The Indian government has declared that the country, now a major car producer, will sell
only
electric cars by 2030. The government wants to reduce external costs, some of which are
caused by petrol and diesel cars. Demand for electric cars is currently relatively low and
price-elastic. The government, however, thinks that it will not need to subsidise the
production of electric cars to achieve its target.
(a) Define external costs. [2]
(b) Explain two influences on whether demand for a product is price-elastic or priceinelastic. [4]
(c) Analyse, using a demand and supply diagram, how a subsidy given to producers could
affect the market for electric cars. [6]
(d) Discuss whether cars should be produced by the private sector or the public sector. [8]
A number of countries are withdrawing high value banknotes. For instance, Singapore
plans to stop issuing its $10000 note. High value notes were originally intended to act as
a convenient store of value. Central banks are concerned some notes are now being used
illegally. The Singapore Police Force and the Monetary Authority of Singapore (its central
bank) were trying to recruit more workers in 2017. It was expected that the central bank
would raise the rate of interest in 2018.
(a) State two functions of money, other than a store of value. [2]
（b）Identify and explain four roles of a central bank
In 2016, 20 billion barrels of oil and 1.6 billion barrels of natural gas were discovered in
Texas,
US. D
Which factor of production has increased in the US due to this discovery?
A capital
B enterprise
C labour
D land
What is a cause of market failure?
A many firms
B monopoly
C profit maximisation
D specialisation
The price of bread rose by 5% and the quantity demanded fell by 4%.
What was the price elasticity of demand for bread?
A –0.4 B –0.8 C –1.25 D –2.0
What is the basic economic problem?
A excess supply of goods and services
B lack of profits
C recession
D scarcity of resources
On which factor of production does innovation directly depend?
A decisions of entrepreneurs
B high inputs of capital
C long hours of manual labour
D plentiful supplies of land
Which person makes macroeconomic decisions?
A a bank manager
B a government finance minister
C a shareholder in a firm
D a worker
What is a function of the price mechanism?
A to allocate goods and services
B to calculate national expenditure
C to ensure an equal distribution of income
D to guide government policy decisions
The price elasticity of supply of a good is 2. The price of the good then falls by 10%.
What is the effect on quantity supplied?
A It falls by 0.2%.
B It falls by 20%.
C It increases by 0.2%.
D It increases by 20%.
Why might a market economy fail to achieve the best use of scarce resources?
A Consumers may lack information about which good to buy.
B Demerit goods are underconsumed.
C Public goods are overconsumed.
D Most resources are owned by the government.
What is an example of a macroeconomic aim?
A to create and maintain full employment
B to improve efficiency in the manufacturing sector of the economy
C to provide consumers with greater information when buying goods and services
D to encourage greater occupational mobility of labour
Italy is home to the world’s oldest bank and some of the world’s oldest car producers.
Internationally, both industries are facing a number of challenges.
(a) State two functions of a commercial bank.
Explain two reasons why education is a merit good.