Q1. Which of the following is not a factor of production?
(Select one answer)
(a) Labour
(b) Land
(c) Money
(d) Capital
(e) All of these answers are factors of production.
Q2. Economic models are:
(Select one answer)
(a) Usually made of wood and plastic.
(b) Built with assumptions.
(c) Useless if they are simple.
(d) Created to duplicate reality.
Q3. Which of the following statements would you considerto be a normative one?
(Select one answer)
(a) Faster economic growth should result if an economy has a higher level of investment
(b) Changing the level of interest rates is a better way of managing the economy thanusing taxation and governmentexpenditure
(c) Higher levels of unemployment will lead to higher levels of inflation
(d) The average level of growth in the economy was faster in the 1990s than the 1980s.
Q4. In a free-market economy the allocation of resources is determined by:
(Select one answer)
(a) votes taken by consumers
(b) a central planning authority
(c) By consumer preferences
(d) the level of profits of firms.
Q5. Raising taxes and increasing welfare payments:
(Select one answer)
(a) reduces market power.
(b) proves that there is such a thing as a free lunch
(c) improves efficiency at the expense of equity
(d) improves equity at the expense of efficiency.
Q6. Which of the following goods or services would not be provided by a pure free-market economy?
(Select one answer)
(a) Public transport system
(b) Pensions
(c) National Defence
(d) Education.