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FORMAL ASSESSMENT 1
2016 - 2017
SUBJECT: Economics
GRADE: X (IGCSE)

MARKS: 50

DATE: 5/Aug/2017

DURATION: 1 hr

NAME : _____________________________________________________________________
Candidates answer on the Question Paper.
No Additional Materials are required.
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READ THESE INSTRUCTIONS FIRST

Write your Candidate Number and Name on all the work you hand in.
Write in dark blue or black pen.
You may use a soft pencil for any diagrams, graphs or rough working.
Do not use staples, paper clips, highlighters, glue or correction fluid.
Answer all questions
The number of marks is given in brackets [] at the end of each question or part question.

For Examiners Use

Multiple Choice Questions

[1x15= 15]

1. What type of product is education?

a) An essential good
b) An inferior good
c) A merit good
d) A public good
2. In what type of economy , are most workers employed by the government?
a) Free Enterprise
b) Market
c) Mixed
d) Planned
3. Which of the following is a macroeconomic aim of the government?
a) A fall in the national output
b) High unemployment
c) Imports exceeding exports
d) Price stability
4. Which of the following could increase a countrys productive potential?
a) An improvement in the education
b) A reduction in the retirement age
c) Retention of worn out machinery by firms
d) Migration of workers to other cities
5. A country has a population of 120m and a labour force of 50m. 6m of its labour
force are unemployed . What is the unemployment rate ?
a) 3.53%
b) 5%
c) 10.71 %
d) 12 %

6. When does the budget deficit occur ?

a) When imports exceeds exports
b) When govt expenditure is greater than the govt. revenue
c) When interest rates are falling
d) When the money supply is raising
7. A government is keen to reduce unemployment . Which measures would not increase public expenditure?
a) A cut in income tax
b) A reduction in the retirement age
c) A rise in the school leaving age
d) A subsidy to firms to encourage their expansion
8. What is most likely to conflict with a governments aim of full employment?
a) Lower income tax
b) Lower spending on imports
c) Higher government expenditure
d) Higher interest rates
9. What is most likely to happen due to economic growth?
a) A fall in the standard of living
b) A fall in tax revenue
c) A rise in employment
d) A rise in government expenditure on unemployment benefits
10.Which of the following may reduce the effectiveness of a government policy
measure ?
a) Accurate information
b) An absence of economic problems in other economies
c) An absence of policy conflicts
d) A time lag

11.Which of the following is the direct tax ?

a) Excise duty on petrol
b) Inheritance tax
c) Sales tax
d) Tariff
12.What is meant by regressive tax?
a) A tax that falls in line with inflation
b) a tax that reduces government revenue over time
c) A tax that places a greater burden on the poor than the rich
d) A tax that is replaced by one which generates more income

13.What is the likely advantage of economic growth ?

a) Government tax revenue falls
b) The standard of living falls
c) The level of employment rises
d) The level of pollution increases
14.In 2006 , output of Indonesia rose by 4.9%. Which of the government objectives
does this meet?
a) Balance of payments stability
b) Economic growth
c) Full employment
d) Price stability
15.Which government policy measure is most likely to benefit people on a high income ?
a) Increase in housing benefit
b) Increasing unemployment benefit
c) Reducing government expenditure on higher education
d) Reducing income tax

Structured Questions :
Q1
[20 marks]
a) Distinguish with examples between :
Direct and indirect taxes
(3)
Progressive and Regressive Tax
(3)
b) Explain why government imposes tax ?
(6)
c) Discuss what might happen to economy if a government increases income tax
rates
(8)

Q2

[15 marks]

China has removed price controls on most of the consumer goods . Their prices
are now determined by the market . The prices of a number of services , however ,
remain under the control of the National Development Reform Commission - the
chief economic planning body of the country . These include , water, oil, power, cable TV fees and parking fees for cars. The price controls are designed to protect
people against monopolies and to keep inflation low. There is some evidence ,
however , that price controls are distorting the market and damaging the economy .
Petrol stations in Southern China , for instance , run out of oil quite regularly .
a) How are prices determined by the market?

(4)

b) How price controls distort the market ?

(3)

c) Does the extract suggest that the Chinese National Development Reform
Commission sets maximum and minimum prices on the products mentioned?
Explain your answer.
(8)