 7
Chapter : 12 Government Macroeconomic
B
A Real
the income
period increased
a year,bynominal
1%2%perper
head.
Chapter : 12 Government
19 OverReal
population
income
increased macroeconomic
ofdecreased
by
Intervention 1%.
by national
C Real income increased by 4% per head.
head.income increased by 2%, inflation was 3% and
B Real income increased by 1% per head.
Which statement
D There was noischange
correct?in real income per head.
C Real income increased by 4% per head.
1 2024
A March
Real incomeP32 Q20 by 2% per head.
decreased
D There was no change in real income per head.
20 What is likely to be the most effective policy to reduce inflation caused by a rapid rise in import
B Real income increased by 1% per head.
prices?
C
20 A
What Real income
is likely toinincreased
be by 4% per head.
a decrease thethe most
domestic effective policy to reduce inflation caused by a rapid rise in import
rate of interest
prices?
D There was no change in real income per head.
B a decrease in the rate of income tax
A a decrease in the domestic rate of interest
C an increase in trade tariffs on imports
20 What is likely to be the most effective policy to reduce inflation caused by a rapid rise in import
B a decrease in the rate of income tax
prices?
D a revaluation of the exchange rate
C an increase in trade tariffs on imports
A a decrease in the domestic rate of interest
21 Which macroeconomic
D a revaluation policy
of the objective
exchange will not apply to a government in a closed economy?
rate
B a decrease in the rate of income tax
2 2024
A
C an March
achieving
increase P32
a low
in Q21
and
trade steadyon
tariffs rate of inflation
imports
21 B
Which macroeconomic
achieving policy
a more equal objective
income will not apply to a government in a closed economy?
distribution
D a revaluation of the exchange rate
A
C achievingaasurplus
achieving low andonsteady rate ofofinflation
the balance payments
21 Which
D macroeconomic
B achieving
achieving more policy
aasustainable objective
equalrate
income will notgrowth
apply to a government in a closed economy?
distribution
of economic

C achieving
A achievingaalow
surplus on therate
and steady balance of payments
of inflation
22 A government increases its budget deficit to spend money on infrastructure development. It
B
D achieving
achieving a more equal income
rate ofdistribution
finances this byaprinting
sustainable
money. economic growth
C achieving a surplus on the balance of payments
How is this policy likely to affect the government’s main macroeconomic policy objectives?
22 D
A government increases its
achieving a sustainable ratebudget deficitgrowth
of economic to spend money on infrastructure development. It
finances this by printing money.
3 2024 March
higherP32 Q22
lower lower
economic
22 A
Howgovernment increases
is this policy toits budget
the deficit
likely unemployment
affect to
government’s spend
inflation money
main on infrastructure
macroeconomic policydevelopment.
objectives? It
growth
finances this by printing money.
A less likely
higher less likely more likely
How is this policy likely to affectlower
the government’s lower
main macroeconomic policy objectives?
economic
B less likely more likely
unemployment lessinflation
likely
growth
C higher
more likely more likely less likely
lower lower
A economic
less likely less likely more likely
unemployment inflation
D growth
more likely more likely more likely
B less likely more likely less likely
A less likely less likely more likely
C more likely more likely less likely
B less likely more likely less likely
D more likely more likely more likely
C more likely more likely less likely
D more likely more likely more likely

© UCLES 2024 9708/32/F/M/24 [Turn over

8
4 2024 March P32 Q23
23 The government increases interest rates in order to reduce the rate of inflation.
© UCLES 2024 9708/32/F/M/24 [Turn over
What will also result from this action?
© UCLES 2024 9708/32/F/M/24 [Turn over

A a depreciation of the country’s currency

B a fall in the level of savings
C a reduction in economic growth
D a reduction in unemployment

24 The diagram shows the relationship between the income tax rate and tax revenue.

tax
X
 C a reduction in economic growth
D a reduction in unemployment
8
5 2024 March P32 Q24
24
21 The diagramrepresents
The diagram shows thetherelationship between
short-run Phillips theSRPC
curves income tax
1 and rate2 and
SRPC taxlong-run
and the revenue.Phillips
curve in an economy, where NRU is the natural rate of unemployment. The economy is originally
in equilibrium with no inflation.

tax long-run
X
revenue Phillips curve
inflation
rate W
P2 J

O Z Y
income tax rate
K L
P1
Which statement is correct? SRPC2
M
A A tax rate cut from YOto Z willUcause
2
tax
U1 revenue to decrease.
SRPC1
NRU
B At tax rates below Z a tax rate cut will causeunemployment
tax revenue to
rateincrease.

C
If theThe greater the
government rate ofatax
introduces beyond
fiscal Z, the
stimulus smaller
to reduce will be the tax
unemployment, revenue generated.
monetarists predict that
there will be a series of movements before long-run equilibrium is restored.
D Tax revenue will always increase as the rate of income tax increases.
Which set of movements illustrates this prediction?

A which
25 In J to Ksituation
to L B devaluation
is L to K to J of the
C currency
M to K tomost
J D Mtotocause
likely K to L inflation?
6 2024 Jun P31 Q22
A Excess capacity is available.
22 An economy has a sudden increase in inflation caused by a large rise in energy prices. It also
enters
B a recession
Import tariffs with
are rising unemployment.
reduced.
C Local substitutes
A decrease of imported
in which policy variable israw materials
most likely to are unavailable.
reduce the impact of the recession without
increasing the price level further?
D The demand for exports is price inelastic.
A direct taxation
B government spending
C indirect taxation
D interest rate

23 What is not a threat to globalisation?

9
7 2024
A Jun
rising P31
fear Q24jobs to immigrant workers
of losing
24 Singapore has one
B rising political of theamong
tensions highestmajor
population densities
economies of the in the world. It discourages car use
world
through a high tax on second cars.
C stronger trade unions in industries producing substitutes of imports
Which additional policy would help to relieve road congestion in the short run?
© UCLES
D 2024 9708/32/F/M/24
withdrawal of government support for inefficient industries
A limiting the total number of car licences issued
B encouraging restrictions on the size of families
C improving infrastructure by building new roads
D 2024
© UCLES replacing diesel cars by electric cars 9708/31/M/J/24

25 What is not an example of an expenditure-reducing policy?

A a decrease in government spending

B a depreciation of the exchange rate
C an increase in direct taxes
D an increase in interest rates

26 What does the J-curve effect show?

 B encouraging restrictions on the size of families
unemployed workers.
C
C BThey provide
improving a safety netbytobuilding
infrastructure workersnew
which might reduce their efforts to find a suitable job.
roads
They force firms to raise wages to encourage workers to work rather than relying on
D unemployment benefits.
D They increase
replacing dieselgovernment spending
cars by electric cars and force it to raise taxes.
8 2024
C Jun P31 Q25
They provide a safety net to workers which might reduce their efforts to find a suitable job.
D They increase government spending and force it to raise taxes.
19
25 Country X has
What is not an a marginal
example of propensity to consume (MPC)
an expenditure-reducing policy?of 0.7. Its marginal propensity to save
(MPS), marginal rate of taxation (MRT) and marginal propensity to import (MPM) are each 0.1.
A Country
19 a decrease
X has ainmarginal
government spending
propensity to consume (MPC) of 0.7. Its marginal propensity to save
What is likely
(MPS), to lead
marginal rate of totaxation
the biggest
(MRT) increase
and marginalin propensity
the national income
to import (MPM)multiplier?
are each 0.1.
B a depreciation of the exchange rate
A What
a 5% is likely to leadintothe
increase the MPC
biggesttogether
increase in the national
with a 5% fall income
in themultiplier?
MRT
C an increase in direct taxes
A a 5% increase in the MPC together with a 5% fall in the MRT
B a 5% increase in the MPM together with a 5% fall in the MRT
D B ana increase
5% increase in ininterest
the MPMrates
together with a 5% fall in the MRT
C a 5% increase in the MPS together with a 5% fall in the MPM
C a 5% increase in the MPS together with a 5% fall in the MPM
26 D Da does
What 5%
a 5%increase inthe
the J-curve
increase in the MRT
effect
MRT together
show?
together with awith a 5%
5% fall fallMPS
in the in the MPS
9 2024 Jun P32 Q20
A A successful currency depreciation requires the sum of the import and export elasticities of
20 20
TheThe diagrams show
diagrams show the
theperformance
performanceof anof
economy using different
an economy using measures.
different measures.
demand to be greater than 1.
trend
B After a currency devaluation, the current LRAS
account is likely to get worse before
GDP
it gets better.
trend
goods price LRAS
real GDP
C In the short run, the demand
goods price for imports and exports
level GDPtendsrealto be price elastic.
X
level GDP X
D The value of the terms of trade will affect the success of a currency’s devaluation.
X

X 9AD
27 What O is the most likely consequence
O of an
X increase in theOnumber of multinational companies?
services year
21 Which row correctly identifies the characteristics AD
real outputof an economy experiencing the liquidity trap?
A a decrease in advancements in technology
O services O X O year
If an economy
rate is currently at point X on each diagram, what is the most likely conclusion that can
of
B beamadedecrease in foreign direct
rate of
based on this evidence? investment
rate ofreal output
economic
inflation interest
C A anPrices
increase
growth in exports
will increase significantly as the economy grows in the near future.
If an economy is currently at point X on each diagram, what is the most likely conclusion that can
be
D ABmade based
high on
anSupply-side
increase this evidence?
policies would be the best option to encourage economic growth.
in unemployment
high low
C The economy is currently experiencing a deflationary gap.
A B Prices will
low increase significantly
high as the
loweconomy grows in the near future.
D There are shortages of skilled labour throughout the economy.
B C Supply-side
low policies would
low be the best
lowoption to encourage economic growth.

C D The economy
low low experiencing
is currently higha deflationary gap.

10 2024
D Jun are
There P32shortages
Q22 of skilled labour throughout the economy.
22 Which combination of policies would be most likely to bring a country out of recession?

A expansionary fiscal and monetary policy as well as supply-side policies

B expansionary fiscal policy and tight
© UCLES 2024 monetary policy
9708/32/M/J/24

C tight fiscal and monetary policy

D supply-side policies alone

© UCLES 2024 9708/31/M/J/24 [Turn over

©23 The2024
UCLES inflation rate in a country increased. 9708/32/M/J/24

Which effect would this most likely have on the country’s balance of payments?

A an improvement in the current account balance

B an increase in price competitiveness
C an increase in export revenue
D an increase in import expenditure

24 A government uses monetary policy and fiscal policy to solve a problem of deflation.

Which policy combination is likely to be the most successful?

 B Chile’s performance on the current account balance was worse.
P2 J
C Each country had a weak exchange rate against the US dollar.
D Wage increases in each country were linked to their respective rates of inflation.
11 2024 Jun P32 Q26
26 A measure encourages consumers to change spending on imports to spending on domestically
produced goods. K L
P1
SRPC2
What does this describe? M
O
A an expenditure-reducing policy U2 U1 SRPC1
NRU
B an expenditure-switching policy unemployment rate

C the
If the law of comparative
government advantage
introduces a fiscal stimulus to reduce unemployment, monetarists predict that
there will be a series of movements before long-run equilibrium is restored.
D the Marshall–Lerner condition
Which set of movements illustrates this prediction?
27 The
A macroeconomic
J to K to L Bobjective
L to K of
to aJ government
C M tois Ktotomove
J the
D current
M to Kaccount
to L of the balance of
payments from deficit to surplus. To achieve this, it devalues the currency.
12 2024 Jun P33 Q22
22 Under which condition
An economy would increase
has a sudden a devaluation of the caused
in inflation currencyby
achieve
a largethis objective?
rise in energy prices. It also
enters a recession with rising unemployment.
A if the combined price elasticity of demand for exports and imports is greater than 1
A decrease
B in whichprice
if the combined policy variable
elasticity of is most likely
demand to reduce
for exports and the impact
imports of the
is less recession
than 1 without
increasing the price level further?
C if the income elasticity of demand is less than 1
A direct taxation
D if other countries decide to impose tariffs on all imported goods and services
B government spending
C indirect taxation
D interest rate

23 What is not a threat to globalisation?

9
13 2024 Jun
A rising P33
fear Q24jobs to immigrant workers
of losing
24 Singapore has one of the highest population densities 9 in the world. It discourages car use
B rising political tensions among major economies of the world
through
© UCLES 2024 a high tax on second cars. 9708/32/M/J/24
24 C Singapore has unions
stronger trade one ofin industries
the highest population
producing densities
substitutes in the world. It discourages car use
of imports
Which
through additional
a highpolicy would
tax on secondhelp to relieve road congestion in the short run?
cars.
D withdrawal of government support for inefficient industries
A limiting the total number of car licences issued
Which additional policy would help to relieve road congestion in the short run?
B encouraging restrictions on the size of families
A limiting the total number of car licences issued
C improving infrastructure by building new roads
DB 2024
© UCLES encouraging
replacing diesel restrictions oncars
cars by electric the9708/33/M/J/24
size of families
C improving infrastructure by building new roads
25 What is not an example of an expenditure-reducing policy?
D replacing diesel cars by electric cars
14 2024 Jun P33
A a decrease Q25
in government spending
B a depreciation of the exchange rate
25 What is not an example of an expenditure-reducing policy?
C an increase in direct taxes
A
D a increase
an decrease in government
in interest rates spending
B a depreciation of the exchange rate
26 What does the J-curve effect show?
C an increase in direct taxes
A A successful currency depreciation requires the sum of the import and export elasticities of
D demand
an increase in interest
to be greater rates
than 1.
B After a currency devaluation, the current account is likely to get worse before it gets better.
26 C
What does
In the therun,
short J-curve effectforshow?
the demand imports and exports tends to be price elastic.
D
A The value of the terms
A successful of trade
currency will affect therequires
depreciation success of
thea currency’s
sum of thedevaluation.
import and export elasticities of
demand to be greater than 1.
27 What is the most likely consequence of an increase in the number of multinational companies?
B After a currency devaluation, the current account is likely to get worse before it gets better.
A a decrease in advancements in technology
C In the short run, the demand for imports and exports tends to be price elastic.
B a decrease in foreign direct investment
 C maximises profit no yes
D receives deposits directly no yes
from the government

15 2023 March P32 Q19

19 What is most likely to be the biggest contribution to sustainable economic growth in a developed
economy? 10
A a movement of people from rural to urban areas
25 Which cause of economic growth would involve the least cost for present and future generations
of a an
B country’s population?
increase in technical training
A
C increased
an exploitation
increase in the sizeof
ofathe
country’s mineral resources
population
B
D investment
rising financed
consumer bylevels
credit borrowing from abroad
C investment financed by high rates of domestic savings
20 Which policy is likely
D technological to increase
innovations unemployment?
in production processes
16 2023
A an March P32
increase in Q26 facilities
retraining
26 B
Which additional increase
a significant components may be
in indirect included when measuring economic development that are
taxes
not included in measures of economic growth?
C the imposition of selective import controls
D changesininthe public sector deficit
an increase level of real income
the distribution
poverty per capita 9
of GDP

A
21 What no most effective
is the no policy yes
a government could introduce to reduce frictional
unemployment?
B no yes no

A C cut welfare
yes spendingyes
on benefits no
D yes yes yes
B improve information about job vacancies
© UCLES 2023 9708/32/F/M/23
C reduce tax rates
27 Which curve is shown in the diagram?

17 D raise interest rates 9

2023 Jun P31 Q21
income policy a government could introduce to reduce frictional
21 What is the most effective
unemployment? inequality
22 In a closed economy with no government sector, when will an increase in investment spending
generate
A the largest
cut welfare spendingincrease in equilibrium national income?
on benefits
B
A improve information about
when households havejoba vacancies
high level of autonomous consumption
C reduce tax rates
B when households have O
a high level of compulsory saving
income per capita
D raise interest rates
C when households have a high marginal propensity to consume
A Kuznets curve
D closed
22 In whencurve
B a Laffer
households
economy with have a high marginal
no government propensity
sector, when to save in investment spending
will an increase
generate the largest increase in equilibrium national income?
18 2023
C Juncurve
Lorenz P31 Q23
A when households have a high level of autonomous consumption
23 DWhich combination
Phillips curve of policies is most likely to increase output?
B when households have a high level of compulsory saving
C fiscal
when households policy
have monetary
a high marginal propensity policy
to consume
D Awhen households
decrease have a high
budget marginal propensity
deficit decrease to save
interest rates
B decrease budget deficit increase interest rates
23 Which combination of policies is most likely to increase output?
C increase budget deficit decrease interest rates
fiscal policy monetary policy
D increase budget deficit increase interest rates
A decrease budget deficit decrease interest rates
© UCLESB2023 decrease budget deficit increase interest rates
9708/32/F/M/23
24 A country is a net importer of oil. World oil prices have risen over the year.
C increase budget deficit decrease interest rates

Assuming
D that all
increase otherdeficit
budget factors remain theinterest
increase same, rates
how is this likely to affect inflation, trade balance
and unemployment in this country?
24 A country is a net importer of oil. World oil prices have risen over the year.
inflation trade balance unemployment
Assuming that all other factors remain the same, how is this likely to affect inflation, trade balance
Aunemployment
and decreasein this country? no change increase
 of workers (units)

0 0
10
19 2023 Jun P31 Q25 1 6.0
25 What would reduce the effectiveness 2of a supply-side13.0
stimulus to the economy?

A an imposition of maximum hours 3in a working week

21.0
B an increase in public sector spending
4 27.5
C the provision of new training schemes
5 33.5
D the relaxation of import controls on raw materials
What is the marginal product when the average product per worker equals 7.0 units?

A 6.0 units B 6.5 units C 7.0 units D 8.0 units

26 A multinational company (MNC) shifts its manufacturing capacity to a developing country.
20 2023 Jun P32 Q15
15 What is
What is likely
likely to
to be the ashort-run
cause effect
more equal of this in the
distribution developing
of income in thecountry?
long run?

A a reduction in the top rate of taxation short-run balance

employment investment of payments
B an increase in
increases government spending
increases on education and training
current account
C an increase in unemployment improves

D A privatisation
no of the education
nosector yes
B no yes no
C yes no 9
yes
21 2023 Jun P32 Q23 9
D yes yes no
23 Increased borrowing by the government results in higher interest charges and this leads to less
23 private
Increased borrowing
investment by the government results in higher interest charges and this leads to less
expenditure.
private investment expenditure.
27 Of
Towhat
indicate
is thisthe changing income distribution, the Kuznets curve plots gross domestic product per
an example?
capita
Of what against an
is this an economic
example? variable X.
A an automatic stabiliser

What
B anisautomatic
variable
A crowding out X?stabiliser
C the accelerator
B
A crowding
the out rate
exchange
D the substitution effect
C
B accelerator
the level of income inequality
D the price
C substitution
24 Governments level
set effect
economic policy aims.
22 2023the
D
What Jun
will rateP32 Q24to occur if all these aims are achieved?
of interest
be least likely
24 Governments set economic policy aims.
A a decrease in the average standard of living
28 B
Economists
What will be define
a decrease least the unemployed
in the likely to occur
currency’s allas being
if exchange
foreign these those
aims
rate arewho are not in work but are actively seeking
achieved?
work. Other groups of people in the population of working age include those classed as inactive
C an increase in the level of frictional unemployment
or
A self-employed.
a decrease in the average standard of living
D an increase in the rate of inflation
B a decrease
Which groups ofinpeople
the currency’s foreign
are included exchange
as part rate
of a country’s labour force?
C government
25 The an increase in thetolevel
decides raise of
thefrictional unemployment
rate of value added tax (general sales tax).
unemployed inactive self-employed
D an
What increase
does in the
this suggest rate
is the of inflationmain macroeconomic objective?
government’s
© UCLESA2023 no no no
9708/32/M/J/23
A to reduce the budget deficit
B yes no yes
25 B
Thetogovernment decidesofto
reduce the inequality raisedistribution
income the rate of value added tax (general sales tax).
C Cto reduce the
yes yes no
What does this level of unemployment
suggest is the government’s main macroeconomic objective?
D Dto reduce the
norate of inflation yes yes
A to reduce the budget deficit
B economy
26 An to reduce the inequality
imports most of theoffactors
income distribution
of production used in the manufacture of its exported
goods.
C 2023
© UCLES to reduce the level of unemployment 9708/31/M/J/23
What effect would depreciation of this economy’s rate of exchange have?
D to reduce the rate of inflation
 C an increase in the level of frictional unemployment
D an increase in the rate of inflation
23 2023 Jun P32 Q25
25 The government decides to raise the rate of value added tax (general sales tax).

What does this suggest is the government’s main macroeconomic objective?

9
A to reduce the budget deficit
21 What is the most effective policy a government could introduce to reduce frictional
B to reduce the inequality of income distribution
unemployment?
C to reduce the level of unemployment
A cut welfare spending on benefits
D to reduce the rate of inflation
B improve information about job vacancies
C reduce tax rates
26 An economy imports most of the factors of production used in the manufacture of its exported
D raise 9
24 Juninterest
goods.
2023 P33 Q21rates
21 What is the most effective policy a government could introduce to reduce frictional
What effect would depreciation of this economy’s rate of exchange have?
unemployment?
22 In a closed economy with no government sector, when will an increase in investment spending
generate
A the largest
cut welfare spendingincrease in equilibrium national income?
on benefits
price of imported price of exported
goods
B improve information in the goods
about job vacancies
A when households have a high level of in the
autonomous consumption
domestic
C reduce tax rates
currency domestic currency
B when households have a high level of compulsory saving
D Araise interest rates
fall fall
C when households have a high marginal propensity to consume
B fall rise
D a closed
22 In when households
economy withhave a high marginal
no government propensity
sector, when will an to save in investment spending
increase
C
generate rise
the largest fall income?
increase in equilibrium national
25 2023 Jun P33 Q23
A Dwhen households risehave rise to increase
a high level of autonomous consumption
23 Which combination of policies is most likely output?
B when households have a high level of compulsory saving
C fiscalhave
when households policy monetary
a high marginal propensity policy
to consume
D Awhen households have a high
decrease budget marginal propensity
deficit decrease to interest
save rates

© UCLESB2023 decrease budget deficit increase interest rates

9708/32/M/J/23 [Turn over
23 Which combination of policies is most likely to increase output?
C increase budget deficit decrease interest rates
fiscal policy monetary policy
D increase budget deficit increase interest rates
A decrease budget deficit decrease interest rates
B decrease budget deficit increase interest rates
24 A country is a net importer of oil. World oil prices have risen over the year.
C increase budget deficit 10 rates
decrease interest
26 2023 Jun P33 Q25
Assuming
D that allbudget
increase otherdeficit
factors remain the same,
increase interest how
rates is this likely to affect inflation, trade balance
25 and
Whatunemployment
would reduce in the effectiveness
this country? of a supply-side stimulus to the economy?
A country
24 A an imposition of maximum
is a net importer hours
of oil. World in a working
oil prices have risenweek
over the year.
inflation trade balance unemployment
B an increase
Assuming in public
that all other factorssector
remainspending
the same, how is this likely to affect inflation, trade balance
Aunemployment
and decreasein this country? no change increase
C the provision of new training schemes
B increase improve decrease
inflation trade balance unemployment
D the relaxation of import controls on raw materials
C increase worsen increase
A decrease no change increase
BD decrease
increase no change decreasedecrease
improve
26 A multinational company (MNC) shifts its manufacturing capacity to a developing country.
C increase worsen increase
What
D
is likely to be the short-run
decrease
effect of thisdecrease
no change
in the developing country?

short-run balance
employment investment of payments
increases increases current account
improves
 C Investment depends on the rate of change in national income.
D Investment depends on the rate of change of interest rates.
27 2023 Nov P31 Q23
23 What shows the correct outcome for the policy option?

policy option outcome

A depreciation of the exchange rate encourages more exports, which also
means greater employment
B higher interest rates attracts hot money inflows, and is an
incentive for more consumer spending
C decreased government spending more workers will be employed, and
more imports will be bought
D reduction in income taxes increases consumer spending, with
increased demand for exports

24 The Laffer curve shows expected tax revenues at different tax rates.
9
28 2023 Nov P31 Q25
25 A government wishes to improve the income distribution between the richest and poorest in
R1 benefits for workers on low incomes. To pay for this, income
society. It introduces means tested
tax
tax rates for the highest paid willRincrease.
2
revenue
What is the most significant strength and weakness of this policy approach?

strength weakness
A benefits are only given poor non-workers
to those in need will be no better off
B intergenerational tax avoidance
equity is improved 0 is 50 60
more likely
tax rate / %
C workers will be encouraged to taxation has become
work more hours more regressive
An increase in the tax rate above 50% is expected to decrease tax revenue.
D the policy approach will be wealth distribution will be affected
efficientfor
What is the reason to operate
this? more than income distribution

A decreased incentive for emigration

26 The table shows data on the unemployment and inflation rates for four countries in 2010 and
B decreased incentive for tax evasion10
2014.
29 2023 Nov P31 Q27
C increased incentive for people to workrate
unemployment
27 Which adjustment is made to gross domestic product (GDP) toinflation ratea measure of economic
calculate
welfare (MEW)? country (% of workforce) (% per annum)
D increased incentive for people to work fewer hours
2010 2014 2010 2014
environmental
Australia the value5.2
of the value
6.1 of 2.7 1.6
costs and
leisure activity unpaid work
benefits
Canada 8.0 6.9 2.2 1.9
A no
Japan no 5.1 yes
3.6 –0.3 2.5
B2023
© UCLES yes
United States no 9.6 no
9708/31/O/N/23
6.2 1.7 0.6
C yes yes no
Which countries had a typical Phillips curve?
D yes yes yes
A Australia and Japan
B Australia only
28 Purchasing power parity (PPP) allows a comparison of the purchasing power in two countries.
C Japan only
What is a definition of PPP?
D Canada and the United States
A the amount of the domestic currency needed to purchase a unit of foreign currency
B the quantity of a currency required to purchase the same basket of goods in both countries
C the quantity of goods and services that can be purchased by a person on an average income
D the value of expenditure by households on goods and services in a country
 B no yes
C yes no value
D
Which yes would decrease
car journeys yesinMPC
number if the
0.5 congestion charge area were extended to
include area 2?
30 2023 Nov P32 Q13 MPS 0.2
A journeys
13 Which from point
combination of X to point
fiscal Z measures would be most effective in reducing income
policy
MRT 0.2
inequality?
B journeys from point X to point Y
MPM 0.1
C journeys from of
top rates point Y to point Z value of state
indirect taxes
income
What is the tax
size of the multiplier? benefits
D journeys from point Z to point Y
AA 1 increase B 2 increase C 5increase D 10
15 What
B is most likely to lead to an
increase increase in theincrease
reduce size of the national income?
18 What is likely to happen when the productive capacity of a free enterprise economy increases
A C a fall inreduce
interest rates on increase
savings accounts reduce
over a long period of time?
B D a fall inreduce reduce
the prices of imported goods reduce
A Future generations will be less well-off than present generations.
C a decrease in government spending
B Increasing the production of one good cannot be done without decreasing the production of
D another.
an increase in direct taxes
31 2023 Nov P32
C Individuals willQ16
have more choices due to a wider range of consumer goods.
16 Which government
D Rising levels ofpolicy
outputiswill
most likely
cause to capita
per improve occupational
incomes mobility?
to equalise.
A decreased income tax rates
19 B
The increased
acceleratorgovernment
principle refers to a relationship
spending on educationbetween investment and
and training
A
C the level ofgovernment
increased GDP. spending on infrastructure
B
D changes insubsidies
increased GDP. to firms to employ school leavers
C the level of interest rates.
D changes in interest rates.
32 2023 Nov P32 Q20
20 What is likely to be the effect of an increase in the budget deficit?

A 2023
© UCLES an increase in effective demand 9708/32/O/N/23 [Turn over
B an increase in unemployment
C a reduction in inflation
D 2023
© UCLES a reduction in the volume of spending9708/32/O/N/23

© UCLES 2023 9708/32/O/N/23 [Turn over

 inflation rate unemployment rate
country (% per annum) (% of workforce)
8
33 2023 Nov P32 Q21 2008 2011 2008 2011
21 The table gives details
Canadaof the inflation
2.38 and unemployment
2.89 rates for different
6.15 7.47 countries in 2008 and
2011.
France 3.16 2.29 7.81 9.68
Germany inflation rate
2.75 2.48 unemployment
7.60 rate
5.98
country (% per annum) (% of workforce)
Japan 1.37 –0.28
7 3.99 4.55
2008 2011 2008 2011
Which
19 In countries
its 2020 experienced
population census,aChina
trade-off between
thattheir inflation and unemployment rates?
Canada 2.38 reported2.89 the total population
6.15 was just below
7.47 1.4 billion.
The birth rate had continued to decline, the number of those reaching retirement age had
A Canada
increased andand Germany
theFrance 3.16
percentage size 2.29 had decreased.
of the workforce 7.81 9.68
B Canada only
Which change ofGermany 2.75 quickly sustain
policy would most 2.48 7.60 economic
China’s 5.98
growth in view of these
population
C Francechanges?
and Japan
Japan 1.37 –0.28 3.99 4.55
AD Allow
France onlyimmigration of labour.
more
Which countries experienced a trade-off between their inflation and unemployment rates?
B Encourage women to leave work to have more children.
A Canada
22 Which and Germany
government policy would boost economic growth but not necessarily promote economic
C Increase research in technology to improve labour productivity.
development?
B Canada only
D Tax the labour force more to pay for the increasing number of pensions.
A
C creating a more
France and equal distribution of income and wealth
Japan
B
D diverting
France onlygovernment spending from industry to education
20 Other things remaining equal, what will reduce the level of national income in an economy?
C encouraging the extraction of finite natural resources
A a fall in planned savings
22 Which government
D introducing policy
tighter wouldonboost
controls economic growth but not necessarily promote economic
air pollution
Bdevelopment?
a fall in the marginal propensity to import
34 2023 Nov P32 Q23
CA an increase
creating in theequal
average propensityincome
to consumewealth
23 Which policyameasure
more to distribution
encourage of economic and
growth might be based on the concept of the
DLaffer curve? government
B adiverting
reduction in the levelspending
of defence expenditure
from industry to education
A
C cuts in direct the
encouraging taxes
extraction of finite natural resources
21 What,
B according
exchange rate to the accelerator principle, will cause the level of investment to fall?
depreciation
D introducing tighter controls on air pollution
AC ainvestment
decrease in confidence
subsidies
23 BWhich policy measure
D aquantitative
decrease ineasing to of
the rate encourage economic
growth of national growth might be based on the concept of the
income
Laffer curve?
C an increase in the price of capital equipment
A cuts in direct taxes
D an increase in the rate of interest
B exchange rate depreciation
35 2023 Nov P33 Q22
C investment
22 What subsidies
is measured on the vertical axis of the Phillips curve?

AD the
quantitative easingof real wages
rate of change
B the rate of change of take-home pay
C the rate of inflation
D the rate of interest
© UCLES 2023 9708/32/O/N/23

9
36 2023 Nov P33 Q26
26 What is a government macroeconomic aim?

A 2023
© UCLES a fall in the general price level of goods and services
9708/32/O/N/23

B an increase in monopoly regulation

C lower taxes on consumer goods
D a minimum wage for low paid agricultural workers

© UCLES 2023 9708/33/O/N/23 [Turn over

27 Which row correctly identifies the characteristics of a low-income economy?

dependency
Gini coefficient per capita
on the primary
value real income
sector
 10
37 2023 Nov P33 Q29
29 The diagram shows the international trading position of a country that had tariffs on imports. The
country removed the tariffs on imports.

price Sdomestic
$

Pe
PW + T Sworld + tariff

PW Sworld no tariff

11 11 Ddomestic
O Q1 Q2 Q3 Q4
24 What
24 What isismost
mostlikely to influence
likely subsequent
to influence increases
subsequent in national
increases in income
nationalasincome
a result as
of a
a result of a
government policy of reduced interest rates? quantity
government policy of reduced interest rates?
What was the cost
A marginal quantity of imports into this country after the removal of the tariffs?
A marginal cost
A
B Q1Q2
marginal B ofQcapital
efficiency 1Q4 C Q2Q3 D Q3Q4
B marginal efficiency of capital
C marginal product
C marginal
30 Under product
which circumstances
D marginal utility
will low wages and low-cost land in a low-income country not attract
foreign investment in manufacturing?
38 2024 Nov P31
D marginal Q25
utility
A if the country creates genuine independence for their central bank
25 Which policy to reduce a current account deficit on the balance of payments could be described
as
B an expenditure-switching
if the country embarks onpolicy?
a programme of privatisation
25 Which policy to reduce a current account deficit on the balance of payments could be described
C
A ifa the
as an countryinlacks
decrease well-developed
government
expenditure-switching spendinginfrastructure
policy?
D
B ifa the countryinpermits
decrease repatriation
the exchange of the
rate of profits
country’s currency
A a decrease in government spending
C an increase in domestic income taxes
B a decrease in the exchange rate of the country’s currency
D an increase in domestic interest rates
C an increase in domestic income taxes
26 Which
D ancomponents are
increase in included in
domestic the financial
interest ratesaccount of the balance of payments?
39 2024 Nov P31 Q26
foreign direct interest, profits
investment are included
26 Which components and dividends
in the financial account of the balance of payments?
A key
foreign direct interest, profits
B = included
investment and dividends
C = not included
A key
D
B = included
27 It isCoften argued that the UN Human Development Index=(HDI)
not included
is a better indicator of economic
development than income per capita because it adjusts for
D
A average hours worked by the population.
B 2023
© UCLES environmental pollution. 9708/33/O/N/23
27 It is often argued that the UN Human Development Index (HDI) is a better indicator of economic
C inequality inthan
development income distribution.
income per capita because it adjusts for
D life expectancy at birth.
A average hours worked by the population.
B environmental
28 Some pollution.
conditions for providing foreign aid to low-income countries can be restrictive.

C inequality
Which kind of aidinfits
income distribution.
this description?
D
A life expectancy
food at of
aid in the event birth.
natural catastrophes such as severe drought
B grants that are tied to purchasing donor country goods
28 C
Some conditions
loans for providing
that are repaid foreign
over a long periodaid
at ato low-income
low countries can be restrictive.
rate of interest
 C inequality in income distribution. 11
D life expectancy at birth.
24 Monetary policy does not usually work immediately.
40 2024 Nov P31 Q28
Whichconditions
28 Some time lag is
forlikely to beforeign
providing the least
aid toconcern to a countries
low-income government
canwhose priority is a rapid
be restrictive.
domestic impact?
Which
A thekind
timeofitaid fitsfor
takes thispolicymakers
description?to recognise the cause of a problem

AB food aid in
the time the event
it takes of economy
for the natural catastrophes
respond tosuch
to 12 as severe drought
the introduction of the policy

29 B
C grants
What the time
is most that
likely are
it takes tied to
thepurchasing
for the
to cause foreign donor
of acountry
exchange
living standards rate goods
to respond
country to rise? to the effect of the policy
C loans
AD anthe thatit inare
time
increase therepaid
takes to putover
number a long period
thedoctors
of chosen at a low rate
policy measure into of interest
place

D
B an technical
increase assistance using highly skilled worker transfers to provide support
in the gold reserves
25 CTheanoptimum level
increase in of population
the number of peopleisper
deemed
house to be that level at which real output per head is
maximised.
© UCLES 2024 9708/31/O/N/24 [Turn over
D an increase in the money supply
41 2024 Nov P31
The diagram Q30the relationship between population size and output per head in a country for
shows
two differentmeans
30 Globalisation time periods.
that goods and services, capital and labour are traded on a worldwide basis.

Which combination illustrates that each trade partner can benefit when a low-income country
trades with a high-income country?
Q2
output
the low-income country output per head year 2
the high-income country
per head
Q1
A contracts are not always fulfilled agrees to increase investment in
due to corrupt practices output per head year 1
the infrastructure of low-income
countries

B experiences liquidity problems transfers short-term government

that restrict investment
O loans repayable
P1 P2 at high interest
rates
population
C multinational companies receives supplies at high prices
repatriate
Which change profits
could from
not mining
satisfactorily from multinationals
explain to year
the shift from meet 1 to year 2?
of rare minerals for export excess demands for rare metals
AD Population
supplieshas increased.
seasonal labour to repatriates wages to families
overcome shortages for of seasonal workers
B State of picking
technology has improved.
fruit crops
C Stock of capital has increased.
D Volume of productive resources in use has increased.
42 2024 Nov P33 Q26
26 A government wants to reduce the current account deficit on the balance of payments.

What is an example of an expenditure-reducing policy?

A a devaluation of the currency

B a subsidy on domestic production
C a tariff on imports
D an increase in income taxes

Permission to reproduce items where third-party owned material protected by copyright is included has been sought and cleared where possible. Every
reasonable effort has been made by the publisher (UCLES) to trace copyright holders, but if any items requiring clearance have unwittingly been included, the
publisher will be pleased to make amends at the earliest possible opportunity.

To avoid the issue of disclosure of answer-related information to candidates, all copyright acknowledgements are reproduced online in the Cambridge
Assessment International Education Copyright Acknowledgements Booklet. This is produced for each series of examinations and is freely available to download
at www.cambridgeinternational.org after the live examination series.
© UCLESAssessment
Cambridge 2024 9708/33/O/N/24
International Education is part of Cambridge Assessment. Cambridge Assessment is the brand name of the University of Cambridge [Turn over
Local Examinations Syndicate (UCLES), which is a department of the University of Cambridge.

© UCLES 2024 9708/31/O/N/24

 supported by the data?
C an increase of 1%
A The data are entirely consistent with the theory of the Phillips curve.
D an increase of 2%
B The data prove conclusively that the Phillips curve theory does not operate.
43 2024
C TheNov
data P33 Q28
suggest that no conclusions can be reached about the validity of the Phillips curve
theory.
28 What is most likely to result from foreign direct investment in a developing economy?
D The data suggest that the theory of the Phillips curve is correct, though with time lags.
A an improvement in the developing economy’s trade balance
B an increase in the developing economy’s net investment income
24 What indicates that a more equal distribution of income has been achieved?
C aafaster
A reduction
rate ofin the developing
economic growth economy’s government tax revenue
BD aahigher
reduction in Development
Human wage levelsIndex
in the developing economy
C a lower Gini coefficient
29 DTheadiagram
lower tax /shows an economy’s Lorenz curve (VW).
GDP ratio
44 2024 Nov P32 Q25
100 W
45° of imports from
25 In 2018, the United States (US) government introduced tariffs on a wide range
China. cumulative %
of income
Which type of policy was the US government adopting?

A expenditure-reducing
B expenditure-switching
area Y
C expansionary monetary
D contractionary monetary
area Z
V
0 11 100
45 2024 Nov P32 Q26
cumulative % of population
26 A US company receives a US$20 million dividend from shares that it owns in a Brazilian
company.
How is the Gini coefficient for the economy calculated?
How would this dividend be shown in the balance of payments of the United States?
A 2024 Y B Y C Z D Z
© UCLES 9708/32/O/N/24
A aY
credit
 Z in the capital account
Z Y YZ
B a credit in the current account
C a debit in the capital account
D a debit in the current account

27 An increase or decrease in exchange rates can take place in both a floating and a fixed exchange
rate system but different terminology is used for each system.

What is the correct terminology?

floating rate fixed rate

decreases increases
© UCLES 2024 9708/33/O/N/24
A depreciation appreciation
B depreciation revaluation
C devaluation appreciation
D devaluation revaluation

28 Company X is a multinational company that produces batteries for electric cars. It decides to
invest in a new factory in country N.

Under which conditions is this investment most likely to improve the current account balance on
the balance of payments in country N?

% of raw materials income elasticity

used to make of demand for
batteries supplied electric cars outside
by country N country N
 C Inheritance tax has been reduced.
D The tax-free allowance has been decreased for everyone.
46 2024 Nov P32 Q30
30 What is a likely result of globalisation?

A Absolute advantage replaces comparative advantage as the basis for trade.

B Firms’ supply chains are shortened.
C Trade is less likely to suffer from international economic shocks.
D There are higher standards of living.

Permission to reproduce items where third-party owned material protected by copyright is included has been sought and cleared where possible. Every
reasonable effort has been made by the publisher (UCLES) to trace copyright holders, but if any items requiring clearance have unwittingly been included, the
publisher will be pleased to make amends at the earliest possible opportunity.

To avoid the issue of disclosure of answer-related information to candidates, all copyright acknowledgements are reproduced online in the Cambridge
Assessment International Education Copyright Acknowledgements Booklet. This is produced for each series of examinations and is freely available to download
at www.cambridgeinternational.org after the live examination series.

Cambridge Assessment International Education is part of Cambridge Assessment. Cambridge Assessment is the brand name of the University of Cambridge
Local Examinations Syndicate (UCLES), which is a department of the University of Cambridge.

© UCLES 2024 9708/32/O/N/24

Answers:
1D
2C

3C

4C

5C

6C

7A

8B

9C

10A

11B

12C

13A

14B

15B

16C

17B

18C

19A

20B

21B

22A

23A

24B

25C

26A

27A

28A

29D

30B

31B

32A
33C

34A

35C

36A

37B

38B

39A

40B

41D

42D

43A

44B

45B

46D
 B At tax rates below Z a tax rate cut will cause tax revenue to increase.

Chapter : 13
C The greater the International Economic
rate of tax beyond Z, the smaller will be the taxIssues
revenue generated.
D Tax revenue will always increase as the rate of income tax increases.
1 2024 March P32 Q25
25 In which situation is devaluation of the currency most likely to cause inflation?

A Excess capacity is available.

9
B Import tariffs are reduced.
26 A country imports most of the raw materials used as factor inputs.
C Local substitutes of imported raw materials are unavailable.
Which policy is most likely to control cost-push inflation?
D The demand for exports is price inelastic.
A an appreciation of the exchange rate
B an increase in the rate of income tax
9
2 2024
C an March
increase P32
in the Q26
rate of interest
26 A
D country imports
an increase in themost ofsales
rate of the raw
tax materials used as factor inputs.

Which policy is most likely to control cost-push inflation?

27 Germany, one of the world’s strongest trading nations, achieved a surplus on current account of
the balance of payments in 2021–2022.
A an appreciation of the exchange rate
Which income flow would not have been included in the calculation of Germany’s current
B an increase in the rate of income tax
account?
C an increase 9
A Declining salesin
of the rate cars
German of interest
for export overseas.
©24
UCLES 2024
Singapore has oneinof
ofthe
therate
highest population 9708/32/F/M/24
densities in the world. It discourages car use
D an increase
B Falling earnings foreign of sales
exchange tax visitors
from to Germany.
through a high tax on second cars.
C Increasing transfers of aid to less developed countries.
Which additional policy would help to relieve road congestion in the short run?
27 Germany,
D Investment oneinof the world’s
a natural strongest
gas pipeline link totrading nations,
its main foreign achieved a surplus on current account of
supplier.
3 the
A
2024balance
limiting
March of P32
the payments
total Q28 in 2021–2022.
number of car licences issued

28 B encouraging
A country restrictions
maintains onexchange
its foreign the size ofrate
families
against the United States dollar, within a narrow but
Which
changingincome
band. flow would not have been included in the calculation of Germany’s current
C improving infrastructure by building new roads
account?
What
D is this type
replacing of exchange
diesel rate? cars
cars by electric
A Declining sales of German cars for export overseas.
A fixed
25 B
WhatFalling earnings
is not an
B floating example of foreign
of an exchange from
expenditure-reducing visitors to Germany.
policy?
C
A Increasing
C amanaged in transfers
decreasefloat ofspending
government aid to less developed countries.
D Investment
depreciation in
D atrade-weighted
B of a
thenatural gasrate
exchange pipeline link to its main foreign supplier.
C an increase in direct taxes
D country
28 A an increase in interest
maintains its rates
foreign exchange rate against the United States dollar, within a narrow but
4 2024 Junband.
changing P31 Q26
26 What does the J-curve effect show?
What is this type of exchange rate?
A A successful currency depreciation requires the sum of the import and export elasticities of
A demand
fixed to be greater than 1.
B After
B a currency devaluation, the current account is likely to get worse before it gets better.
floating
C In the short run, the demand for imports and exports tends to be price elastic.
C managed float
D The value of the terms of trade will affect the success of a currency’s devaluation.
D trade-weighted

27 What is the most likely consequence of an increase in the number of multinational companies?

A a decrease in advancements in technology

B a decrease in foreign direct investment
© UCLES 2024 9708/32/F/M/24 [Turn over
C an increase in exports
D an increase in unemployment
 B
After a growth
currency devaluation, the current account is likely to get worse before it gets better.
B low high low
C In the short run, the demand for imports and exports tends to be price elastic.
A high high low
C low low low
D The value of the terms of trade will affect the success of a currency’s devaluation.
5 B low high low
2024
D Jun P31 low Q27 low high
C is the most
27 What low likely consequence
low of an increaselow in the number of multinational companies?
Da decrease
22 AWhich lowin advancements
combination lowinwould
of policies technologyhigh likely to bring a country out of recession?
be most
B a decrease in foreign direct investment
A expansionary fiscal and monetary policy as well as supply-side policies
22 CWhich combination
an increase of policies would be most likely to bring a country out of recession?
in exports
B expansionary fiscal policy and tight monetary policy
DA an increase in unemployment
expansionary fiscal and monetary policy as well as supply-side policies
C tight fiscal and monetary policy
B expansionary fiscal policy and tight monetary policy
D supply-side policies alone
6 C tight fiscal and monetary policy
2024 Jun P32 Q23
23 D
The supply-side
inflation ratepolicies aloneincreased.
in a country

Which effect would this most likely have on the country’s balance of payments?
23 The inflation rate in a country increased.
A an improvement in the current account balance
Which effect would this most likely have on the country’s balance of payments?
B an increase in price competitiveness
A an improvement in the current account balance
C an increase in export revenue
B an increase in price competitiveness
D 2024
© UCLES an increase in import expenditure9708/31/M/J/24 [Turn over
C an increase in export revenue
D an increase in import expenditure
24 A government uses monetary policy and fiscal policy to solve a problem of deflation.
7 2024 Jun P32 Q24
Which policy combination is likely to be the most successful?
24 A government uses monetary policy and fiscal policy to solve a problem of deflation.

Which policymonetary policy

combination fiscal
is likely to be the policy
most successful?

A increasing interest rates contractionary

monetary policy fiscal policy
B increasing interest rates expansionary
A increasing interest rates contractionary
C reducing interest rates contractionary
B increasing interest rates expansionary
D reducing interest rates expansionary
C reducing interest rates contractionary
D reducing interest rates expansionary

© UCLES 2024 9708/32/M/J/24 [Turn over

© UCLES 2024 9708/32/M/J/24 [Turn over

 current account change in
GDP
country balance currency units
% change
% of GDP against US dollar
10
8 2024 Jun P32 Q25
Argentina 17.9 1.7 –18.9
25 The table shows Chile
indicators for the
17.2macroeconomies
–1.8 of two South –13.3
American countries over one
year. During this year, both governments attempted to reduce unemployment by expanding
aggregate demand.
Based on the information given, what is the most likely reason why Argentina achieved a higher
% change in the unemployment rate than Chile?
current account change in
GDP
A Argentina had a greater % change in GDP balance
country growth. currency units
% change
% of GDP against US dollar
B Chile’s performance on the current account balance was worse.
C Argentina
Each country 17.9
had a weak exchange 1.7the US dollar. –18.9
rate against
Chile 17.2 –1.8 –13.3
D Wage increases in each country were linked to their respective rates of inflation.
Based on the information given, what is the most likely reason why Argentina achieved a higher
26 % change inencourages
A measure the unemployment rate to
consumers than Chile?spending on imports to spending on domestically
change
produced goods.
A Argentina had a greater % change in GDP growth.
What does this
B Chile’s describe?on the current account balance was worse.
performance
9
A
C an expenditure-reducing
Each country had a weakpolicy
exchange rate against the US dollar.
24 B
Singapore
D an
Wage has one in ofeach
expenditure-switching
increases the country
highest
policy were linked9 to
population densities in the world.
their respective It inflation.
rates of discourages car use
through a high tax on second cars.
24 C the law of
Singapore hascomparative
one of the advantage
highest population densities in the world. It discourages car use
Which
through
26 A additional
a high taxpolicy
on would
second help
cars.to relieve road congestion in the short run?
D measure encourages consumers
the Marshall–Lerner condition to change spending on imports to spending on domestically
produced goods.
9 A
2024
Which limiting
Jun the
P32
additional total number
Q27
policy wouldof help
car licences
to relieveissued
road congestion in the short run?
27 What
The does this describe?
B macroeconomic
encouraging restrictions
objectiveonofthe size of families
a government is to move the current account of the balance of
A limiting the total number of car licences issued
payments from deficit to surplus. To achieve this, it devalues the currency.
A
C an expenditure-reducing
improving infrastructure bypolicy
building new roads
B encouraging restrictions on the size of families
Under
B
D an which condition would
expenditure-switching
replacing a
policy cars of the currency achieve this objective?
devaluation
diesel cars by electric
C improving infrastructure by building new roads
A
C ifthe the combined
law price elasticity
of comparative advantageof demand for exports and imports is greater than 1
D replacing diesel cars by electric cars
25 B
What
D iftheis Marshall–Lerner
the not an example
combined priceof an expenditure-reducing
elasticity
condition of demand for exports policy?
and imports is less than 1
A ifa the
C decrease
incomeinelasticity
government spending
of demand is less than 1
25 What is not an example of an expenditure-reducing policy?
27 The macroeconomic
B ifa other
D depreciation objective
of decide
countries of
the exchange a government
to imposeratetariffs on is
allto move the
imported current
goods and account
servicesof the balance of
payments from deficit
A a decrease to surplus.spending
in government To achieve this, it devalues the currency.
C an increase in direct taxes
B a which
Under depreciation of the
condition exchange
would rate of the currency achieve this objective?
a devaluation
D an increase in interest rates
C ifan increase
10 2024
A Jun
the P33inQ26
combined direct taxes of demand for exports and imports is greater than 1
price elasticity
D ifan
26 B
What increase
the
doescombinedin interest
price
the J-curve rates
elasticity
effect show?of demand for exports and imports is less than 1
CA ifAthe income elasticity
successful currencyofdepreciation
demand is less than the
requires 1 sum of the import and export elasticities of
26 Whatdemand
does the J-curve
to be effect
greater thanshow?
1.
D if other countries decide to impose tariffs on all imported goods and services
B
A After a currency
A successful devaluation,
currency the current
depreciation account
requires theis sum
likelyoftothe
get import
worse before it getselasticities
and export better. of
© UCLES 2024 9708/32/M/J/24
demand to be greater than 1.
C In the short run, the demand for imports and exports tends to be price elastic.
B The
D Aftervalue
a currency devaluation,
of the terms of tradethe
willcurrent account
affect the success is likely to get worse
of a currency’s before it gets better.
devaluation.
C In the short run, the demand for imports and exports tends to be price elastic.
27 What
D Theis the most
value oflikely consequence
the terms of an
of trade will increase
affect in the number
the success of multinational
of a currency’s companies?
devaluation.
11 2024 Jun P33
A a decrease Q27
in advancements in technology
27 B
Whata is the most
decrease in likely consequence
foreign of an increase in the number of multinational companies?
direct investment
© UCLES 2024 9708/32/M/J/24
A
C a decrease
an advancements in technology
increase in exports
B
D a decrease
an increase in unemployment
foreign direct investment
C an increase in exports
D an increase in unemployment
 C increases falls increases
D increases falls no change
9
12 2023 March P32 Q18
18 Whichisstatement
21 What the mostapplies to apolicy
effective central
a bank and to could
government a commercial
introducebank?
to reduce frictional
unemployment?

A cut welfare spending on benefits central commercial

bank bank
B improve information about job vacancies
C Areduce
issues bank notes
tax rates yes yes
D Braiselender
interestofrates
the last resort yes yes
C maximises profit no yes
22 In a closed economy with no government sector, when will an increase in investment spending
D receives
generate deposits
the largest increase directly noincome?
in equilibrium national yes
from the government
A when households have a high level of autonomous consumption
B when households have a high level of compulsory saving
19 C
What is most
when likely have
households to bea high
the biggest
marginal contribution to sustainable economic growth in a developed
propensity to consume
13 economy?
2023 March P32 Q28
11
D when households have a high marginal propensity to save
28 Which indicator is of
A a movement least
peoplelikely
fromto rural
be used whenareas
to urban measuring the comparative economic
development of an economy?
23 Which
B ancombination
increase inof policies
technical is most likely to increase output?
training
A mean years of schooling
C
B an increase
average inpolicy
lifefiscal the size
expectancy of the population
at birth monetary policy

D A level
C decrease
rising budget
consumer
of real GNP deficitlevels decrease interest rates
percredit
head
D B size of
decrease budget deficit
population increase interest rates
C
20 Which increase
policy budgettodeficit
is likely decrease interest rates
increase unemployment?
29 What
D is anincrease
examplebudget
of an expenditure-switching
deficit increasepolicy?
interest rates
A an increase in retraining facilities
14 2023
A an Jun P31
increase Q24 tax rates
in income
B a significant
24 A increaseoil.in indirect taxes
B country is a netinimporter
an increase interest of
rates World oil prices have risen over the year.
C an
C the
Assuming imposition
that allinother
increase offactors
tariff selective
rates import
remain controls
the same, how is this likely to affect inflation, trade balance
and unemployment in this country?
D an
D anincrease
increase in the
in the public
supply sector deficit
of money
inflation trade balance unemployment
30 Labour
A fromdecrease
low-income countries often migrates to increase
no change high-income countries and finds jobs.

How
B would increase
such a movement ofimprove
labour be likely to decrease
affect the economic growth and the pressure
on wage rises in the high-income country?
C increase worsen increase
D decrease pressure
no changeon decrease
economic growth
wage rises

A decrease decrease
© UCLES
B 2023 decrease increase 9708/32/F/M/23

C increase decrease
D increase increase

© UCLES 2023 9708/31/M/J/23 [Turn over

 B to reduce the inequality of income distribution
C to reduce the level of unemployment
D to reduce the rate of inflation
15 2023 Jun P32 Q26
10
26 An economy imports most of the factors of production used in the manufacture of its exported
goods.
27 The table shows the Human Development Index (HDI) values for India in 2014 and 2020.
What effect would depreciation of this economy’s rate of exchange have?
HDI value
price of imported price of exported
2014 0.60
goods in the goods in the
domestic currency domestic
2020currency0.64

A conclusion
Which fallis most likely to be drawn
fall from the table about the change in the HDI value
from
B 2014 to 2020?
fall rise
A C India had a rise
fall in life expectancy at fall
birth. 9
B D India had a rise riseper head.
fall in real national income
21 What is the most effective policy a government could introduce to reduce frictional
C India had a rise in environmental pollution and crime rates.
unemployment?
D
A India
cut had a spending
welfare rise in theon
mean years of schooling of the adult population.
benefits
16 B2023 Jun information
improve P32 Q28 about job vacancies
28 The2023
© UCLES diagram shows a J curve which indicates [Turn over
that a fall in the exchange rate will worsen
9708/32/M/J/23 the
C reduce
current tax rates
account position before it starts to improve.
D raise interest rates
J curve
current
account
22 In a closed economy with no government sector, when will an increase in investment spending
surplus
generate the largest increase in equilibrium national income?

A when households haveOa high level of autonomous consumption

time
B when households have a high level of compulsory saving
current
C account
when households have a high marginal propensity to consume
deficit
D when households have a high marginal propensity to save

What is said to explain this?

23 Which combination of policies is most likely to increase output?
A a time lag before recognising that prices have changed
B fiscal policy
an improvement in the quality of goods monetary
produced policy
C A the demand
decrease
forbudget
importsdeficit
and exportsdecrease
is elastic interest rates
in the short run
D B the supply
decrease budget
of goods deficitelastic increase interest rates
is price
C increase budget deficit decrease interest rates
29 Which
D country is likely
increase to be
budget the most highly
deficit developed?
increase interest rates
17 2023 Jun P33 Q24 relative size of
Gini coefficient death rate
24 A country is a net importer of oil. World oil pricestertiary sectorover the year.
have risen

A
Assuming thathigh high the same, how
all other factors remain high
is this likely to affect inflation, trade balance
and
B unemployment
low in this country?
low low
C low
inflation low
trade balance high
unemployment
D low high low
A decrease no change increase
B increase improve decrease
© UCLES 2023 9708/32/M/J/23
C increase worsen increase
D decrease no change decrease
 B yes no no
C yes yes no
D yes yes yes
18 2023 Nov P31 Q28
28 Purchasing power parity (PPP) allows a comparison of the purchasing power in two countries.

What is a definition of PPP?

A the amount of the domestic currency needed to purchase a unit of foreign currency
B the quantity of a currency required to purchase the same basket of goods in both countries
C the quantity of goods and services that can be purchased by a person on an average income
D the value of expenditure by households on goods and services in a country

29 A Lorenz curve measures the income distribution in a country. The further the Lorenz curve is
from the line of absolute equality, the greater the
9 level of inequality.
19 2023 Nov P32 Q24
24 The exchange rate of an100
economy appreciates.

Assuming thatcumulative line

the Marshall–Lerner condition holds in this economy, what is the1 likely outcome for
percentage line of
imported inflation and unemployment?
of income absolute equality
line 2
imported inflation unemployment

A falls falls F
G
B falls rises
C rises falls H

D rises rises
0
0 100
cumulative percentage
25 Which characteristics are most commonly found inoflow-income
householdscountries?

capital-output
What is the value of the Gini coefficient when the Lorenz curve is at line 2?
saving ratio
ratio
F+G F+G G H
AA low B C D
H F + G +low
H G+H F+G+H
B high low
C low high
D high high
© UCLES 2023 9708/31/O/N/23

26 What has not accompanied global economic growth over the last 25 years?

A a depletion of non-renewable resources

B decreased international trade
C growing urbanisation
D increased atmospheric pollution

27 When assessing income distribution in an economy, which change in the Gini coefficient
suggests that a country is distributing its income more equally?

A It has moved closer to one.

B It has moved closer to zero.
C It has moved from negative to positive.
D It has moved from positive to negative.
 B a credit in the current account
C a debit in the capital account
D a debit in the current account
20 2024 Nov P32 Q27
27 An increase or decrease in exchange rates can take place in both a floating and a fixed exchange
rate system but different terminology is used for each system.

What is the correct terminology?

floating rate fixed rate

decreases increases

A depreciation appreciation
B depreciation revaluation
C devaluation appreciation
D devaluation revaluation

28 Company X is a multinational company that produces batteries for electric cars. It decides to
invest in a new factory in country N.

Under which conditions is this investment most likely to improve the current account balance on
the balance of payments in country N?

% of raw materials income elasticity

used to make of demand for
batteries supplied electric cars outside
by country N country N

A 10 0.5
B 10 1.5
C 90 0.5
D 90 1.5

© UCLES 2024 9708/32/O/N/24 [Turn over

Answers:
1C
2A
3C
4B
5C
6D
7D
8A
9A
10B
11C
12C
13D
14C
15D
16A
17C
18B
19B
20B
 P2 cost-pushJ inflation?
Which policy is most likely to control
0
an appreciation0of the exchange rate 100
Chapter
A
: 14 Economic
B an increase in the rate of income tax
Development and
% of households
C an increase in the rate ofGlobalization
interest
At first, income in a country is more equally distributed than wealth.
D an increase in the rate of sales tax
K L
1 In a period,
2024 March the Q27 P1 of income becomes more unequal but the distribution of wealth
P32distribution
becomes more equal. SRPC2
27 Germany, one of the world’s strongest trading nations, achieved a surplus on current account of
M
the balance of payments in 2021–2022.
Which movement would show O the Ueffects
2
of Uthese
1
changes onSRPC the distribution of income and
1
wealthincome
Which within flow
the country?
would not have been includedNRU in the calculation of Germany’s current
account? unemployment rate
distribution
A Declining sales of Germanof income
cars for export overseas.distribution of wealth
If the government introduces a fiscal stimulus to reduce unemployment, monetarists predict that
B AFalling
there earnings
will shift
be a from ofcurve
series foreign1exchange
to curvefrom
of movements visitors
before
2 to Germany.
long-run
shift fromequilibrium
curve 4 to is restored.
curve 3
C Increasing transfers of aid to less developed countries.
B setshift
Which from curve illustrates
of movements 2 to curve this
1 prediction?
shift from curve 3 to curve 4
D Investment in a natural gas pipeline link to its main foreign supplier.
C shift from curve 3 to curve 4 shift from curve 2 to curve 1
A J to K to L B L to K to J C M to K to J D M to K to L
D
28 A country shift fromitscurve
maintains foreign4exchange
to curverate
3 against
shift
thefrom curve
United States1dollar,
to curve 2 a narrow but
within
changing band.
2 22 2024 March has
An economy P32aQ30
sudden increase in inflation caused by a large rise in energy prices. It also
30 enters
What is a recession
this with rising
type of exchange rate?unemployment.
What is likely to happen in a developing country as it becomes more developed?
A fixed
AA decrease
A lower in which policy
percentage variable
of people willisgo
most likely to reduce the impact of the recession without
to university.
increasing
B floating the price level further?
B Average life expectancy will rise.
C managed float
A direct taxation
C trade-weighted
D The rate of population growth will increase.
B government spending
D The tertiary sector will decline in importance.
C indirect taxation
D interest rate
3 2024 Jun P31 Q23
23 What is not a threat to globalisation?

A rising fear of losing jobs to immigrant workers

B rising political tensions among major economies of the world
C stronger trade unions in industries producing substitutes of imports
D withdrawal of government support for inefficient industries

© UCLES 2024 9708/32/F/M/24

© UCLES 2024 9708/32/F/M/24 [Turn over

© UCLES 2024 9708/31/M/J/24

 10
4 2024 Jun P31 Q28
28 The table shows the GDP and population of four countries.
10
Which country is most likely to have the lowest standard of living?
28 The table shows the GDP and population of four countries.

Which country is most likely toGDP

country
population
have the lowest
10 standard of living?
US$ billion million
28 The table shows the GDP and population
GDP of fourpopulation
countries.
A Bangladesh
country 206.7 153.5
US$ billion million
Which
B country is most likely to 2989.1
India have the lowest standard
1147.9of living?
A Bangladesh 206.7 153.5
C Nigeria 292.7
GDP 138.3
population
B country
India 2989.1 1147.9
D South Africa US$ billion
467.1 million
43.8
C
A Nigeria
Bangladesh 292.7
206.7 138.3
153.5
D
B South Africa
India 467.1
2989.1 43.8
1147.9
29 What will increase the size of a country’s optimum population?
5 2024
C JunNigeria
P31 Q29 292.7 138.3
A a rise in the birth rate
29 What
D will increase
South Africathe size of467.1
a country’s optimum
43.8population?
B a lowering of the age of retirement
A a rise in the birth rate
C a rise in the stock of capital available in the country
29 What
B awill increase
lowering the size
of the age of
of aretirement
country’s optimum population?
D a decrease in the productivity of the country’s industries
A
C aa rise
riseininthe
thebirth
stockrate
of capital available in the country
B
D aatable
lowering
decreaseof the age of retirement
30 The showsinthethe productivity
values of thecoefficient
of the Gini country’sfor
industries
some countries in a given year.
C a rise in the stock of capital available in the country

30 D
The atable
decrease
showsin the
the values
productivity
of theofGini
the country’sGini coefficient
industries
coefficient for some countries in a given year.
6 2024 Jun P31 Q30 Namibia 74.3
30 The table shows the values of the Gini
Gini coefficient
coefficient for some
Zambia 50.4 countries in a given year.
Namibia 74.3
France Gini coefficient
32.7
Zambia 50.4
Denmark
Namibia 74.324.7
France 32.7
Zambia is correct?
Using this information, which statement 50.4
Denmark 24.7
France 32.7
A Income is distributed more equally in Denmark than France.
Using this information, which statement
Denmark is correct? 24.7
B Income is distributed more equally in Namibia than Zambia.
A Income
Using is distributed
this information, more
which equallyisincorrect?
statement Denmark than France.
C Income per capita is higher in Zambia than Namibia.
B Income
A Incomeisisdistributed
distributedmore
moreequally
equally
in in Namibia
Denmark than
than Zambia.
France.
D There are proportionally more people below the poverty line in Zambia than France.
C Income per capita is higher in Zambia than Namibia.
B Income is distributed more equally in Namibia than Zambia.
D
C There are
Income perproportionally
capita is highermore peoplethan
in Zambia below the poverty line in Zambia than France.
Namibia.
D There are proportionally more people below the poverty line in Zambia than France.

© UCLES 2024 9708/31/M/J/24

© UCLES 2024 9708/31/M/J/24

 B improves worsens Phillips curve
A
C worsens inflationimproves
improves
rate
B
D improves
worsens worsens
7 2024
C Junworsens
P32 Q29 P2
improves J
29 The
D table gives information about
worsens the population of three countries in a given year.
worsens

birth rate death rate infant mortality % of population

29 The table gives information about the per
per 1000 population
1000 of three countries
rate per 1000 in a given
underyear.
16

Singapore 12rate
birth death4 rate
K L5
infant mortality 18
% of population
per151000P1 per 6
1000 rate per8 1000 under
Hong Kong 20 16
SRPC 2
Singapore
China 12
20 4
9 M5
28 18
38
Hong Kong 15 O 6 U2 U8 20SRPC1
Which conclusion can be drawn about the countries in the1 table in that year?
China 20 9
NRU 28 38
unemployment
A China had the highest percentage of children who died in infancy. rate
Which conclusion
B People can
in Hong be drawn
Kong about
lived the the countries in the table in that year?
longest.
If the government introduces a fiscal stimulus to reduce unemployment, monetarists predict that
Cthere
A willhad
China be had
Singapore a series
the ofpercentage
highest movements
the largest number of before
of children
people long-run
who
aged died in
over 16.equilibrium
infancy. is restored.
B
D People in Hong of
The population Kong lived the
Singapore longest.
was expected to fall in the next five years.
Which set of movements illustrates this prediction?
C Singapore had the largest number of people aged over 16.
A J tocertain
30 During K to Lperiod, aBcountry
L to with
K toaJconstantC population
M to K expands
to J itsDoutput
M toperKhead.
to L It also
D Thea population of Singapore was expected to fall in the next five years.
experiences a significant increase in river and atmospheric pollution.
8 2024 Jun P32 Q30
22 In
Antheeconomy
30 During absence
a certainofhas
any a
other
period, changes,
sudden
a country withwhich
increase measure wouldcaused
in inflation
a constant show
population a decrease
expands in living
byitsa output
large standards?
risehead.
per in energy
It also prices. It also
experiences
enters a a significant
recession increase
with risinginunemployment.
river and atmospheric pollution.
A Gross Domestic Product per head
In
BA the absence
Gross of any
National other changes,
Product per head which measure would show a decrease in living standards?
decrease in which policy variable is most likely to reduce the impact of the recession without
Cincreasing
A Gross the price
HumanDomestic level
Product
Development further?
per
Index head
B
DA Gross
directNational
Measure ProductWelfare
of Economic
taxation per head
C Human Development Index
B government spending
D Measure of Economic Welfare
C indirect taxation
D interest rate
9 2024 Jun P33 Q23
23 What
© UCLES 2024 is not a threat to globalisation?
9708/32/M/J/24

A rising fear of losing jobs to immigrant workers

© UCLES 2024 9708/32/M/J/24
B rising political tensions among major economies of the world
C stronger trade unions in industries producing substitutes of imports
D withdrawal of government support for inefficient industries

© UCLES 2024 9708/33/M/J/24

 10
10 2024 Jun P33 Q28
28 The table shows the GDP and population of four countries.
10
Which country is most likely to have the lowest standard of living?
28 The table shows the GDP and population of four countries.

Which country is most likely toGDP

country 10population
have the lowest standard of living?
US$ billion million
28 The table shows the GDP and population
GDP of fourpopulation
countries.
A Bangladesh
country 206.7 153.5
US$ billion million
Which country is most likely to have the lowest standard of living?
B India 2989.1 1147.9
A Bangladesh 206.7 153.5
C Nigeria 292.7
GDP 138.3
population
B country
India US$2989.1
billion 1147.9
million
D South Africa 467.1 43.8
C
A Nigeria
Bangladesh 292.7
206.7 138.3
153.5
D
B SouthIndiaAfrica 467.1
2989.1 43.8
1147.9
29 What will increase the size of a country’s optimum population?
11 2024
C JunNigeria
P33 Q29 292.7 138.3
A a rise in the birth rate
29 What
D will increase
South Africathe size of467.1
a country’s optimum
43.8population?
B a lowering of the age of retirement
A a rise in the birth rate
C a rise in the stock of capital available in the country
29 What will increase the size of a country’s optimum population?
B a lowering of the age of retirement
D a decrease in the productivity of the country’s industries
A
C aa rise
riseininthe
thebirth
stockrate
of capital available in the country
B a lowering of the age of retirement
D atable
30 The decrease
showsinthe
thevalues
productivity of thecoefficient
of the Gini country’sfor
industries
some countries in a given year.
C a rise in the stock of capital available in the country

30 D
The atable
decrease
showsin the
the values
productivity
of theof Gini
the country’sGini coefficient
industries
coefficient for some countries in a given year.
12 2024 Jun P33 Q30 Namibia 74.3
30 The table shows the values of the Gini coefficient Gini coefficient
for some countries in a given year.
Zambia 50.4
Namibia 74.3
France Gini coefficient
32.7
Zambia 50.4
Namibia
Denmark 74.3
24.7
France 32.7
Zambia 50.4
Using this information, which statement is correct? 24.7
Denmark
France 32.7
A Income is distributed more equally in Denmark than France.
Denmark is correct?
Using this information, which statement 24.7
B Income is distributed more equally in Namibia than Zambia.
A Income
Using is distributed
this information, more
which equallyis in
statement Denmark than France.
correct?
C Income per capita is higher in Zambia than Namibia.
B Income
A Incomeisisdistributed
distributedmore
more equally
equally in Namibia
in Denmark than
than Zambia.
France.
D There are proportionally more people below the poverty line in Zambia than France.
C Income
B Incomeisper capita ismore
distributed higher in Zambia
equally than than
in Namibia Namibia.
Zambia.
C
D Income per proportionally
There are capita is highermore
in Zambia than
people Namibia.
below the poverty line in Zambia than France.
D There are proportionally more people below the poverty line in Zambia than France.

© UCLES 2024 9708/33/M/J/24

© UCLES 2024 9708/33/M/J/24

 B an increase in technical training
C an increase in the size of the population
D rising consumer credit levels
13 2023 March P32 Q20

20 Which policy is likely to increase unemployment?

A an increase in retraining facilities

B a significant increase in indirect taxes
C the imposition of selective import controls
11

D anindicator
28 Which increaseisinleast
the public
likely sector
to be deficit
used when measuring the comparative economic
development of an economy?

A mean years of schooling

9
14 2023
B March
average P32 Q21 at birth
life expectancy

21 C
What does
level theGNP
of real accelerator
per head principle state?
D size of population
A Consumption is a function of the rate of change of income.
B Income
29 What is a function
is an example of the rate of change
of an expenditure-switching policy?of investment.
C 2023
© UCLES
A Investment
an increase in is a function
income of
tax rates the rate of9708/32/F/M/23
change of income.
D
B Investment
an increase in is a function
interest rates of the rate of interest.
C an increase in tariff rates

22 D an increase
Which in the supply
government aim ofis money
least likely to be achieved using macroeconomic monetary policy
15 measures?
2023 March P32 Q30
30 Labour from low-income countries often migrates to high-income countries and finds jobs.
A low unemployment level
How would such a movement of labour be likely to affect the economic growth and the pressure
B wage
on more equal
rises in theincome distribution
high-income country?
C stable exchange rate
pressure on
economic growth
D steady price level wage rises

A decrease decrease

23 A Bgovernment
decrease increase
adopts an expansionary fiscal policy to increase the economic growth rate.
C increase decrease
Which other main macroeconomic aims is this policy most likely to help?
D increase increase

full stable current account

employment price level surplus

A
B
C
D

24 Country X decides to devalue its currency to eliminate a balance of payments deficit.

Why might devaluation have a positive effect on its macroeconomy?

A Competitive pricing of exports may create employment potential in country X.

B Foreign importers may depreciate their own currencies and reduce any advantage gained by
country X.
© UCLES 2023 9708/32/F/M/23

C Inelastic demand for imported raw materials may lead to cost inflation in country X.
D Loss of import duties by country X may reduce government backing for trade promotion.
 7
16 2023 Jun P31 Q16
16 The diagram shows the Lorenz curves for Norway (N) and India (I).

100
cumulative
percentage line of
of income perfect equality

N
I

0
0 100
cumulative percentage
of households

What can be concluded from a comparison of the Lorenz curves?

A India is more likely to have lower indirect taxes and a public sector education system than
Norway.
10
B India is more likely to have a progressive income tax system and means tested benefits than
Norway.
25 What would reduce the effectiveness of a supply-side stimulus to the economy?
C Norway is more likely to have a progressive tax system and public sector pensions than
A India.
an imposition of maximum hours in a working week
D
B Norway is likely
an increase to have
in public a higher
sector percentage of tax generated from indirect taxes and
spending
privately funded pensions than India.
C the provision of new training schemes
D reason
17 A the relaxation of import
for government controlsinon
intervention theraw materials
workings of the economy is to attempt to correct a
market failure. Sometimes, though, government failure may occur.
17 2023 Jun P31 Q26
26 What is not a possible
A multinational companyreason for government
(MNC) failure?
shifts its manufacturing capacity to a developing country.
A Governments may have to make decisions on the basis of out-of-date information.
What is likely to be the short-run effect of this in the developing country?
B Governments may make decisions that reduce negative externalities.
C short-run
The extent of the market failure may be difficult balance
to judge.
employment investment of payments
D When circumstances
increases change, a government may
increases be unable
current to respond quickly.
account
improves

A no no yes
B no yes no
C yes no yes
D yes yes no

27 To indicate the changing income distribution, the Kuznets curve plots gross domestic product per
capita
© UCLES 2023 against an economic variable X.
9708/31/M/J/23 [Turn over

What is variable X?

A the exchange rate

B the level of income inequality
C the price level
D the rate of interest

28 Economists define the unemployed as being those who are not in work but are actively seeking
 B no yes no
C yes no yes
D yes yes no
18 2023 Jun P31 Q27
27 To indicate the changing income distribution, the Kuznets curve plots gross domestic product per
capita against an economic variable X.

What is variable X?

A the exchange rate

B the level of income inequality
C the price level
D the rate of interest

28 Economists define the unemployed as being those who are not in work but are actively seeking
work. Other groups of people in the population11 of working age include those classed as inactive
19 2023
or Jun P31 Q29
self-employed. 11
29 The table shows some United Nations population statistics for 2010 and estimates for 2050.
29Which
The table shows
groups some are
of people United Nations
included as population statisticslabour
part of a country’s for 2010 and estimates for 2050.
force?
total total urban urban population population
totalinactive total self-employed
urban urban population population
type of unemployed
region population population population population urbanised urbanised
type of region population population population population urbanised urbanised
(m) 2010 (m) 2050 (m) 2010 (m) 2050 (%) 2010 (%) 2050
A no (m) 2010no (m) 2050 (m)
no 2010 (m) 2050 (%) 2010 (%) 2050
more
B developed
more yes
developed 1237
1237 no 1275
1275 930
yes930 1100
1100 75
75 86
86
lessCdeveloped
less yes
developed 5671
5671 yes 7875
7875 2556
no2556 5186
5186 45
45 66
66
least
D developed
least no
developed 855 1673
855 yes 1673 249
yes249 914
914 29
29 55
55

Which
Whichrelationship can
relationship canbebeconfirmed
confirmedfrom
fromthe
thetable?
table?
A The least
© UCLESA2023The leastdeveloped
developedregions
regionshave
havethe
thelargest
largesturban
9708/31/M/J/23urbanpopulations,
populations, actual
actual or
or predicted,
predicted, in
in both
both
years.
years.
B B The more
The moredeveloped
developedregions
regionshave
havethe
thelowest
lowestgrowth
growthrate
rateof
ofurbanisation
urbanisation between
between 2010
2010 and
and
2050.
2050.
C C The
Thetype ofofregion
type regionwith
withthe
thegreatest
greatesttotal
totalpopulation
populationinin2010
2010isispredicted
predicted to
to have
have the
the greatest
rate of of
rate population
populationgrowth
growthbyby2050.
2050.
D D The
Thetype
typeofof
region
regionwith
withthe
thegreatest
greatesturban
urbanpopulation
populationinin2010
2010isispredicted
predicted to
to have
have the
the highest
level ofof
level urbanisation
urbanisationbyby2050.
2050.

3030The diagram
The shows
diagram showsa aLorenz
Lorenzcurve
curvewith
withtwo
twoareas,
areas,XXand
andY,
Y,identified.
identified.

100
100
cumulative
cumulative lineofof
line
%%ofofincome
income perfect
perfect
equality
equality

XX YY

Lorenz
Lorenz
curve
curve
00
00 100
100
cumulative
cumulative % %
ofofhouseholds
households

How
How is is
thethe correspondingGini
corresponding Ginicoefficient
coefficientcalculated?
calculated?

A
X divided by (X plus Y)
A X divided by (X plus Y)
B (X plus Y) divided by X
B (X plus Y) divided by X
C (X plus Y) divided by Y
C (X plus Y) divided by Y
D Y divided by (X plus Y)
D Y divided by (X plus Y)
 D The type of region with the greatest urban population in 2010 is predicted to have the highest
level of urbanisation by 2050.
20 2023 Jun P31 Q30
30 The diagram shows a Lorenz curve with two areas, X and Y, identified.

100
cumulative line of
% of income perfect
equality

X Y

Lorenz
curve
0
0 100
cumulative %
of households

How is the corresponding Gini coefficient calculated?

A X divided by (X plus Y)
B (X plus Y) divided by X
C (X plus Y) divided by Y
D Y divided by (X plus Y)

8
21 2023 Jun P32 Q19
19 Middle Eastern countries earn foreign exchange from exports of oil and natural gas. The World
Economic Forum has encouraged oil producers to assist low-income countries in achieving
economic
© UCLES 2023 growth. 9708/31/M/J/23

Which policy by Middle Eastern countries would be least likely to achieve this economic growth
in low-income countries?

A assisting low-income countries to overcome foreign exchange shortages by writing off debts
B enabling low-income countries to undertake capital projects for supplies of clean water
through financial aid
C hiring mainly labour from low-income countries to build infrastructure in the Middle East
D reducing exports of fuels to low-income countries to lower pollution of the environment

20 An open economy has injections, J, into the circular flow of income and withdrawals, W.

W
injections and
withdrawals

S T
J
R

O
Q E
national income

If the full employment level of national income is OQ, what represents the inflationary gap?

A QE B RT C SR D ST

21 Which condition will produce the highest value of the national income multiplier in an open
 current account position before it starts to improve.

J curve
current
10
22 2023 Jun P32 Q27account
surplus
27 The table shows the Human Development Index (HDI) values for India in 2014 and 2020.

O HDI value
time
2014 0.60
current 2020 0.64
account
deficit
Which conclusion is most likely to be drawn from the table about the change in the HDI value
from 2014 to 2020?

What
A is said
India had ato
fallexplain this?
in life expectancy at birth.
B
A India had a fall in real national income per head.
a time lag before recognising that prices have changed
C India had a rise in environmental pollution and crime rates.
B an improvement in the quality of goods produced
D India had a rise in the mean years of schooling of the adult population.
C the demand for imports and exports is elastic in the short run
D diagram
28 The the supply
showsof goods is price
a J curve which elastic
indicates that a fall in the exchange rate will worsen the
current account position before it starts to improve.
23 2023 Jun P32 Q29
J curve
29 Which country is current
likely to be the most highly developed?
account
surplus
relative size of
Gini coefficient death rate
O tertiary sector
time
A high high high
current
B lowaccount low low
deficit
C low low high
What
D is said to explain
low this? high low
A a time lag before recognising that prices have changed
B an improvement in the quality of goods produced
© UCLES 2023 9708/32/M/J/23
11
24 2023
C theJun P32
demand forQ30
imports and exports is elastic in the short run

30 D
What
theissupply
central to economic
of goods growth but not necessarily to economic development?
is price elastic

A an expansion of the range of economic choices available to individuals

29 Which country is likely to be the most highly developed?
B an increase in Gross Domestic Product
relative size of
C theGini coefficient of absolute
eradication death rate
poverty tertiary sector
DA the satisfaction
high of basichigh
needs amongst high
the whole population
B low low low
C low low high
D low high low

© UCLES 2023 9708/32/M/J/23

25 7
2023 Jun P33 Q16
16 The diagram shows the Lorenz curves for Norway (N) and India (I).

100
cumulative
percentage line of
of income perfect equality

N
I

0
0 100
cumulative percentage
of households

What can be concluded from a comparison of the Lorenz curves?

A India is more likely to have lower indirect taxes and a public sector education system than
Norway.
B
10
India is more likely to have a progressive income tax system and means tested benefits than
Norway.
25 What would reduce the effectiveness of a supply-side stimulus to the economy?
C Norway is more likely to have a progressive tax system and public sector pensions than
A India.
an imposition of maximum hours in a working week
D
B Norway is likely
an increase to have
in public a higher
sector percentage of tax generated from indirect taxes and
spending
privately funded pensions than India.
C the provision of new training schemes
D reason
17 A the relaxation of import
for government controlsinonthe
intervention raw materials
workings of the economy is to attempt to correct a
market failure. Sometimes, though, government failure may occur.
26 2023 Jun P33 Q26
26 What is not a possible
A multinational companyreason for government
(MNC) failure?
shifts its manufacturing capacity to a developing country.
A Governments may have to make decisions on the basis of out-of-date information.
What is likely to be the short-run effect of this in the developing country?
B Governments may make decisions that reduce negative externalities.
C short-run
The extent of the market failure may be difficult balance
to judge.
employment investment of payments
D When circumstances
increases change, a government current
increases may be unable to respond quickly.
account
improves

A no no yes
B no yes no
C yes no yes
D yes yes no

27 To indicate the changing income distribution, the Kuznets curve plots gross domestic product per
capita
© UCLES 2023 against an economic variable X.
9708/33/M/J/23 [Turn over

What is variable X?

A the exchange rate

B the level of income inequality
C the price level
D the rate of interest

28 Economists define the unemployed as being those who are not in work but are actively seeking
 B no yes no
C yes no yes
D yes yes no
27 2023 Jun P33 Q27
27 To indicate the changing income distribution, the Kuznets curve plots gross domestic product per
capita against an economic variable X.

What is variable X?

A the exchange rate

B the level of income inequality
C the price level
D the rate of interest

28 Economists define the unemployed as being those who are not in work but are actively seeking
work. Other groups of people in the population
1111of working age include those classed as inactive
11
28 2023
or Jun P33 Q29
self-employed.
29The
29 29 The
The table
table shows
shows
table some
some
shows United
United
some Nations
Nations
United population
Nationspopulation statistics
populationstatistics for
statisticsfor 2010
for2010 and
2010and estimates
andestimates for
estimates for 2050.
for 2050.
2050.
Which groups of people are included as part of a country’s labour force?
total
total
total total
total
total urban
urban
urban urban
urban
urban population population
population population
population population
type
type unemployed
of
of region
region inactive
population
population population
populationself-employed
population
population population
population urbanised
urbanised urbanised
urbanised
type of region population population population population urbanised urbanised
(m)
(m)
(m) 2010
2010 (m)
2010 (m) 2050
(m)2050
2050 (m) (m) 2010
(m)2010 (m)
2010 (m) 2050
(m)2050
2050 (%)(%) 2010
(%)2010 (%)
2010 (%) 2050
(%) 2050
2050
A no no no
more
more
more developed
developed 1237
1237 1275
1275 930
930 1100
1100 75
75 86
86
B developed yes 1237 no 1275 yes930 1100 75 86
less
less developed
developed 5671
5671 yes 7875 7875
7875 2556
2556 5186
5186 45
45 66
66
lessCdeveloped yes 5671 2556
no 5186 45 66
least
least developed
developed 855
855 yes 1673 1673
1673 249
249 914
914 29
29 55
55
least
D developed no 855 yes249 914 29 55
Which
Which relationship
relationship can
can be confirmed from the table?
Which relationship can bebe confirmedfrom
confirmed fromthe
thetable?
table?
A The least developed regions have the largest urban populations, actual or predicted, in both
A A2023
© UCLES TheThe least
least
years.
developed
developed regionshave
regions havethethelargest
largesturban
9708/33/M/J/23
urbanpopulations,
populations,actual
actual or
or predicted,
predicted, in
in both
both
years.
years.
B The more developed regions have the lowest growth rate
rateofof urbanisation between 2010 and
B B TheThe more
more
2050.
developed
developed regionshave
regions havethe
thelowest
lowestgrowth
growthrate ofurbanisation
urbanisation between
between 2010
2010 and
and
2050.
2050.
C
C TheThe type
type ofof region
region with
with the
the greatest
greatest total
total population
population in
in 2010
2010 is is predicted
predicted to
to have
have the
the greatest
greatest
C The type population
rate of region with the by
greatest total population in 2010 is predicted to have the greatest
rate of
of population growth
growth by 2050.
2050.
rate of population growth by 2050.
D
D TheThe type
type ofof region
region with
with the
the greatest
greatest urban
urban population
population in
in 2010
2010 is is predicted
predicted to
to have
have the
the highest
highest
D The type
level of of region with
urbanisation the
by greatest
2050.
level of urbanisation by 2050. urban population in 2010 is predicted to have the highest
level of urbanisation by 2050.

30
30 The
The diagram
diagram shows
shows a
a Lorenz
Lorenz curve
curve with
with two
two areas,
areas, XX and
and Y,
Y, identified.
identified.
30 The diagram shows a Lorenz curve with two areas, X and Y, identified.
100
100
cumulative 100
cumulative line
line of
of
cumulative
%
% of
of income
income line of
perfect
perfect
% of income perfect
equality
equality
equality
X
X Y
Y
X Y
Lorenz
Lorenz
curve
Lorenz
curve
0
0
0 curve 100
0 0 100
0 cumulative %
cumulative % 100
of
of households
cumulative %
households
of households
How
How isis the
the corresponding
corresponding Gini
Gini coefficient
coefficient calculated?
calculated?
How is the corresponding Gini coefficient calculated?
A
A X X divided
divided by
by (X
(X plus
plus Y)
Y)
A B X divided by (X plus Y)
B (X (X plus
plus Y)
Y) divided
divided by
by X
X
B C (X (X
plus Y)Y)
plus divided
dividedbyby
XY
C (X plus Y) divided by Y
C D
D (X Y
Yplus Y) divided
divided
divided by
by (X by YY)
(X plus
plus Y)
D Y divided by (X plus Y)
 rate of population growth by 2050.
D The type of region with the greatest urban population in 2010 is predicted to have the highest
level of urbanisation by 2050.
29 2023 Jun P33 Q30
30 The diagram shows a Lorenz curve with two areas, X and Y, identified.

100
cumulative line of
% of income perfect
equality

X Y

Lorenz
9
curve
0
25 A government wishes to improve the income 0distribution between the richest 100and poorest in
society. It introduces means tested benefits for workers on low incomes. To pay for this, income
tax rates for the highest paid will increase. cumulative %
of households
What is the most significant strength and weakness of this policy approach?
How is the corresponding Gini coefficient calculated?
strength weakness
A A X divided by (X
benefits areplus
only Y)
given poor non-workers
to those in need will be no better off
B (X plus Y) divided by X
B intergenerational tax avoidance
C (X plus Y) divided
equity by Y
is improved is more likely
workersby
D C Y divided will(X
beplus
encouraged
Y) to taxation has become
work more hours more regressive
D the policy approach will be wealth distribution will be affected
efficient to operate more than income distribution
30 2023 Nov P31 Q26
26 The table shows data on the unemployment and inflation rates for four countries in 2010 and
2014.
© UCLES 2023 9708/33/M/J/23

unemployment rate inflation rate

country (% of workforce) (% per annum)

2010 2014 2010 2014

Australia 5.2 6.1 2.7 1.6
Canada 8.0 6.9 2.2 1.9
Japan 5.1 3.6 –0.3 2.5
United States 9.6 6.2 1.7 0.6

Which countries had a typical Phillips curve?

A Australia and Japan

B Australia only
C Japan only
D Canada and the United States
 B the quantity of a currency required to purchase the same basket of goods in both countries
C the quantity of goods and services that can be purchased by a person on an average income
D the value of expenditure by households on goods and services in a country
31 2023 Nov P31 Q29
29 A Lorenz curve measures the income distribution in a country. The further the Lorenz curve is
from the line of absolute equality, the greater the level of inequality.

100
cumulative line 1
percentage line of
of income absolute equality
line 2

F
G

0
0 100
cumulative percentage
of households
8
What is the value of the Gini coefficient when the Lorenz curve is at line 2?
21 The table gives details of the inflation and unemployment rates for different countries in 2008 and
F+G F+G G H
2011.
A B C D
H F+G+H G+H F+G+H
inflation rate unemployment rate
country (% per annum) (% of workforce)
2008 2011
11 2008 2011
32 2023 Nov P31 Q30
© UCLES 2023 Canada 2.38 2.89
9708/31/O/N/23 6.15 7.47
30 The turning point on the Kuznets curve for income inequality has been estimated to be in the
region of US$10 500.
France 3.16 2.29 7.81 9.68

For a country thatGermany

has a GDP per2.75 2.48 what is7.60
capita of $8000, most likely?5.98

A Japan
A reduction in 1.37
GDP per capita –0.28
will have no 3.99 inequality.
effect on income 4.55

B A reduction
Which countriesinexperienced
GDP per capita will increase
a trade-off betweenincome inequality.
their inflation and unemployment rates?
C
A An increase
Canada andinGermany
GDP per capita will have no effect on income inequality.
D
B An increase
Canada onlyin GDP per capita will increase income inequality.
C France and Japan
D France only
33 2023 Nov P32 Q22
22 Which government policy would boost economic growth but not necessarily promote economic
development?

A creating a more equal distribution of income and wealth

B diverting government spending from industry to education
C encouraging the extraction of finite natural resources
D introducing tighter controls on air pollution

23 Which policy measure to encourage economic growth might be based on the concept of the
Laffer curve?

A cuts in direct taxes

B exchange rate depreciation
C investment subsidies
D quantitative easing
 B characteristics
25 Which falls rises
are most commonly found in low-income countries?
C rises falls
capital-output
D saving ratio
rises rises
ratio
34 2023
A Nov P32
low Q25 low
25 Which characteristics are most commonly found in low-income countries?
B high low
C low high
capital-output
saving ratio
D high ratio
high
A low low
B has nothigh
26 What low economic growth over the last 25 years?
accompanied global

A C a depletion
lowof non-renewable
highresources
B D decreased
high high
international trade
C growing urbanisation
26 What has not accompanied global economic growth over the last 25 years?
D increased atmospheric pollution
35 2023
A a Nov P32
depletion of Q27
non-renewable resources
27 When assessing
B decreased income distribution
international trade in an economy, which change in the Gini coefficient
suggests that a country is distributing its income more equally?
C growing urbanisation
A It has moved closer to one.
D increased atmospheric pollution
B It has moved closer to zero.
C It has
27 When moved from
assessing negative
income to positive.
distribution in an economy, which change in the Gini coefficient
suggests that a country is distributing its income more equally?
D It has moved from positive to negative.
A It has moved closer to one.
B It has moved closer to zero.
10
36 2023
C It Nov P32 from
has moved Q28negative to positive.
28 In
D 2021,
It hasamoved
very large
fromcargo ship
positive to carrying
negative.over 18 000 cargo containers blocked the Suez Canal
for seven days. It delayed over 350 other cargo ships, causing shortages of products in markets
around the world as supplies were disrupted.

Which consequence of globalisation is best illustrated by this event?

© UCLES 2023 9708/32/O/N/23 [Turn over
A cheaper products for consumers
B greater choice of products for consumers
C increased interdependence between countries
D 2023
© UCLES increased migration of labour between countries
9708/32/O/N/23 [Turn over

29 The table shows data for Namibia and Spain from 2014 to 2017.

Namibia Spain
2014 2017 2014 2017
real GDP per capita ($) 6113 6013 29 399 32 283
health spending per capita ($) 452 447 2 671 2 506
(assuming constant price levels)

What can be concluded about whether there has been an increase in economic growth and
economic development in Namibia and Spain between 2014 and 2017?

economic economic
growth development

A Namibia only Namibia only

B Spain only Namibia and Spain
C Spain only neither country
D neither country Spain only
 B greater choice of products for consumers
C increased interdependence between countries
D increased migration of labour between countries
37 2023 Nov P32 Q29
29 The table shows data for Namibia and Spain from 2014 to 2017.

Namibia Spain
2014 2017 2014 2017
real GDP per capita ($) 6113 6013 29 399 32 283
health spending per capita ($) 452 447 2 671 2 506
(assuming constant price levels)

What can be concluded about whether there has been an increase in economic growth and
economic development in Namibia and Spain between 2014 and 2017?

economic economic
growth development

A Namibia only Namibia only

B Spain only Namibia and Spain
C Spain only neither country
D neither country Spain only

© UCLES 2023 9708/32/O/N/23

 5

10 What is consistent with a movement towards Pareto optimality?

11
11
38 2023 Nov P32 Q30 11
A when negative externality lowers the utility of an individual
3030The graphs show the Human Development Index
Index(HDI)
(HDI)and
anditsitscomponent
component parts
parts for
for Zimbabwe.
30B The
The graphs
graphs
when
show
show the
consumptionthe Human
Human Development
Development
of a good
Zimbabwe.
is non-rival Index (HDI) and its component parts for Zimbabwe.
Human
Human Development
Development Index
Index education index
C when Human Development
reallocation Index can make someone better offeducation
of resources education index
without index
making any other
0.55
0.55 0.6
0.6
0.55 person worse off 0.6
0.5 0.55
0.55
D0.5
0.5 when trade takes place to make one nation better 0.55
off at the expense of its trading partner
0.5
0.5
0.45
0.45 0.5
0.45
0.45
0.45
0.45
11 0.4
The
0.4 diagram shows the short-run supply curve and long-run supply curve of labour.
0.4 0.4
0.4
0.4
0.35
0.35
0.35 0.35
0.35
0.35
short run
0.30.3 wage 0.3
0.3
0.3 0 rate 5 5 6 6 77 0.3 0
00 11 1 22 2 33 3 44 4 5 6 7 00 11 1 22
2 33
3 44
4 55
5 6
6 7
7
year long run year
year
year year
year

lifelife
life expectancy
expectancy
expectancy GNI
GNI per
GNIper capita,
percapita, ppp
capita, ppp (2011
ppp (2011 ppp)
(2011 ppp)
ppp)
0.55
0.55
0.55 X 0.6
0.6
0.6
0.55
0.55
0.50.5
0.5 Y 0.55
Z0.5
0.45 0.5 D
0.5
0.45
0.45
O 0.45
0.45
0.45
quantity of labour
0.40.4
0.4 0.4
0.4
0.4
Which area turns from economic rent in the short run to transfer earnings in the long run?
0.35
0.35
0.35 0.35
0.35
0.35
A0.3 X B X+Y C Y 0.3 D Y+Z
0.30.3 0 1 2 3 4 5 6 7 0.3 0
0.3 1 2 3 4 5 6 7
0 0 1 1 2 2 3 3 4 4 5 5 6 6 77 00 11 22 33 44 55 6 7
year
year year
year
12 Which policies might a governmentyear year
introduce to increase the marginal productivity of labour?
Between
Between years
years 3–7,
3–7, which components
componentsofof
whichcomponents HDI
ofHDI have
HDIhave comparable
havecomparable changes
comparablechanges to
changes to its
to its overall
its overall change?
overall change?
change?
Between years 3–7, which
tax allowances
betterGNI per capita and life expectancy
A education,
A A education,
education, GNI
GNI per percapitaforand
capita capital
andlife
lifeexpectancy
expectancy
education
B education and GNI per goods
capita only
B B education
education and
and GNI GNIper percapita
capitaonly
only
AC no and life expectancy
education no only
C C education
education
andandlifelifeexpectancy
expectancyonly only
BD GNI pernocapita and life yes
expectancy only
D D GNI
GNI per
per capita
capita and andlife
lifeexpectancy
expectancyonly only
C yes no
D yes yes
39 2023 Nov P33 Q13
13 What is most likely to increase relative poverty in a country?

A increasing means-tested benefit levels

B increasing the power of trade unions
C making the tax system more progressive
D removing the national minimum wage

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 88 8
40 2023 Nov P33 Q23
23 South
23 South
23 Africa
South
Africa hashas
Africa
has attempted
attempted to improve
attempted
to improve
to thethe
improve
the level ofof
level
level of economicgrowth
economic growthby
byattracting
attracting foreign
foreign direct
direct
investment
investment (FDI).
investment (FDI).
(FDI). 8

23 South Africa has attempted FDIFDI

FDI to improve the level of economic growth byGDP GDP
GDP growth
growth
growth
attracting foreign direct
3.50
3.50 3.50 44 4
investment (FDI).
of% of
% of 3.003.00
3.00 8 % %% ofof 33 3
of
% GDP 22 2
GDP
GDP 2.502.50 2.50 FDI GDP
GDP GDP growth
GDP
23 South3.50 Africa has attempted to improve the level of economic
2.002.00 1 1 growth by attracting foreign direct
14
2.00 00
investment (FDI). % of 03
1.501.50
3.00
% of 1.50 –1
GDP –12–2–1
GDP 1.001.001.00
2.50
FDI –2 GDP growth
–2 1
0.500.50
2.00
3.50
0.50 –3
–3 4
0
–3
1.50 0 % of –4 3–4
% of 3.00 00 2008 2010 2012 2014 2016 2018 –4
–1 2008 2010 2012 2014 2016 2018
GDP 2.501.002008 2010
2008 2010 20122012 2014 2014 2016 2016 20182018 GDP –2 2
2008 2010
2008 2010 2012
2012 2014
2014 2016
2016 2018
2018
0.50 year 1 year
2.00 year
year –3 year
year
0 –40
1.50
What can2010
be deduced from this diagram about the relationship between FDI and GDP growth
2008 2012from 2014 –1
What
What 1.00can be
can
between be2008
deduced
deduced
and 2018?from this this2016
diagram
diagram
2018about the
about
2008 2010
the relationship
relationship 2012FDI
between
between
2014
and 2016
FDI and
2018
GDP growth
GDP growth
–2
between
between 2008 and
0.50 2008 and 2018? 2018? year year
A The relationship between level of FDI and GDP growth –3 is generally weak.
A A The 0
The relationship
relationship between
between level level of
of FDI
FDI and
and GDP
GDP growth
growth –4 is
is generally
generally weak.
weak.
What can
B 2008 be2010
deduced
Increases FDI from
in2012 2014
are inthis diagram
line2016 2018about the in
with improvements relationship
GDP 2008 between
2010
growth. 2012FDI and 2016
2014 GDP growth
2018
between
B 2008
Increases and
in FDI2018?
are
B Increases in FDI are in line within line with improvements
improvements in
in GDP
GDP growth.
growth.
C Lowering FDI is linked to stable year GDP growth. year
C A The
C Loweringrelationship
Lowering FDI is
FDI between
is linked
linked level of
to stable
to stable GDP
GDPFDIgrowth.
and GDP growth is generally weak.
growth.
WhatD canNegative GDP growth
be deduced from this is linked to a lack
diagram aboutof inflows of FDI. between FDI and GDP growth
the relationship
D B Increases
D Negative
Negative
between in
GDP
2008GDP
andFDI are inis
growth
2018?
growth isline withto
linked
linked toimprovements
aa lack
lack of in GDP
of inflows
inflows of FDI.
of growth.
FDI.
C
24 Lowering
A Which FDI iswould
The relationship
change linked
between beto stable
level GDPFDI growth.
most oflikely and GDP growth
to indicate that ais country
generallyhas
weak.
experienced economic
24
24 development?
Which
Which change
changeGDP
D Increases
Negative would
would growth be
be is most
most likely
likely
linked to
to a to indicate
lackindicate
of inflowsthat
that a country has experienced
a country has experienced
of FDI. economic
economic
B
development? in FDI are in line with improvements in GDP growth.
41 development?
2023A Nov P33 Q24in the country’s currency
an appreciation
C Lowering FDI is linked to stable GDP growth.
AA an appreciation
an appreciation in the
in the country’s
country’s currency
currency
24 Which
B change would
an improvement be
in themost likelycitizen’s
average to indicate
qualitythat a country has experienced
of life economic
D Negative
development? GDP growth is linked to a lack of inflows of FDI.
B
B C an improvement
an improvement in the
in the average
average citizen’s
citizen’s quality of life
an improvement in the country’s trade quality
balanceof life
A
C D an appreciation
improvement ininthe country’s
thecountry’s
country’s currency
trade balance
C an improvement
an increase inin the
the country’s trade
real GDP balance
24 Which change would be most likely to indicate that a country has experienced economic
B
D anan improvement
increase in
development? theincountry’s
in the the average
country’s realcitizen’s
GDP quality of life
D increase real GDP
25
A The
C an table gives some
an improvement
appreciation inintheeconomic
the indicators
country’s
country’s for four countries.
trade balance
currency
25 The
The table
D table
an gives some
increase some economic
economic indicators
indicators for four
four countries.
25 B Which countryinisthe
gives
an improvement incountry’s
closest realcitizen’s
GDP
to achieving
the average theforqualitycountries.
principal aims
of lifeof government economic policy?
Which
Which
C country
ancountry is closest
is
improvement closest to achieving
to
in the achieving trade
country’s the principal
the principal aims of
balanceaims of government
government economic
economic policy?
policy?
balance of
25 The table gives
change some economic
in GDP rate indicators
of inflationfor four countries.
unemployment
D an increase (%) in the country’s real payments
(%)GDP (%) balance of
42 change in GDP rate of inflation unemployment (% of GDP)
balance of
2023
WhichNov
changeP33
country Q25 torate
in closest
is GDP of inflation
achieving unemployment
the principal aims of government economic policy?
payments
payments
(%)
(%) (%)
(%) (%)
(%)
A 0.47 0.8 3.4 (% of
(% of+3.3
GDP)
GDP)
25 The table gives some economic indicators for four countries.
balance of
A Bchange
A 0.47
0.47
in1.13
GDP rate of0.8 inflation
0.9 unemployment
0.8 the principal aims
10.5
3.4
3.4
–0.1
+3.3
payments
+3.3
Which country is closest to achieving
(%) (%) (%) of government economic policy?
B C 1.131.18 0.91.1 10.56.9 (% of GDP)
–3.3
–0.1
B 1.13 0.9 10.5 –0.1
C Dchange
A
C 0.47
1.18
1.18
1.45
in GDP rate of1.1 0.8
1.1 0.1 4.6
3.4
6.9
inflation unemployment
6.9
+8.5 of
balance
+3.3
–3.3
–3.3
payments
B
D (%)
1.13
1.45 (%)
0.9
0.1 (%)
10.5
4.6 –0.1
+8.5
D 1.45 0.1 4.6 (% +8.5
of GDP)
C 1.18 1.1 6.9 –3.3
A 0.47 0.8 3.4 +3.3
D 2023 1.45 0.1 4.6 +8.5
B
© UCLES 1.13 0.9 10.5
9708/33/O/N/23 –0.1
C
© UCLES 2023
1.18 1.1 6.9
9708/33/O/N/23
–3.3
© UCLES 2023 9708/33/O/N/23
D 1.45 0.1 4.6 +8.5

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 B an increase
country removedinthe
monopoly
tariffs onregulation
imports.
C lower taxes on consumer goods
D a minimumprice
wage for low paid agricultural workers
43 Sdomestic
2023 Nov P33
$ Q27
27 Which row correctly identifies the characteristics of a low-income economy?

dependency Pe
PW + T Gini coefficient per capita Sworld + tariff
on the primary
value real income
sector
PW Sworld no tariff
A high high high
B high high low Ddomestic

C high O Q1 low Q2 Q3 low Q4

quantity
D low high low
What was the quantity of imports into this country after the removal of the tariffs?
28 What
A Qis the role of the
1Q2 B International
Q1Q4 Monetary
C Q Fund
2Q3
(IMF)? D Q3Q4
44 2023 Nov P33
A to advise Q30that are experiencing trade disagreements
countries
30 Under
B to which circumstances
help charities willemergency
providing low wagesassistance
and low-cost land in ainlow-income
to countries need country not attract
foreign investment in manufacturing?
C to offer short-term assistance to countries with balance of payments problems
A if the country creates genuine independence for their central bank
D to provide interest-free credit to developing countries for infrastructure purposes
B if the country embarks on a programme of privatisation
C if the country lacks well-developed infrastructure
D if the country permits repatriation of profits

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 C devaluation appreciation
D devaluation revaluation
45 2024 Nov P32 Q28
28 Company X is a multinational company that produces batteries for electric cars. It decides to
invest in a new factory in country N.

Under which conditions is this investment most likely to improve the current account balance on
the balance of payments in country N?

% of raw materials income elasticity

used to make of demand for
batteries supplied electric cars outside
by country N country N

A 10 0.5
B 10 1.5
C 90 0.5
D 90 1.5

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Answers:
1D

2B

3D

4A

5C

6A

7A

8D

9D

10A

11C

12A

13B

14C

15C

16C

17D

18B

19B

20A

21D

22D

23C

24B

25C

26D

27B

28B

29A

30A

31B

32D
33C

34A

35B

36C

37C

38C

39D

40A

41B

42D

43B

44C

45D