Paper 3: A Level Multiple Choice · 9708/32

Cambridge International (CAIE) A-level Paper 3, June 2025

All 30 multiple choice questions from Cambridge International (CAIE) A-level Paper 3 (June 2025), A Level Multiple Choice. Each question shows its marks and topic, and opens the question paper and mark scheme at the right page.

Question paperMark scheme
Q31 mark
A consumer spends all of their income on only two goods, X and Y. The consumer is initially in equilibrium, maximising their total utility. The consumer’s tastes change and they get less utility from consuming good Y. The prices of both goods are unchanged. What would be a rational response from the consumer?
  1. Agood X: buy less; good Y: buy more
  2. Bgood X: buy more; good Y: buy less
  3. Cgood X: buy more; good Y: unchanged
  4. Dgood X: unchanged; good Y: buy less
Show the answer

The answer is B.

TopicUtility

Question paper p.2Mark scheme p.2Open in the tool
Q41 mark
When might a moral hazard occur?
  1. AWhen a consumer does not have full information about a product.
  2. BWhen a person undertakes an activity that causes harm to another person.
  3. CWhen a person undertakes a risky activity, knowing another person bears the risk.
  4. DWhen the seller of a product has more information than the buyer.
Show the answer

The answer is C.

TopicEfficiency and market failure

Question paper p.3Mark scheme p.2Open in the tool
Q71 mark
Two manufacturing firms in the same industry, producing similar products, are considering merging together. What would be the least convincing reason for merging?
  1. AIt would enable greater bargaining power when buying raw materials.
  2. BIt would enable technical economies of scale.
  3. CIt would produce savings in management and administration costs.
  4. DIt would reduce the dependence of the firms on the suppliers of raw materials.
Show the answer

The answer is D.

TopicGrowth and survival of firms

Question paper p.3Mark scheme p.2Open in the tool
Q81 mark
The marginal social benefit of consuming a drink is less than the marginal private benefit. What would be the best policy to improve resource allocation in this market?
  1. Agive a subsidy to the producers of the drink
  2. Bincrease competition in the drink industry
  3. Cimpose a maximum price for the drink above the market equilibrium price
  4. Dimpose a per unit tax on the drink
Show the answer

The answer is D.

TopicGovernment policies to achieve efficient resource allocation and correct market failure

Question paper p.4Mark scheme p.2Open in the tool
Q91 mark
A country’s government banned cigarette smoking in enclosed public spaces, such as offices, shops, bars and restaurants. What is a government failure arising from this ban?
  1. Adecreased consumption of cigarettes by smokers
  2. Bdecreased levels of passive cigarette smoking by non-smokers
  3. Cincreased litter from used cigarettes outside offices and shops
  4. Dincreased sales of cigarette substitutes like nicotine patches and gum
Show the answer

The answer is C.

TopicGovernment failure in microeconomic intervention

Question paper p.4Mark scheme p.2Open in the tool
Q111 mark
What is not an outcome of the existence of private property rights?
  1. AThey encourage private owners to conserve property when its value is expected to rise.
  2. BThey give private owners the incentive to manage their property carefully.
  3. CThey make private owners accountable for damage to others from property misuse.
  4. DThey prevent private owners gaining from using resources to benefit others.
Show the answer

The answer is D.

TopicGovernment policies to achieve efficient resource allocation and correct market failure

Question paper p.4Mark scheme p.2Open in the tool
Q171 mark
Which combination of income tax and government benefit payment systems will produce automatic stabilisation?
  1. Aincome tax: progressive; benefit payments system: means tested
  2. Bincome tax: progressive; benefit payments system: universal
  3. Cincome tax: regressive; benefit payments system: means tested
  4. Dincome tax: regressive; benefit payments system: universal
Show the answer

The answer is A.

TopicEffectiveness of policy options to meet all macroeconomic objectives

Question paper p.6Mark scheme p.2Open in the tool
Q201 mark
A government decreases interest rates to reduce unemployment but finds this has little effect due to hysteresis. What causes this hysteresis?
  1. Acapital investment increases
  2. Bfewer people are encouraged to save
  3. Cskills of unemployed workers become outdated
  4. Dthe money supply increases
Show the answer

The answer is C.

TopicEmployment and unemployment10.3 Effectiveness of policy options to meet all macroeconomic objectives

Question paper p.8Mark scheme p.2Open in the tool
Q211 mark
In a closed economy, the central bank raises interest rates to reduce an increasing rate of inflation. Which macroeconomic policy objective is this targeting?
  1. Aa surplus on the current account of the balance of payments
  2. Bfaster economic growth
  3. Cfull employment
  4. Dstable prices
Show the answer

The answer is D.

TopicGovernment macroeconomic policy objectives10.3 Effectiveness of policy options to meet all macroeconomic objectives

Question paper p.8Mark scheme p.2Open in the tool
Q221 mark
A government sets a target for the annual rate of inflation to be no more than 3%. Which circumstances would make it difficult to achieve the target?
  1. Aif devaluation of the currency leads to a trade surplus
  2. Bif interest rates are increased to control effective demand
  3. Cif the government increases its tax revenue
  4. Dif wage increases are kept in line with productivity
Show the answer

The answer is A.

TopicEffectiveness of policy options to meet all macroeconomic objectives8.3 Labour market forces and government intervention

Question paper p.8Mark scheme p.2Open in the tool
Q231 mark
The central bank of a country decreases interest rates. What are the likely consequences?
  1. Ainternal value of the currency: falls; external value of the currency: falls
  2. Binternal value of the currency: falls; external value of the currency: rises
  3. Cinternal value of the currency: rises; external value of the currency: falls
  4. Dinternal value of the currency: rises; external value of the currency: rises
Show the answer

The answer is A.

TopicMoney and banking11.2 Exchange rates

Question paper p.8Mark scheme p.2Open in the tool
Q261 mark
The value of the currency of an open economy with a fixed exchange rate is significantly below its purchasing power parity value. If the economy decides to adopt a floating exchange rate, which of its macroeconomic policy aims is most likely to benefit?
  1. Alow inflation
  2. Blow unemployment
  3. Creduced deficit on the current account of the balance of payments
  4. Dsteady economic growth
Show the answer

The answer is A.

TopicExchange rates

Question paper p.9Mark scheme p.2Open in the tool
Q281 mark
The table shows possible changes in population, the rate of inflation and the number of years of education. Which combination would lead to an increase in both real GDP per capita and the Human Development Index?
  1. Apopulation: falls; rate of inflation: falls; number of years of education: rises
  2. Bpopulation: falls; rate of inflation: rises; number of years of education: rises
  3. Cpopulation: rises; rate of inflation: falls; number of years of education: falls
  4. Dpopulation: rises; rate of inflation: rises; number of years of education: rises
Show the answer

The answer is A.

TopicEconomic development

Question paper p.10Mark scheme p.2Open in the tool
Q291 mark
The following are four conditions sometimes attached to IMF loans to low-income countries. Which condition would conflict with the ‘infant industry’ argument?
  1. Athe need to allow free trade
  2. Bthe need to control inflation
  3. Cthe need to have a contractionary fiscal policy
  4. Dthe need to privatise government enterprises
Show the answer

The answer is A.

TopicRelationship between countries at different levels of development10.3 Effectiveness of policy options to meet all macroeconomic objectives

Question paper p.10Mark scheme p.2Open in the tool
Q301 mark
Countries X and Y form a customs union which leads to a removal of tariffs between the countries. The diagram shows the effect on the market for wheat in country X. How much wheat is imported into country X from country Y before and after the customs union?
  1. Abefore customs union: KL; after customs union: MN
  2. Bbefore customs union: KL; after customs union: KN
  3. Cbefore customs union: LM; after customs union: MN
  4. Dbefore customs union: LM; after customs union: KN
Show the answer

The answer is D.

TopicGlobalisation

Question paper p.11Mark scheme p.2Open in the tool

Other years of Cambridge International (CAIE) A-level Paper 3

November 2025March 2025November 2024June 2024March 2024November 2023June 2023March 2023

Topics on this paper

Indifference curves and budget linesEfficiency and market failureUtilityTypes of cost, revenue and profit, short-run and long-run productionDifferent market structuresGrowth and survival of firmsGovernment policies to achieve efficient resource allocation and correct market failureGovernment failure in microeconomic interventionEquity and policies towards income and wealth redistributionLabour market forces and government interventionThe circular flow of incomeEffectiveness of policy options to meet all macroeconomic objectivesEconomic growth and sustainabilityEmployment and unemploymentGovernment macroeconomic policy objectivesMoney and bankingExchange ratesPolicies to correct disequilibrium in the balance of paymentsEconomic developmentRelationship between countries at different levels of developmentGlobalisation

Question text is quoted from the question papers, © Cambridge University Press & Assessment (UCLES), for students’ private study. Open the official papers and mark schemes from the links on each question. Examiner insights are written with AI assistance and moderated by Finn.