Madhrasathul Ahmadhiyya, Male FIRST TERM TEST 2002

Grade 10 ECONOMICS Paper - 1 (Multiple choice) Duration: 1 hour Information and instructions:
Write your name, index number, class and register number on answer sheet. Answer ALL questions. Read the instructions carefully. Use black or blue ballpoint pen to answer. B. is supplied by the private sector. D. is produced under conditions of increasing efficiency

1. What is an economic good? One which: A. is sold at a profit. C . has an opportunity cost.

2. What is the fundamental economic problem, which faces all societies? A. the redistribution of income. B. the reduction of inflation. C. the elimination of pollution. D. what, how and for whom to produce 3. Which of the following is a capital good? A. a fishing area. C. a motorcar used for leisure purposes. B. a bank loan to a newly established company. D. a photocopying machine used in an accountancy firm.

4. A rise in price results in an extension in demand. This is true of which types of goods? A. inferior B. giffen. C. superior D. scarce. 5. Which of the following would cause the demand curve for a good to shift to the left? A. a rise in the price of good. B. an increase in the supply of the good. C. a decrease in the price of a substitute good. D. a decrease in the tax imposed by the government. 6. What is meant by liquidity preference? A. the desire to hold wealth in the form of money. B. the demand for loans by firms wishing to expand. C. the wish to earn a high return on financial assets. D. the preference of financial institutions to hold government securities. 7. Which of the following would increase a trade unions ability to gain a wage rise for its members? A. a high level of national unemployment. B. inelastic demand d for the product the workers produce. C. a low level of membership among workers. D. a fall in the profit level earned by the employer. 8. Which of the following would be likely to raise government expenditure? A. an ageing population B. a fall in the rate of interest. C. a rise in employment D. a decrease in the school leaving age.

Madhrasathul Ahmadhiyya

First Term Test 2002

Economics grade 10

paper 1

Page 1 of 6

9. Wage rate

W1 W

Number of hours worked

What could explain the change in the supply curve from W to W1? the firm substituting capital for labour. A. the firm substituting capital for labour. B. the worker substituting leisure for work. C. consumers switching to another firms products. D. the government imposing on indirect tax on the good the worker produces. 10. A vertical merger is one, which occurs between two firms. A. marketing different types of products. B. producing in the same geographical area. C. producing at the same stage of production of the same product. D. different stages of production of the same product. 11. Which of the following may be found under conditions of perfect competition? A. advertising B. investment in new plants. C. differentiated products. D. different prices charged to different groups of consumers 12. Which of the following is a factor of production? A. the payment of interest on a bank loan. B. the profit declared by a company in its annual report. C. the skill of the managers of a business. D. the taxes paid to the government. 13. What is not a function of a trade union? A. collective bargaining. B. fixing the prices of a product. C. maintaining job security. D. negotiating conditions of services. 14. What is a benefit of tariffs? A. increased choice. C. more competition. B. increased government revenue. D. more trade.

15. What is a function of a commercial bank? A. acting as a government banker. B. fixing the exchange rate. C. issuing bank notes. D. making loans.

Madhrasathul Ahmadhiyya

First Term Test 2002

Economics grade 10

paper 1

Page 2 of 6

16. The graph shows the demand and supply curves for compact discs.

S2

D
Price ($)

S1

S2 S1
Quantity (units)

What could account for the changes in the supply curve from S1S1 to S2S2? A. cassette tape recorders become cheaper. B. compact disc players become cheaper. C. the production of compact discs becomes cheaper. D. the tax on compact discs is increased. 17. The table shows a firms total costs. Quantity produced (units) 0 1 2 3 What is the average variable cost of 3 units? A. $ 12 B. $ 15 C. $36 D. $ 45 18. International companies have made substantial investments in computer production in India. India is now a major centre of the world computer industry. Profit margins are high since labour costs are a tenth of those in the USA. What does this suggest is the reason for companies locating in India rather than in the USA? A. access to cheap land B. availability of capital investment C. availability of investment funds D. competitive wage rate 19. What would shift the market demand curve for digital to the right? A. an improvement in manufacturing processes reducing costs B. an increase in tax levied on digital televisions C. a successful advertising campaign by suppliers D. increased unemployment leading to lower incomes Total costs ($) 9 20 34 45

Madhrasathul Ahmadhiyya

First Term Test 2002

Economics grade 10

paper 1

Page 3 of 6

20. The diagram shows the market for Tuna fish in the Maldives with equilibrium point X. A new type of fishing boat increases production, which reduces costs. S3 S1 Which point represents the new equilibrium? S
D
2

Price

X B

D1

D2

quantity 21. The table shows the retail price index (RPI) and a persons money wage in two years. Year RPI Money wage ($) Year 1 100 200 Year 2 200 400 What happened to the real wage between year 1 and year 2? A. it fell by 50% B. it remained constant C. it rose by 50% D. it doubled 22. What is happening when a firm is experiencing diseconomies of scale? A. it has rising long-run average costs B. it is operating in the short run C. its fixed costs are less than variable costs D. its output is increasing faster than its inputs 23. The table shows the costs of a firm. Output Variable costs ($) 0 0 1 10 2 16 What is the average fixed cost when two units are produced? A. $6 B. $8 C. $20 D. $28 Total costs ($) 40 50 56

24. Which of the following is an export of Maldives? A. a loan to Maldives by the International Monetary Fund B. Maldivian holidays taken by German tourists C. dividends paid by a company in Maldives to its American shareholders D. sales of Japanese cars in Maldives 25. The diagram shows the annual rate of inflation in the UK between 1990 and 1993 10 8 rate of inflation % 6 Which statement is true of the period 1990 and 1993? A. the cost of living fell B. the price level rose C. the retail price index fell D. the value of money rose
Madhrasathul Ahmadhiyya First Term Test 2002

4 2 0
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1991 year 1993

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1993

Economics grade 10

26. Which situation would produce an ageing population? A. a falling births rate and a falling death rate. B. a rising birth rate and a rising death rate. C. a rising fertility rate and a falling death rate. D. a rising marriage rate and a rising death rate. 27. A Maldivian student leaves school and decides to spend the next two years improving her qualifications by attending a commercial school of higher learning. What is the opportunity cost to the student of taking this decision? A. The higher salary she will earn as a result of her improved qualification. B. The money she would have earned if she had been in work for the two years. C. the increase in job opportunities she will have as a result of her extra qualifications. D. the cost of the course fees at the college. 28. A Singapore bus company offers three routes, x, y and z. It is considering reducing its fares. The table shows the companys estimates of price elasticity of demand for a given fare reduction. ROUTE PRICE ELASTICITY OF DEMAND X Elastic Y Inelastic Z Totally inelastic To maximize revenue, on which routes should the fares reduced? A. X only B. Y only C. X and Y only D. Y and Z only 29. The diagrams show different conditions of demand and supply for an agricultural good.
D S D S S S D S S D D S D S

A C D B Which diagram shows the condition of demand and supply where the market price would remain unchanged despite a fall in the income of consumers? 30. Which one of the following is likely to result from the introduction of a government guaranteed price set above the equilibrium market price? A. a fall in demand B. an increase in supply C. an excess supply D. a shortage of supply 31. Two independent companies, which make soft drinks, decided to merge. What term is used to describe this situation? A. diversification B. lateral integration C. horizontal integration D. vertical integration 32. A coal miner being made redundant because of reduction in the demand of coal would be an example of
Madhrasathul Ahmadhiyya First Term Test 2002 Economics grade 10 paper 1 Page 5 of 6

A. structural unemployment C. regional unemployment

B. seasonal unemployment D. technological unemployment.

33. What does the phrase terms of trade describe? A. a measure of trade restrictions with other countries B. the level of foreign exchange reserves C. the relationship between the price of imports and the price of exports D. the value of one currency in terms of other currency 34. The figures show the balance of payments on current account for a country in one year $m visible exports 50 visible imports 65 invisible exports 30 invisible imports 20 What is the balance of trade? A - $ 15m B. +$ 15m C. +$ 65m D. -$ 5m 35. Which of the items below is an invisible export of the UK? A. sales of UK food in Japan. B. dividends paid by a company in the UK to its American shareholders. C. the purchase of UK holidays by American tourists. D. a purchase of UK Treasury bills by an American bank. 36. Tea, which is grown in Srilanka, is exported to Singapore, where it is blended, packed and profitably exported to the Philippines. This transaction will have a favourable effect on the balance of payments of A. Singapore and the Philippines B. Srilanka only C. the Philippines only D. Srilanka and Singapore 37. The following items appear on a balance sheet for a commercial bank. Which of them is usually the least liquid asset? A. treasury bill B. cash C. bills discounted D. advances 38. Which one of the items listed below of the balance of payments account will record directly, a loan from the International Monetary Fund to a country? A. balancing item B. interest, profits and dividends C. official financing D. government services. 39. The optimum output of a firm is that at which: A. profits are maximized. C. average costs are at a minimum. B. total cost is minimized. D. average cost is greatest.

40. The major oil producers sometimes try to raise the price of oil. How could this be shown on a demand and supply diagram? A. a movement along the supply curve to the right. B. a shift in the supply curve to the right. C. a shift in the demand curve to the left. D. a shift in the supply curve to the left.

Madhrasathul Ahmadhiyya

First Term Test 2002

Economics grade 10

paper 1

Page 6 of 6