Econ MPC Zimsec Prep 2021
Econ MPC Zimsec Prep 2021
ECONOMICS
MULTIPLE CHOICE
2021
NEW CURRICULUM
ALL TOPICS COVERED
SIR_KURU
COMPILED BY NYONI T 0773359000
NEW CURRICULUM 2021 A LEVEL ECONOMICS MPC
Business-ethics-Exercise 1 D. environmental protection
A. A rise in income.
B. A rise in the subsidy to producers.
C. Advancement in production
technology.
D. A fall in production. A. Area adf
2) The diagram shows supply and demand B. Area abcf
curves for computers at equilibrium E. C. Area bcd
D. Area cef
A. Combination A
B. Combination B
C. Combination C
D. Combination D 10) Assuming that there is a rise in demand
in a market. Which of the following might
7) Which of the following factors does not not occur?
cause market disequilibrium?
Choose the best possible answer for the 6) A limited company is managed and
following questions. controlled by ________.
A. a management team
1) One of the disadvantage of a B. board of directors
partnership is that: C. the manager
A. The owners have unlimited liability. D. all shareholders
B. The owners face a difficulty in
raising more capital. 7) The form of business in which two or
C. The business is difficulty to dissolve. more owners jointly control a company is
D. There is too much government called a ________.
intervention. A. Sole proprietorship
B. Corporation
2) In which organization does the owner C. Partnership
have complete control of the business and D. Franchise
where unlimited liability exists?
A. Sole trader 8) A partner who has unlimited liability but
B. Public Limited company is actively involved in the day to day running
C. General partnership of the business is called ________.
D. Private limited company A. inactive partner
B. limited partner
3) All of the following are forms of business C. silent partner
except ________. D. dominant partner
A. Partnership
B. Sole proprietorship 9) Identify a disadvantage of sole
C. Cooperative proprietorship from the following.
D. Business venture A. There is unlimited liability.
B. The business is separate from its
4) The document used by shareholders to owner.
advertise shares to potential investors is C. The firm must publish its financial
called ________. accounts.
A. articles of association D. It is difficult to dissolve the business.
B. prospectors
C. partnership deed 10) With limited liability, the owner
D. memorandum of association ________.
A. is not liable to pay for the business
5) Which form of business organization debts
can easily raise more capital for expansion? B. is the only one who can provide the
A. Sole proprietorship capital for expansion
B. Cooperative C. is the only one who manages the
C. Franchise business
4) An increase in required reserve ratio will 9) What is the total amount of loan that the
result in ________. bank will create?
A. an increase in credit creation A. $300
B. an increase in demand for loans B. $30 000
C. a decrease in credit creation C. $2 700
D. a decline in demand for loans D. $27 000
5) Credit creation of money have 10) Credit creation system assumes that _.
________. A. there are leakages of money in the
A. a positive impact on economic banking system
growth and development
A. jointly supplied
B. jointly demanded
C. competitively used
D. competitively demanded
Economic-integration-Exercise 1
A. A change in consumer
preferences.
B. A fall in the price of timber.
C. A rise in the price of desks.
D. A fall in the cost of production.
Choose the best possible answer for the 4) The following table shows
following questions. combination of A,B,C and D. Which
combination shows a normal good with
1) A product has PED of 1,5. If its price a downward slopping demand curve?
increases from 10 to 12, demand will
________.
A. decrease by 20%
B. decrease by 13.3% Income
Price Elasticity
C. increase by 20% Combination Elasticity of
of Demand
D. increase by 13,3% Demand
A Negative Positive
B Negative Negative
2) Income for a certain economy C Positive Positive
decreases by 5% and the demand for
D Positive Negative
holidays overseas decreases by 20%.
YED for holidays overseas is ________.
A. -4
A. Combination A
B. 4
C. 0,25
B. Combination B
D. -0,25
C. Combination C
3) The essential characteristic of an
D. Combination D
inferior good is that it’s ________.
A. YED is positive
5) Which of the following curves A, B,
B. YED is negative
C or D shows that the relation between
C. PED is positive
two goods Y and Z are compliments.
D. PED is negative
4) Identify a statement which is not true 9) The rules that govern a firm’s
about entrepreneurs? dealings with outside stakeholders is
A. A talented entrepreneur avoids called ________.
business risks. A. articles of association
B. Personal experience and B. memorandum of association
expertise are good sources of C. deed incorporation
business ideas. D. prospectus
C. Most entrepreneurs are people
who want to be independent. 10) All of the following are
D. Capital is the most important characteristics of successful
component in starting a business. entrepreneurs except that they are___.
A. profit oriented
5) The document that a firm gets after B. self-confident
its registration is called a ________. C. innovative and initiative
A. trading license D. high risk takers
A. Supernormal profits
B. Normal profits
C. Negative profits
D. Subnormal profits
3) Which one is the equilibrium point in a 9) Which equation shows the equilibrium
four sector economy? state in the two sector economy?
A. E = C + I + G + X A. E = C + I +G
B. E = C + I + (X-M) B. E = C + I + (X-Z)
C. E= C + I +G + (X-M) C. E = C + I + Z
D. E = C + I + G + (M-X) D. Y = O = E
4) In the circular flow of income, 10) Tanzania has a net export figure of
consumers are assumed to be rational. In $320 million, GNI figure of $980 million and
this regard, being rational means that investment worth $200 million. In which
consumers maximize ________. model of the circular flow of income does
A. return on their investment the country belong?
B. earning from factors of production A. Two sector economy
C. their utility from consuming goods B. Three sector economy
D. injections and reduce leakages in C. Four sector economy
the economy D. Multi-sector economy
3) How can GDP be adjusted from the 8) From the following, identify an
market price to factor costs? intermediate good or service.
A. By adding indirect taxes and A. Fuel purchased by parents to visit
subtracting subsidies. their child at a boarding school.
B. By subtracting indirect taxes and B. Sugar purchased to be used by a
subsidies. bakery to produce bread.
C. By subtracting indirect taxes and C. A box of soap that a family buys
adding subsidies. to use during the following year.
D. By adding indirect taxes and D. A truck that a fruit grower
subsidies. purchases to deliver farm
produce to the market.
4) What term describes the value of all
goods and services that an economy 9) When the national income has been
produces within a year? computed by adding all the incomes
A. National income earned by residents of the country
B. Net national product irrespective of the country they operate
C. Gross national product in, the figure they get is called
D. National expenditure ________.
A. net national income
2) From the following, identify a short 7) Which of the following is not a long-
term source of capital. term source of debt finance?
A. Debenture A. Mortgage
B. Share capital B. Debentures
C. Mortgage loan C. Issuing of shares
D. Family and friends D. Debt factoring
Wage-differentials-Exercise 1
A. C + I + G
B. C + I + G – M
C. C + I + G + (X-M)
D. C + I + G + (M-X)
6) What would cause the national
income to move from point A to point B?
A. Diagram A
B. Diagram B
C. Diagram C
D. Diagram D A. Decrease in supply of money.
2) The aggregate demand in the B. A fall in the price level.
economy may fall because of ________. C. Increase in taxes.
D. Increase in interest rate.
A. an increase in consumption 7) At the point where the Philips curve
B. an increase in investment is vertical an increase in the supply of
C. a decrease in imports money will result in an increase in
D. an increase in taxation ________.
3) All the following are causes of
supply shocks except ________. A. unemployment rate
B. inflation rate
A. Increase in exports.
B. Increase in investment.
C. Increase in consumption.
D. Increase in import.
9) Identify a factor which does not lead
to a shift in the long run aggregate
supply.
4) Firm C decides to merge with firm B. 9) Which one from the following is not
Which type of integration is this? a benefit to the economy of Zimbabwe
A. Forward vertical integration when a multinational company sets up
B. Conglomerate integration in Zimbabwe?
C. Horizontal integration A. Employment creation
D. Backward vertical integration B. Improved standard of living
A. African economies.
B. Developing economies.
C. Economies throughout the world.
D. Western economies.
12) The government may increase the If the market price is $15 the firm
supply of maize on the Zimbabwean ________.
market by:
A. is earning an economic profits
A. Raising the sales tax on maize. B. is incurring an economic loss
B. Imposing a price ceiling on C. is earning abnormal profit
maize. D. might shut down its operation
C. Granting subsidies to maize
producers. 16) The loanable funds theory states
D. Levying a specific tax on maize. that the two main determinants of
interest rate are ________.
13) If a government adopts an
expansionary fiscal policy: A. exchange rate and supply of
money
A. It increase the supply of money. B. investment and credit creation
B. It increase borrowing to reduce a C. investments and savings
deficit. D. savings and demand of money
C. It increase exchange rate and
decrease taxation. 17) Balance of payments records:
D. It increase its expenditure and
decrease taxation. A. Inputs and outputs of a country.
B. Imports and exports of a country.
14) Gradient of a budget line shows C. Equilibrium and disequilibrium of
________. a country.
D. Exchange rate and interest rate
A. price of the product of a country.
B. demand of the product
C. opportunity cost by consumers 18) A subsidy provided by the
D. attainable point of consumption government will be of a beneficial to
consumers when demand is ________.
15) The diagram below shows a
perfectly competitive firm. A. unitary elasticity
B. infinity elasticity
Quantity consumed
On the diagram line AB indicates:
(Glasses) Total utility Marginal
gained utility A. Induced savings
0 0 0 B. Autonomous investment
5 25 5 C. Aggregate demand
7 42 ? D. National income
A. 42 2) The level of consumption that
B. 10 depends on changes in income and
C. 8,5 interest is called ________.
D. 0,85
10) Which one of the following is not an A. autonomous consumption
assumption of the law of diminishing B. aggregate spending
marginal utility? C. net consumption
A. Irrational consumers are considered. D. induced consumption
B. Preferences of consumers remain 3) All of the following determines the
constant. level of national income except:
C. Consumption of goods is
continuous. A. Foreign consumption of local
D. Standard size of goods are involved. products.
B. The level of net exports of the
country.
C. The level of private and public
National-income-determination- investments.
Exercise 1
A. 50%
B. 25%
C. 20% Profits-losses-and-economic-efficiency-
D. 10% Exercise 1
6) The level of income is $300 000 and
consumption is $250 000. Calculate the
average propensity to save? Choose the best possible answer for the
following questions.
A. 0,8 1) Firms in perfectly competitive
B. 1,2 markets maximise profits or minimise
C. 0,17 losses in the short run by producing the
D. 0,2 output level at which:
7) All the following are determinants of
investment in a country except A. Marginal cost equals to marginal
________. revenue.
B. Total cost equals total revenue.
A. exchange rate C. Total revenue is at minimum.
B. interest rate D. Total revenue is at maximum.
C. marginal efficiency of capital
D. level of income 2) A firm maximises profit at the point
8) The level of income is $300 000 and where:
consumption is $250 000. What is the
average propensity to consume? A. Price equals to average cost.
B. Total revenue equals to total
A. 0,8 cost.
B. 0,83 C. Marginal revenue equals to
C. 1,2 average revenue.
D. 1,8 D. Marginal revenue equals to
9) Investment that exists in an marginal cost.
economy when income is zero is called
________. 3) A firm experiences losses in the
short run when:
C. inflation
D. supply
A. taxation rate
B. exchange rate
C. reserve ratio
D. money supply
Solutions-to-market-failure-Exercise 1
9) Study the following diagram.
Choose the best possible answer for the
following questions.
1) An increase in tax:
A. Has no effect on the price of
commodities.
B. Results in an increase in supply.
C. Has no effect on supply.
D. Results in a decrease in supply.