Cambridge International (CAIE) AS Paper 1, June 2025

1. AA statement that is based on fact and can be tested.
2. BA statement that attempts to influence economic decisions.
3. CA statement that is subjective and cannot be confirmed.
4. DAn encouraging economic update in the opinion of the central bank.

TopicEconomic methodology

1. Achoice → opportunity cost → scarcity
2. Bchoice → scarcity → opportunity cost
3. Cscarcity → choice → opportunity cost
4. Dscarcity → opportunity cost → choice

TopicScarcity, choice and opportunity cost

1. AIt is not possible to stop a non-payer from using the product.
2. BOne person consuming the product does not reduce the amount of it available to others.
3. CPeople consume too little of the product because they are unaware of its true benefits.
4. DThere is an unlimited supply of the product.

TopicClassification of goods and services

1. Ahuman capital: decreases; physical capital: decreases
2. Bhuman capital: decreases; physical capital: increases
3. Chuman capital: increases; physical capital: decreases
4. Dhuman capital: increases; physical capital: increases

TopicSupply-side policy3.2 Methods and effects of government intervention in markets

1. Aa decrease in mineral resources
2. Ba decrease in prices of consumer goods
3. Can increase in employment
4. Dan increase in technology

TopicProduction possibility curves

1. Aa decrease in real incomes and a rise in the costs of new car production
2. Ba decrease in the price of petrol and a subsidy on new car production
3. Can increase in the availability of loans for new car purchases and a specific tax on new cars
4. Dan increase in the price of train travel and an increase in the number of car producers

TopicDemand and supply curves

1. AWhen it is a luxury good.
2. BWhen it is a necessity good.
3. CWhen it is a normal good.
4. DWhen it is an inferior good.

TopicPrice elasticity, income elasticity and cross elasticity of demand

1. Ashort run: 0.5; long run: 2.0
2. Bshort run: 0.5; long run: 1.4
3. Cshort run: 2.0; long run: 0.7
4. Dshort run: 2.0; long run: 0.5

TopicPrice elasticity of supply2.1 Demand and supply curves

1. Acost of production
2. Bmaximum price
3. Cminimum price
4. Dsubsidy

TopicConsumer and producer surplus2.4 The interaction of demand and supply

1. AFarmers and honeyguide birds are rival consumers.
2. BWild honey and beeswax are free goods.
3. CWild honey and beeswax are in joint supply.
4. DWild honey is the opportunity cost of beeswax.

TopicDemand and supply curves

1. Aprice elasticity of demand is elastic
2. Bprice elasticity of demand is inelastic
3. Cprice elasticity of supply is elastic
4. Dprice elasticity of supply is inelastic

TopicMethods and effects of government intervention in markets

1. Athe house owned by the individual
2. Bthe savings in the individual’s bank account
3. Cthe stocks and shares owned by the individual
4. Dthe wages earned by the individual

TopicAddressing income and wealth inequality

1. AConsumers are not fully aware of the benefits of education.
2. BEducation in a free market system would be over consumed.
3. CEducation is a public good and there would be many free riders.
4. DThe private costs of education exceed the private benefits in a free market.

TopicClassification of goods and services1.4 Resource allocation in different economic systems

1. AA new market equilibrium will be established.
2. BAn illegal market for rice will develop.
3. CThere will be a shortage of rice.
4. DThere will be a surplus of rice.

TopicMethods and effects of government intervention in markets

1. A$0
2. B$3000
3. C$6000
4. D$10 000

TopicMethods and effects of government intervention in markets

1. AFor price stability to occur, there must be no changes in prices of any products.
2. BFor price stability to occur, the number of products whose prices rise must exactly match the number whose prices fall.
3. CIf some prices rise and others fall, there cannot be price stability.
4. DDifferent weightings of items used in the calculation of CPI mean that price stability can occur

TopicPrice stability

1. AGovernment investment is equal to private investment.
2. BPlanned injections are equal to planned withdrawals.
3. CSpending by households is equal to taxes collected by government.
4. DValue of export earnings is equal to expenditure on imports.

TopicIntroduction to the circular flow of income

1. AA fall in the price level will lead to a rise in demand for imports.
2. BAs the price level falls, improved productivity will reduce unit costs.
3. CIf the price level is high, any interest rate changes will encourage consumption.
4. DThe real value of assets increases as the price level falls.

TopicAggregate demand and aggregate supply analysis4.6 Price stability2.1 Demand and supply curves

1. Alack of relevant skills for vacant jobs
2. Black of up-to-date job vacancy information
3. Cgreater use of technology in the production process
4. Dan increase in regional pay inequality

TopicUnemployment

1. A$570 000
2. B$610 000
3. C$640 000
4. D$690 000

TopicNational income statistics

1. Aa decrease in the availability of credit
2. Ba decrease in the exchange rate
3. Can increase in government spending
4. Dan increase in subsidies for training

TopicMonetary policy

1. Aeconomic growth: less likely; low inflation: less likely; low unemployment: less likely
2. Beconomic growth: more likely; low inflation: less likely; low unemployment: more likely
3. Ceconomic growth: less likely; low inflation: more likely; low unemployment: less likely
4. Deconomic growth: more likely; low inflation: more likely; low unemployment: less likely

TopicFiscal policy4.5 Unemployment4.6 Price stability

1. Aindirect
2. Bprogressive
3. Cproportional
4. Dregressive

TopicAddressing income and wealth inequality

1. Aan increase in government subsidy to small firms
2. Ban increase in the national minimum wage
3. Can increase in the power of trade unions
4. Dan increase in the tax on business profits

TopicSupply-side policy

TopicAggregate demand and aggregate supply analysis

1. Ato allow a newly developed domestic industry to grow to a viable size
2. Bto enable a country to retain control of an industry it regards as being of strategic importance
3. Cto give consumers a wider choice of goods and services
4. Dto give time for workers in a declining domestic industry to find alternative employment

TopicProtectionism

1. Aa low domestic savings rate
2. Ban undervalued exchange rate
3. Chighly protectionist policies by other countries
4. Dlow investment income from abroad

TopicCurrent account of the balance of payments

1. Athe average price of exports divided by the average price of imports
2. Bthe average price of imports divided by the average price of exports
3. Cthe value of exports divided by the value of imports
4. Dthe value of imports divided by the value of exports

TopicThe reasons for international trade

1. Adecrease in income tax rates
2. Bincrease in exchange rates
3. Cincrease in government spending
4. Dincrease in import tariffs

TopicPolicies to correct imbalances in the current account

1. Aa decrease in European Union inflation
2. Ba decrease in US interest rates
3. Can increase in European Union imports
4. Dan increase in European Union unemployment

TopicExchange rates