Question 1
Governments in market economies give different reasons for intervening in the operation of an economy.
Which reason given is a normative statement?
Answer: C.
The word "unfair" carries a value judgement. Measuring how income is distributed is a factual exercise, a Gini coefficient or a Lorenz curve can be computed, but deciding whether a given distribution is unfair requires a view about what a just distribution would look like, and no evidence can settle that. Two economists could agree entirely on the data and disagree on the fairness, which is what makes the statement normative.
Why the other options are positive statements:
- A, average incomes failing to keep pace with price rises, is a comparison of two measured series, nominal income growth and inflation. Testable.
- B, energy prices rising by more than 50%, is a straightforward factual claim about price data.
- D, the poorest 10% suffering the greatest fall in real income, is the strongest distractor because it concerns inequality and sounds like a complaint. But it makes no judgement: it states which decile experienced the largest fall, and household income statistics can confirm or refute it.
Question 2
The table gives details of national income statistics for an economy. What is the net national income for this economy?
Answer: A.
Question 3
A teenager received a cheque for $50 as a birthday gift from her parents. The teenager paid the cheque into her savings account at the bank. Why is this gift a transfer payment?
Answer: D.
What this practice covers
Real past-paper questions, the answer key from the mark scheme, and the explanation that goes with it. Each one is marked the moment you pick, the correct option is shown whether or not you found it, and the full explanation opens either way. No account needed to answer them.
These questions are drawn from past CIE 9708 papers. You answer, you find out immediately whether you were right, and you get the reasoning for the correct option and for each distractor. Wrong answers go to a mistakes locker so you can come back to exactly those.
Practice is free. You need an account only so your progress and your mistakes are still there next time.
What examiners see students get wrong here
These are the errors that cost marks on national income statistics, taken from our own topic notes. Read them before you practise and you will recognise the traps in the questions.
- Counting every transaction instead of final output.
- Defining GDP by ownership, or GNI as output inside the country.
- Adding income paid abroad, or dropping the minus sign.
- Including every cross-border payment: GNI uses net primary income only.
- Deducting depreciation twice, or confusing it with inflation or with investment: net investment is gross investment minus depreciation.
- Subtracting subsidies when converting market to basic prices.
- Leaving out units.
Revise it first
If any of the above is unfamiliar, work through the notes before practising: National Income Statistics revision notes.