Month: November 2020

A representative basket of goods costs $2500 in the United States. The same basket of goods costs £2000 in the UK.

What can be deduced from this?

Select ONE answer:

1. The £ sterling is 25% over-valued.
2. The £ sterling is 20% under-valued.
3. The purchasing power parity exchange rate of the £ sterling is $0.80 to the £.
4. The purchasing power parity exchange rate of the £ sterling is $1.25 to the £.

Show your workings to arrive at your answer, and explain and justify your reasons:……………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………

This multiple choice question is suitable for Economics KS4 and KS5 classes.

The answer is 4

1. Not correct
2. Not correct
3. Not correct
4. Correct

This work is licensed under a Creative Commons Attribution 4.0 International License.

In an economy real national output increases more rapidly than the increase in employment.

What could account for this?

Select ONE answer:

1. a decrease in the general price level
2. an improvement in the country’s terms of trade
3. an increase in the size of the labour force
4. an increase in labour productivity

Show your workings to arrive at your answer, and explain and justify your reasons:……………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………

This multiple choice question is suitable for Economics KS4 and KS5 classes.

The answer is 4

1. Not correct
2. Not correct
3. Not correct
4. Correct

This work is licensed under a Creative Commons Attribution 4.0 International License.

What is likely to improve the visible trade balance of South Africa but to worsen its invisible balance?

Select ONE answer:

1. A South African company sets up a subsidiary company in England.
2. A UK company builds a factory in South Africa to serve the African market.
3. The South African government removes import controls on semi-manufactured goods.
4. The South African government increases interest rates with a view to strengthening the exchange rate of the South African Rand.

Show your workings to arrive at your answer, and explain and justify your reasons:……………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………

This multiple choice question is suitable for Economics KS4 and KS5 classes.

The answer is 2

1. Not correct
2. Correct
3. Not correct
4. Not correct

This work is licensed under a Creative Commons Attribution 4.0 International License.

A developing country imposes a tariff to protect a new domestic industry.

Which argument would provide an acceptable economic case for this?

Select ONE answer:

1. It is believed that the industry will always need government assistance to compete internationally.
2. It is believed that the industry will compete effectively when it achieves economies of scale.
3. The country wishes to reduce the rate of inflation.
4. The country wishes to lower its terms of trade.

Show your workings to arrive at your answer, and explain and justify your reasons:……………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………

This multiple choice question is suitable for Economics KS4 and KS5 classes.

The answer is 2

1. Not correct
2. Correct
3. Not correct
4. Not correct

This work is licensed under a Creative Commons Attribution 4.0 International License.

Why might the establishment of a customs union lower economic welfare?

Select ONE answer:

1. The exchange rate is realigned.
2. Labour mobility is increased.
3. Trade is created.
4. Trade is diverted.

Show your workings to arrive at your answer, and explain and justify your reasons:……………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………

This multiple choice question is suitable for Economics KS4 and KS5 classes.

The answer is 4

1. Not correct
2. Not correct
3. Not correct
4. Correct

This work is licensed under a Creative Commons Attribution 4.0 International License.