Free GCE O Level Economics June 2016 Past Paper 1 Questions

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Subject Code	0525
Subject Title	O Level Economics
Session	June 2018 Paper 1

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Cameroon GCE O Level Economics Paper 1 Solution - June 2023

1. Money whose face value is greater than the value of its metal content is known as:

A. Standard money

B. Token money

C. Paper money

D. Near money

2. Industries producing commodities that are fragile are better located:

A. Near the source of raw materials

B. Near the source of power

C. Near the market outlets

D. Near the source of power

3. When net migration is positive, it implies that:

A. Immigrants are greater than emigrants

B. Emigrants are greater than immigrants

C. Immigrants are less than emigrants

D. Rural urban migrants are greater than urban rural migrants

4. Co-operative societies that buy and retail goods to members are:

A. Thrift and loan co-operative societies

B. Producers co-operative societies

C. Marketing co-operative societies

D. Consumers co-operative societies

5. Which of the following documents give a public limited company the right to commence business?

A. Articles of Association

B. Certificate of Trading

C. Memorandum of Association

D. Certificate of Incorporation

6. Any addition to the stock of capital is known as:

A. Net investment

B. Real investment

C. Gross investment

D. True investment

7. The economic concept of choice is as a result of:

A. Opportunity cost

B. Scale of preference

C. Unlimited wants

D. Scarce resources

8. How is an economic good similar to a free good?

A. Both yield utility to consumers

B. Both are scarce relative to demand

C. Both are free gifts of nature

D. Both command a price in the market

9. Study the table illustrating the utility pattern of a consumer of palm wine:

Number of cups of palm wine: 1, 2, 3

Total utility (in utils): 10, 19, 24

What is this consumer’s marginal utility when he consumes 2 cups of palm wine?

A. 14 utils

B. 9 utils

C. 10 utils

D. 5 utils

10. The practice of mono-cropping over a large piece of land is known as:

A. Subsistence farming

B. Commercial farming

C. Plantation farming

D. Co-operative farming

11. The population of a country is 16 million people and the working population which is 47.5% is effectively employed. What is the number of unemployed?

A. 8,400,000 people

B. 9,600,000 people

C. 5,600,000 people

D. 6,400,000 people

12. When total output is increasing at an increasing rate, the return to variable factors is:

A. Constant

B. Increasing

C. Decreasing

D. Negative

13. The main aim of backward vertical integration is to:

A. Acquire more market outlets

B. Gain monopoly power

C. Secure the supply of raw materials

D. Increase retail shops

14. This question is based on the diagram showing cost of production:

When output is 60 pens, the variable cost is:

A. 1,000 FCFA

B. 2,000 FCFA

C. 4,000 FCFA

D. 3,000 FCFA

15. Use this diagram and answer the question that follows:

Cocoa and Bananas → Chocolate and Biscuits → Wholesale and Retailer → Consumers

Which letter represents the destruction of utilities?

A. A

B. B

C. C

D. D

The correct answer is "D. Destruction of utilities occurs at the final stage, where goods are consumed."

16. To which of the following trade blocs does Cameroon belong?

A. CEMAC

B. UDEAC

C. ECOWAS

D. ECCAS

The correct answer is "B. UDEAC." Cameroon is a member of the Central African Economic and Monetary Community.

17. When the government uses taxation to regulate the economy, she is using what policy?

A. Monetary policy

B. Fiscal policy

C. Physical policy

D. Government policy

The correct answer is "B. Fiscal policy." Taxation and government spending are tools of fiscal policy.

18. Which name would you give to trade among CEMAC member states?

A. Foreign trade

B. Bilateral trade

C. International trade

D. Multilateral trade

The correct answer is "A. Foreign trade." Trade within regional blocs is considered foreign trade among member states.

19. Use the data and answer the question that follows:

Year: 2010 - 2011 - 2012
Index of Export Prices: 100 - 150 - 130
Index of Import Prices: 100 - 120 - 140

Calculate the terms of trade for 2011:

A. 125

B. 80

C. 120

D. 100

The correct answer is "C. 120." Terms of trade = (Export Price Index / Import Price Index) × 100 = (150/120) × 100 = 120.

20. A country registered 200,000 emigrants and 500,000 immigrants in 2012. Net migration is:

A. 300,000

B. -300,000

C. 700,000

D. 700,000

The correct answer is "D. 700,000." Net migration = Immigrants - Emigrants = 500,000 - 200,000 = 700,000.

21. Which of the following is a feature of developed countries?

A. High dependency ratio

B. High birth rate

C. High standard of living

D. High level of unemployment

22. What will determine the exchange rate for any currency if we have a free floating exchange rate?

A. The demand for it

B. The supply for it

C. The demand for and supply for it

D. The exchange rate policy

23. A commercial bank operating with a cash ratio of 10%, received bank deposits of 10,000,000 FCFA. Which amount will it keep as cash reserves?

A. 1,000,000 FCFA

B. 9,900,000 FCFA

C. 1,900,000 FCFA

D. 9,000,000 FCFA

24. Which function of money enables the state to collect taxes from individuals?

A. Store of value

B. Measure of value

C. One way payment

D. Medium of exchange

25. A cocoa producer in Cameroon sells his cocoa in Britain for 12,000 FCFA while in Cameroon, he sells it at 15,000 FCFA. How can this be best described?

A. Dumping

B. Devaluation

C. Revaluation

D. Black marketing

26. Excise duties are defined as:

A. Taxes on goods and services

B. Taxes on homemade goods and services

C. Taxes on imported goods and services

D. Taxes on consumer goods

27. Which of the following factors can affect the demand for a commodity?

A. The availability of hire purchase facilities

B. The degree of necessity

C. The size of stock available

D. The number of uses of the good

28. The holding of money to take care of any eventual sickness in the family is known as:

A. Transactions motive

B. Precautionary motive

C. Speculative motive

D. Idle balances

29. In which market does the buying and selling of the FCFA take place?

A. Stock exchange market

B. Capital market

C. Money market

D. Foreign exchange market

The correct answer is "Foreign exchange market." The FCFA is a currency traded in foreign exchange markets.

30. Which of the following types of agriculture is involved in the cultivation of foodstuff mainly for family consumption?

A. Plantation agriculture

B. Commercial agriculture

C. Peasant farming

D. Arable farming

The correct answer is "Peasant farming." This type of agriculture is for subsistence, primarily aimed at feeding families.

31. A population in which a greater proportion is made up of old people can be described as:

A. Sparse population

B. Underpopulation

C. Expanding population

D. Declining population

The correct answer is "Declining population." A population with a high proportion of elderly individuals is often considered to be in decline due to lower birth rates.

32. The weekly incomes of five (5) sons are as: 2,500 FCFA, 3,000 FCFA, 3,500 FCFA, 4,000 FCFA, and 4,500 FCFA. Calculate the mean weekly income.

A. 4,000 FCFA

B. 3,500 FCFA

C. 3,500 FCFA

D. 2,500 FCFA

The correct answer is "3,500 FCFA." The mean is calculated by summing the incomes (18,000 FCFA) and dividing by 5, giving 3,500 FCFA.

33. A negative income elasticity of demand suggests that the commodity is:

A. An inferior good

B. A normal good

C. A Veblen good

D. A good of ostentation

The correct answer is "An inferior good." Negative income elasticity means demand decreases as income increases, which is typical for inferior goods.

34. Paul has 400,000 FCFA and he sets aside 120,000 FCFA to buy bread. If a loaf of bread sells at 300 FCFA, what quantity of bread will he buy?

A. 600 loaves

B. 500 loaves

C. 400 loaves

D. 300 loaves

The correct answer is "400 loaves." Dividing the 120,000 FCFA by the price per loaf (300 FCFA) gives 400 loaves.

35. In which market structure are firms said to be "price takers"?

A. Monopoly

B. Monopolistic competition

C. Perfect competition

D. Monopsony

The correct answer is "Perfect competition." In this structure, firms cannot set prices and must accept the market equilibrium price.

36. What is the main function of an entrepreneur?

A. Providing capital

B. Insuring the enterprise against risks

C. Employment of workers

D. Risk bearing

The correct answer is "Risk bearing." Entrepreneurs are known for taking risks to establish and manage businesses.

37. Which taxation system may help to reduce the gap between the rich and the poor?

A. Progressive tax system

B. Flat rate tax system

C. Proportional tax system

D. Regressive tax system

The correct answer is "Progressive tax system." This system taxes higher-income earners at a higher rate, reducing income inequality.

38. If government expenditure is 42 billion FCFA and her revenue stands at 40 billion FCFA, this type of budget is called:

A. Balanced budget

B. Neutral budget

C. Budget deficit

D. Budget surplus

The correct answer is "Budget deficit." Expenditure exceeding revenue results in a deficit.

39. Another name for fixed costs is:

A. Prime costs

B. Supplementary costs

C. Explicit costs

D. Sunk costs

The correct answer is "Explicit costs." Fixed costs remain constant regardless of output.

40. Which type of production is a musician involved in when entertaining his fans?

A. Indirect production

B. Direct production

C. Tertiary production

D. Primary production

The correct answer is "Direct production." A musician's performance directly entertains fans without intermediaries.

41. Peter changes his job from a cook to a bus driver. This is an example of:

A. Occupational mobility of labour

B. Geographical mobility of labour

C. Voluntary mobility of labour

D. Horizontal mobility of labour

The correct answer is "Occupational mobility of labour." Peter has changed his job from one type to another.

42. Study this diagram that shows the shape of a supply curve. What is the price elasticity of supply between points A and C?

A. 1.67

B. 1.33

C. 1.85

D. 2.46

The correct answer is "1.33." This is calculated as the percentage change in quantity divided by the percentage change in price.

43. A debt incurred by the state to finance a war is known as:

A. National debt

B. Internal debt

C. Deadweight debt

D. External debt

The correct answer is "Deadweight debt." It is a debt that does not yield any future economic benefits.

44. Study the balance sheet of a commercial bank and answer the question that follows:

Items	Amount (in million FCFA)
Notes and coins in till	5
Investment	25
Treasury bills	10
Advances to customers	50
Deposits with the central bank	5

What is the value of the bank’s liquid assets?

A. 75 million FCFA

B. 95 million FCFA

C. 45 million FCFA

D. 85 million FCFA

The correct answer is "95 million FCFA." Liquid assets include notes and coins, treasury bills, and deposits with the central bank (5 + 10 + 5 = 95 million FCFA).

45. In National Income, factor incomes flow from:

A. Firms to households

B. Households to firms

C. Consumers to producers

D. Government to consumers

The correct answer is "Firms to households." Factor incomes like wages, rent, and profits are paid by firms to households for the use of resources.

46. All things being equal, which of the countries in the diagrams illustrating the production possibility curves experience a higher economic growth?

A. Diagram A

B. Diagram B

C. Diagram C

D. Diagram D

The correct answer is "Diagram B." Economic growth is represented by an outward shift in the production possibility curve.

47. Given a Gross National Product of 5,600 billion FCFA and a National Income of 5,110 billion FCFA, what is the value of depreciation of productive assets of the nation?

A. 10,710 billion FCFA

B. 5,600 billion FCFA

C. 490 billion FCFA

D. 5,110 billion FCFA

The correct answer is "490 billion FCFA." Depreciation is calculated as GNP - National Income (5,600 - 5,110 = 490 billion FCFA).

48. Economic planning in Cameroon is necessary in order to:

A. Improve on trade

B. Encourage investment

C. Attract foreign investment

D. Ensure balanced development

The correct answer is "Encourage investment." Economic planning helps allocate resources effectively to boost investment.

49. A cheque is a written order by a drawer to a drawee to pay a specified sum of money to a payee. The drawee in this case is:

A. The owner of the bank account

B. The bank where the bank account is

C. The beneficiary to the cheque

D. The creditor of the bank

The correct answer is "The bank where the bank account is." The drawee is the institution responsible for paying the cheque.

50. The most profitable function of a commercial bank is:

A. Accepting deposits

B. Agent of payments

C. Giving out loans and advances

D. Issuing cheques to customers

The correct answer is "Giving out loans and advances." This is the main way commercial banks earn profit through interest.

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