Households (Cambridge (CIE) IGCSE Economics)

Exam Questions

1 hour28 questions
11 mark

The table shows how household spending changes with income.

income ($ per month)

spending ($ per month)

3000

3150

3300

3375

3600

3500

3900

3825

4200

4050

4500

4275

What is the lowest level of income at which savings are positive?

  • $3000

  • $3600

  • $3900

  • $4200

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21 mark

Banks decrease interest rates.

What is likely to be the effect of this on borrowing and saving?

 

borrowing

saving

A

B

C

D

falls

falls

rises

rises

falls

rises

falls

rises

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    31 mark

    The table shows the weekly values of certain items for the average person in each group. In which group does the average person save the most?

     

     

    income ($)

    spending ($)

    borrowing ($)

    A

    B

    C

    D

    employed workers

    retired people

    school students

    unemployed

    500

    150

    25

    200

    400

    140

    30

    300

    50

    0

    5

    100

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      41 mark

      What is the most important factor that affects how much a family saves?

      • the income of the family

      • the level of taxation

      • the rate of inflation

      • the reliability of banks

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      51 mark

      Which of the following factors typically encourages household spending?

      • High interest rates

      • Low consumer confidence

      • Uncertain economic conditions

      • Seasonal sales and discounts

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      11 mark

      What may cause an individual to save a higher proportion of their income?

      • a belief that the price of goods will rise in the future

      • a fall in the rate of interest paid by the country’s banks

      • a fear that income will fall in the future

      • a rise in the individual’s wish to enjoy higher consumption immediately

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      21 mark

      A musician has a choice of playing for an orchestra in either Germany or England. Which combination of incomes and cost of living is most likely to cause her to choose the German orchestra?

       

      Incomes and cost of living in Germany compared with those in England

      pre-tax (gross) income

      after-tax (net) income

      cost of living

      A

      B

      C

      D

      higher

      higher

      lower

      lower

      higher

      lower

      higher

      higher

      higher

      lower

      higher

      lower

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        31 mark

        What will cause the level of savings in an economy to rise?

        • a fall in investment

        • a fall in real wages

        • a rise in income taxes

        • a rise in interest rates

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        41 mark

        What is most likely to encourage the immediate purchase of an expensive item such as a new car?

        • anticipating a fall in the rate of inflation

        • expecting interest rates to fall

        • making it easier to obtain a loan

        • needing to plan for unexpected emergencies

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        51 mark

        The table shows the percentage (%) of income saved by different age groups.

        age (years)

        15–29

        30–39

        40–49

        50–64

        65+

        % of income saved

        –30

        –5

        +15

        +30

        –10

        What can be concluded from the table?

        • Over the age range shown total savings equalled total dissavings.

        • The 15–29 age group has the lowest level of income.

        • The 50–64 age group saves the highest percentage of its income.

        • The 65+ age group has a lower income than the 30–39 age group.

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        11 mark

        The table shows how three people (X, Y and Z) spend their income.

         

        person X

        person Y

        person Z

        food, clothing and housing entertainment and leisure luxury goods

        35%

        25%

        40%

        50%

        20%

        30%

        20%

        40%

        40%

        For these three people, what is the most likely order of income, from highest income to lowest income?

        • X → Y→ Z

        • Y → Z → X

        • Z → X → Y

        • Z → Y → X

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        21 mark

        The table shows how three people (X, Y and Z) spend their income.

         

        person X

        person Y

        person Z

        food, clothing and housing

        entertainment and leisure

        luxury goods

        30%

        35%

        35%

        25%

        35%

        40%

        50%

        25%

        25%

        For these three people, what is the most likely order of income, from lowest income to highest income?

        • Y → X → Z

        • Y → Z → X

        • Z → X → Y

        • Z → Y → X

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        3
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        1 mark

        Which of the following factors would likely have a negative impact on household saving?

        • An increase in disposable income due to a raise in the minimum wage

        • A decrease in interest rates on savings accounts

        • The introduction of a new tax incentive for retirement savings

        • A rise in consumer confidence leading to increased spending

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        4
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        1 mark

        What is the main impact of an increase in interest rates on household saving?

        • Household saving tends to increase because higher interest rates make borrowing less attractive, leading to higher saving

        • Household saving remains unchanged as interest rates have no impact on saving behaviour

        • Household saving increases as higher interest rates provide greater incentives to save money

        • Household saving becomes volatile as interest rates have an unpredictable influence on saving patterns

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        5
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        1 mark

        What is likely to be a consequence of a significant increase in consumer credit availability on household spending?

        • Decreased consumer confidence leading to reduced spending

        • Higher interest rates on existing loans, encouraging spending

        • A decrease in disposable income due to rising inflation

        • Increased spending in the short term, but potential long-term debt 

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