Which of the following is a normative statement?

:br

::indent
- A. $\hspace{1em}$ The inflation rate is 2$\%$ higher than last year

- B. $\hspace{1em}$ The economy has grown faster this year than last year
- C. $\hspace{1em}$ The unemployment rate has fallen by 5$\%$
- D. $\hspace{1em}$ The richest 10$\%$ of people own too much wealth 


Which of the following falls within the realm of normative economics?

:br

::indent
- A. $\hspace{1em}$ The use of value judgments

- B. $\hspace{1em}$ The use of models 
- C. $\hspace{1em}$ The use of logic
- D. $\hspace{1em}$ The possibility of refutation


Identify the positive statement from the following choices: 

:br

::indent
- A. $\hspace{1em}$ Public education is provided free by the government.

- B. $\hspace{1em}$ Education must be provided free of charge by the government.
- C. $\hspace{1em}$ The government budget for public education must be increased.
- D. $\hspace{1em}$ Public education ought to be better than private education.


Define the term $\text{\textquotedblleft}$ceteris paribus$\text{\textquotedblright}$.

:br

::indent

- A. $\hspace{1em}$ All other things are held constant forever.

- B. $\hspace{1em}$ All other things are held constant.
- C. $\hspace{1em}$ All other things are unimportant.
- D. $\hspace{1em}$ All other things are equally important.


:::center
**Figure 1**
![EC0366 fig1](question:5d4bffd3-29de-49de-b75e-0f37331c1923)
:::

:br

1.  Describe the opportunity costs faced by the economy shown in **Figure 1**. :marks[2]

:br

2.  Using **Figure 1**, describe how a production possibilities curve illustrates the concepts of scarcity and opportunity cost.  :marks[3]


Which of the following is **not** one of the basic economic questions?

:br

::indent
- A. $\hspace{1em}$ Why to produce?

- B. $\hspace{1em}$ How to produce?
- C. $\hspace{1em}$ What to produce?
- D. $\hspace{1em}$ For whom to produce?


Assume a hypothetical complex and open economy. 

From the following list, identify the leakages from the economy's circular flow of income:

::indent
- I. $\hspace{1em}$ Taxes
- II. $\hspace{.7em}$ Export revenue
- III. $\hspace{.4em}$ Saving

:br

::indent

- A. $\hspace{1em}$ I only

- B. $\hspace{1em}$ I and III only
- C. $\hspace{1em}$ I, II, and III
- D. $\hspace{1em}$ II and III only


Which of the following statements is **not** true about the circular flow of income model?

:br

::indent
- A. $\hspace{1em}$ It illustrates interdependence between various economic agents interacting within an economic system

- B. $\hspace{1em}$ It shows the inputs, outputs, income, and expenditure flowing within an economy, along with multiple leakages and injections
- C. $\hspace{1em}$ If injections are smaller than leakages then national income will tend to decrease
- D. $\hspace{1em}$ If injections increase, then leakages will tend to decrease


Despite showing resilience to the global economic depression starting in 1929, the Soviet planned economy was unable to withstand the test of time. Output from its free market capitalist counterparts regularly far exceeded its own economic growth rates. The lack of dynamic growth in the Soviet economy has been mirrored in modern contexts when looking at the economies in countries such as North Korea and Cuba.

:br

Outline the differences in how free markets and planned economies answer the basic economic questions. :marks[3]

Identify which of the following is **not** a feature of a mixed economy.

:br

::indent
- A. $\hspace{1em}$ private ownership of the factors of production

- B. $\hspace{1em}$ resource allocation is influenced by the desire for profit
- C. $\hspace{1em}$ forces of demand and supply allocate resources
- D. $\hspace{1em}$ government officials decide how to distribute output


Which of the following is **not** a free good?

:br

::indent

- A. $\hspace{1em}$ Sunshine 

- B. $\hspace{1em}$ Rain
- C. $\hspace{1em}$ Fresh air
- D. $\hspace{1em}$ Free school lunches


Which of the following correctly states an example of land and an example of capital?

:br

:::tableoptions{col1="hide"}
| | Land | Capital |
| :-: | :-: | :-: |
| $\hspace{1.5em}$A.$\hspace{1.5em}$| Natural gas | A manager |
|$\hspace{1.5em}$B.$\hspace{1.5em}$ | Pesticides | A factory |
| $\hspace{1.5em}$C.$\hspace{1.5em}$ | Wild fish | An oven |
| $\hspace{1.5em}$D.$\hspace{1.5em}$ | A tractor | An MRI machine |

With regards to the origin of economic ideas in a historical context, which of the following happened in the 19th century?

:br

::indent
- A. $\hspace{1em}$ The Keynesian revolution

- B. $\hspace{1em}$ The Marxist critique of classical economic thought
- C. $\hspace{1em}$ The rise of macroeconomic policy
- D. $\hspace{1em}$ The monetarist/new classical counter revolution


Which of the following is a feature of the $\text{\textquoteleft}$circular economy' which has become more popular in 21st-century economic thought?

:br

::indent
- A. $\hspace{1em}$ Emphasizing repair, refurbishment, and remanufacture

- B. $\hspace{1em}$ Designing products to be replaced after a while 
- C. $\hspace{1em}$ Extracting materials for all new products from the environment
- D. $\hspace{1em}$ Once used, products end up in landfill sites


Which of the following statements can be true of a free-market economy?
::indent
- I. $\hspace{1em}$ Resources are owned by private individuals
- II. $\hspace{.7em}$ Income is distributed on the basis of individual's productivity
- III. $\hspace{.4em}$ A free-market economy results in unequal distribution of income 

:br

::indent
- A. $\hspace{1em}$  I only

- B. $\hspace{1em}$  I and II only
- C. $\hspace{1em}$  II and III only
- D. $\hspace{1em}$  I, II, and III


Which of the following statements correctly describe the circular flow of income model?

::indent
- I. $\hspace{1em}$ Import spending is a leakage; export revenue is an injection
- II. $\hspace{.7em}$ Investment spending is an injection; saving is a leakage 
- III. $\hspace{.4em}$ Wages are the factor payment for labour
- IV. $\hspace{.4em}$ Interest is the factor payment for  entrepreneurship 

:br

::indent
- A. $\hspace{1em}$ I only

- B. $\hspace{1em}$ I and II only
- C. $\hspace{1em}$ I, II, and III only
- D. $\hspace{1em}$ I, II and IV only


What allocates resources in a fully planned economy?

:br

::indent
- A. $\hspace{1em}$ The choices of consumers

- B. $\hspace{1em}$ The functions of the price mechanism
- C. $\hspace{1em}$ The problem of scarcity
- D. $\hspace{1em}$ The decisions of government officials


Identify the key concept associated with each statement:
::indent
- I. $\hspace{1em}$ Human wants are unlimited and exceed what can actually be produced to fulfil these wants
- II. $\hspace{.7em}$ Resources should be used in the best possible way for society, ensuring minimum waste
- III. $\hspace{.4em}$ Resources should be used in a way that does not limit future generations from also benefiting from the resources

:br

:::tableoptions{col1="hide"}
| | Statement I | Statement II |Statement III|
| :-: | :-: | :-: | :-: |
| $\hspace{1.5em}$A.$\hspace{1.5em}$| Sustainability | Equity | Interdependence|
|$\hspace{1.5em}$B.$\hspace{1.5em}$ | Scarcity | Efficiency | Sustainability |
| $\hspace{1.5em}$C.$\hspace{1.5em}$ | Efficiency | Scarcity |Economic well-being|
| $\hspace{1.5em}$D.$\hspace{1.5em}$ | Scarcity | Equity |Efficiency|


:br

:::center
![EC0014](question:b41b7914-28ab-47bd-9a20-05ca44705493)
:::

Which of the following would cause the shift from PPC$_1$ to PPC$_2$ in the diagram above?

:br

::indent

- A. $\hspace{1em}$ A fall in unemployment

- B. $\hspace{1em}$ A natural disaster
- C. $\hspace{1em}$ A rise in labour productivity
- D. $\hspace{1em}$ Migration from the country


Which of the following statements is true?

:br

::indent
- A. $\hspace{1em}$ Households only receive wages, rent, and interest as flows of income.

- B. $\hspace{1em}$ The payment to capital is profit.
- C. $\hspace{1em}$ In an open economy, all income is spent on domestically produced goods and services.
- D. $\hspace{1em}$ Government spending can be greater than tax revenue. 


Say's Law of Markets can be summarised as $\text{\textquoteleft}$supply creates its own demand'. What does this economic principle mean?

:br

::indent
- A. $\hspace{1em}$ If a product is supplied, then households will immediately buy it.

- B. $\hspace{1em}$ If a product is supplied, then households will eventually want it.
- C. $\hspace{1em}$ If a product is supplied, then households will have the income to demand it.
- D. $\hspace{1em}$ If a product is supplied, then households will be dependent on it.


Maximisation of utility assumes:

:br

::indent
- A. $\hspace{1em}$ consumers are rational and that their purchases of goods and services will maximise their satisfaction

- B. $\hspace{1em}$ producers are rational and that they would always maximise their profits
- C. $\hspace{1em}$ governments are rational, and they would always maximise their tax revenues.
- D. $\hspace{1em}$ consumers make choices out of habit


The 2 sector circular flow of income model shows:

:br
::indent
- A. $\hspace{1em}$ injections increase national output

- B. $\hspace{1em}$ income equality
- C. $\hspace{1em}$ the flow of money from households to firms but not vice-versa
- D. $\hspace{1em}$ income flows to owners of factors of production


:::center
![image](question:8f72ae41-da5f-4094-bb07-c00350ace137)
:::

Referring to the PPCs above, identify the factors that would cause the changes illustrated in Figure 1 and Figure 2.

:br

:::tableoptions{col1="hide"}
| | Figure 1 | Figure 2 |
| :-: | :-: | :-: | 
| $\hspace{1.5em}$A.$\hspace{1.5em}$| an increase in the quantity of resources | an increase in the quality of resources | 
|$\hspace{1.5em}$B.$\hspace{1.5em}$ | an increase in the quality of resources | an increase in the quantity of resources | 
| $\hspace{1.5em}$C.$\hspace{1.5em}$ | an increase in the quality of resources | a reduction in unemployment |
| $\hspace{1.5em}$D.$\hspace{1.5em}$ | a reduction in unemployment | an increase in the quantity of resources |




:::center
![image](question:fcdf35bc-1f07-4ecd-a74e-01ea99e3faf7)
:::

An economy is initially producing the combination of consumer goods and producer goods shown by point **X**. If there is no change in the quantity or quality of the factors of production, which new point represents a change toward producing more consumer goods?

:br

::indent
- A. $\hspace{1em}$ A

- B. $\hspace{1em}$ B

- C. $\hspace{1em}$ C

- D. $\hspace{1em}$ D

All Questions for Topic 1 (Foundations). 
        Scarcity, Choice, and the PPC, How Economists Approach the World

Original Data Response Questions to develop skills in analysing and evaluating data that you need for Paper 2 and 3. 

Foundations

Foundations (all)

EC0162

EC0012

EC0160

EC0007

EC0021

EC0014

EC0158

EC0366

EC0370

EC0165

EC0166

EC0161

EC0023

Scarcity, Choice, Opportunity Cost, Production Possibilities Curve, Circular Flow Model

Scarcity, Choice, and the PPC

EC0159

EC0178

EC0011

EC0013

EC0016

EC0179

EC0157

EC0015

Economic Methodology, History of Economic Thought

How Economists Approach the World

EC0022

EC0163

EC0164

EC0024

Microeconomics Part I

Demand, Supply, and Equilibrium

EC0218

EC0219

EC0216

EC0032

EC0136

EC0223

EC0220

EC0217

EC0133

EC0425

EC0451

EC0446

EC0376a

Elasticities

EC0228

EC0042

EC0034

EC0037

EC0169

EC0167

EC0502hl

EC0374

EC0368

EC0369

EC0376b

Law of Demand, Law of Supply, Determinants of Demand & Supply, Equilibrium, the Price Mechanism, Allocative Efficiency

Demand & Supply, Equilibrium

EC0135

EC0031

EC0033

EC0017

EC0134

EC0018

EC0019

EC0020

EC0215

EC0377a

EC0221

EC0222

EC0224

EC0460

EC0375

EC0559

EC0569

EC0570

EC0571

Price Elasticity of Demand (PED), Income Elasticity of Demand, Price Elasticity of Supply (PES)


IB Economics HL - Questionbank

Topic 1 All - Foundations

Question 1

Question 2

Question 3

Question 4

Question 5

Question 6

Question 7

Question 8

Question 9

Question 10

Question 11

Question 12

Question 13

Question 14

Question 15

Question 16

Question 17

Question 18

Question 19

Question 20

Question 21

Question 22

Question 23

Question 24

Question 25

#1 IB Math Resource

34% Grade Increase

80% of IB Students

More IB Econ HL Resources

Questionbank

Data Response Questions

Practice Exams

Past Papers