MCQ BANK MYP2

In the poorest developing countries it is difficult to measure the size of GDP. What is the main cause of this?

A high proportion of the paid workforce is in the informal sector.

Which characteristic will show that a country has significant absolute poverty?

Basic living needs are not being met.

Malaysia decides to put more of its resources into the production of rubber, because it can produce rubber more efficiently than the rest of the world. This means that Malaysia will combine the benefits from

comparative advantage and specialisation.

When does free trade occur?

when goods face no import barriers

When must there be a rise in a country's population?

when the birth rate is greater than death rate and there is no migration

Instead of cleaning their own homes, a large number of households decide to clean each other's homes and charge for their services. They all declare their income to the tax authority. What will increase as a result of this?

Gross Domestic Product

A newspaper reported that exports from Sweden remained low for five months as changes in the rate of exchange meant that Swedish goods became more expensive to buy abroad. What else would be likely to happen?

Imported goods would become cheaper in Sweden.

What is most likely to happen as unemployment falls?

Tax revenue rises.

What usually happens as a developing country becomes more developed?

The fertility rate declines.

The US government decides to reduce the size of the quota on a good it buys from China. What is likely to happen?

There will be less of the good imported into the US.

What is most likely to conflict with a government's aim of price stability?

higher government spending

A person pays $500 tax when earnings are $5000. Which of the following tax payments would indicate that the country has a regressive tax system if his income rose to $12 000?

$1000

Which is the best measure of a country's standard of living?

real national income per head

Which policy is most likely to reduce relative poverty?

reduce the rate of sales tax

Which of the following is an example of cyclical unemployment?

An airline cuts jobs in a world recession.

An economy is suffering from a period of deflation. What does this mean for the economy?

Consumers may delay purchase of some products.

A country has the highest GDP per head in the world. What is this information most likely to suggest about the country?

It has the world's highest standard of living.

The US trades with Uruguay. In 2002 the US approved a loan of US$ 1.5 billion to Uruguay to help boost Uruguay's economy.

It would encourage Uruguay to import from the US.

A survey of employment in a particular economy shows that the primary sector was diminishing in importance and more people were being employed in the tertiary sector. What does this mean?

More people were employed in the service industries

What would increase the debits on a country's balance of trade?

People buy imported instead of home-produced cars.

Multi-national companies often set up business in developing countries. These countries benefit in a number of ways. What effect could not be considered a benefit for a developing country?

Profits earned are sent abroad.

Government advisers have suggested the following policies to reduce youth unemployment. Which would not increase public expenditure?

a cut in the minimum wage paid to young people

What is most likely to cause the government to have a budget surplus?

a decrease in government spending

What is the most likely cause of a fall in the population growth of a developing country?

a decrease in the birth rate

What is most likely to cause an increase in the population growth of a developing country?

a decrease in the death rate

What is a common feature of developing countries?

a high emigration rate

Over two-thirds of the world's poorest people live in rural areas. They are mainly involved in subsistence agriculture. What explains why poverty remains at a high level for subsistence farming families?

a lack of finance to buy machinery to improve productivity

What is likely to show that a country has a rising level of economic development?

a reduced unemployment rate

Which policy would be most likely to reduce unemployment in the short run?

a reduction in the standard rate of income tax

A basket of goods is used to calculate a country's rate of inflation. What is included in the basket of goods?

a representative sample of current household spending

Which of the following is the most obvious sign of inflation?

a rise in retail prices

The following extract appeared in an international newspaper : "Hundreds of thousands of peasants, fleeing rural poverty and drudgery, have flocked into China's cities seeking work." What would be the most likely result for the Chinese economy?

a rise in unemployment in the city areas

What lowers the cost of producing goods for export?

a subsidy

What would be a cause of cost-push inflationary pressure in an industry which supplies mobile (cell) phones?

an increase in advertising expenses for mobile phones

An economy is predicted to grow at a rate of 3% during the next year. What is most likely to cause this growth?

an increase in expenditure

What is the most likely result of a sustained increase in Gross Domestic Product (GDP)?

an increase in tax revenues

A government believes that consumption of a certain good will be of benefit to society. Which policy is most likely to encourage producers to increase their output of that good?

an increase in the subsidies for that good

There was a fall in investment spending by businesses in the third quarter of 2015. What would be the likely result of this?

an increase in unemployment

What might cause prices to rise because of cost-push inflation?

an increase in wages and salaries

What can a government do to increase demand in its economy?

cut taxes

What is a likely consequence of economic growth?

decreased levels of poverty

The government has an important role in mixed economies. Which function would it not perform?

distributing dividends from profits of state-owned enterprises

A government decided to increase its spending on building schools and hospitals. Which aim of government policy is most likely to be achieved by this?

economic growth

'The pound sterling made a dramatic recovery in the world's currency markets yesterday.' To what does this statement refer?

exchange rate

Which of the following government policies would lead to a more even distribution of income?

expenditure on unemployment benefits

If a country places a tax on imports of food, which group in the country is most likely to benefit?

farmers

What is likely to fall when the rate of unemployment falls?

government welfare payments

A newspaper reported that a country's economy had grown by 3 % during the last year. What must have increased in that year?

gross domestic product

A company is described as a multinational if it

has production units in several countries.

The introduction of a tariff on imported goods is likely to

increase the demand for domestically produced goods.

The government of Kenya wishes to help people with very low incomes. Which policy would achieve this?

increasing housing subsidies

What is likely to lead to a decrease in structural unemployment?

increasing labour mobility

What is included in the Human Development Index (HDI)?

life expectancy at birth

What is certain to encourage a higher level of international trade?

more specialisation and falling transport costs

What is the most likely disadvantage of international specialisation?

overdependence on other economies

The birth rate and death rate in a country are the same. What is likely to happen if there is a decrease in the birth rate, while the death rate and migration remain the same?

population will decrease

Which aim of government policy is most likely to be achieved by a decrease in government spending?

price stability

Which type of business organisation is necessarily in the public sector of the economy?

public corporation

In order to reduce unemployment, a government moves one of its departments to a different part of the country, even though this is expensive. Which type of unemployment is most likely to be reduced?

regional

Which policy aims to maintain low inflation over a period of time?

restricting the supply of money through the central bank

Which feature is found in a developed country rather than a developing country?

significant tertiary employment

Which of the following is an aim of government policy?

stable prices

Many fishermen are unemployed owing to long-term legislation to conserve fish stocks in the North Sea. What type of unemployment is this?

structural

What will reduce the volume of international trade in the world economy?

the US government introducing quotas for European steel products

Which of the following is a reason for collecting national income statistics?

to compare standards of living