1. What will encourage a higher degree of division of labour?

1. firms wishing for a greater level of self-sufficiency
2. firms wishing to increase their flexibility in production
3. firms wishing to raise their level of productivity
4. firms wishing to reduce their level of risk

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2. The diagram shows a country’s production possibility curve.

What could allow the economy to move from M to N in the long run?

1. an increase in consumer spending
2. an increase in demand for exports
3. an increase in government spending on pensions
4. an increase in investment

3. Which statement about factors of production is correct?

1. All factors of production can earn income for their owner.
2. The factor capital includes human capital, money capital and physical capital.
3. The factor labour involves only physical effort.
4. The natural resources classed as land are in unlimited supply.

4. A website compares the prices of groceries.

Which function of money is illustrated by this?

1. medium of exchange
2. standard of deferred payment
3. store of value
4. unit of account

5. It is expected that the price of gold rings will increase in the future.

Which diagram shows the impact this expectation is likely to have on demand for gold rings in the present?