VYASA PURNIMA TERM

ECONOMICS – SHAMIKA JI
TEST 1
NAME: _____________________________________________ GRADE: ______________

1.
2. In economics, the excess of human wants over existing (d) there is usually a more equitable distribution of wealth
resources is known as
(a) greed (c) opportunity cost 9. Production can be defined as the
(b) scarcity (d) economic decline (a) interaction between buyers and sellers
(b) transformation of inputs into outputs
3. An ‘economy’ is BEST described as (c) pricing of resources according to demand
(a) a system of production, distribution and consumption (d) economic relationship between output and input
(b) a system where suppliers produce all the goods and services
needed by consumers 10. Which of the following items is NOT an example of a primary
(c) the utilization of resources by manufacturers to produce product?
goods and maximize profits (a) Gold (c) Furniture
(d) a system whereby all the goods and services used by citizens (b) Banana (d) Crude oil
of a country are provided by the government
11. Which of the following pairs of activities in a country falls
Item 3 refers to the following diagram which illustrates the under the tertiary sector?
production possibility frontier for an economy that is capable of (a) Banking and tourism
producing bauxite and sugar in different combinations. (b) Tourism and agriculture
(c) Banking and construction
(d) Manufacturing and fishing

12. The economic system where major economic decisions are made
by private individuals and businesses is known as a
(a) free market economy (c) controlled economy
(b) subsistence economy (d) planned economy

13. A normal supply curve for farm produce will slope upwards if
farmers
4. Point X on the diagram above represents (a) pass on increased costs to customers
(a) economic growth (b) are willing to produce more as price increases
(b) unemployed resources (c) increase their profit margins as price increases
(c) an efficient combination (d) are willing to increase supply as demand increases
(d) an unattainable combination
14. Which of the following items is a primary product?
5. An outward shift in the production possibility curve can be (a) Truck (c) Bauxite
caused by an (b) Bread (d) Clothing
(a) increase in wages
(b) increase in imports 15. Which of the following is a reward to a factor of production?
(c) improvement in technology (a) Taxes paid to government
(d) improvement in the standard of living (b) annual review of employee performance
(c) Profits declared by a company in its annual report
6. Economics is classified as a (d) The managerial skills of the managers of a business
(a) social science (c) physical science
(b) natural science (d) business science 16. “Resources both human and physical, are required to produce
goods.”
7. Which of the following is LEAST likely to be among a
government’s potential economic decisions regarding The statement above MOST accurately describes
businesses? (a) productivity (c) factors of production
(a) Increasing retirement benefits (b) entrepreneurship (d) factors of productivity
(b) Passing minimum wage legislation
(c) Regulating the emission of toxic waste 17. Economic choices are made because
(d) Identifying areas where businesses should be located (a) people’s needs exceed their wants
(b) people may not have money to conduct business
8. An advantage of a planned economic system is that (c) resources are unlimited and people’s wants are limited
(a) consumers have a wider variety of goods (d) resources are scarce while people’s wants are unlimited
(b) workers are more motivated and diligent
(c) firms have a greater incentive to be efficient

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Item 17 refers to the following diagram which shows the price of an (A) A decline in social welfare
item and the quantity demanded and supplied before and after the (B) An increase in poverty through the country
item is subsidized. S is the supply curve before a subsidy is given. (C) An increase in the level of unemployment among skilled and
unskilled labour
(D) An adequate amount of goods and services for consumers

24. The organization responsible for the regulation and control of

the financial sector is the
(A) Treasury (c) Board of Currency Control
(B) Central Bank (d) Institute of Monetary Affairs

18. As a result of the granting of the subsidy, it is expected that 25. The term ‘money supply’ refers to the
(A) Supply will increase (c) Demand will decrease (A) The total stock of money in an economy at any moment
(B) Supply will decrease (d) Price will increase (B) Amount of money traded in the foreign exchange market
(C) Total assets base of the institutions in the financial sector
Item 18 refers to the following diagram. (D) Total amount of gold, silver and other precious metals in the
reserve
26. A pure public good can be described as
(A) Excludable (c) Diminishable
(B) Zero-priced (d) Complimentary

27. Which of the following is usually a consequence of widespread

retrenchment in a country?
(A) Reduction in crime rate (c) A fall in standard of living
19. The diagram best describes the
(B) Increase standard of living (d) Equal income distribution
(A) Functions of the central bank
(B) Flow of deposit into the financial sector
28. Shinelle spends 0.02% of her monthly income on a particular
(C) Role the financial sector performs for customers
good. Her demand for this good, in terms of price, can be
(D) Flow of funds into the household sector
described as
Item 19 refers to the following market supply curves. (A) Elastic (c) Perfectly elastic
(B) Inelastic (d) Perfectly inelastic

29. Which of the following is TRUE about financial institutions?

(A) They provide insurance protection to speculators
(B) They are free from government interference
(C) They place emphasis on consumer education and national
development
20. Which of the following curves shows that price elasticity of (D) They channel funds from those who have saved to those
supply is unitary? who wish to borrow
(A) I (B) II (C) III (D) IV 30. Which of the following is NOT an example of a factor of
Item 20 refers to the following diagram which shows the price and production in a commercial bank?
quantity demanded for Good X. (A) The building (c) Shareholders of the bank
(B) The bank’s vault (d) Students’ special savings accounts

Item 30 refers to the following diagram which illustrates the

production possibility frontier for an economy in Year 1 (AA)
and Year 2 (BB).

21. The movement of the demand curve of Good X from D to D

results from an increase in
(A) Consumer income (c) The price of a complement
(B) The price of good X (d) Cost of producing X
31. From the diagram below, it can be deduced that
22. Governments often put measures in place to control monopolies (A) point X was unattainable in Year 2
because monopolies (B) point X was efficient in Year 1 and Year 2
(A) Set fair prices (C) Earn normal profits (C) There was decreasing opportunity cost in Year 1 and Year 2
(B) Restrict supply (D) Promote consumer sovereignty
(D) there was economic growth between Year 1 and Year 2
23. Which of the following is LEAST likely to occur when there is
market failure?
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