CIE AS ECONOMICS MOST CHALLENGING QUESTIONS PAPER 1 0 votes, 0 avg AS Economics Most Challenging Questions 2025 These are collections of most difficult MCQ questions. On average, 50% of the candidates answered these questions wrongly. Take your time to understand the questions before answering. 1 / 14 The diagram shows the impact of a government introducing an export subsidy for its domestic producers of oil. What will be the effect of this export subsidy on the operation of the domestic market? A. domestic output of oil will increase by 15 million units B. imports of oil will decrease by 25 million units C. the domestic price of oil will decrease by $28 D. the domestic price of oil will increase by $8 2 / 14 A decrease in the quantity demanded of a product results in a proportionate decrease in sales revenues. What is true about its price elasticity of demand? A. It is between zero and one. B. It is infinite. C. It is unitary. D. It is zero. 3 / 14 Which statement about a market economy is not correct? A. Competition is promoted among firms which can increase productive efficiency. B. Immobility of the factors of production can lead to allocative inefficiency. C. Price always reflects all the costs and all the benefits associated with production. D. The entrepreneur is encouraged to innovate and take risks, motivated by profit. 4 / 14 9708_11_MJ_2025 The price of a pack of six eggs rises from $1.00 to $1.32 over a year. Consumer prices, as measured by the consumer price index, rise by 10% over the same period. What is the real price of a pack of six eggs at the end of the year? A. $1.00 B. $1.10 C. $1.20 D. $1.32 5 / 14 9708_11_MJ_2025 An open economy with a government sector is in equilibrium. Households in this economy save $100 million and firms spend $150 million on investment. Which combination of the budget balance and the current account balance would lead to an equilibrium position on the circular flow of income? A. A B. B C. C D. D 6 / 14 9708_11_MJ_2025 How can a public good become a private good? A. Consumers are dissatisfied with the performance of state-run services. B. New technological developments make the good excludable. C. The government privatises the industry producing the good D. The price of the good increases so it becomes more profitable. 7 / 14 9708_11_MJ_2025 The diagram shows the production possibility curves of two countries, X and Y. What can be concluded from the diagram? A. Both countries have decreasing opportunity cost in the production of consumer goods. B. Both countries should produce 40 units of capital goods and 20 units of consumer goods. C. Country Y has constant opportunity cost in the production of consumer goods. D. Country Y is producing more consumer goods than country X. 8 / 14 An income tax has a tax-free allowance of $10 000 and a single rate of 25%. What type of tax is this? A. indirect B. progressive C. proportional D. regressive 9 / 14 9708_12_MJ_2025 The table shows figures estimated at the end of a train drivers’ strike. What was the reduction in the recorded level of national income resulting from the strike? A. $570 000 B. $610 000 C. $640 000 D. $690 000 10 / 14 9708_12_MJ_2025 The aggregate demand curve is typically downward sloping. What is one possible explanation for this? A. A fall in the price level will lead to a rise in demand for imports. B. As the price level falls, improved productivity will reduce unit costs. C. If the price level is high, any interest rate changes will encourage consumption. D. The real value of assets increases as the price level falls. 11 / 14 9708_13_MJ_2025 A flood-control dam is an example of a good provided directly by a government. Which statement relating to the direct provision of a flood-control dam is not correct? A. It allows the government to tackle the failure to provide public goods. B. It forces the government to incur an opportunity cost. C. It involves the supply of a merit good. D. It is an example of government allocation of resources. 12 / 14 9708_13_MJ_2025 A country depends heavily on the production of an agricultural product, good X. It decides to introduce a buffer stock scheme for good X. The government allocates a fixed amount of money for setting up and running the scheme. In which situation is the scheme least likely to run out of money? A. A B. B C. C D. D 13 / 14 9708_13_MJ_2025 A government has a target to reduce the rate of inflation. Why might it not want to raise interest rates to achieve this target? A. aggregate demand may fall B. aggregate supply may fall C. saving may fall D. the exchange rate may fall 14 / 14 9708_13_MJ_2025 The table gives the terms of trade index for a country over three years. What is the most likely impact of this change? A. there will be a decrease in cost-push inflation B. there will be a decrease in living standards C. there will be an increase in the budget surplus D. there will be an increase in the volume of exports Your score isThe average score is 28% 0% Restart quiz Rate us to help improve the learning site. Anonymous feedback Thank you for keeping us motivated! Send feedback /11 0 votes, 0 avg AS Most Challenging Questions - 2023 These are collections of most difficult MCQ questions for the 2023 exam year. On average, 50% of the candidates answered these questions wrongly. 1 / 11 Which term relates to a fall in the domestic real value of a currency? deflation depreciation appreciation inflation 2 / 11 A Kenyan banker who lives and works in India sends 15% of their wage back to Kenya every month. What would be the change in the current account components for either country? a fall in secondary income for India an increase in the balance of trade in services for Kenya an increase in the current account surplus for India an increase in primary income for Kenya 3 / 11 Which combination of initial equilibrium and supply-side policy is likely to be least effective when attempting to increase the real output of an economy? A B C D 4 / 11 General equilibrium in the macroeconomy is achieved when total injections are equal to total leakages. What is most likely to cause disequilibrium in the macroeconomy in the short run? an increase in government spending of $10bn and a decrease in exports of $10bn an increase in investment of $30bn and a decrease in household savings of $30bn an increase in spending on imports of $40bn and an increase in government spending of $40bn an increase in taxation of $40bn and a decrease in spending on imports of $40bn 5 / 11 The diagram shows the production possibility curves (PPCs) for country X and country Y, the only two countries in the world. Both countries produce just two goods, M and N. Under which terms of trade will both country X and country Y benefit from trading with each other? 1M for 0.75N 1M for 0.8N 1M for 1N 1M for 2N 6 / 11 The table shows different combinations of rings and bracelets that can be produced by Luke and Zoe in the same time period. Which statement is not correct? Luke has a larger opportunity cost than Zoe for making bracelets. The opportunity cost of producing rings is constant for both Luke and Zoe. Zoe should specialise in making rings. Zoe’s opportunity cost for each bracelet is 2 rings. 7 / 11 Which combination is possible for an economy experiencing zero inflation? A B C D 8 / 11 A new section of a road is provided toll-free by the government. What best describes this good? a demerit good a free good a private good a public good 9 / 11 Which components are included as primary income in the current account of the balance of payments? A B C D 10 / 11 A government aims to reduce unemployment through expansionary fiscal policy and borrows more from the commercial banks, increasing its borrowing requirement. What will be the result? a decrease in the budget deficit a decrease in the national debt an increase in the balance of payments deficit on the current account an increase in the interest rates 11 / 11 What is the most likely cause of the continuous increase in prices of famous paintings by now dead artists? the increasing technological ability to copy famous paintings perfectly the popular view that famous paintings are an appreciating asset the totally inelastic supply of famous paintings by dead artists the wish of governments to treat art galleries as merit goods Your score isThe average score is 26% 0% Restart quiz 2 votes, 3 avg AS Most Challenging Questions 2022 These are collections of most difficult MCQ questions. On average, 50% of the candidates answered these questions wrongly. Take your time to understand the questions before answering. 1 / 12 The diagram shows the impact of a government introducing an export subsidy for its domestic producers of oil. What will be the effect of this export subsidy on the operation of the domestic market? A. domestic output of oil will increase by 15 million units B. imports of oil will decrease by 25 million units C. the domestic price of oil will decrease by $28 D. the domestic price of oil will increase by $8 2 / 12 What is necessary for consumer surplus to be zero? A. Demand is perfectly elastic. B. Demand is perfectly inelastic. C. Supply is perfectly elastic. D. Supply is perfectly inelastic. 3 / 12 Why does an individual’s demand curve generally slope downwards to the right? A. The additional satisfaction an individual gets from consuming most goods decreases as consumption increases. B. The additional satisfaction an individual gets from consumption decreases as income rises. C. The individual has finite income which is used to attempt to satisfy many wants. D. For most goods the price charged by producers falls as the quantity purchased increases. 4 / 12 A country is suffering from severe deflation. What is most likely to prevent the deflation from worsening? A. increasing income tax to help reduce the government’s budget deficit B. increasing interest rates to encourage more saving C. increasing transfer payments to reduce inequality of income D. revaluing the currency to bring in more revenue from exports 5 / 12 The diagram shows the aggregate demand (AD) and aggregate supply (AS) for a country. The initial equilibrium is at point E. The sum of the price elasticities of demand for imports and exports for this country exceeds one. A devaluation of the country’s exchange rate will cause aggregate demand to change. What will be the new equilibrium? 6 / 12 A government imposes a maximum price on medical face masks, below the market equilibrium. What is the most likely effect of this? A. Some consumers will be unable to buy face masks at the maximum price. B. Firms will produce more masks to meet the excess demand at the maximum price. C. Poorer consumers will be able to obtain all the masks they need at the maximum price. D. The market will clear at the maximum price. 7 / 12 The diagram shows the demand curve for a normal product. Which two points indicate a move from a price inelastic point to a less price inelastic point? A. W to X B. X to W C. Y to Z D. Z to Y 8 / 12 The table gives different combinations of possible values for a country’s price elasticity of demand for exports and price elasticity of demand for its imports. Following the devaluation of the country’s currency, under which combination of elasticities would the country’s balance of payments on the current account worsen? A. A B. B C. C D. D 9 / 12 Which combination of tax changes is most likely to be regressive in a developed economy? A. A increasing the rate of wealth tax and raising the rate of sales tax (VAT) on luxury products B. B introducing a tax on owning property based on its sales value and increasing the rate of income tax C. C reducing the basic rate of income tax and increasing the duty on fuel D. D removing the tax-free allowance for income tax and extending sales tax (VAT) to include all food 10 / 12 Which combination of events is most likely to leave the demand curve for a normal good in the same position? A. a decrease in consumer incomes and an increase in the price of a substitute good B. a decrease in consumer incomes and an increase in the price of the good C. an increase in consumer incomes and an increase in the price of a substitute good D. an increase in consumer incomes and an increase in the price of the good 11 / 12 Why might a country’s government impose a tax on fuel exports? A. A to encourage domestic refineries to increase production B. B to improve the country’s trade balance C. C to reduce fuel prices for domestic consumers D. D to reduce the government’s budget surplus 12 / 12 When is division of labour likely to be most effective. A. in a large market with stable demand B. in a market where consumers prefer a handmade product over a product made using machines C. in a market where consumers require a variety of goods D. in a small market where consumers require a custom-made product Your score isThe average score is 43% 0% Restart quiz Rate us to help improve the learning site. Anonymous feedback Thank you for keeping us motivated! Send feedback
