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SHUN TAK FRATERNAL ASSOCIATION LEUNG KAU KUI COLLEGE
F.6 Economics Mock Exam (2021-2022)
PAPER 1
8:30 am – 9:30 am (1 hour)
Date of Examination: 09 –03 – 2022
Name: ______________________
Class: __________
(
)
Group: X______
Marks:
/45
INSTRUCTIONS:
1. Read carefully the instructions on the Answer Sheet.
After the announcement of the start of
the examination, you should first stick a barcode label and insert the information required in
the spaces provided.
No extra time will be given for sticking on the barcode label after the
‘Time is up’ announcement.
2. When told to open this book, you should check that all the questions are there.
Look for the
words ‘END OF PAPER’ after the last question.
3. All questions carry equal marks.
4. ANSWRER ALL QUESTIONS.
You are advised to use an HB pencil to mark all the
answers on the Answer Sheet, so that wrong marks can be completely erased with a clean
rubber.
You must mark the answer clearly; otherwise you will lose marks if the answers
cannot be captured.
5. You should mark only ONE answer for each question. If you mark more than one answer,
you will receive NO MARKS for that question.
6. No marks will be deducted for wrong answers.
F.6 Economics I Mock Exam 21-22
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SHUN TAK FRATERNAL ASSOCIATION LEUNG KAU KUI COLLEGE
F.6 Economics Mock Exam (2021-2022)
PAPER 1
8:30 am – 9:30 am (1 hour)
Date of Examination: 09 – 03 – 2022
Name: ______________________
Class: _____ (
) Group: X____
Marks:
/ 45
Write down the answer of each question in the following table:
1
16
31
2
17
32
3
18
33
4
19
34
5
20
35
6
21
36
7
22
37
8
23
38
9
24
39
10
25
40
11
26
41
12
27
42
13
28
43
14
29
44
15
30
45
F.6 Economics I Mock Exam 21-22
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There are 45 questions in this paper. Choose the BEST answer for each question.
1.
Miss Lee bought a car. In which of the following situations will her opportunity cost of using the car
increase?
(1) The price of the car in the second-hand market increases.
(2) The performance of the car is worse than she expected.
(3) There are reports that the brake system of this car model is defective.
(4) The price of gasoline decreases.
2.
A.
(1) and (3) only
B.
(1) and (4) only
C.
(2) and (3) only
D.
(2) and (4) only
Which of the following are positive statements?
(1) Levying a vacant property tax will cause the prices of residential properties to decrease.
(2) Levying a capital gain tax can help improve income inequality.
(3) Increasing the salaries tax rate will not affect people’s work incentive.
3.
A.
(1) and (2) only
B.
(1) and (3) only
C.
(2) and (3) only
D.
(1), (2) and (3)
Which of the following(s) do/does not exist in a one-man economy?
(1) What to produce
(2) How to produce
(3) For whom to produce
A.
(1) only
B.
(2) only
C.
(3) only
D.
All of the above
F.6 Economics I Mock Exam 21-22
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4. The government of a country plans to sell premises in shopping centres run by the government at 60%
of the market price to local people. However, the premises must be for owners’ business use, and the
owners are not allowed to lease their premises out within 3 years or sell their premises within 5 years.
Which of the private property rights over the premises would be weakened?
(1) right to use
(2) right to derive income
(3) right to transfer
A.
(1) and (2) only
B.
(2) and (3) only
C.
(1) and (3) only
D.
All of the above
5. There are three private broadcasters in Hong Kong offering free television programmes. These free
television programmes are _____
A.
economic goods, because their demand is greater than their supply.
B.
free goods, because people can watch the television programmes without paying any
charges.
C.
public goods, because a person’s consumption of a television programme will not reduce
the amount available to others.
D.
6.
private goods, because they are produced by private firms.
Ryan employs Jessie to produce instructional cooking videos with a fixed monthly salary. Jessie shoots
these videos with her smartphone at home. Jessie engages in ______ and her income consists of
______.
A.
secondary production … wages
B.
secondary production … wages and interest
C.
tertiary production … wages
D.
tertiary production … wages and interest
F.6 Economics I Mock Exam 21-22
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7.
Which of the following is/are labour at a tutorial centre?
(1) students
(2) the receptionist who is paid a fixed monthly salary
(3) the tutors who are paid by a profit-sharing scheme
(4) the shareholders who do not participate in the management of the tutorial centre
8.
A.
(2) only
B.
(1) and (3) only
C.
(2) and (3) only
D.
(2), (3) and (4) only
Below is the input-output relationship of a factory:
Labour (units)
Machine (units)
Total product (units)
1
2
6
2
2
16
3
2
30
4
2
48
5
2
X
If diminishing marginal returns set in when the 5th unit of labour is employed, what is the possible
value of X?
A.
72
B.
70
C.
68
D.
65
F.6 Economics I Mock Exam 21-22
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9. In recent years, more and more companies have participated in the research and development of electric
vehicles, leading to an increase in the price of raw materials used to produce electric vehicle batteries. In
this case, the electric car companies ______
A.
enjoy external economies of scale.
B.
suffer from external diseconomies of scale.
C.
enjoy internal economies of scale.
D.
suffer from internal diseconomies of scale.
10. In March 2021, American chip supplier Qualcomm acquired the chip start-up Nuvia for US$1.4 billion.
Which of the following is the LEAST likely motive behind the expansion?
A.
to spread risks through business diversification
B.
to strive for a higher market share
C.
to strive for a higher profit for the company
D.
to enjoy economies of scale
11. Which of the following expenses of a restaurant belong to variable cost?
(1)
rent of the premises
(2)
overtime work allowance for the staff
(3)
expenses on buying food ingredients
(4)
expense on the business registration certificate
A.
(1) and (2) only
B.
(1) and (3) only
C.
(2) and (3) only
D.
(1), (2) and (3)
F.6 Economics I Mock Exam 21-22
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12.
The table below shows the revenue and cost schedule of a firm.
Output (units)
Total revenue ($)
Total cost ($)
Price ($)
1
10
8
10
2
20
15
10
3
30
25
10
4
40
36
10
5
50
48
10
What is the profit-maximising output level of the firm by marginal analysis?
13.
A.
2 units
B.
3 units
C.
4 units
D.
5 units
An online shop launches a promotion campaign which waives the fixed shipping fee for each order.
Which of the following statements are CORRECT?
(1)
The ratio of higher-priced goods sold to lower-priced goods sold will decrease.
(2)
More lower-priced goods will be sold.
(3)
The profit of the online shop will increase.
A.
(1) and (2) only
B.
(1) and (3) only
C.
(2) and (3) only
D.
(1), (2) and (3)
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14. The diagram below shows the market demand curve for private schools.
Price
A
B
0
D
Quantity
Which of the following reasons can best explain the change of the equilibrium position in the
private school market from A to B?
15.
A.
The government approves an increase in the fees of private schools.
B.
The government approves more applications for opening private schools.
C.
Fewer people are willing to engage in educational services.
D.
More people emigrate to other countries.
After the government increases the quota of good X from 10 to 15 units, the market price of good X
drops from $30 to $27. Which of the following is CORRECT?
A.
The consumers’ total expenditure on good X will decrease.
B.
There will be a shortage of good X in the market.
C.
The market price of substitutes for good X will increase.
D.
Within the above price range, the demand for good X is elastic.
F.6 Economics I Mock Exam 21-22
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16. Suppose Hong Kong employers need to pay a higher handling fee for hiring Indonesian domestic
helpers. At the same time, the average wage level in the Philippines has increased. Which of the
following diagrams could represent a result of the above events?
A.
Indonesian domestic helpers
Wage rate
B.
Indonesian domestic helpers
Wage rate
S1
S2
S2
S1
D2
0
D1
D1
Quantity
C.
Filipino domestic helpers
Wage rate
S2
0
0
Filipino domestic helpers
Wage rate
S2
S1
F.6 Economics I Mock Exam 21-22
Quantity
數量
Quantity
D.
S1
D2
D1
D2
0
D2
D1
Quantity
9
17. Refer to the following demand and supply schedules for good X.
Unit price ($)
20
22
24
26
28
Quantity demanded (units)
10
9
8
7
6
Quantity supplied (units)
8
8
8
8
8
Suppose the government raises the price ceiling from $20 to $26. Based on the above table, which of
the following statements is CORRECT?
A.
The market price will increase to $26.
B.
The quantity transacted will decrease by 3 units.
C.
Total sales revenue will increase by $32.
D.
There will be a surplus of 1 unit in the market.
18. Other things being constant, an increase in the price of good X will cause the total revenue of good Y
to decrease if _____
(1)
good X and good Y are substitutes.
(2)
good X and good Y are complements.
(3)
good X and good Y are in joint supply and the demand for good Y is inelastic.
(4)
good X and good Y are in competitive supply and the demand for good Y is inelastic.
A.
(1) only
B.
(1) and (3) only
C.
(2) and (3) only
D.
(2) and (4) only
19. Which of the following is an example of the divergence between private and social costs?
A.
After a car manufacturer announced a price cut, the sales of other car manufacturers
dropped significantly.
B.
A factory dumped pollutants into a river without giving compensation to residents
downstream.
C.
A restaurant distributes unsold food to the poor.
D.
A factory installed an exhaust emission control device.
F.6 Economics I Mock Exam 21-22
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20. Refer to the following demand-supply diagram of good X.
Price
S
P2
B
A
C
D
P1
G
E
F
0
D1
D2
Quantity
Suppose the demand for good X changes from D1 to D2. The producer surplus will increase by
________ and the total social surplus will increase by ________.
A.
area (C + D) … area (A + D)
B.
area (C + D + E) … area (A + D)
C.
area (A + D) … area (G + F)
D.
area (C + D + E) … area (A + B + C + D + E)
21. When the government provides a per-unit subsidy to the producer of a good, ______
(1)
the consumer surplus will increase.
(2)
the producer surplus will increase.
(3)
the total social surplus will increase.
A.
(1) and (2) only
B.
(1) and (3) only
C.
(2) and (3) only
D.
(1), (2) and (3)
F.6 Economics I Mock Exam 21-22
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22. The table below shows the Gini coefficients of Country X and Country Y in a certain year.
Country X
Country Y
0.32
0.49
Gini coefficient
Country _____ has a Lorenz curve further away from the line of perfect income equality.
The
income distribution of Country Y becomes _____ after the government of Country Y cuts the social
security assistance.
23.
The post-tax post-social transfer Gini coefficient of Country Y will _____.
A.
X … more even … decrease
B.
X … more uneven … increase
C.
Y … more even … decrease
D.
Y … more uneven … increase
Suppose a closed economy produces soybeans and cloth only. The output of year 1 to year 3 is as
follows. Year 1 is the base year.
Unit price of soybeans
Output of soybeans
Unit price of cloth
Output of cloth
($)
(units)
($)
(units)
1
30
20
80
25
2
33
30
78
21
3
36
27
76
24
Year
Which of the following statements about the economy is CORRECT?
A.
The nominal GDP in year 2 is higher than that in year 1 and year 3.
B.
The inflation rate of the economy is greater than zero in year 2 and year 3.
C.
The real GDP of the economy has been increasing since year 1.
D.
The cost of living in year 3 is lower than that in year 2.
F.6 Economics I Mock Exam 21-22
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24. Refer to the following table about Country A in a certain year.
Items
$ million
Private consumption expenditure
25
Gross domestic fixed capital formation
23
Depreciation
15
Changes in inventories
20
Government consumption expenditure
22
Net exports of goods and services
18
Total imports
10
Subsidies
3
Indirect taxes
5
Country A’s GDP at factor cost is _____.
A.
$106 million
B.
$108 million
C.
$110 million
D.
$116 million
25. Which of the following will cause the aggregate demand curve of a country to shift to the left?
A.
The government raises the minimum wage level.
B.
The government increases its expenditure on social welfare.
C.
The global economy is in recession.
D.
The general price level decreases.
26. Which of the following will lead to an increase in the monetary base?
A.
The public withdraws money from the banking system.
B.
The public’s demand for bank loans decreases.
C.
The central bank raises the required reserve ratio.
D.
The central bank lowers the discount rate.
F.6 Economics I Mock Exam 21-22
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27. The diagram below shows the aggregate demand curve, the short run aggregate supply curve and the
long run aggregate supply curve of an economy. The economy is initially at E 0.
Price level
LRAS
SRAS0
SRAS1
E0
0
AD1
AD0
Output
level
Which of the following can best explain the movement of the aggregate demand curve and the
short run aggregate supply curve shown in the above diagram?
A.
a decrease in people’s desire to save and an increase in government subsidies on
research and development
B.
a decrease in government spending on infrastructure and an increase in population
C.
a decrease in the price of raw materials and a reduction in government transfer payments
D.
a reduction of risk in the stock market and more residents migrating to other places
28. When using as money, diamonds are preferred to wheat because diamonds are _____.
(1)
more limited in supply
(2)
more portable
(3)
more durable
(4)
more important
A.
(1) and (2) only
B.
(2) and (3) only
C.
(1), (2) and (3) only
D.
All of the above
F.6 Economics I Mock Exam 21-22
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29. Suppose the money supply data of Hong Kong is as follows:
Components
$ billion
Total issue of legal tender
280
Legal tender held by all authorised institutions
200
Demand deposits
650
All types of deposits with licensed banks
2,250
Negotiable certificates of deposit issued by licensed banks (other than those
360
held by authorised institutions)
Deposits with restricted licence banks and deposit-taking companies
650
Negotiable certificates of deposit issued by restricted licence banks and
220
deposit-taking companies (other than those held by authorised institutions)
The money supply M2 is $_________ billion.
A.
2,690
B.
2,810
C.
3,340
D.
4,330
30. Study the following balance sheet of a banking system. Suppose the public hold $200 million cash and
the banks do not hold excess reserves.
Assets ($ million)
Liabilities ($ million)
Reserves
450 Deposits
Loans
900
1,350
If the public ________, the maximum possible amount of money supply will be $1,450 million.
A.
withdraw $50 million cash from the banking system
B.
withdraw $100 million cash from the banking system
C.
deposit $50 million cash into the banking system
D.
deposit $100 million cash into the banking system
F.6 Economics I Mock Exam 21-22
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31. The diagram below shows the money demand and money supply curves of an economy. The original
equilibrium point is at E.
Nominal
interest rate
MS1 MS0 MS2
A
E
B
C
Md2
Md0
D
0
Md1
Quantity of money
Suppose the use of electronic wallets is becoming more popular and the central bank lowers the
required reserve ratio. The new equilibrium point will be at ______.
A.
A
B.
B
C.
C
D.
D
32. Which of the followings are economic phenomena that would occur when an economy is at trough.
(1)
High unemployment rate
(2)
Weak business confidence
(3)
High level of investment
(4)
High general price level
A.
(1) and (2) only
B.
(1) and (3) only
C.
(2) and (3) only
D.
(1), (2) and (3)
F.6 Economics I Mock Exam 21-22
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33. Suppose the expected inflation rate is 4% and the nominal interest rate is 5%. If the actual inflation rate
is 2%, the cost of holding money is _____ and the real rate of return on holding money is _____.
A.
1% … 2%
B.
1% … 4%
C.
5% … 2%
D.
5% … 4%
34. Refer to the following information on an economy.
Year 1
Year 2
Money supply ($)
120 million
100 million
Real output (units of goods)
800 million
750 million
According to the quantity theory of money, ________ in year 2 has decreased.
35.
A.
the inflation rate
B.
the unemployment rate
C.
the velocity of circulation of money
D.
the nominal GDP
In economy A, all employees have to pay the same amount of salaries tax regardless of their level of
income. The tax system is _____ the income distribution becomes more _____.
A.
progressive …. uneven
B.
proportional … even
C.
regressive … uneven
D.
None of the above
F.6 Economics I Mock Exam 21-22
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36. In a certain year, the nominal wage rate decreases by 4% while the general price level increases by 2%.
If the government reduces the salaries tax allowance by 5%,
A.
the government’s salaries tax revenue will decrease.
B.
people’s work incentive will increase.
C.
people’s real income after tax will increase.
D.
more people will fall into the tax net.
37. The followings are losses to an unemployed person EXCEPT _____.
A.
Lower standard of living
B.
Psychological problems
C.
Social and political unrest
D.
Loss of skills
38. Refer to the following AS-AD diagram of an economy.
Price level
LRAS
SRAS
E
AD
0
Aggregate
output
The economy operates at E initially. Which of the following policies can help the economy restore to
the long run equilibrium without increasing the nominal interest rate?
A.
providing production subsidies to small and medium enterprises
B.
raising the standard tax rate of the salaries tax
C.
lowering the required reserve ratio
D.
selling government bonds in the open market
F.6 Economics I Mock Exam 21-22
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39. A country has an absolute advantage in producing good X. Which of the following statements about
this country is CORRECT?
A.
The opportunity cost of producing good X in this country is lower than that in other
countries.
B.
This country has a comparative advantage in producing good X.
C.
This country needs to use more resources than other countries to produce the same
amount of good X.
D.
This country can produce more units of good X than other countries with the same
resources.
40. The table below shows data on Country A.
Good X (units)
Total output with no international trade
Total output with specialisation and
international trade
Total consumption with international trade
Good Y (units)
50
AND
75
0
AND
150
75
AND
120
Which of the following statements about Country A is CORRECT?
A. The opportunity cost of producing 1 unit of good X is 0.67 units of good Y.
B.
The terms of trade is 1 unit of good X for 1.6 units of good Y.
C.
If the transportation cost per unit of good X is 0.5 units of good Y, Country A will not trade
with another country.
D. The gain from trade of importing 1 unit of good X is 1.1 units of good Y.
F.6 Economics I Mock Exam 21-22
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41. Suppose a small open economy imposes an import tariff on good X and the demand for good X in the
economy increases. Which of the following statements is CORRECT?
A.
The import volume of good X will remain unchanged.
B.
The market price of good X will increase.
C.
The domestic production of good X will decrease.
D.
The total import value of good X will increase.
42. Suppose initially the value of exports is equal to the value of imports in economy A. If ______, the
price level of the economy will increase and there will be a trade deficit.
A.
the government of economy A imports more foreign labour
B.
economy A’s trading partners experience economic recovery
C.
the currency of economy A appreciates
D.
the investment incentive of the firms in economy A increases
43. The following table shows the information about the balance of payments of a country in a certain year.
Items
$ million
Visible trade balance
65
Invisible trade balance
25
Net factor income from abroad
X
Net current transfer
10
Capital inflow
20
Capital outflow
50
Increase in reserve assets
20
Based on the above information, the value of X is ______.
A.
30
B.
50
C.
30
D.
50
F.6 Economics I Mock Exam 21-22
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44. Mavis participated in the Working Holiday Scheme in 2019 and went to Australia to work for three
months. Which of the following statements are CORRECT?
(1) The salary she earned in Australia is included in the calculation of Hong Kong’s GNI in 2019.
(2) The salary she earned in Australia needs to be taxed in Hong Kong.
(3) The salary she earned in Australia is included in the calculation of Hong Kong’s current account
balance.
A.
(1) and (2) only
B.
(1) and (3) only
C.
(2) and (3) only
D.
(1), (2) and (3)
45. Which of the following statements about the linked exchange rate system of Hong Kong is CORRECT?
A.
The money supply M1 of Hong Kong has to be fully backed by the US dollar.
B.
A balance of payments surplus in the United States will lead to a balance of payments
surplus in Hong Kong.
C.
If the US dollar depreciates against the Renminbi continuously, the volume of goods
exported from Hong Kong to the Mainland of China will increase.
D.
The public can convert US dollars at the Hong Kong Monetary Authority at an exchange
rate of US$1 = HK$7.8.
End of Paper 1
F.6 Economics I Mock Exam 21-22
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