NEC preparation 9

A firm produces 1000 units and has a total cost of $50 000. The variable cost per unit produced is $40.

What is the total fixed cost of the firm?

• $1000

• $4000

• $10000

• $40000

When is the budget described as balanced?

• when direct taxes and indirect taxes are equal

• when exports and imports are equal

• when government spending and government revenue are equal

• when the demand for money and the supply of money are equal

What is the main aim of supply-side policy?

• increasing economic growth by raising productivity

• increasing the balance of payments surplus by restricting free trade

• reducing the government’s budget deficit by increasing taxation

• reducing the money supply by increasing the rate of interest

A government has a contractionary fiscal policy to reduce inflation. What will the government increase?

• expenditure on infrastructure

• income tax rates

• personal tax allowances

• unemployment benefits

What would not be required in the construction of an index of consumer prices?

• the selection of a base year

• the selection of a representative range of items

• the calculation of average wage levels

• the weighting of each item in the index

In recent years some low-income countries have achieved higher rates of economic growth than high-income countries.

What is most likely to explain this accelerated economic growth?

• ease of transfer of modern technology to increase productivity

• falling agricultural prices

• higher ratios of labour to capital in manufacturing industries

• increased trade barriers by high-income countries

A perfectly inelastic supply curve represents

• a product supply that is extremely responsive to a price change.

• a product with a constant price, regardless of the quantity offered for sale.

• a product in abundant in supply.

• a fixed supply of a good.

 The area underneath a demand curve down to the equilibrium price is

• always less than the area under the supply curve.

• always greater than the area under the supply curve.

• consumer surplus.

• producer surplus.

Which of the following is the best example of a variable cost?

• Monthly payments for hired labor.

• Property tax payments.

• Monthly rent payments for a warehouse.

• Pension payments to retired workers.

What is an advantage to a country of having an efficient commercial banking system?

• It controls the money supply

• It discourages spending.

• It encourages tax evasion.

• It enables investment.