Economics Multiple Choice Question – 30 September 2017

The home of multiple choice questions for all your KS3, KS4 and KS5 Business Studies, Economics and Accounting requirements.

The chart below shows the annual percentage change in the UK Consumer Prices Index (CPI) – January 2008 – October 2013.

Chart 01

Which ONE of the following can be inferred from the chart above?

Select ONE answer:

  1. There was deflation in the UK economy between September 2008 and September 2009
  2. The CPI inflation rate was higher in September 2012 than in September 2009
  3. From January 2011 to January 2012, the average price level in the UK fell
  4. From May 2010 to September 2010, the cost of living in the UK fell
  5. From September 2011 to September 2012, the cost of living rose in the UK

Explain TWO limitations of using the CPI to measure the rate of inflation.
……………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………

This is multiple choice question is suitable for Economics KS5 classes.

The answer is 2 – The CPI in September 2012 was 2%, whilst in September 2009 it was 1%

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Economics Multiple Choice Question – 29 September 2017

The home of multiple choice questions for all your KS3, KS4 and KS5 Business Studies, Economics and Accounting requirements.

Which ONE of the following is a likely cause of an increase in the value of an economy’s multiplier?

Select ONE answer:

  1. An increase in the marginal propensity to save
  2. An increase in the basic rate of income tax in the economy
  3. A decrease in the marginal propensity to import
  4. A decrease in investment in the economy
  5. An increase in the propensity to import

In 2011, the Bank of England estimated that the marginal propensity to consume for UK households was on average 0.4. Calculate the value of the multiplier for the UK in 2011. You are advised to show your workings:
……………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………

This is multiple choice question is suitable for Economics KS5 classes.

The answer is 3 – The value of the Multiplier depends upon if people spend a high % of any extra income, then there will be a big multiplier effect. However, if any extra money is withdrawn from the circular flow the multiplier effect will be very small. Where k = 1 / 1-mpc =  1 – mpw. Marginal Propensity to Consume (mpc) = a persons willingness to spend money, if a worker saved all his money there wouldn’t be an increase in GDP. Marginal Propensity to Withdraw (mpw) = when money is withdrawn from the circular flow – includes: Marginal Propensity to Tax + Marginal propensity to Import + Marginal Propensity to Save

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Economics Multiple Choice Question – 28 September 2017

The home of multiple choice questions for all your KS3, KS4 and KS5 Business Studies, Economics and Accounting requirements.

The table below shows UK annual real GDP values for 2011–2013.

Table 05

Which ONE of the following can be inferred from the table?

Select ONE answer:

  1. Real GDP was falling between 2012 and 2013
  2. The annual UK economic growth rate for 2012 was negative
  3. Nominal GDP was falling between 2012 and 2013
  4. The annual UK economic growth rate for 2012 was positive
  5. Real GDP was lower in 2014 than in 2012

Calculate the annual UK economic growth rate for 2013 from the table above. You are advised to show your workings:
……………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………

This is multiple choice question is suitable for Economics KS5 classes.

The answer is 4 – 2012 Real GP was £1,506 Billion and £1,502 Billion in 2011, an increase of 0.3%

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Economics Multiple Choice Question – 27 September 2017

The home of multiple choice questions for all your KS3, KS4 and KS5 Business Studies, Economics and Accounting requirements.

According to research, 57% of UK consumers would consider changing insurance providers in the next 12 months.

The underlying assumptions of rational decision making are that:

Select ONE answer:

  1. consumers aim to maximise utility and firms aim to minimise profits
  2. consumers aim to minimise utility and firms aim to maximise profits
  3. consumers aim to maximise utility and firms aim to maximise costs
  4. consumers aim to minimise utility and firms aim to minimise costs
  5. consumers aim to maximise utility and firms aim to maximise profits

Explain one possible reason why 43% of consumers in the UK would not consider changing insurance providers, even though they may be offered lower prices by other insurance providers:
……………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………

This is multiple choice question is suitable for Economics KS5 classes.

The answer is 5 – Typically we assume that when making decisions people aim to maximise their own welfare, and firms aim to maximise profits for its owners.

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Economics Multiple Choice Question – 26 September 2017

The home of multiple choice questions for all your KS3, KS4 and KS5 Business Studies, Economics and Accounting requirements.

In 2013, the UK had more off-shore wind turbines than all other countries in the world combined. The UK government announced plans to close five coal-burning power stations and to build five nuclear power stations to produce electricity. One nuclear power plant at Hinckley Point will take 10 years to be fully operational.

Which ONE of the following is the correct classification for these energy sources?

Select ONE answer:

   Wind Turbines         Coal

  1. Non-renewable        Renewable
  2. Non-renewable        Non-renewable
  3. Renewable                Non-renewable
  4. Renewable                Renewable
  5. Renewable                Nuclear

 

Explain the likely price elasticity of supply for energy generated by nuclear power plants:

……………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………

This is multiple choice question is suitable for Economics KS5 classes.

The answer is 3 – Wind Turbines are a renewable source of energy, whilst Coal is a non-renewable source of energy.

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Economics Multiple Choice Question – 25 September 2017

The home of multiple choice questions for all your KS3, KS4 and KS5 Business Studies, Economics and Accounting requirements.

Which ONE of the following is an example of market failure?

  1. The price of a good falling to clear the market when there is excess supply
  2. The over consumption of cigarettes owing to consumers’ lack of information
  3. A rise in unemployment caused by an increase in the minimum wage
  4. Consumers experiencing diminishing marginal utility
  5. Companies increase the price of petrol following in oil prices

The UK government allocated £39 billion to defence in 2012/2013. Explain why defence is a public good:
……………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………

This is multiple choice question is suitable for Economics KS5 classes.

The answer is 2 – In economics, a market failure is a situation in which the allocation of goods and services is not efficient. Smoking is a de-merit good. A demerit good is defined as a good which can have a negative impact on the consumer – but these damaging effects may be unknown or ignored by the consumer. Demerit goods also usually have negative externalities – where consumption causes a harmful effect to a third party.The classification of demerit goods is a normative judgment. In defining demerit goods we may assume that people are irrational and make poor choices – often consuming goods which are harmful, degrading or damaging in the long-term. This may be due to poor information or poor decision making. In other words, people may under-estimate the private costs and over-estimate the private benefits. Demerit goods have these two characteristics: a) Harmful, unhealthy to individual consumer & b) have negative externalities i.e. Costs imposed on third parties.

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Economics Multiple Choice Question – 24 September 2017

The home of multiple choice questions for all your KS3, KS4 and KS5 Business Studies, Economics and Accounting requirements.

The diagram shows a production possibility frontier (PPF) for an economy.

Diagram 01

The opportunity cost of a movement from point X to point Y is:

Select ONE answer:

  1. 10 units of consumer goods
  2. 20 units of capital goods
  3. 30 units of capital goods
  4. 80 units of capital goods
  5. 90 units of consumer goods

Define the term ‘production possibility frontier’:
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This is multiple choice question is suitable for Economics KS5 classes.

The answer is 3 – By moving from point X to point Y, and extra 10 units of consumer goods have been produced at an opportunity cost of 30 units of capital goods as at Z they can produce 80 capital goods but only 50 capital goods at Y.

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