Paper 3: A Level Multiple Choice · 9708/32

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

All 30 multiple choice questions from Cambridge International (CAIE) A-level Paper 3 (November 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
Q11 mark
What is the definition of moral hazard?
  1. AAn increase in the likelihood of taking risks because another party is paying for these risks.
  2. BThe loss of social welfare arising from the consumption of a good.
  3. CWhen buyers and sellers have different amounts of information regarding product quality.
  4. DWhen costs and benefits are taken into account when a decision is being made.
Show the answer

The answer is A.

TopicEfficiency and market failure

Question paper p.2Mark scheme p.2Open in the tool
Q21 mark
The diagram shows a consumer’s budget line. What determines the slope of the budget line?
  1. Athe marginal rate of substitution of good X for good Y
  2. Bthe price of good X multiplied by the price of good Y
  3. Cthe ratio of the price of good X to the income of the consumer
  4. Dthe ratio of the price of good X to the price of good Y
Show the answer

The answer is D.

TopicIndifference curves and budget lines

Question paper p.2Mark scheme p.2Open in the tool
Q41 mark
A firm has very high fixed costs but low marginal costs of production. It experiences continuous economies of scale so that the minimum efficient scale is not reached until the firm is very large in relation to total market demand. In which type of market structure would the firm operate?
  1. Amonopolistic competition
  2. Bmonopsony
  3. Cnatural monopoly
  4. Doligopoly
Show the answer

The answer is C.

TopicDifferent market structures

Question paper p.3Mark scheme p.2Open in the tool
Q51 mark
The table gives the marginal utility of two goods, X and Y. The price of good X is $2.00 and the price of good Y is $1.00. If a consumer spends all of their income on goods X and Y, which combination of goods would they choose to maximise their utility?
  1. A1 unit of X and 1 unit of Y
  2. B3 units of X and 1 unit of Y
  3. C3 units of X and 4 units of Y
  4. D5 units of X and 1 unit of Y
Show the answer

The answer is C.

TopicUtility

Question paper p.4Mark scheme p.2Open in the tool
Q61 mark
An economist undertakes a cost–benefit analysis of the pollution resulting from a manufacturing process. Which outcome is most likely to guide any recommendation about the optimal level of manufacturing output?
  1. Athat the marginal social cost of manufacturing equals the marginal social benefit
  2. Bthat the marginal cost of pollution is zero
  3. Cthat the total revenue of manufacturing equals the total cost
  4. Dthat the total benefit of pollution is maximised
Show the answer

The answer is A.

TopicPrivate costs and benefits, externalities and social costs and benefits

Question paper p.4Mark scheme p.2Open in the tool
Q101 mark
A government has a policy where income tax is paid only after the first $20 000 of income has been earned. What would make the government’s policy more equitable?
  1. ADecreasing the threshold for paying income tax to $10 000 for all taxpayers.
  2. BIntegrating the tax and welfare systems by introducing a negative income tax.
  3. CIntroducing universal benefits that are available to all citizens irrespective of wealth.
  4. DMeans testing all benefits so that they remain the same even if real incomes fall.
Show the answer

The answer is B.

TopicEquity and policies towards income and wealth redistribution

Question paper p.5Mark scheme p.2Open in the tool
Q121 mark
A government intervenes to raise the wages of a group of workers to prevent their exploitation. Where might such government intervention be justified?
  1. Ain an industry that is protected by tariffs on imports from abroad
  2. Bin an industry where a trade union negotiates wages for the workers
  3. Cin an industry where the output is produced by a single firm monopolist
  4. Din an industry where workers are employed by a monopsonist
Show the answer

The answer is D.

TopicLabour market forces and government intervention

Question paper p.6Mark scheme p.2Open in the tool
Q131 mark
What is likely to reduce the domestic money supply?
  1. ABanks being allowed to hold a lower liquidity ratio.
  2. BIndividuals choosing to hold more money in the form of idle balances.
  3. CThe government financing its budget deficit by borrowing from the banking sector.
  4. DThe government increasing its borrowing from other countries.
Show the answer

The answer is B.

TopicMoney and banking

Question paper p.6Mark scheme p.2Open in the tool
Q141 mark
The unemployment rate in an economy may continue to rise even after the economy has recovered from a recession. Which explanation for this trend is not correct?
  1. AMany foreign businesses have moved out of the country.
  2. BThe government has abolished the national minimum wage.
  3. CAn increase in net migration of low-skilled workers.
  4. DWorkers lose skills, making them less employable.
Show the answer

The answer is B.

TopicEmployment and unemployment9.2 Economic growth and sustainability

Question paper p.7Mark scheme p.2Open in the tool
Q161 mark
In these four diagrams, the money supply in an economy is initially at MS1 and the demand for money is initially at LP1. Which diagram shows the effect of a policy of quantitative easing on the rate of interest?
Show the answer

The answer is A. Open the question paper to read the options.

TopicMoney and banking

Question paper p.7Mark scheme p.2Open in the tool
Q181 mark
A country with a managed exchange rate has a persistent deficit on the current account of the balance of payments. It devalues its currency to reduce this deficit. Under which conditions will a devaluation help the government to achieve its four main macroeconomic objectives?
  1. AMarshall−Lerner condition satisfied: no; level of employment: below full employment
  2. BMarshall−Lerner condition satisfied: no; level of employment: full employment
  3. CMarshall−Lerner condition satisfied: yes; level of employment: below full employment
  4. DMarshall−Lerner condition satisfied: yes; level of employment: full employment
Show the answer

The answer is C.

TopicExchange rates11.1 Policies to correct disequilibrium in the balance of payments

Question paper p.8Mark scheme p.2Open in the tool
Q191 mark
What would cause an individual’s demand curve for an active money balance to move to the left?
  1. Aan increase in the frequency of income payments
  2. Ban increase in the general price level
  3. Can increase in the individual’s income
  4. Dan increase in the rate of interest
Show the answer

The answer is A.

TopicMoney and banking

Question paper p.8Mark scheme p.2Open in the tool
Q211 mark
Which combination shows the most likely outcome if a government increases the level of direct taxation?
  1. Abalance of payments deteriorates and inflation increases
  2. Beconomic growth increases and balance of payments improves
  3. Cinflation decreases and unemployment increases
  4. Dunemployment decreases and balance of payments improves
Show the answer

The answer is C.

TopicEffectiveness of policy options to meet all macroeconomic objectives9.3 Employment and unemployment

Question paper p.9Mark scheme p.2Open in the tool
Q221 mark
In an economy, the price elasticity of demand for imported raw materials is 0.3, and the price elasticity of demand for exports is also 0.3. Following a depreciation of the economy’s currency, what will the impact on inflation be?
  1. Achange in inflation rate due to cost-push factors: decrease; change in inflation rate due to demand-pull factors: decrease
  2. Bchange in inflation rate due to cost-push factors: decrease; change in inflation rate due to demand-pull factors: increase
  3. Cchange in inflation rate due to cost-push factors: increase; change in inflation rate due to demand-pull factors: decrease
  4. Dchange in inflation rate due to cost-push factors: increase; change in inflation rate due to demand-pull factors: increase
Show the answer

The answer is C.

TopicExchange rates

Question paper p.9Mark scheme p.2Open in the tool
Q241 mark
Which statement is correct?
  1. AEconomic development is necessary for economic growth.
  2. BEconomic growth and economic development are directly proportional.
  3. CEconomic growth enables economic development.
  4. DEconomic growth is always sustainable.
Show the answer

The answer is C.

TopicEconomic development

Question paper p.9Mark scheme p.2Open in the tool
Q251 mark
What is a trade-weighted exchange rate?
  1. Athe price of one currency against a basket of other currencies
  2. Bthe price of one currency in terms of another
  3. Cthe price of one currency in terms of its real purchasing power
  4. Dthe price of one currency being determined by state intervention
Show the answer

The answer is A.

TopicExchange rates

Question paper p.10Mark scheme p.2Open in the tool
Q261 mark
The United Nations gives aid to a developing country so it can purchase vaccinations manufactured in India. How is this aid characterised?
  1. Acharacteristic 1: bilateral; characteristic 2: tied
  2. Bcharacteristic 1: bilateral; characteristic 2: untied
  3. Ccharacteristic 1: multilateral; characteristic 2: tied
  4. Dcharacteristic 1: multilateral; characteristic 2: untied
Show the answer

The answer is C.

TopicRelationship between countries at different levels of development11.4 Characteristics of countries at different levels of development

Question paper p.10Mark scheme p.2Open in the tool
Q291 mark
An economy has a large surplus on the current account of its balance of payments. It revalues its currency. The current account of the balance of payments becomes a greater surplus in the short run. In the long run the surplus becomes smaller and eventually becomes a deficit. What is the sum of the price elasticities of imports and exports in the short run and in the long run?
  1. Ashort run: greater than 1.0; long run: greater than 1.0
  2. Bshort run: greater than 1.0; long run: less than 1.0
  3. Cshort run: less than 1.0; long run: greater than 1.0
  4. Dshort run: less than 1.0; long run: less than 1.0
Show the answer

The answer is C.

TopicPolicies to correct disequilibrium in the balance of payments11.2 Exchange rates

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

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

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

Topics on this paper

Efficiency and market failureIndifference curves and budget linesPrivate costs and benefits, externalities and social costs and benefitsDifferent market structuresUtilityDiffering objectives and policies of firmsEquity and policies towards income and wealth redistributionGovernment policies to achieve efficient resource allocation and correct market failureLabour market forces and government interventionMoney and bankingEmployment and unemploymentEffectiveness of policy options to meet all macroeconomic objectivesEconomic growth and sustainabilityExchange ratesLinks between macroeconomic problems and their interrelatednessEconomic developmentRelationship between countries at different levels of developmentPolicies to correct disequilibrium in the balance of paymentsCharacteristics of countries at different levels of development

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.