AS Level Economics MCQs with answers
Practise AS Level Economics (9708) with 413 exam-style MCQs, each with the answer and a short explanation. Every test is marked the moment you finish and shows your score chapter by chapter, so you know what to revise next. It is free and needs no sign-up.
413 questions · 6 chapters · 12 Cambridge past papers · 5 mock exams
What each chapter covers 6 chapters
The questions follow the syllabus chapter by chapter. You can test the whole subject or one chapter at a time.
- Basic economic ideas and resource allocation 69 questionsScarcity, choice and opportunity cost, Economic methodology, Factors of production, Resource allocation in different economic systems, Production possibility curves, Classification of goods and services
- The price system and the microeconomy 83 questionsDemand and supply curves, Price elasticity, income elasticity and cross elasticity of demand, Price elasticity of supply, The interaction of demand and supply, Consumer and producer surplus
- Government microeconomy intervention 52 questionsReasons for government intervention in markets, Methods and effects of government intervention in markets, Addressing income and wealth inequality
- The Macroeconomy 90 questionsNational income statistics, Introduction to the circular flow of income, Aggregate Demand and Aggregate Supply analysis, Economic growth, Unemployment, Price stability
- Government macroeconomic intervention 50 questionsGovernment macroeconomic policy objectives, Fiscal policy, Monetary policy, Supply-side policy
- International economic issues 69 questionsThe reasons for international trade, Protectionism, Current account of the balance of payments, Exchange rates, Policies to correct imbalances in the current account of the balance of payments
Sample AS Level Economics MCQs with answers 12 questions
12 questions from the test, one or two from each chapter. Try each one, then open the answer.
1. What does a production possibility curve (PPC) show?
- A
the combinations of two goods that consumers would most like to buy with their incomes
- B
the actual output of two goods produced in a particular year
- C
the maximum output of two goods possible with all resources fully employed
- D
the combinations of two goods that earn firms the most profit
Show answer
Answer: C. A PPC shows the greatest possible combinations of two goods when all resources are fully and efficiently employed, given the state of technology. Actual output may lie inside it.
2. When is a market in equilibrium?
- A
when the demand and supply curves have exactly the same slope
- B
when firms are selling the largest quantity they are able to produce
- C
when quantity demanded equals quantity supplied at the ruling price
- D
when the price equals the average cost of production
Show answer
Answer: C. At equilibrium the plans of buyers and sellers match, so there is no excess demand or supply and no pressure for the price to change. People unwilling or unable to pay the price do not buy even at equilibrium.
3. Why do many buffer stock schemes eventually fail?
- A
the floor price is set too high, so the agency buys more than it sells
- B
the ceiling price is set too high, so the agency's stocks run out quickly
- C
the product can be stored cheaply for many years without spoiling
- D
the scheme causes the market price to fluctuate more than before
Show answer
Answer: A. If the floor price is above the long-run average market price, the agency buys far more than it sells, and stocks and storage costs grow until its funds run out. A low ceiling, not a high one, would exhaust the stocks.
4. Why is the short-run aggregate supply (SRAS) curve usually drawn sloping upwards?
- A
a higher price level reduces the real value of wealth, so households spend less
- B
in the short run all resources are fully employed
- C
higher prices reduce firms' profits, so they produce less
- D
with money wages fixed in the short run, higher prices make more output profitable
Show answer
Answer: D. In the short run some costs, especially money wages, do not change, so a higher price level raises the profit on extra output and firms supply more. The fall in real wealth as prices rise helps explain the slope of AD, not SRAS.
5. Which is an example of government capital (investment) spending?
- A
building a new motorway between two cities
- B
paying the salaries of police officers
- C
buying medicines for state hospitals
- D
paying pensions to retired civil servants
Show answer
Answer: A. Capital spending is on assets that will be used for many years, such as roads, schools and hospitals. Salaries and medicines are current spending, used up within the year, and pensions are transfer payments.
6. What is a likely consequence of a large and persistent current account surplus for the surplus country?
- A
upward pressure on its exchange rate, reducing export competitiveness
- B
downward pressure on its exchange rate, making its imports more expensive
- C
a fall in AD because its net exports are negative
- D
a need to borrow from abroad to pay for its imports
Show answer
Answer: A. Export earnings exceed spending abroad, so demand for the currency exceeds supply and it tends to appreciate, making exports dearer. A surplus adds to AD, and it is deficit countries that must borrow.
7. In economics, the short run is a period in which
- A
all factors of production can be varied
- B
the state of technology is able to change
- C
less than one calendar year has passed
- D
at least one factor of production is fixed
Show answer
Answer: D. The short run is defined by fixed factors, not by calendar time. In the long run all factors can be varied; in the very long run technology can change as well.
8. Consumers' incomes rise by 8%. The quantity demanded of a good falls from 250 to 240 units a week. What is the income elasticity of demand, and what type of good is it?
- A
−2; an inferior good
- B
+0.5; a normal good
- C
−0.5; a necessity
- D
−0.5; an inferior good
Show answer
Answer: D. %ΔQ = −10 ÷ 250 = −4%, so YED = −4 ÷ 8 = −0.5. A negative YED means demand falls as income rises, so the good is inferior. A necessity is a normal good with YED between 0 and 1.
9. A specific tax of $2 per unit is imposed on a good with a downward-sloping demand curve and an upward-sloping supply curve. What happens?
- A
the price paid by consumers rises by exactly $2 and the quantity traded falls
- B
the price paid by consumers rises by more than $2 and the quantity traded falls
- C
the price paid by consumers rises by less than $2 and the quantity traded is unchanged
- D
the price paid by consumers rises by less than $2 and the quantity traded falls
Show answer
Answer: D. The supply curve shifts up by $2. As the price rises, quantity demanded falls, so the new price is less than $2 above the old one and producers bear the rest. The full $2 is passed on only if demand is perfectly inelastic or supply is perfectly elastic.
10. An increase in AD raises the general price level. How is the response of firms shown on the SRAS curve?
- A
as a shift of the SRAS curve to the right
- B
as a movement up along the SRAS curve
- C
as a shift of the SRAS curve to the left
- D
as a movement down along the SRAS curve
Show answer
Answer: B. The SRAS curve already shows how much firms supply at each price level, so a higher price level caused by a change in AD is a movement along it. SRAS shifts only when something other than the price level changes, such as costs.
11. An economy is on the upward-sloping section of its aggregate supply curve. The government raises income tax. What is the most likely effect?
- A
AS shifts left; the price level rises and real output falls
- B
AD shifts right; the price level, real output and employment all rise
- C
AD shifts left; the price level falls, but real output and employment do not change
- D
AD shifts left; the price level, real output and employment all fall
Show answer
Answer: D. Higher income tax reduces disposable income and consumption, so AD shifts to the left. On the upward-sloping section this lowers both the price level (or the rate of inflation) and real output, so fewer workers are needed.
12. Which policy reduces a current account deficit mainly by encouraging people to buy domestic goods instead of imports, rather than by reducing total spending?
- A
a rise in the rate of income tax on all earners
- B
a rise in the central bank's interest rate
- C
an import quota on foreign-made cars
- D
a cut in government spending
Show answer
Answer: C. A quota switches spending from imports to domestic products. Higher taxes, higher interest rates and lower government spending work by reducing total spending, which cuts imports but also demand for domestic goods.
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Ways to practise 7 ways
- Quick check. 10 questions drawn fresh each time, about 10 minutes.
- By chapter. 10 questions from one chapter, for the topic you are revising now.
- Full paper. A full-length timed paper across the whole syllabus.
- Past papers. 12 Cambridge multiple-choice papers, answered on screen and marked for you.
- Mock exams. 5 full papers of our own questions in the style of the real paper.
- Practice mode. See the right answer and an explanation after every question, with no clock.
- Exam mode. Timed like the real paper, with no going back.
Common questions
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Are these past paper questions?
The 413 MCQs are our own, written to the syllabus in the style of the exam. The 12 Cambridge past papers are listed separately inside the test.
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Instantly. You get your score, the right answer and an explanation for every question, and a list of the topics to work on.
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