1. A government is worried about the increasing monopsony power of employers in the wage
bargaining process.
Which policy combination is most likely to improve the wages and employment prospects of
workers?

	Trade union powers	Immigration controls	National minimum wage
A	Strengthen	Relax	Cut
B	Strengthen	Strengthen	Raise
C	Weaken	Relax	Cut
D	Weaken	Strengthen	Raise

2. The diagram shows the labour market for fruit pickers in country X.

If the market was originally in equilibrium, what would happen to wages and employment if a
minimum wage of W were imposed?

	Wages	Employment
A	Fall	Fall
B	Fall	Rise
C	Rise	Fall
D	Rise	Rise

3. What would not be regarded as an example of a possible negative impact of rapid economic
growth?
A Greater production could result in greater atmospheric pollution.
B A higher level of income could cause a higher balance of trade deficit.
C Increased AD could cause domestic inflation to increase.
D Increased GDP could generate greater tax receipts.

4. How can GDP at market prices be calculated if GDP at factor cost is known?
A add taxes, add subsidies
B add taxes, subtract subsidies
C subtract taxes, add subsidies
D subtract taxes, subtract subsidies

5. Which combination indicates that GDP per capita is likely to be an accurate indicator of living
standards in a country over time?

	Income distribution	Hidden economy as % of GDP	Quality of goods and services produced
A	Equal	Large	Constant
B	Unequal	Large	Improving
C	Equal	Small	Improving
D	Unequal	Small	Constant

Answers