Free Economics Revision questions and answers-CPA Foundation

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Free Economics Revision Questions And Answers

Free Economics Revision Questions and Answers

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CPA Foundation

Free Principles of Economics -CPA Foundation

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Category: CPA Foundation-Principles of Economics

1. Define socialist economic systems and outline their key features.

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Category: CPA Foundation-Principles of Economics

2. A state of ____________occurs where supply equals demand and there is no tendency for change in price or quantity.

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Category: CPA Foundation-Principles of Economics

3. Stating that the government should strive for economic growth of 22% or inflation of 8 % is an example of:

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Category: CPA Foundation-Principles of Economics

4. Elasticity can be defined as the rate of change in the quantity demanded with respect to the rate of change in price. List the four(4) main methods used in measuring the price elasticity of demand.

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Category: CPA Foundation-Principles of Economics

5. TRUE or FALSE: According to the law of demand , buyers will demand more of an economic good at higher prices, whereas according to the law of supply, suppliers will supply more of an economic good at lower prices.

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Category: CPA Foundation-Principles of Economics

6. Outline six(6) types of demand

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Category: CPA Foundation-Principles of Economics

7. The data below relates to the demand and supply of Rice for Safari wholesalers:

The Demand And Supply Of Rice

Required
The equilibrium price and quantity of the commodity using the graphical method.

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Category: CPA Foundation-Principles of Economics

8. Kipevu supplies diesel to several petrol stations in Malindl. The table below shows the supply and demand of diesel:

Diesel Demand And Supply

Required
The equilibrium price and quantity of the commodity using the graphical method.

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Category: CPA Foundation-Principles of Economics

9. TRUE or FALSE: Demand for the giffen increases even when their prices rise, regardless of a consumer's income.

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Category: CPA Foundation-Principles of Economics

10. Ordinal utility states that:

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Category: CPA Foundation-Principles of Economics

11. TRUE or FALSE: In economics, products are often substituted if the demand for one product decreases when the price of the other goes up.

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Category: CPA Foundation-Principles of Economics

12. In economics, the backward-bending labor supply curve is used to demonstrate :

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Category: CPA Foundation-Principles of Economics

13. The theory of the firm is a microeconomic concept that states that:

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Category: CPA Foundation-Principles of Economics

14. Why does the marginal cost curve always intersect the average cost curve at the lowest point?

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Category: CPA Foundation-Principles of Economics

15. In economics, different industries are classified and differentiated based on their degree and nature of competition for goods and service. In_______, there is a large number of small companies competing against each other, who sell similar products (homogeneous), lack price influence over the commodities, and are free to enter or exit the market

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Category: CPA Foundation-Principles of Economics

16. TRUE or FALSE: In an oligopoly market, if one firm increased prices, all the others will follow suit to maintain their position in the market.

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Category: CPA Foundation-Principles of Economics

17. Outline three(3) advantages of a controlled market system.

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Category: CPA Foundation-Principles of Economics

18. 1There are three(3) main approaches used in measuring national income: Value Added Method, Factor Income Method, and Expenditure Method. Under the (a)______ method, the national income is measured by adding up the expenditures made by individuals, companies, and the government. Under the (b) _______method, the economy is divided into different industry sectors ( e.g. fishing & mining) and shows the contribution of each producing unit in the production process, whereas under the (c)_______ method ,the national income is measured by adding up the pretax income generated by the individuals and companies in the economy & shows the national income distribution among different earning groups in the economy

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Category: CPA Foundation-Principles of Economics

19. TRUE or FALSE: An inflationary gap refers to the situation in an economy where actual output exceeds potential output, leading to upward pressure on prices, or inflation.

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Category: CPA Foundation-Principles of Economics

20. Highlight eight(8) factors that could contribute to the high cost of living in a developing country.

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Category: CPA Foundation-Principles of Economics

21. Outline five(5) advantages and disadvantages of an informal sector in developing countries.

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Category: CPA Foundation-Principles of Economics

22. Which of the following policies can reduce an inflationary gap?

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Category: CPA Foundation-Principles of Economics

23. TRUE or FALSE: For an inflationary gap to be considered inflationary, the current GDP must be higher than the potential GDP.

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Category: CPA Foundation-Principles of Economics

24. TRUE or FALSE: Increasing marginal revenue is a sign that the company is producing too little relative to consumer demand, and that there are profit opportunities if production expands.

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Category: CPA Foundation-Principles of Economics

25. TRUE or FALSE: A currency’s value is determined by a market’s demand and supply for the currency.

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Category: CPA Foundation-Principles of Economics

26. The____________-defines legal reserves that banks shall maintain as a part of demand deposits while advancing loans and credit of the excess reserves.

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Category: CPA Foundation-Principles of Economics

27. Matata deposited kes 50,000 in KCB bank. The legal reserve ratio that the bank should maintain is 17.5%. Calculate the total credit creation.

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Category: CPA Foundation-Principles of Economics

28. The ________ method of economics involves observing economic phenomena, formulating hypotheses, testing these hypotheses through data, and refining theories based on empirical evidence.

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Category: CPA Foundation-Principles of Economics

29. Outline seven(7) characteristics of a free market system

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Category: CPA Foundation-Principles of Economics

30. A motorcycle dealer in Mombasa city has received a shipment of 25 new motorcycles. The dealer offers the Motorcycles for sale for KES 150,000 each. However, there are only five people in the city who are willing to buy a motorcycle at this price. This situation can be described as:

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Category: CPA Foundation-Principles of Economics

31. Highlight four(4) limitations of the cardinal approach in the theory of consumer behavior.

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Category: CPA Foundation-Principles of Economics

32. Outline five(5) assumptions of the Law of Equi-Marginal Utility.

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Category: CPA Foundation-Principles of Economics

33. TRUE or FALSE: The marginal cost curve always intersects the average total cost curve at its lowest point because the marginal cost of making the next unit of output will always affect the average total cost.

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Category: CPA Foundation-Principles of Economics

34. The ______cost calculates the direct costs of raw materials and labor that are involved in the production of a good.

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Category: CPA Foundation-Principles of Economics

35. A new movie is released after having been heavily promoted to teenagers. On the first night, the tickets sell out, and there are still teenagers waiting outside the theaters, desperate to see the movie and unable to get a ticket. Is this market in equilibrium?

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Category: CPA Foundation-Principles of Economics

36. TRUE or FALSE: Avoidable costs are indirect and are not affected by the level of output, whereas unavoidable costs are direct and are affected by the level of output.

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Category: CPA Foundation-Principles of Economics

37. When the supply of a good increases, what happens to the equilibrium price and quantity?

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Category: CPA Foundation-Principles of Economics

38. Explain why economic profits are driven to zero under perfect competition.

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Category: CPA Foundation-Principles of Economics

39. TRUE or FALSE: At zero economic profit, firms do not make any returns.

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Category: CPA Foundation-Principles of Economics

40. Differentiate between ‘nominal national output’ and real national output’ figures in an economy.

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Category: CPA Foundation-Principles of Economics

41. The data provided below represents estimated national income figures for country XYZ in trillion of shillings:

Country Xyz National Income

Required: Use the data to compute the following:
a. Net National Income at factor cost
b. Net National Product at market price
c. Personal income
d. Disposable income for country XYZ

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Category: CPA Foundation-Principles of Economics

42. TRUE or FALSE: Climate change can contribute to a high cost of living in a developing country.

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Category: CPA Foundation-Principles of Economics

43. Outline eight(8) crucial roles played by the industrial sector in the economic development of developing countries.

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Category: CPA Foundation-Principles of Economics

44. If you invest KES 2,500 for two years at 8.75 % per annum simple interest, what is the value of your investment at the end of the four years?

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Category: CPA Foundation-Principles of Economics

45. TRUE or FALSE: If Alice performs computer software upgrades for Michael in exchange for him repairing her car, then their double coincidence of wants will be satisfied.

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