Free GCE O Level Economics June 2024 Past Paper 1 Questions
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Subject Code
0525
Subject Title
O Level Economics
Session
June 2024 Paper 1
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Cameroon GCE O Level Economics Paper 1 Solution - June 2024
1. The productivity of labour is defined as:
A. Maximum number of hours worked
B. Output per man hour
C. Output achieved in a short time
D. Average output produced
The correct answer is "Output per man hour."
2. Disguised unemployment is said to exist when:
A. Labour faces physical disability
B. There is a change in demand
C. Manpower is under-utilized
D. There is immobility of labour
The correct answer is "Manpower is under-utilized."
3. When the price of garri increases from 50frs a cup to 100frs a cup, the supply of garri increases from 5 basins to 15 basins. The numerical coefficient of price supply is:
A. 0.5
B. 3
C. 0.3
D. 2
The correct answer is 2.
4. The principle of 'limited liability' implies that:
A. Shareholders are liable up to their share capital
B. The debts of the company are paid using its assets.
C. The company does not have to pay debts
D. The shareholder is liable to the debt up to his private properties.
The correct answer is "Shareholders are liable up to their share capital."
5. The bank rate is generally fixed by:
A. ECO Bank
B. BICEC
C. BEAC
D. NFC
The correct answer is BEAC, as it is the central bank responsible for fixing the bank rate.
6. What is the value of the balance of trade?
Items
Millions (FCFA)
Visible Imports
17000
Visible Exports
15000
Invisible Imports
10000
Invisible Exports
20000
A. 8,000M FCFA
B. -2,000M FCFA
C. 10,000M FCFA
D. -10,000M FCFA
The correct answer is -2,000M FCFA because the balance of trade is calculated as Visible Exports - Visible Imports (15000 - 17000 = -2000).
7. Given that fixed cost is 50,000 FCFA, variable cost is 150,000 FCFA, and the output is 50 units, what will be the average total cost of producing one unit?
A. 6,000 FCFA
B. 2,000 FCFA
C. 5,000 FCFA
D. 4,000 FCFA
The correct answer is 4,000 FCFA. Total cost = Fixed Cost + Variable Cost = 50,000 + 150,000 = 200,000. Average Total Cost = Total Cost / Output = 200,000 / 50 = 4,000.
8. The incidence of a tax implies:
A. The effect of the tax
B. The base of the tax
C. The finality of the tax
D. The rate of the tax
The correct answer is The effect of the tax, referring to who ultimately bears the burden of the tax.
9. The merging of firms involved in different stages of production is referred to as:
A. Horizontal integration
B. Vertical integration
C. Diversified integration
D. Lateral integration
The correct answer is Vertical integration, as it involves combining firms from different stages of production.
10. A black market is the result of:
A. Maximum price control
B. Minimum price control
C. Floor price
D. Price control
The correct answer is Maximum price control, as it can create a shortage, leading to illegal markets.
11. The demand for labor is referred to as:
A. Market demand
B. Derived demand
C. Independent demand
D. Composite demand
The correct answer is Derived demand, as labor is demanded for the goods and services it helps produce.
12. What is the consumer surplus when the price of a commodity is 2,000 FCFA, but consumers are willing to pay 5,000 FCFA?
A. 3,000 FCFA
B. 5,000 FCFA
C. 7,000 FCFA
D. 2,000 FCFA
The correct answer is 3,000 FCFA, as consumer surplus is the difference between what consumers are willing to pay and the market price (5,000 - 2,000 = 3,000).
13. Which of the following is an economic good?
A. Sunshine
B. A loaf of bread
C. Rainwater
D. Fresh air
The correct answer is A loaf of bread, as it is scarce and has a price.
14. What is the most liquid form of money?
A. Cash
B. Bonds
C. Savings deposits
D. Stocks
The correct answer is Cash, as it can be used immediately for transactions.
15. What is the primary function of an entrepreneur?
A. To save money
B. To bear risks
C. To organize production
D. To produce goods
The correct answer is To organize production, as the entrepreneur coordinates resources for production.
16. Which of the following is not a direct tax?
A. VAT
B. Corporate tax
C. Income tax
D. Capital gains tax
The correct answer is VAT, as it is an indirect tax paid through consumption.
17. What does GDP at factor cost exclude?
A. Production costs
B. Indirect taxes
C. Subsidies
D. Labor costs
The correct answer is Indirect taxes, as GDP at factor cost is calculated before including taxes.
18. What happens when the supply of a commodity increases?
A. Price falls
B. Quantity supplied decreases
C. Quantity demanded increases
D. Price rises
The correct answer is Quantity demanded increases, as per the law of demand.
19. Which of these is an advantage of a mixed economy?
A. No competition
B. Balances efficiency and equity
C. Fully state-controlled
D. Ensures full employment
The correct answer is Balances efficiency and equity, as it combines private and public sector roles.
20. What is the main purpose of insurance?
A. Risk management
B. Wealth accumulation
C. Saving money
D. Profit generation
The correct answer is Risk management, as insurance spreads risk among many people.
21. What type of unemployment is caused by changes in the structure of the economy?
A. Cyclical unemployment
B. Structural unemployment
C. Frictional unemployment
D. Seasonal unemployment
The correct answer is Structural unemployment, as it occurs when industries decline or new technologies emerge.
22. What is the main goal of monetary policy?
A. Reduce income inequality
B. Stabilize the economy
C. Increase taxation
D. Promote exports
The correct answer is Stabilize the economy, as monetary policy aims to control inflation and stimulate economic growth.
23. Which of these is an example of a public good?
A. Electricity
B. Bread
C. National defense
D. Mobile phones
The correct answer is National defense, as it is non-excludable and non-rival in consumption.
24. What is the opportunity cost of choosing one alternative over another?
A. The total expenditure
B. The time spent
C. The next best alternative forgone
D. The actual cost of the chosen option
The correct answer is The next best alternative forgone, as opportunity cost measures the trade-off of decisions.
25. What type of market structure is characterized by a single seller?
A. Monopoly
B. Oligopoly
C. Perfect competition
D. Monopolistic competition
The correct answer is Monopoly, where one firm controls the market.
26. What is the function of a central bank?
A. Issue currency
B. Provide loans to individuals
C. Collect taxes
D. Regulate trade
The correct answer is Issue currency, as central banks control the money supply.
27. When demand is perfectly inelastic, the demand curve is:
A. Vertical
B. Horizontal
C. Downward sloping
D. Upward sloping
The correct answer is Vertical, indicating that quantity demanded does not change with price.
28. Which of the following is a feature of perfect competition?
A. Product differentiation
B. Many buyers and sellers
C. High barriers to entry
D. Price control
The correct answer is Many buyers and sellers, which ensures no single entity can control the market.
29. What is a tariff?
A. A tax on imports
B. A subsidy for exports
C. A trade agreement
D. A quota on exports
The correct answer is A tax on imports, used to protect domestic industries.
30. What is GDP a measure of?
A. National wealth
B. Population growth
C. Economic output
D. Inflation rate
The correct answer is Economic output, as GDP measures the total value of goods and services produced.
31. What is the primary objective of fiscal policy?
A. Control money supply
B. Increase exports
C. Influence economic activity
D. Reduce interest rates
The correct answer is Influence economic activity, as fiscal policy involves government spending and taxation to manage the economy.
32. In economics, what does "scarcity" refer to?
A. Limited resources
B. High demand
C. Inflation
D. Excess supply
The correct answer is Limited resources, as scarcity means there are not enough resources to satisfy all wants and needs.
33. Which economic system relies on supply and demand to allocate resources?
A. Command economy
B. Market economy
C. Mixed economy
D. Traditional economy
The correct answer is Market economy, where prices are determined by supply and demand forces.
34. What does CPI measure?
A. National output
B. Inflation
C. Employment rate
D. Trade deficit
The correct answer is Inflation, as CPI (Consumer Price Index) tracks changes in the price level of a market basket of consumer goods and services.
35. Which of the following is a form of direct tax?
A. Income tax
B. Sales tax
C. Value-added tax
D. Import duties
The correct answer is Income tax, as it is levied directly on individuals' earnings.
36. What is the primary purpose of a tariff?
A. Reduce production costs
B. Lower consumer prices
C. Protect domestic industries
D. Increase foreign investments
The correct answer is Protect domestic industries, as tariffs make imported goods more expensive compared to local goods.
37. What is meant by the term "elastic demand"?
A. Demand changes significantly with price
B. Demand remains constant regardless of price
C. Demand increases with higher prices
D. Demand is unaffected by supply
The correct answer is Demand changes significantly with price, meaning consumers are responsive to price changes.
38. What is the term for a sustained increase in the general price level?
A. Recession
B. Inflation
C. Deflation
D. Stagnation
The correct answer is Inflation, reflecting a persistent rise in average prices over time.
39. What does a trade deficit indicate?
A. Exports exceed imports
B. Imports exceed exports
C. Equal exports and imports
D. Reduced foreign investments
The correct answer is Imports exceed exports, indicating more goods and services are purchased from abroad than sold.
40. What is the term for the value of the next best alternative foregone?
A. Fixed cost
B. Opportunity cost
C. Marginal utility
D. Variable cost
The correct answer is Opportunity cost, which represents the benefits of the option not chosen.
41. What does GDP stand for?
A. General Domestic Product
B. Gross Domestic Product
C. Gross Domestic Product
D. Global Domestic Product
The correct answer is Gross Domestic Product (GDP), which is the total value of goods and services produced in a country.
42. Which of the following is an example of a monopolistic competition?
A. Oil industry
B. Restaurant industry
C. Electricity supply
D. Public transportation
The correct answer is the Restaurant industry, which has many firms offering differentiated products.
43. What is a progressive tax?
A. Tax rate decreases as income increases
B. Tax rate increases as income increases
C. Tax rate remains constant
D. Tax rate is based on consumption
The correct answer is Tax rate increases as income increases, as progressive taxes are designed to collect a higher percentage from higher earners.
44. Which of the following is not a form of monetary policy?
A. Open market operations
B. Taxation changes
C. Discount rates
D. Reserve requirements
The correct answer is Taxation changes, as taxation is a fiscal policy tool, not a monetary policy tool.
45. What is the main function of the Federal Reserve System?
A. Regulate trade policies
B. Control the money supply
C. Set corporate tax rates
D. Manage government spending
The correct answer is Control the money supply, as the Federal Reserve is responsible for regulating the money supply and interest rates.
46. Which economic indicator is used to measure the overall health of an economy?
A. Gross National Product (GNP)
B. Gross Domestic Product (GDP)
C. Inflation rate
D. Unemployment rate
The correct answer is Gross Domestic Product (GDP), which measures the total value of goods and services produced in a country.
47. What is the primary goal of international trade agreements?
A. Limit competition
B. Increase tariffs
C. Reduce trade barriers
D. Restrict foreign investments
The correct answer is Reduce trade barriers, as trade agreements aim to make cross-border commerce easier.
48. What does the term "liquidity" refer to in finance?
A. Ease of converting assets to cash
B. Total value of an asset
C. Amount of debt in a company
D. Profitability of an asset
The correct answer is Ease of converting assets to cash, which defines liquidity in financial terms.
49. What is the term for the price of one country's currency in terms of another currency?
A. Exchange rate
B. Exchange rate
C. Interest rate
D. Inflation rate
The correct answer is Exchange rate, which reflects the value of one currency relative to another.
50. What is the purpose of diversification in investment?
A. Maximize risk
B. Minimize returns
C. Minimize risk
D. Maximize debt
The correct answer is Minimize risk, as diversification reduces the potential impact of any single asset’s poor performance.
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