CENTERAL ETHIOPIA REGIONAL STATE BUREAU OF EDUCATION MODEL

EXAMINATION FOR GDADE 12

ECONOMICS SENE2016/JUNE2024

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NUMBER OF QUESTIONS: TIME ALLOWED:2 HOURS
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THIS BOOKLET CONTAINS ECONOMICS EXAMINATION. IN THIS EXAMINATION,

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1 .Which of the following is true about the condition during a period of price rises.
A. Nominal and real GDP increase at same rate
B. Real GDP increases faster than nominal GDP
C. Real GDP increases slower than the nominal GDP
D. Both nominal and real GDP decline at the same rate
2. Fiscal or budget deficit arises when:
A. Citizens of a country spend more than their income in a year
B. A government spends more than it received in taxes and other revenue in a Year
C. A government spends more than it received in taxes and other revenue term in power
D. Residents of a country borrow from abroad because their expenditure exceeds their income
3. Which of the following situation leads to higher inflation.
A. Both Aggregated demand and Aggregated supply increase
B. Both Aggregated demand and Aggregated supply decrease
C. Aggregated demand increase and Aggregated supply decrease
D. Aggregated demand decrease and aggregated supply increase
4. Which one of the following is personal income tax in Ethiopia?
A. Tax paid by self-employed individuals from their businesses
B. Tax paid by government employees’ proportion to their expenditures in good
C. Tax paid by non-government organization employees from the purchase of luxury items
D. Tax paid by private organization employees from the wage /salary the earn
5. Which of the following is failure of the environmental policy of the Ethiopian government?
A. Strengthening measures taken for the preservation of biodiversity
B. Strengthening efforts to address the critical problems of land degradation
C. Strengthening exploitation of natural resources to stimulate the economy irrespective
D. Strengthening regulatory and institutional capacity in regards to environmental protection
6. The first Growth and Transformation Plan (GTP I) was articulated through one of the following
overarching objectives, except.
A. Maintaining at least an average real GDP growth rate of 11% per annum
B. Nationalizing Rural land and other productive assets
C. Expanding access and ensuring the qualities of education and health services
D. Establishing condition for sustainable nation
7. Sens welfare theory relies on individuals:
A. Accomplishments C. Capabilities
B. Wealth D. Education
8. Which of the following is true about GTP II?
A. Sustain the rapid, broad based and equitable economic growth and witnessed the last decade
B. Decrease the productive capacity and efficiency to reach the economies production
C. It is operated with in the frame work of the Agricultural developed lead industrial
 D. GTP II main objectives and pillars are different from that of GTP I
9. The first poverty reduction strategy to be introduced by the EPRDF was:
A. Plan for accelerated and sustainable development to end poverty
B. Peasant agricultural development extension projects
C. Poverty reduction strategy paper
D. Agricultural developed lead industrial
10. Which one of the following is not economic situation of common market failures?
A. Externalities C. Information asymmetries
B. Factor immobility D. Perfect market
11. Which of the following is not true with respect to open market operation in Ethiopia?
A. Open market operation are tools of fiscal policy
B. Open market operation were introduced by the new government in 1994/95
C. Open market operation are indirect monetary policy instrument
D. Open market operation work by controlling the money supply in an economy
12. Which one of the following is falsifying information on a tax return in order to reduce ones tax
liability or even not filing at all which is illegal?
A. Tax avoidance C. Tax compliance
B. Tax evasion D. Bureaucracy in tax systems
13. Which one of the following is a false good tax system is characterized by.
A. Discourage the consumption of harmful products
B. Acts as an instrument of economic growth
C. Ensures the reduction of economic inequalities
D. Enable optimum allocation of resources
14. Which one of the following is not a macroeconomic question?
A. What determinates how many goods and services a nation produces?
B. What determinates the levels of economic activity in society?
C. What causes a firm to grow?
D. What determinates how many jobs are available in an economy?
15. Which of the following is true about Vulnerability to climate change:
A. Unpredictable rain patterns
B. Climate change has direct impact on the physical and ecological environments
C. Increase severity of storms with heavy precipitation and flooding
D. The degree to which a system is likely to experience harm as the result of exposure to hazard
16. Which one of the following is false about the determinant of aggregate demand?
A. General level of income of the people C. Real interest rate
B. Cost of input or change in input price D. The level of export
17. Unemployment rate is:
A. The percentage of the population who are unemployed
B. The percentage of the labor force who are not able to find work
 C. Made up of workers who have lost their jobs
D. Labor force participation rate
18. One of the following rightly characterizes absolute poverty, expect one
A. The capability to function is what really matters for one’s status as a poor or non-poor person
B. It is the situation of someone being unable or only barely able to meet the subsistence essentials
such as food clothing and shelter
C. It is deprivation of basic need
D. The extent of absolute poverty is expressed as the number of people who are unable to command
sufficient resources to satisfy basic needs
19. Which one of the following is true about externality?
A. An additional cost that is imposed by the government on producer
B. A cost or benefit that arises from production and falls on someone other than the producer
C. An additional gain received by consumers from decisions made by the government
D. The additional amount that consumers have to pay to consume an additional amount
20. Which of the following is wrong about externality
A. Externalities can be neither positive nor negative
B. Externalities can be unconditional or reciprocal in nature
C. Externalities can be viewed as special kinds of public good or bad
D. Externalities can be generated when somethings is made or used
21. An exchange rate measures the:
A. Price at which one can exchange one good for another good
B. Price at which one can exchange one resource for another resource
C. Discounted price one received when returning defective goods for exchange
D. Price at which one can exchanged one currency for another currency
22. One of the following is not among the measures taken by the FDRE to promote industrialization.
A. Privatization of public industrial enterprises
B. Removal of maximum limit on the capital of private investors
C. Public development and management of medium and large-scale industries
D. Managerial autonomy and responsibility to public strategic industrial enterprises
23. Which of the following is false currently a serious and top environmental concern in Ethiopia?
A. Deforestation and loss of biodiversity C. Sanitation and environmental health
B. Air pollution D. Land degradation and soil erosion
24. Which one of the following is not the major goals of national development plan under EPRDF?
A. Poverty reduction through rapid economic growth
B. Development of a governance system that ensures social justice
C. People’s participation in the democratic governance of the country
D. Increasing income inequality to increase domestic capital accumulation
25. Which one of the following is an expansionary monetary policy?
A. Decreasing money supply C. Increasing money supply
 B. Increasing interest rate D. Increasing the discount rate
26. An appreciation of the Ethiopian Birr relative to the US dollar would result in all of the following
except:
A. A reduction in the price of imported resource C. Increase aggregate demand
B. An increase in the price of exported resource D. Increase net export
27. Ethiopia income tax is ______because it _____with taxable income.
A. Progressive………..decreases C. Proportional …………the same
B. Progressive………..increases D. Regressive……………increases
28. GDP can be measured as the sum of;
A. Investment, wages, profits and intermediate production
B. The value of final goods and services, intermediates good, transfer payment
C. Consumption, investment, government purchase final good and service
D. Consumption, investment, government purchase and net export
29. Which one of the following best describes the situation of global poverty and women, except.
A. Women make up a substantial majority of the world’s poor
B. Among the poorest communities throughout the developing world, virtually everywhere
Women and children experience the harshest deprivation
C. Women is not the economic mainstream in order to improved living condition for the Poorest
individuals
D. Women are more likely to be poor and malnourished and less likely to receive medical
30. What are the two major sources of revenue for the Ethiopian government?
A. Sales of bond and shares C. Export and imports of goods and services
B. Sales of agricultural and industrial products D. Taxes and non-tax revenues
31. Assuming that all other factors remain the same, which of the following will
most likely occur during the expansionary phase of a business cycle?
A. Real GDP rises and unemployment falls
B. Inflation rises and employment falls
C. Real GDP declines and inflation rises
D. D. Interest rates rise and business failures rise
32. The increase in spending that occurs because of the increases the real value of money, when the
price level falls is called
A. The wealth effect C. The foreign trade effect
B. The interest rate effect D. The income effect
33. Which of the following is true about tragedy of the common is the absence of incentives to:
A. Prevent overuse of common resources C. Discover new common resources
B. Prevent underuse of common resource D. Export wool in sixteenth-century
34. Which economic theory emphasizes the importance of technological progress in driving economic
growth?
A. Classical economics C. Keynesian economics
 B. Neoclassical economics D. Endogenous growth theory
35. In the short-run, lower aggregate demand will cause:
A. A large decrease in the price level, but no change in the level of out put
B. A lower level of output, but only a slight decrease in the level out put
C. A lower price level, but only a slight decrease in the price level
D. A large decrease in both the price level and the level of output
36. Which one of the following best describes contractionary fiscal policy?
A. Reduction of income tax C. Increasing of income tax
B. Increasing of reserve requirement D. Reduction of reserve requirement

37. Which of the following is wrong about poverty measuring system.

A. To keep poor people on the agenda
B. To identify poor people and so that we are not able to target appropriate
innervation
C. To monitor and evaluate projects and policy intervention geared to poor
people
D. To evaluate the effectiveness of institutions whose goal is to help poor people
38. Which of the following factors that shift aggregate demand curve to the right.
A. International trade effect C. Interest rate effect
B. Real balance effect D. A reduction price of out put
39. Which one of the following is true about if a good is a public goods?
A. No one can be excluded from enjoying its benefits
B. Anyone can be excluded from enjoying its benefits
C. Consumers must be pay a high price to enjoying benefits
D. Consumers pay a low price
40. Which of the following is the benefits from these goods are not diminished by
consumption and cannot be withheld from any one
A. Social cost B. Adverse selection C. Moral hazard D. Externalities
41. Which of the following is false with adaptation to climate change strategies.
A. Mobility avoids risks across space
B. Storage reduced risks which are experienced over time
C. Diversification reduces risks across asset owned by households
 D. Communal pool is not involves joint ownership of asset and resources

42. __________is an economy that result in improved human wellbeing and social
equity, while significantly reducing environmental risks and ecological
A. Green growth B. Green economy C. Adaptation strategies D. Mitigation
43. One of the following is a measure of inequality, which is often expressed by the ratio of the area
between the Lorenz curve and a 45 degree line and the total
area under the 45 degree line
A. Gini coefficient C. Personal distribution income
B. Functional factor distribution income D. Lorenz curve
44. All of the following are true about poverty measuring ways, except.
A. The poverty head count index those whose incomes or consumption fall
below
B. Total poverty gap the total amount of income that is necessary to rise
everyone
C. The multidimensional poverty index a class of measures of the level of
absolute poverty
D. The foster-Greer-thorbecke index a class of measures of the level of
absolute poverty
45. Which of the following is not true with a good tax system is characterised by,
A. Simple, financially adequate and elastic C. Balanced and harmonious
B. Ensures the reduction of economic inequalities D. Privatization efficient
46. Which one of the following is the advantages of fixed exchange rate systems?
A. Constraint on government policy C. problems with reserves
B. The economy may be unable to respond to shocks D. Policy conflicts
47. A tax imposed the burden or impact on the same person who earns the income.
A. Withholding tax C. Custom duty tax
B. Employment income tax D. Stamp duty tax

48. Which one of the following is incorrect awareness about the environment goes
back to:
A. The 1950s with the growing concern over the Great Smog of London in 1952
B. The publication of Rachel Carson’s Silent Spring in 1962
C. The publication of the ‘Excesses to Growth’’ report of 1972
D. The concern that perpetual economic growth entails severe consequences for environment
49. Which of the following is not key strategic pillars of the ten-year (2021_2030)
development plan are:
 A. Gender and Inequality of women C. Quality Economic Growth and Shared
B. Sustainable Development Financing D. Gender and Social Inclusion
50. If the national economy is closed, i.e. a country has no interaction with the rest
of the world, then,
A. GNP = GDP B. RGDP = NGDP C. GNP < GDP D. GNP > GDP
51. A good that is rival and non-excludable is a:
A. Private good C. Government good
B. Regulated good D. Common resource
52. One of the following are focus areas of structural reform processes, one is
different.
A. Ensuring coordination transport and logistics services
B. Increasing the role and participation of the private sector in the economy
C. Loss of scale economics in provision public goods
D. Strengthening Ethiopia’s global and regional partnership

53. Which of the following is wrong one of the direct contributions of the tourism
sub-sector of the Ethiopia economy?
A. Contribution to Gross Domestic product (GDP)
B. Contribution to the productivity of the manufacturing sub-sector
C. Contribution to employment
D. Foreign exchange contribution
54. Which one of the following was not among the factors that put the Ethiopia
economy into a very problematic situation during the end of the Derg regime?
A. Poverty alleviation through rapid economic growth
B. Lack of foreign exchange and declining investment
C. High rise in defense expenditure
D. Manufacturing sector stagnated as agricultural input declined
55. Which of the following represents the capital account component of the balance of payments of a
country?
A. The inflow and out flow of foreign currency resulting from the sale of goods
B. The inflow and out flow of foreign currency resulting from the sale of services
C. The flow of net transfer, including gifts and remittances that the country
Receives
D. The flow loans and investments that change country’s foreign assets and
liability
56. Which one of the following is correct about fiscal policy?
A. The allocation of resources in an instrument of fiscal policy to bring about
economic growth
B. Price controls can be used as instruments of fiscal policy to reduced
fluctuations in price
C. Fiscal policy uses taxes and expenditure as instruments to allocate them into
production of Public and private goods
D. Distribution of income is one of the instruments used by fiscal policy to deal
with fluctuations
57. Which of the following is component of the current account section of the
balance of payment?
A. Capital account C. Debt service
B. Trade balance D. Direct investment
58. Which of the following best representation of foreign exchange rate system
based on the Supply and demand of foreign exchange?
A. Floating exchange rate C. Quotas
B. Fixing foreign exchange D. Managed exchanged
59. One of the following is among the SDGs, except
A. Quality education C. Gender equality
B. Reduced inequality D. Poor health and well-being
60. One of the following is not the advantages of Decentralized system
A. Tailoring output to local tastes
B. Experimentation and innovation in locally provided public good and services
C. Loss of scale economics in provision public goods
D. Fostering intergovernmental competition
61. Which of the following statement is not describes the situation of environmental resources
globally:
A. The face rising pressures with severe consequences for future growth
potential and the quality of life
B. Global production networks and increased urbanization have changed the
character of rural
C. The global ecosystem is a flow of raw materials and energy from the planetary sources
D. Underlying the pressure on the sources and sinks is the growth of the world
 population and industrial production
62. One of the following is false the major development challenges in Ethiopia for
the last years.
A. Balances between domestic savings and investment C. External debt distress
B. Challenges to stabilize inflation D. Rise in unemployment
63. Which organization defined poverty as “the pronounced deprivation in
wellbeing”?
A. IFAD B. ILO C. UNESCO D. World Bank
64. Which of the following is not aggregate supply is determined by a number of
factors.
A. Change of input or change in input price C. Change in productivity
B. General level of income of the people D. State of technology
65. Which one of the following refers to the recurrent ups and downs in the level of
economic activity?
A. Economic boom C. Business cycle
B. Economic trough D. Unemployment

66. Which one of the following goods in excludable?

A. A city bus C. Protection from the police force
B. A bridge that does not charge at a toll D. The atmosphere
67. Which one of the following characteristic incorrect a perfectly competitive labor market?
A. A large number of firms competing with each other to hire a specific type of
labor to fill identical jobs
B. Numerous qualified people who have identical skills and independently supply their labor
C. Wage taking behavior, that is, neither workers nor firms exert control over the market wage
D. Imperfect, costless information and labor mobility
68. Which one of the following is false about national development plan under
FDRE?
A. Expansion of agricultural technology C. Boosting rural non- agricultural
B. Investment in agricultural infrastructural D. High rise in defense expenditure
69. Which of the following is correct about shocks to aggregate supply
A. Causes can either be expansionary or contractionary
B. An expansionary demand shock shifts the aggregate demand curve to the
right, increasing both P and Y
C. An increase in the price of oil causes a decrease in the supply of the product
which results in a left ward shift of the aggregate supply curve
D. Both rise with an increase in demand and both fall with a decrease in demand
70. One of the following is true about tax is imposed for each tax year on a person
renting out a building or buildings who has taxable income for the year.
A. Rental income tax C. Income from employment
B. Income from business D. Income from royalties
71. __________is the accumulated set of common –sense knowledge and ideas of
the local people about their everyday realities of living.
A. Poverty C. Inequality
B. Indigenous D. Indigenous knowledge
72. Which of the following is not climate change
A. Denotes a variation in the mean state of the climate persisting for an extended period and
resulting from anthropogenic greenhouse gas emissions
B. Short-term atmospheric condition expressed in the mix of events such as
temperature, rainfall and humidity that occur each day or week
C. To significant and persistent change in the mean state of the climate system
that alters that composition of the global atmosphere observed over long time
D. Changes as average temperatures, precipitation, humidity, wind conditions
73. Everything else held constant, aggregate demand increases when:
A. Government spending is reduced C. Taxes are cut
B. The money supply is reduced D. Availability of credit
74. Which one of the following is wrong the government objective of tax impose to achieve several
important macroeconomic and social goals.
A. Minimize income and wealth inequality
B. Discourage the consumption of harmful products
C. Provide incentive for capital formation in the private sector
D. Maximize unemployment and discourage export
75. One of the following is a work group where community members assists an
individual on a rotational basis, often for free.
A. Debo B. Iqub C. Idir D. Global

76. One of the following impacts are expected to affect most of the poorest countries, except one.
A. Prolonged droughts C. Expanded desertification
B. Expanded afforestation D. Longer and severe heat waves
77. An increase in government spending, all else the same, will shift the aggregate
demand curve from the initial aggregate demand curve to the curve labelled.
A. Either curve, depending on the simultaneous changes in taxation
B. Neither curve because government spending does not affect the aggregate
demand curve
 C. Increase in aggregate demand
D. Decreases in aggregate demand
78. A tax imposed on imported goods or exported goods is known as:
A. Pension contribution C. Stamp duty
B. Withholding tax D. Custom duty
79. According to Sen’s capability approach,
A. The capability to function is what really matters for one’s status as a poor or non-poor Person
B. The expansion of commodity production is valued not for its own sake, but as a means to
human welfare and freedom
C. Income and wealth are ends in themselves
D. To the situation of being unequal or uneven, or a social disparity of
distributions
80. What is the difference between direct and indirect taxes?
A. Indirect taxes are paid directly to the government, while direct taxes are
collected by businesses and passed on to consumers
B. Indirect taxes are levied on goods and services, while direct taxes are levied
on individual and businesses
C. Indirect taxes are more visible to taxpayers, while direct taxes are hidden in
the price of goods and services
D. Direct tax can be shifted, while indirect tax cannot be shifted

Economics G-12 ANSWER Sheet

1 9 17 25 33 41 49 57 65 73
2 10 18 26 34 42 50 58 66 74

3 11 19 27 35 43 51 59 67 75

4 12 20 28 36 44 52 60 68 76

5 13 21 29 37 45 53 61 69 77

6 14 22 30 38 46 54 62 70 78

7 15 23 31 39 47 55 63 71 79

8 16 24 32 40 48 56 64 72 80