Cambridge Past Paper Questions

What, if decreased, will help to reduce the rate of inflation?

What is an example of contractionary fiscal policy?

A country with low unemployment and a managed floating exchange rate has a persistent current account deficit on its balance of payments. Which pol...

Which factor of production is needed first in order to set up a new business?

Assuming nothing else changes, which change in an economy's labour market will cause the production possibility curve to shift to the left?

What is not a characteristic of a mixed economy?

What is not likely to result from the use of division of labour?

Price plays a number of functions in the allocation of resources. Which statement best illustrates the function that relies upon consumer choice (s...

Which pair of products are substitutes both in consumption and production?

There is a worldwide shortage of oil. The diagram shows the consumption and production of oil (billion tonnes) for selected countries. [Figure 7.1]...

The cross elasticity of demand between bus travel and rail travel is +2. A rise in the price of bus fares caused the demand for rail travel to rise...

A change in the price of a good causes an increase in the quantity of the good demanded. What would be the nature of the good and the direction of ...

A specific tax is placed upon each bottle of perfume sold. In the diagram, S is the supply curve before tax, St is the supply curve after tax. [Fig...

The diagram shows the supply curve of a firm. [Figure 11.1] Which statement about the price elasticity of supply (PES) along this curve is correct?

The diagram shows the market for electric cars with X as the initial equilibrium. What will be the new equilibrium when the price of electric car b...

What would cause a market disequilibrium?

In the diagram, area OP₁M1Q₁ is equal to area OP2M2Q2. [Figure 14.1] What is the value of the price elasticity of demand if the price is halved fro...

The table shows changes in a consumer's expenditure on various goods when her income increases from $20000 to $24000. [Table 15.1] Assuming all els...

Which combination of government measures is most likely to increase the consumption of a merit good?

The table contains some figures from the balance of payments account of the United States (US) for a given year. [Table 17.1] What cannot be conclu...

Which change is shown directly by the use of aggregate demand and aggregate supply analysis?

Why might aggregate demand increase when a country's price level falls?

What is used to convert nominal GDP to real GDP?

The diagram shows a basic two-sector circular flow of income. [Figure 21.1] What can be concluded about the direction of flows?

The table shows the types of unemployment and their possible solutions. [Table 22.1] Which combination is not correct?

Which combination of policies would be most effective in reducing a balance of payments current account surplus? [Table 23.1]

If a country is experiencing a period of high inflation, which groups will benefit the most from this? [Table 24.1]

What will definitely change a country's terms of trade? 1 when the price of imported raw materials increases 2 a change in inflation rates 3 an app...

The world consists of two countries, M and N. The graphs show their production possibilities for wheat and rice. [Figure 26.1] Countries M and N op...

The diagram shows the current equilibrium of an economy. The government introduces a contractionary monetary policy. [Figure 27.1] What is the most...

A government wishes to reduce the deficit on the secondary income section of its current account. Which policy would be most effective?

Supply-side policies can be used to correct cost-push inflation. Which policy would best achieve this aim in the long run?

Economic growth leads to increased levels of income and consumption per capita for the adult population. Which circumstances are needed for this to...

What is the best definition of a positive economic statement?

The diagram is from a chapter on 'The Fundamental Economic Problem' in an Economics textbook. It should contain the terms opportunity cost, scarcit...

What is a statement of the non-rivalrous nature of public goods?

A country increases its spending on education and training. It pays for this by reducing unemployment benefit payments and increasing taxes on impo...

The diagram shows an outward shift of the production possibility curve from PPC₁ to PPC₂. [Figure 5.1] What could have caused this shift?

D₁ and S₁ are the initial demand and supply curves in the market for new cars with an equilibrium at X. [Figure 6.1] What will cause the demand cur...

When can a product be said to have a negative income elasticity of demand?

The diagram shows the short-run supply curve (SSR) and long-run supply curve (SLR) for a bakery. The price of a loaf of bread increases from $2.00 ...

An increase in which variable will always lead to an increase in the consumer surplus?

Farmers want to extract wild honey from beehives. They find the beehives by following birds known as honeyguide birds who want the beeswax that is ...

An indirect tax is imposed on good X. Which situation is most likely to result in producers bearing a higher burden of the tax?

What would not be included in the calculation of an individual's wealth?

Why might governments provide free education for children aged 4 to 16 years old?

The diagram shows the demand and supply for rice. The market for rice is initially in equilibrium at a price of P₁. The government introduces a max...

Price stability can be said to occur if the measured value of the consumer prices index (CPI) is unchanged during the year. Which statement is corr...

Based on the circular flow of income, which condition is necessary for an open economy to be in equilibrium?

The aggregate demand curve is typically downward sloping. What is one possible explanation for this?