CIE A LEVEL ECONOMICS AS LEVEL MCQ’S

1. What is the central purpose of economic activity?

a) To accumulate wealth

b) To satisfy needs and wants

c) To maximize profits

d) To promote technological advancement

2. Which of the following is NOT a factor of production?

a) A tractor used on a farm

b) The effort of a teacher in a classroom

c) Money used to start a business

d) Land on which a factory is built

3. A shift in the supply curve of a good is caused by a change in:

a) The price of the good

b) Consumer income

c) The cost of production

d) Consumer tastes

4. If the price of a good increases and the quantity demanded decreases, this illustrates:

a) The law of supply

b) The law of demand

c) An increase in demand

d) A decrease in supply

5. If the demand for a good is price inelastic, then:

a) A price increase will lead to a proportionally larger decrease in quantity demanded.

b) A price increase will lead to a proportionally smaller decrease in quantity demanded.

c) A price increase will have no effect on quantity demanded.

d) A price increase will lead to an increase in total revenue.

6. Which of the following is NOT an example of a market failure?

a) A monopoly

b) Pollution

c) Public goods
d) Perfect competition

7. A minimum price set above the equilibrium price will lead to:

a) A surplus

b) A shortage

c) An increase in demand

d) A decrease in supply

8. Which of the following is a reason for government intervention in markets?

a) To promote competition

b) To redistribute income

c) To provide public goods

d) All of the above

9. Which of the following is a function of commercial banks?

a) Setting interest rates

b) Printing money

c) Providing loans

d) Regulating the stock market

10. The multiplier effect refers to:

a) The increase in aggregate demand caused by an initial injection of spending.

b) The decrease in aggregate demand caused by an initial withdrawal of spending.

c) The increase in aggregate supply caused by a decrease in costs of production.

d) The decrease in aggregate supply caused by an increase in costs of production.

11. Which of the following is NOT a cause of inflation?

a) Demand-pull inflation

b) Cost-push inflation

c) Deflation

d) Imported inflation

12. Which of the following is a potential consequence of high inflation?

a) Increased purchasing power

b) Reduced uncertainty

c) Redistribution of income

d) Increased economic growth

a) Increasing government spending

b) Reducing interest rates

c) Improving education and training

d) Increasing taxes

14. Which of the following is a characteristic of a perfectly competitive firm?

a) It is a price maker.

b) It faces a downward-sloping demand curve.

c) It earns supernormal profits in the long run.

d) It produces where marginal cost equals marginal revenue.

15. Which of the following is a potential barrier to entry in a market?

a) Perfect information

b) Low start-up costs

c) Brand loyalty

d) Homogeneous products

16. Cyclical unemployment is caused by:

a) A mismatch of skills

b) Seasonal variations in demand

c) A downturn in the business cycle

d) Workers moving between jobs

17. Which of the following is a component of the current account?

a) Foreign direct investment

b) Portfolio investment

c) Income from abroad

d) Changes in foreign currency reserves

18. A floating exchange rate system is characterized by:

a) Exchange rates fixed by the government.

b) Exchange rates determined by market forces.

c) No government intervention in the foreign exchange market.

d) Stable exchange rates.

19. Which of the following is a potential benefit of a fixed exchange rate system?
a) Increased certainty for businesses

b) Automatic correction of trade imbalances

c) Greater flexibility for policymakers

d) Reduced speculation

20. Which of the following is a reason for protectionism?

a) To protect infant industries

b) To prevent dumping

c) To protect domestic jobs

d) All of the above

21. Which of the following is a potential consequence of a trade deficit?

a) Increased domestic employment

b) Increased foreign reserves

c) Depreciation of the domestic currency

d) Reduced inflation

22. Which of the following is a type of trade barrier?

a) Tariffs

b) Quotas

c) Subsidies

d) All of the above

23. Which of the following is a measure of poverty?

a) The Gini coefficient

b) The Human Development Index

c) The poverty line

d) The unemployment rate

24. Which of the following is a cause of poverty?

a) Low levels of education

b) Lack of access to healthcare

c) Unemployment

d) All of the above

25. Which of the following is a characteristic of a developing economy?

a) High levels of income inequality

c) High dependence on agriculture

d) All of the above

26. Which of the following is a potential benefit of economic growth?

a) Increased pollution

b) Increased income inequality

c) Increased living standards

d) Increased resource depletion

27. Which of the following is a potential drawback of globalization?

a) Increased trade

b) Increased cultural exchange

c) Loss of cultural identity

d) Increased access to technology

28. Which of the following is a potential benefit of foreign aid?

a) Increased dependency

b) Reduced poverty

c) Increased corruption

d) Reduced economic growth

29. Which of the following is a potential drawback of privatization?

a) Increased efficiency

b) Reduced government control

c) Increased prices for consumers

d) Increased competition

30. Which of the following is a goal of sustainable development?

a) To maximize economic growth

b) To protect the environment

c) To promote social equity

d) All of the above