BoP
What would not be included in the current account of the balance of payments?
A dividends earned from a firm in another country
B imports of TVs from another country
C purchase of a house in another country
D rents paid to owners of land in another country
C purchase of a house in another country
Which factor in the world’s low-income countries limits their economic development?
A balance of payments surpluses
B high saving ratios
C large inflows of foreign investment
D rapid population growth
D rapid population growth
An economy is experiencing rising prices. Which government policy will help reduce consumer expenditure?
A introducing compulsory saving for income earners
B investing more in building infrastructure
C issuing more banknotes and coins
D reducing indirect taxes
A introducing compulsory saving for income earners
Which government policy measure would cause an increase in a country’s supply of labour?
A increasing unemployment benefits
B lowering interest rates
C raising income tax
D raising the age of retirement
D raising the age of retirement
What causes the birth rate to fall in a country?
A Fewer women work.
B Infant mortality rates rise.
C Medical supplies and healthcare improve.
D The optimum population increases.
C Medical supplies and healthcare improve
country experienced a deficit on each of its trade in goods, primary income and secondary income. Overall, it had a surplus on the current account of its balance of payments. What must this mean?
A It had a floating exchange rate.
B It had a surplus on its trade in services.
C It had a surplus on the government’s budget.
D It was a low-income country.
B It had a surplus on its trade in services.
One of the indicators of living standards is the Human Development Index (HDI). What is not taken into consideration when calculating the HDI?
A education
B income per head
C level of savings
D life expectancy
C level of savings
What is included in the construction of the Consumer Prices Index (CPI)?
A a base year
B incomes
C price elasticity of demand
D quantity supplied
A a base year
A government decreased the tax on all goods produced in its country. What is the most likely consequence of this?
A a decrease in exports
B an increase in imports
C an increase in production
D a worsening of the balance of trade in goods
C an increase in production
How might a multinational company (MNC) directly benefit a host country?
A It creates local employment.
B It depletes local natural resources.
C It imports raw materials.
D It receives tax concessions.
A It creates local employment.
A country has a current account deficit on its balance of payments. Which measure is most likely to reduce the deficit?
A a cut in interest rates
B a cut in the rate of income tax
C a depreciation of the exchange rate
D an increase in government expenditure
C a depreciation of the exchange rate
The United Nations (UN) predicts that the population in low-income countries will increase. What is likely to be a cause of this?
A Climate change will lead to lower food output and starvation.
B Improved education for girls will lead to a small decline in birth rates.
C Increasing numbers of people will migrate to higher income countries.
D Modern medicine and sanitation will lead to a rapid decline in death rates.
D Modern medicine and sanitation will lead to a rapid decline in death rates
Deflation is a sustained fall in the general price level. What might cause deflation?
A insufficient private capital investment
B loss of confidence in the government’s economic policies
C rising oil prices
D shortages of skilled labour in relation to demand
B loss of confidence in the government’s economic policies
Tax is charged at 1.45% on all wages earned to pay for basic medical provision. How would this tax be described?
A direct and proportional
B direct and regressive
C indirect and proportional
D indirect and regressive
A direct and proportiona
Which method of trade protection would enable domestic firms to lower their prices and undercut the price of imported goods?
A a subsidy B a tariff C an embargo D an import quota
A a subsidy
In 2015, China was the world’s largest exporter of manufactured goods and a major importer of oil and minerals. China devalued the yuan (renminbi) by 2%. According to economic theory, what would have been a consequence of this devaluation?
A China paid less in foreign currencies for imports.
B China reduced its demand for oil and minerals.
C China’s exports became less competitive.
D China’s trading partners improved their balance of trade with China.
B China reduced its demand for oil and minerals.
Which statement about poverty is correct?
A Absolute poverty occurs when income falls below what is needed for survival.
B An advanced economy is likely to have a higher level of absolute poverty than relative poverty.
C It is impossible for relative poverty to rise as absolute poverty falls.
D Relative poverty is measured by the same goods and services in all countries.
A Absolute poverty occurs when income falls below what is needed for survival.
A country has rapidly increasing inflation. What is an example of a monetary policy measure to reduce this problem?
A increasing income tax
B increasing interest rates
C introducing maximum prices for some products
D subsidising key industries
B increasing interest rates
What is included in a government’s budget?
A the balance of government revenue and government expenditure
B the balance of export revenue and import expenditure
C the difference between investment and saving
D the difference between social benefits and social costs of production
A the balance of government revenue and government expenditure
What is necessarily involved in international free trade?
A the absence of transport costs
B the gift of foreign aid from charities
C the supply of zero interest rate government loans
D the unrestricted exchange of goods and services
D the unrestricted exchange of goods and services
n recent years, the US has experienced a deficit on its overall current account of the balance of payments. What could have led to an increase in the size of the deficit?
A increased competitiveness of goods made in the US
B increased earnings by US investors in foreign companies
C increased numbers of overseas visitors to the US
D increased spending on US military bases abroad
D increased spending on US military bases abroad
Which characteristic do developed and developing economies have in common?
A participation in international trade
B high birth rates and high death rates
C rapid economic growth
D stable financial conditions and institutions
A participation in international trade
In trying to achieve one of its aims a government may make it difficult to achieve another aim. What is an example of this conflict?
A Achieving a more even distribution of income may prevent a rise in the average standard of living.
B Achieving an increase in economic growth may prevent full employment.
C Achieving full employment may prevent stable prices.
D Achieving stable prices may prevent a current account surplus on the balance of payments
C Achieving full employment may prevent stable prices.
Which government policy is most likely to increase the volume of exports?
A devaluation B embargoes C quotas D tariffs
A devaluation
A newspaper reported that a country’s economy had grown by 3% during the last year. What must have increased in that year?
A costs of production
B gross domestic product
C unemployment
D wage levels
B gross domestic product