Han Chiang High School

E Trial Examination, 2018

STUDENT 'S
NAME

STUDENT 'S
CLASS
NUMBER

_____________________________________________________________________

ECONOMICS 0455/Paper 1
CE21/CE22 September 2018
45 minutes

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READ THESE INSTRUCTIONS FIRST

Answer all in the o sheet paper provided.
The total marks for this paper is 30.
Write in soft pencil.
Electronic calculators may be used for calculation.
Do not use staples, paper clips, glues or correction fluid.
This paper consists of 7 printed pages.

Answer ALL questions

At the end of the examination, fasten all your work securely together.
The number of marks is given in brackets [ ] at the end of each question or part
question.

This document consists of 8 printed pages.

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Section A – Objective questions (30%)

1. A farmer pays a landowner for the use of a field. What is the income to the landowner
called?
A. Interest
B. Profit
C. Rent
D. Wages

2. A government is faced with the choice of spending on either education or healthcare. Of

what is this an example?
A. Conservation of resources
B. Opportunity cost
C. Monetary policy
D. Substitution of factors

3. The diagram shows two production curves for an economy.

X
Y
manufactured
product

o
Y X
agricultural products
What could have caused the change in the economy’s production possibility curve from
XX to YY?
A. A large number of industrial disputes
B. A decrease in the price level
C. An increase in employment
D. A major earthquake

4. What necessarily happens when an external benefit exists?

A. Social benefit is greater than private benefit.
B. Social benefit is greater than social cost.
C. Social cost is equal to private cost.
D. Social cost is greater than private cost.

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5. What is most likely to influence the price elasticity of demand for a food?
A. A change in consumer tastes
B. The number of close substitutes
C. The rate of inflation
D. Whether the food can be stored easily

6. A bridge is built over a river which enables journey times to be reduced. The table shows
costs and benefits from building the bridge.
$000
Private benefit 12
Private cost 10
External benefit 8
External cost 5

Which calculation represents social benefit?

A. $12000 - $10000 = $2000
B. $8000 - $5000 = $3000
C. $8000 + $12000 = $20000
D. $12000 - $5000 = $17000

7. In a market there is a shortage of a good. What change would cause the market to come
to an equilibrium?
A. A rise in price
B. A decrease in supply
C. A fall in price
D. An increase in demand

8. What is a disadvantage for a trade union representing workers in a company that has
increased specialisation?
A. Production levels are decreased.
B. Different abilities can be used fully.
C. Workers are able to gain a higher level of skill.
D. Capital equipment can be substituted for labour.

9. A government finance minister said that the purchasing power of most people’s income
had risen in the last year. What must have increased for the purchasing power to rise?
A. Money wages
B. Net income after tax
C. Real wages
D. Wage rates

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10. The table shows the change in income for selected occupations between 1995 and 2015.
Occupation Change in income %
Car assembly workers 110
Builders 110
Teachers 60
Nurses 30
Shop assistants -5

What can be concluded from the table?

A. Car assembly workers and builders earned the same in 2015.
B. Everyone was better off in 2015 than 1995.
C. Nurses earned less than teachers in 2015.
D. Secondary sector workers received the highest percentage increase.

11. When is a firm most likely to reduce its demand for labour?
A. When the firm’s profitability increases
B. When the productivity of labour decreases
C. When the demand for the final good increases
D. When the price of labour decreases

12. What distinguishes a multinational company from other types of company?

A. It exports its products.
B. It imports its raw materials.
C. It produces outside its country of origin.
D. It promotes its products in trade fairs abroad.

13. What may exist in perfect competition but not in monopoly?

A. Many sellers
B. Barriers to entry
C. Economies of scale
D. Product differentiation

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14. The diagram shows the cost and revenue curves of a firm which starts to make a profit
only after producing 100 units of output.
1

2
costs and
revenue 500
$

0
100
output
What are the correct labels for line 1 and line 2?
Line 1 Line 2
A Total revenue Total cost
B Average cost Average revenue
C Variable cost Total revenue
D Total cost Total revenue

15. A large tyre manufacturer expands by taking over a rubber plantation. Of what is this an
example?
A. Diversifying integration
B. Horizontal integration
C. Forward vertical integration
D. Backward vertical integration

16. What describes a regressive tax?

A. It takes a higher proportion from high incomes.
B. It is paid by a higher proportion of high income earners.
C. It takes a higher proportion from low incomes
D. It is paid by a higher proportion of low income earners.

17. In 2016 the Egyptian Government increased the top rate of income tax. What is likely to
have been the main aim of this policy measure?
A. A relocation of resources from producing necessities to producing luxury products
B. A redistribution of income from the rich to the poor
C. A reduction in the deficit on the current account of the balance of payments
D. A reduction in the level of cost-push inflation

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18. The Indian government uses direct and indirect taxation. Which is a direct tax?
A. Corporate (profits) tax
B. Customs duty
C. Goods and services tax
D. Petrol tax

19. What, when increased, will help a government to reduce the rate of inflation?
A. Budget deficit
B. Pensions
C. Consumer spending
D. Income tax

20. What is most likely to decrease when employment increases?

A. Economic growth
B. Government welfare payments
C. The price level
D. The standard of living

21. Why is the Human Development Index (HDI) often considered to be better than Gross
Domestic Product (GDP) per head as a measure of living standards?
A. GDP per head excludes economic growth
B. GDP per head ignores population growth
C. HDI includes more than the production of goods and services
D. HDI is calculated by the national government

22. An economy is predicted to grow at a rate of 3% during the next year. What is most
likely to cause this growth?
A. An increase in expenditure
B. An increase in interest rates
C. An increase in sales (goods and services) tax
D. An increase in the government’s budget surplus

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23. The table gives information about three economic indicators in four countries.
Inflation % Interest rates % Unemployment %
Country W 1.4 3.4 10.2
Country X 3.7 8.7 12.3
Country Y 3.6 7.3 14.2
Country Z 2.1 6.0 7.7

What may be concluded from this information?

A. Countries with higher interest rates have lower unemployment.
B. Countries with higher inflation have higher interest rates.
C. The country with the lowest inflation had the highest unemployment.
D. The country with the lowest unemployment had the lowest inflation.

24. Why might the emigration of workers help the economy of a developing country?
A. The dependency ratio is likely to improve.
B. The least healthy workers are likely to be the last ones to leave.
C. The more skilled workers are likely to be the ones to leave.
D. The inflow of transfers of money is likely to increase.

25. Each year, extra cleaning staffs were employed by a hotel on a temporary basis during the
busy holiday period. They were not employed when the hotel was not busy. What type of
the unemployment occurred when the hotel was not busy?
A. Cyclical
B. Frictional
C. Seasonal
D. Technological

26. In 2016, Nigeria had a birth rate of 36 and an infant mortality rate of 94. What can be
concluded from this information?
A. Nigeria experienced a natural decrease in population.
B. Nigeria’s population increased.
C. 36 children were born per hundred of the population.
D. 94 babies died before their first birthday out of every thousand babies born.

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 27. In many developing economies there is a high rate of population growth. What is caused
of this?
A. Jobseekers migrate from rural to urban centres.
B. Poor people have many children to provide labour on family farms.
C. There is increased resistance to life saving drugs.
D. There is not enough clean water

28. What is likely to cause a rise in country’s foreign exchange rate?

A. A fall in its imports of goods and services
B. A fall in its exports of goods and services
C. A fall in its inflow of income
D. A rise in its outflow of transfers

29. Who is most likely to benefit if India bans all steel imports?
A. Buyers of steel in India
B. Foreign steel producers
C. Indian firms buying steel
D. Indian firms selling steel at home

30. What is certain to encourage a higher level of international trade?

A. Conservation of resources and unstable exchange rates
B. Exploitation of resources and wider use of quotas
C. More specialisation and falling transport costs
D. Increased support for home industries and increased tariffs

Prepared by Ong Sue Fynn Checked by: Ms Cheow Phaik Gim