Free GCE O Level Economics June 2019 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. Touch-light and battery are good examples of:

A. Joint demand

B. Composite demand

C. Competitive demand

D. Derived demand

The correct answer is "Derived demand."

2. The supply of labour can be increased by:

A. An increase in the school leaving age

B. An increase in education and training

C. An increase in retirement age

D. An increase in welfare services

The correct answer is "An increase in education and training."

3. Which one of the following is likely to cause inflation?

A. Increase in direct taxes

B. Budget surplus

C. Sale of securities to the general public

D. Increase in indirect taxes

The correct answer is "Increase in indirect taxes."

4. Weight-losing industries are likely to locate:

A. Near the market

B. Near the source of raw materials

C. Near the source of power

D. Near the source of labour

The correct answer is "Near the source of raw materials."

5. Assuming there are four consumers of fish in town X: Miss A, B, C, and Mr. D. From Monday to Sunday, Miss A bought 4 kg on Monday and 1 kg on Saturday; Miss B bought 3 kg on Wednesday; Miss C and Mr. D bought 5 kg each on Tuesday and Sunday respectively. What is the weekly demand at 850 FRS per kg?

A. 850 kg

B. 13 kg

C. 18 kg

D. 12 kg

The correct answer is "18 kg."

6. Question 6 is based on the following data on population:

Population (millions): 50, 70, 90, 100

Food production (million tonnes): 220, 210, 225, 275

The optimum population size in the data will be:

A. 70

B. 50

C. 90

D. 100

The correct answer is "90."

7. A tax system in which the tax rate increases as income falls is described as:

A. Regressive tax

B. Progressive tax

C. Flat rate tax

D. Proportional tax

The correct answer is "Regressive tax."

8. The following data represents some items of a commercial bank’s balance sheet:

Site deposit	30
Loans and advances	25
Current account deposit	65
Coin and bank notes	10

The sum of the bank’s liabilities will be:

A. 95m Fefa

B. 35m Fefa

C. 55m Fefa

D. 130m Fefa

The correct answer is "130m Fefa."

9. 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."

10. 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."

11. When the price of garri increases from 50 FRS a cup to 100 FRS a cup, the supply of garri increases from 5 basins to 15 basins. The numerical coefficient of price elasticity of supply is:

A. 0.5

B. 3

C. 0.3

D. 2

The correct answer is "3."

12. 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 "The company does not have to pay debts."

13. The bank rate is generally fixed by:

A. ECO Bank

B. BICEC

C. BEAC

D. NFC

The correct answer is "BEAC."

14. The following are items of a country’s balance of payment:

ITEMS
Visible imports: 17,000 Million F (CFA)
Visible exports: 15,000 Million F (CFA)
Invisible imports: 10,000 Million F (CFA)
Invisible exports: 20,000 Million F (CFA)

What is the value of the balance of trade?

A. 8,000M F (CFA)

B. -2,000M F (CFA)

C. 10,000M F (CFA)

D. -10,000M F (CFA)

The correct answer is "-2,000M F (CFA)."

15. Given that fixed cost is 50,000 CFA, variable cost is 150,000 CFA, and the output is 50 units, what will be the average total cost of producing one unit?

A. 6,000 CFA

B. 4,000 CFA

C. 5,000 CFA

D. 2,000 CFA

The correct answer is "4,000 CFA."

16. 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 finality of the tax."

17. The merging of firms engaged 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."

18. 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 "Minimum price control."

19. Factory building, machinery, and raw materials are examples of:

A. Business wealth

B. Social wealth

C. Collective wealth

D. Public wealth

The correct answer is "Collective wealth."

20. A characteristic of plantation agriculture is:

A. Mixed cropping

B. Mono cropping

C. Bush fallowing

D. Shifting cultivation

The correct answer is "Mono cropping."

21. The use of government income and expenditure to regulate the economy falls under:

A. Physical policy

B. Regional policy

C. Fiscal policy

D. Monetary policy

The correct answer is "Fiscal policy."

22. If we assume that the demand for a good is represented by Qd = 20 − 4P and supply by Qs = 6P − 10, where P represents the price of the good and Q represents quantity demanded and supplied. What is the equilibrium quantity?

A. 3 units

B. 14 units

C. 12 units

D. 8 units

The correct answer is "14 units."

23. The following data represents the quantities of fish bought by seven restaurants in a market: 30, 70, 40, 3, 30, 20, 10. The mode will be:

A. 30

B. 29

C. 60

D. 3

The correct answer is "30."

24. A fall in the external value of a country’s currency due to changes in the forces of demand and supply is termed:

A. Devaluation of the currency

B. Revaluation of the currency

C. Appreciation of the currency

D. Depreciation of the currency

The correct answer is "Devaluation of the currency."

25. The price paid for human efforts in production is:

A. Bonus

B. Wages

C. Profit

D. Interest

The correct answer is "Wages."

26. Given that a country has a Gross National Product of 200 million F (CFA) in a year with a population of 5 million inhabitants, the Gross National Product per capita will be:

A. 40 F (CFA)

B. 4000 F (CFA)

C. 40,000 F (CFA)

D. 40m F (CFA)

The correct answer is "40 F (CFA)."

27. If the birthrate of a country remains constant and death rate declines, population size will:

A. Fall

B. Expand

C. Remain constant

D. Fluctuate

The correct answer is "Expand."

28. When Mr A is granted a loan of 300,000 FRS on an interest of 3% per annum, the interest he will pay per year will be:

A. 9000 FRS

B. 12000 FRS

C. 3000 FRS

D. 90000 FRS

The correct answer is "9000 FRS."

29. Small farms that grow cash crops to later supply to the main plantations are called:

A. Small plantations

B. Commercial farms

C. Subsistence farms

D. Small holders scheme

The correct answer is "Small holders scheme."

30. The expression “Terms of trade” is used to describe:

A. The difference between invisible export and import

B. The difference between visible export and import

C. The rate at which export are exchanged for import

D. The rate at which the country’s currency is exchanged for another

The correct answer is "The difference between visible export and import."

31. A firm produces 50 units of output with a total variable cost (TVC) of 200 FRS and total fixed cost (TFC) of 300 FRS. Its average cost will be:

A. 2

B. 4

C. 6

D. 10

The correct answer is "6."

32. Question 32 is based on the diagram below showing various tax systems:

A. D

B. C

C. B

D. A

The correct answer is "C."

33. Which of the following is an example of a non-renewable resource?

A. Mineral deposit

B. Skilled labour

C. Unskilled labour

D. Forest

The correct answer is "Mineral deposit." Non-renewable resources are those that cannot be replenished on a human timescale. Mineral deposits like coal, oil, and natural gas are finite and take millions of years to form. For example, once an oil field is depleted, it cannot regenerate quickly, making it non-renewable. In contrast, forests (if managed sustainably) can regrow, making them renewable resources.

34. An approach of calculating national income that involves the addition of the final values of transport, agriculture, and other services is known as:

A. Expenditure method

B. Output method

C. Income method

D. Value-added method

The correct answer is "Value-added method." This method calculates national income by adding the value added at each stage of production across all sectors (e.g., agriculture, transport). For example, in the agricultural sector, the value of crops sold minus the cost of seeds and fertilizers gives the added value. This method ensures there is no double counting in GDP calculation.

35. The type of capital invested that carries the least risk is:

A. Ordinary shares

B. Cumulative preference shares

C. Participating preference shares

D. Debentures

The correct answer is "Participating preference shares." These shares guarantee a fixed dividend, and shareholders may receive additional profits if the company performs well. This makes them less risky than ordinary shares, where dividends are not guaranteed. For example, in a stable company, holders of participating preference shares are prioritized over ordinary shareholders when dividends are distributed.

36. Which of the following is a limitation to credit creation by commercial banks?

A. An increase in minimum lending rate

B. Availability of collateral security

C. Reduction in cash ratio

D. An increase in bank deposits

The correct answer is "Availability of collateral security." Commercial banks require borrowers to provide collateral before loans are granted. For example, a farmer needing a loan might be required to use their land as collateral. If suitable collateral is unavailable, banks limit credit creation to minimize risks.

37. Scarcity will continue to be a global problem in the future because:

A. The quantity of resources will decline

B. Unlimited means and limited wants

C. Limited means and unlimited wants

D. Limited means and limited wants

The correct answer is "The quantity of resources will decline." Natural resources like water and fossil fuels are depleting due to overuse and environmental degradation. For instance, freshwater scarcity is becoming a significant issue as global populations grow, leading to increased competition for diminishing supplies.

38. Which of the following is an example of an invisible item in the current account of the balance of payment of Cameroon?

A. Export of cocoa from Cameroon

B. Import of computers from USA

C. Payment for shipping and civil aviation

D. Loans from IMF

The correct answer is "Payment for shipping and civil aviation." Invisible items refer to services or transactions that do not involve physical goods. For example, when Cameroon pays for international shipping services or aviation fees, these are recorded under invisible trade, unlike cocoa exports, which are tangible.

39. One common feature of a perfect market is:

A. Large number of buyers and few sellers

B. Limited knowledge of market conditions

C. Product differentiation

D. Homogeneous products

The correct answer is "Homogeneous products." A perfect market assumes all products are identical, leading to no brand preference among buyers. For instance, in agricultural markets, a kilogram of wheat from one farmer is treated the same as another, ensuring price uniformity.

40. The natural increase in population occurs when:

A. Immigration exceeds birth rates

B. Death rate exceeds birth rates

C. Birth rate exceeds death rate

D. Emigration exceeds immigration

The correct answer is "Birth rate exceeds death rate." Natural increase in population occurs when more people are born than those who die in a given period.

41. One cause of economic growth in an economy is:

A. Increase in output

B. Increase in technology

C. Increase in consumption

D. Increase in tax revenue

The correct answer is "Increase in technology." Technological advancements improve productivity and contribute to economic growth.

42. Payments made by the state to persons with no services rendered is called:

A. Transfer payments

B. Income payments

C. Free gifts

D. Social security payments

The correct answer is "Transfer payments." These are payments such as pensions or unemployment benefits given without any exchange of goods or services.

43. A shareholder that partakes in the profit of a limited liability business, receives:

A. Wages or salaries

B. Dividends

C. Profits

D. Interest

The correct answer is "Dividends." Shareholders are entitled to dividends as a share of the company's profit based on their investment.

44. One of the features of an underdeveloped economy is:

A. High literacy rate

B. High employment rate

C. High illiteracy rate

D. High capacity utilization

The correct answer is "High illiteracy rate." Underdeveloped economies typically face issues like lack of education and skills.

45. Roads and law and order, are examples of:

A. Merit goods

B. Free goods

C. Economic goods

D. Public goods

The correct answer is "Public goods." These are non-excludable and non-rivalrous, provided by the government for the benefit of society.

46. The central bank regulates commercial banks by:

A. Controlling foreign trade

B. Controlling interest rates

C. Financing public projects

D. Providing subsidies

The correct answer is "Controlling interest rates." The central bank uses tools like interest rate adjustments to influence the economy and regulate commercial banks.

47. The main objective of imposing tariffs is to:

A. Protect local industries

B. Increase exports

C. Reduce government revenue

D. Encourage imports

The correct answer is "Protect local industries." Tariffs make imported goods more expensive, thus encouraging the consumption of locally produced goods.

48. A country's balance of payments is a record of:

A. Government expenditures

B. Domestic trade

C. International trade and financial transactions

D. Tax revenues

The correct answer is "International trade and financial transactions." The balance of payments tracks all transactions between a country and the rest of the world.

49. An increase in demand without a change in supply will lead to:

A. A decrease in price

B. An increase in price

C. No change in price

D. A surplus in supply

The correct answer is "An increase in price." When demand rises and supply remains constant, prices tend to go up due to higher competition for the same quantity of goods.

50. The law of diminishing returns states that as more units of a variable factor are added to a fixed factor:

A. Total output increases at a constant rate

B. Marginal output increases indefinitely

C. Marginal output eventually decreases

D. Total output decreases immediately

The correct answer is "Marginal output eventually decreases." This occurs because the efficiency of additional input decreases when the fixed factor becomes a constraint.

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