Cambridge International (CAIE) AS Paper 1, March 2024

1. AResources are unlimited.
2. BResources have alternative uses.
3. CSome resources can be imported.
4. DSome resources may be unemployed.

TopicProduction possibility curves

1. AAggregate demand will increase following a decrease in interest rates.
2. BA rise in unemployment will decrease inflationary pressures.
3. CThe incentive to work will rise if benefit payments are reduced.
4. DUnsustainable economic growth is more harmful to the economy than hyperinflation.

TopicEconomic methodology4.6 Price stability

1. Aresources: limited; wants: limited
2. Bresources: limited; wants: unlimited
3. Cresources: unlimited; wants: limited
4. Dresources: unlimited; wants: unlimited

TopicScarcity, choice and opportunity cost

1. ADemerit goods will be over supplied.
2. BMerit goods will be under supplied.
3. CPrivate goods will not be supplied.
4. DPublic goods will not be supplied.

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

1. Aall the other things the person could have bought
2. Bthe cost of getting to the sports shop
3. Cthe current value of the person’s old pair of shoes
4. Dthe next best thing that could have been bought with the $20

TopicScarcity, choice and opportunity cost

1. Ademand that is speculative
2. Bdemand that is supported by the ability to pay
3. Cthe relationship between price and quantity demanded
4. Dthe total amount demanded by consumers

TopicDemand and supply curves

1. Ainferior good, price-elastic demand and substitute for good Y
2. Binferior good, price-inelastic demand and complement to good Y
3. Cnormal good, price-elastic demand and complement to good Y
4. Dnormal good, price-inelastic demand and substitute for good Y

TopicPrice elasticity, income elasticity and cross elasticity of demand

1. ABoth X and Y are unit price elastic over their whole length.
2. BBoth X and Y have the same elasticity at every price.
3. CX has a higher price elasticity than Y at every price.
4. DY is more likely to have substitutes than X.

TopicPrice elasticity, income elasticity and cross elasticity of demand2.1 Demand and supply curves

1. A0.3%
2. B3.0%
3. C13.3%
4. D30%

TopicPrice elasticity of supply2.1 Demand and supply curves2.4 The interaction of demand and supply

1. Aprice of bread: decreases; price of buttermilk: decreases
2. Bprice of bread: decreases; price of buttermilk: increases
3. Cprice of bread: increases; price of buttermilk: decreases
4. Dprice of bread: increases; price of buttermilk: increases

TopicDemand and supply curves2.2 Price elasticity, income elasticity and cross elasticity of demand

1. APWU
2. BPVW
3. COUWQ
4. DOPWQ

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

1. AThe effective minimum wage is increased by 25%.
2. BThe rate of income tax paid by the lowest band of earners is reduced.
3. CThe government increases the level of subsidies given to producers of some merit goods.
4. DThe government provides more goods that are regarded as essential.

TopicAddressing income and wealth inequality

1. ATheir value is not fully understood by consumers.
2. BThey are unproductive goods and services.
3. CThey can only be provided by the government.
4. DThey are only provided by private sector businesses.

TopicClassification of goods and services3.1 Reasons for government intervention in markets

1. Aincome tax: a higher tax-free allowance; sales tax: a higher rate of tax
2. Bincome tax: a higher top rate of tax; sales tax: a lower rate of tax
3. Cincome tax: a lower tax-free allowance; sales tax: a higher number of exempt goods
4. Dincome tax: a lower top rate of tax; sales tax: a lower number of exempt goods

TopicAddressing income and wealth inequality3.2 Methods and effects of government intervention in markets

1. AInflation reduced the real value of GDP in the first six months of 2021.
2. BReal GDP was lower at the end of 2021 than 2020.
3. CThe economy was in recession at the end of the first six months of 2021.
4. DThe standard of living was higher at the end of 2021 than in 2020.

TopicNational income statistics4.3 Aggregate demand and aggregate supply analysis

1. Adepreciation of currency
2. Bincreased import tariffs
3. Cdecreased spending on infrastructure
4. Dincreased wages

TopicPrice stability

1. Aimports would increase
2. Bnational income would increase
3. Csavings would increase
4. Dtaxes would increase

TopicIntroduction to the circular flow of income

1. Athe total adult population aged 18–65.
2. Bthe number of unemployed who are seeking work.
3. Cthe total number in full-time employment.
4. Dthe total population in the labour force.

TopicUnemployment

1. Aconsumption expenditure.
2. Bgovernment expenditure.
3. Cimport expenditure.
4. Dinvestment expenditure.

TopicAggregate demand and aggregate supply analysis

1. A–10%
2. B0%
3. C+10%
4. D+20%

TopicFiscal policy2.4 The interaction of demand and supply2.2 Price elasticity, income elasticity and cross elasticity of demand

1. Adecrease government spending
2. Bdepreciation of the currency
3. Cincrease indirect taxation
4. Dincrease interest rates

TopicUnemployment6.3 Current account of the balance of payments4.1 National income statistics

1. Aincome tax: decrease; sales tax: decrease
2. Bincome tax: decrease; sales tax: increase
3. Cincome tax: increase; sales tax: decrease
4. Dincome tax: increase; sales tax: increase

TopicAggregate demand and aggregate supply analysis5.2 Fiscal policy3.2 Methods and effects of government intervention in markets

1. Aan increase in government expenditure on training
2. Ban increase in sales tax
3. Can increase in the rate of interest
4. Dan increase of the exchange rate

TopicSupply-side policy

1. ACountry X has an absolute advantage in wheat and car production.
2. BCountry Y has an absolute advantage in wheat and car production.
3. CCountry Y has a comparative advantage in wheat production.
4. DOpportunity cost of wheat and car production is the same between countries.

TopicThe reasons for international trade

1. AThe country gains a competitive advantage from the depreciation.
2. BThe country has a surplus on its capital and financial accounts.
3. CThe price elasticities of demand for the country’s exports and imports are greater than one.
4. DThere are high trade barriers with the country’s main trading partners.

TopicPolicies to correct imbalances in the current account6.3 Current account of the balance of payments

1. Awhen the volume of exports falls and the volume of imports rises
2. Bwhen the total value of exports falls and the total value of imports rises
3. Cwhen the balance of trade in goods moves from deficit to surplus
4. Dwhen the average price of exports rises and the average price of imports falls

TopicThe reasons for international trade

1. A–$10bn
2. B–$15bn
3. C–$30bn
4. D–$50bn

TopicCurrent account of the balance of payments

1. A2015–2016
2. B2016–2017
3. C2017–2018
4. D2018–2019

TopicCurrent account of the balance of payments

1. Aan embargo on imports
2. Ban exchange rate appreciation
3. Ca subsidy to domestic producers
4. Da tariff on imports

TopicProtectionism6.4 Exchange rates

1. AConsumer spending is low.
2. BPrimary incomes in the form of investment income are low.
3. CThe rate of exchange is high.
4. DWage costs of production are high.

TopicCurrent account of the balance of payments