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Wycherley International School-Gampaha

Term 1- 2023/2024
Mid Term Examination-October
Economics

Grade 10 A/B Duration -: 1hr & 20 minutes

Name:………………………………………….. Grade:…………………………

INSTRUCTIONS
 Answer all questions.

 You may use a calculator.

INFORMATION

 Total marks for this paper is 50.

 The number of marks for each question or part question is shown in brackets

Question 1
Question 2
Question 3
Total

Question 1
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Underline the correct answer.

1.The following are a government’s receipts from taxation.

What is the total amount of revenue raised by direct taxes?

A $315m B $525m C $590m D $700m

2.A government lowers the rate of interest.

Who is most likely to be disadvantaged by this policy?
A house buyers
B manufacturers
C retailers
D savers

3. Which is a supply-side policy that would increase output in the long-run?

A an increase in benefit payments
B an increase in places at training colleges
C an increase in the rate of income tax
D an increase in the rate of tax employers pay

4. An unemployed worker accepts a job.

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What is most likely to cause economic growth?

A a better educated workforce

B a reduction in the right to own property

C decreased wages

D higher taxation

5. In recent years, governments have had to manage the effects of a world recession.
Which supply-side policy could have been used to stimulate economic growth?
A increases in income tax
B investment in skills training schemes
C payments of unemployment benefits
D reduction in interest rates

6. A government decided to increase its spending on building schools and hospitals.

Which aim of government policy is most likely to be achieved by this increase?
A a balance of payments surplus
B a stronger exchange rate
C economic growth
D price stability

7.What is an expansionary monetary policy?

A a decrease in the interest rate
B a decrease in the rate of value added tax
C an increase in the power of trade unions
D an increase in the standard rate of income tax.
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8. A government decides to increase the rate of income tax and spend the extra revenue
on providing training colleges.
How might this be described?
A as fiscal and monetary policy
B as fiscal and supply-side policy
C as fiscal, monetary and supply-side policy
D as monetary and supply-side policy

9. When is a tax progressive?

A when some goods have a higher tax than others

B when the rate of tax increases as income increases

C when the tax is linked to the rate of inflation

D when the tax is on incomes rather than on goods or services

10. The information below refers to an economy for a financial year.

government expenditure = $2866 million

government revenue = $1940 million

What was the budget balance of the government in that year?

A $926 million in deficit

B $4806 million in deficit

C $926 million in surplus

D $4806 million in surplus

(10 marks)
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Question 2

i.Identify one way in which monetary policy differ from fiscal policy (2)

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ii.Explain how a central bank might reduce household borrowings (6)

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iii. Analyse how a rise in investment could increase a country’s economic growth (6)

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iv. Discuss whether or not an increase in the rate of income tax will reduce the inflation(6)

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(Total=20 marks)

Question 3

i.State two reasons for levying taxes (2)

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ii.Explain two causes for inflation (4)

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iii.Analyse how supply side policy measures may reduce unemployment. (6)

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iv. Discuss whether or not firms will benefit from a fall in unemployment (8)

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(Total =20 marks)