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GCE Advanced Level Economics

Sample quiz, 10 questions, graded instantly.

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Q1
Broad Money ( $M_2$ ) in Sri Lanka is calculated by adding which of the following to Narrow Money ( $M_1$ )?
Currency held by the public
Demand deposits held by the public
Time and savings deposits held by the public at commercial banks
Government deposits at the Central Bank
Foreign currency deposits held by non-residents
Q2
A linear supply curve intersects the positive quantity axis (x-axis). Which of the following statements is true regarding its price elasticity of supply (PES)?
PES is greater than 1 at all points on the curve.
PES is equal to 1 at all points on the curve.
PES is less than 1 at all points on the curve.
PES is equal to 0 at all points on the curve.
PES approaches infinity as quantity increases.
Q3
Which of the following is considered an injection into the circular flow of income?
Savings
Taxes
Imports
Investment
Consumption
Q4
In economics, which of the following is considered a unique characteristic of 'Land' as a factor of production?
It is highly mobile geographically.
Its supply is perfectly elastic.
It is a free gift of nature with a strictly limited overall supply.
It is a produced means of production.
It depreciates in value over time due to wear and tear.
Q5
Which of the following best describes the concept of 'absolute poverty'?
The inability of a household to afford a basic minimum standard of living.
The condition where a household's income is lower than the national average income.
The income inequality existing between different regions of a country.
The poverty level measured based on the cultural norms of a society.
The lowest 10% of income earners in a given population.
Q6
When the price of a product increases from Rs. 100 to Rs. 120, the quantity demanded decreases from 500 units to 400 units. Using the point elasticity method based on the initial values, what is the price elasticity of demand?
-0.5
-0.8
-1.0
-1.2
-2.0
Q7
A developing nation opens its economy to international trade. Over the next decade, domestic firms experience increased innovation due to exposure to foreign competition, and the country's overall economic growth rate accelerates. In the context of international trade theory, how are these specific benefits classified?
As static gains, because they result from the initial reallocation of resources according to comparative advantage.
As static gains, because they improve the immediate consumption possibilities of the nation.
As absolute advantages, because the nation can now produce more than its trading partners.
As dynamic gains, because they relate to changes in the economy's productive capacity and growth over time.
As terms of trade improvements, because export prices have risen relative to import prices.
Q8
If the price of a complementary good decreases, what will be the effect on the market for the primary good?
An increase in the quantity demanded, represented by a downward movement along the demand curve.
A decrease in the quantity demanded, represented by an upward movement along the demand curve.
An increase in demand, represented by a rightward shift of the demand curve.
A decrease in demand, represented by a leftward shift of the demand curve.
No change in demand, but an increase in quantity supplied.
Q9
In the context of Sri Lanka, which of the following actions would most likely shift the long-run aggregate supply (LRAS) curve to the right?
Increasing the statutory reserve ratio for commercial banks.
Implementing a comprehensive infrastructure development project.
Increasing the value-added tax (VAT) rate on essential goods.
Providing cash transfers to low-income households.
Selling government treasury bills in the open market.
Q10
Cost-push inflation is most likely to be caused by which of the following?
A significant increase in consumer optimism leading to higher spending
An increase in government expenditure financed by borrowing
A sudden increase in the prices of imported raw materials
A reduction in direct taxes increasing disposable income
An expansionary monetary policy increasing the money supply

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