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Olympiad Questions

This document contains an economics exam with multiple choice questions covering topics like: - Division of labor and efficiency - Price elasticity of demand - Market equilibrium and perfect information - Transfer payments from the government - Terms of trade and import/export prices - Types of trade agreements between countries - Government policies around inflation, unemployment, and deflation

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Asilbek Ashurov
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769 views7 pages

Olympiad Questions

This document contains an economics exam with multiple choice questions covering topics like: - Division of labor and efficiency - Price elasticity of demand - Market equilibrium and perfect information - Transfer payments from the government - Terms of trade and import/export prices - Types of trade agreements between countries - Government policies around inflation, unemployment, and deflation

Uploaded by

Asilbek Ashurov
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
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Part 1: Each task is evaluated from 0.

9
1. Which outcome depends upon the division of labour?

A) a decrease in boredom at work


B) a decrease in comparative advantage
C) a decrease in efficiency
D) a decrease in opportunity cost

2. A theatre increases the price of its tickets from $10 to $15. As a result, its total
receipts decrease from $10 000 to $6000.
Within what range does the price elasticity of demand for theatre tickets lie?

A) 0.2 to 0.5
B) 0.6 to 1.0
C) 1.1 to 1.4
D) 1.5 to 2.0
3. A taxi firm raises fares at its busiest times by as much as five times the normal
fare. Taxi drivers and customers are notified of the changes by mobile (cell)
phone.
What will result from this policy?

A) It will be less likely that there is a market equilibrium.


B) Potential customers will have less perfect information.
C) The market surplus will become a shortage.
D) The supply of taxi rides will become more price elastic.

4. Money is paid by the government to an unemployed worker in the form of a


benefit. Why is this called a transfer payment?

A) The payment is from taxes paid by employed workers.


B) The payment is made from government savings not current income.
C) The payment is made without the production of goods and services taking
place.
D) The payment must be spent as directed by the government

5. What will definitely lead to an improvement in the terms of trade?


A) Export prices fall whilst import prices rise.
B) Export prices rise by the same amount as import prices.
C) Export prices rise slower than import prices.
D) Export prices rise whilst import prices stay the same.

6. Two countries trade with one another without any forms of protection. They also
impose a common external tariff on the imports from all other countries.
A) a customs union
B) a free trade area
C) a monetary union
D) an economic union

7. Which type of import control allows a country to develop a potential comparative


advantage in a particular good?
A) a quota that protects jobs in a depressed region
B) a short-term tariff that protects an infant industry
C) a tariff that improves an industry’s terms of trade
D) an embargo on goods with negative externalities

8. A government is faced with rising inflation. It wishes to reduce inflationary


pressure while avoiding a fall in output.
Which action is most likely to meet its needs?
A) an increase in laws to promote competition
B) an increase in taxation
C) an increase in the budget surplus
D) an increase in the exchange rate
9. Which statement about government intervention is correct?
A) Government failure may result from policies that have unintended side effects.
B) Governments cannot identify the existence of inefficiency.
C) Inefficient government policies mean that the market system will be better at
resource allocation.
D) Market failure means that government action will necessarily improve the
situation.

10. Which source of income is not included in measuring real GDP?


A pension paid to retired people
B profits made by firms
C rent paid to landlords
D wages paid to nurses

Part 2: Each task is evaluated from 1.5 points

11. A government in a developed economy wishes to reduce cyclical unemployment.


Which policy is likely to be most effective?
A) decrease government expenditure and increase income tax
B) decrease its budget deficit
C) increase government expenditure and decrease income tax
D) increase its budget surplus
12. The diagram shows the market for a good that creates a negative externality in
production and no positive externalities. The current level of consumption is OQ1.

The government decides to tax producers of the good.


Which size of tax on producers would result in a socially efficient allocation of
resources?
A) VW B) VX C) VY D) VZ

13. The diagram shows a production possibility frontier, PPF1. The economy is
initially at point X. If the economy achieves actual economic growth but not
potential growth, what would the final position be?
14. What would be classified by economists as an increase in transfer payments?
A) a reallocation of spending from defence to education
B) additional funding for government pensions
C) extra spending on public sector infrastructure
D) increased salaries paid to the police

15. Japan is suffering from deflation.


Which government policy would not help to overcome this problem?
A) encouraging domestic savings rather than consumption
B) increasing incentives for business start-ups by lowering profits tax
C) lowering interest rates and increasing the money supply
D) promoting more innovation in technical industries

16. What would be likely to increase inflation in an economy?


A) an increase in consumer saving
B) an increase in interest rates
C) an increase in labour productivity
D) an increase in taxes on imports

17. Which statement is a normative statement?

A) China has never had a balance of payments surplus.


B) Higher interest rates might reduce investment.
C) Perfect competition is allocatively efficient.
D) Welfare payments should be increased.

18. What may increase the benefits a country gains from international trade?
A) a reduction in transportation costs because of a fall in world oil prices
B) domestic wage rates increase at a faster rate than output per worker
C) the domestic labour force becomes more occupationally immobile
D) trading partners increase tariffs on imported goods

19. A country has a balance of trade deficit. When will this be least likely to be
improved as a result of a depreciation of its currency?
A) if it is currently operating with a significant amount of unused resources
B) if the sum of the price elasticities of demand for exports and imports is less than
1
C) if in the long term, the price elasticity of demand for exports should increase
D) if the country uses a relatively small proportion of imports in their production
process

20. Which type of policy would have the most immediate effect in dealing with a
deflationary economic downturn?
A) increasing the government’s budget surplus
B) increasing borrowing by assisting banks to lend more
C) investing in long-term projects to improve transport networks
D) switching the burden of taxation from earning to spending

Part 3: Each task is evaluated from 2.6 points


1. _____ occurs when two goods are produced together but for different
purposes
2. ______ : someone who consumes a good or service without paying for it.
3. ________: being able to turn an asset into cash quickly without a loss.
4. ________: the percentage rise in the price level of goods and services over
time.
5. _______: the record of a country’s economic transactions with other
countries.
6. ____________: the final impact on aggregate demand being greater than the
initial change.
7. ___________ :one which takes the same percentage of the income or wealth
of all taxpayers.
8. ___________: decisions on the money supply, the rate of interest and the
exchange rate taken to influence aggregate demand.
9. ___________: the price of one currency in terms of another currency or
currencies.
10._____________: a reduction in real GDP over a period of six months or more.

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