Quelpr

CAPE Economics Unit 2 · 2006 · Paper 1

44 questions and parts from this paper. Open one to see it in full, then practise it on Quelpr and get it marked against the mark scheme.

Practise this paper
  1. 1(a)4 marksExplain TWO of the specified macro-economic variables.
  2. 1(b)2 marksState ONE way in which inflation is measured.
  3. 2(a)(i)1 markState the component of GDP (expenditure-based) affected when a family buys a new refrigerator.
  4. 2(a)(ii)1 markState the component of GDP (expenditure-based) affected when Aunt Jane buys a new home.
  5. 2(a)(iii)1 markState the components of GDP (expenditure-based) affected when your parents buy a bottle of French wine.
  6. 2(a)(iv)1 markState the component of GDP (expenditure-based) affected when the city council repairs a main highway.
  7. 2(b)2 marksState ONE limitation of GDP as a measure of economic well-being.
  8. 3(a)1 markDetermine the level of autonomous consumption spending.
  9. 3(b)1 markDetermine the marginal propensity to consume.
  10. 3(c)2 marksCalculate the multiplier.
  11. 3(d)2 marksDetermine the equilibrium level of income.
  12. 4(a)2 marksDefine the terms 'saving' and 'investment'.
  13. 4(b)2 marksState the relationship between saving and investment at equilibrium in a closed economy.
  14. 4(c)2 marksDraw the Keynesian aggregate supply curve.
  15. 5(a)4 marksUsing Keynesian analysis, draw a diagram to illustrate an inflationary gap.
  16. 5(b)2 marksState ONE factor that can explain the volatility of investment.
  17. 6(a)(i)1 markDefine the term 'money'.
  18. 6(a)(ii)2 marksDistinguish between fiat money and commodity money.
  19. 6(b)3 marksState THREE functions of money.
  20. 7(a)2 marksExplain the term 'the demand for money'.
  21. 7(b)4 marksDifferentiate between M1 and M2.
  22. 8(a)2 marksDefine the term 'monetary policy'.
  23. 8(b)2 marksExplain the MAIN goal of an expansionary monetary policy.
  24. 8(c)2 marksList TWO tools used by the Central Bank to control the money supply.
  25. 9(a)3 marksExplain, briefly, the effect of an increase in government spending (with no change in taxes) on aggregate income in an economy that is in recession.
  26. 9(b)3 marksOutline THREE lags that are associated with fiscal policy.
  27. 10(a)(i)2 marksDistinguish between a budget surplus and a budget deficit.
  28. 10(a)(ii)2 marksDistinguish between budget deficit and national debt.
  29. 10(b)2 marksState TWO ways by which a country can reduce its debt burden.
  30. 11(a)3 marksList THREE structural characteristics of a Caribbean economy with which you are familiar.
  31. 11(b)3 marksOutline THREE factors that constrain the economic development in Caribbean economies.
  32. 12(a)(i)2 marksDistinguish between 'exports' and 'imports'.
  33. 12(a)(ii)1 markGive ONE example of an export from the Caribbean Community (CARICOM).
  34. 12(b)(i)1 markDefine the term 'Tariffs'.
  35. 12(b)(ii)1 markDefine the term 'Export subsidies'.
  36. 12(b)(iii)1 markDefine the term 'Quotas'.
  37. 13(a)4 marksState TWO arguments in favour of free trade.
  38. 13(b)2 marksGive ONE argument in favour of protection.
  39. 14(a)2 marksIf the exchange rate is 1 Kor to 1 Tol, determine the imported price of steel and corn for Lowland.
  40. 14(b)2 marksIf the exchange rate is 1 Kor = 3 Tols, determine the imported price of steel and corn for Highland.
  41. 14(c)2 marksWith an exchange rate of 1 Kor = 3 Tols, which country will import both steel and corn? Give a reason for your answer.
  42. 15(a)(i)2 marksDefine the term 'foreign direct investment'.
  43. 15(a)(ii)2 marksState TWO ways in which foreign direct investment can occur.
  44. 15(b)2 marksState ONE advantage and ONE disadvantage of foreign direct investment in your country.

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