CAPE Economics Unit 2 · 2014 · Paper 2

42 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.

1. 1(a)2 marksDefine the term 'intermediate good'.
2. 1(b)(i)2 marksExplain why intermediate goods are NOT counted in the calculation of GDP.
3. 1(b)(ii)2 marksDefine the term 'value added'.
4. 1(c)(i)a)2 marksState the formula for calculating gross domestic product (GDP) using the expenditure approach.
5. 1(c)(i)b)2 marksCalculate the GDP for Oilandia, using the expenditure approach.
6. 1(c)(ii)a)3 marksExplain the income approach for calculating GDP.
7. 1(c)(ii)b)3 marksCalculate the GDP for Oilandia using the income approach.
8. 1(d)9 marksDescribe THREE types of 'leakages' from the circular flow of an economy.
9. 2(a)(i)2 marksDefine the macroeconomic variable 'Investment'.
10. 2(a)(ii)2 marksDefine the macroeconomic variable 'Interest rate'.
11. 2(b)(i)4 marksDistinguish between 'savings' and 'consumption'.
12. 2(b)(ii)3 marksWith the use of an example, explain the term 'marginal propensity to consume'.
13. 2(c)(i)3 marksCalculate the equilibrium level of income.
14. 2(c)(ii)2 marksState the multiplier of the economy.
15. 2(d)(i)3 marksExplain Durability as a determinant of the variability of investment.
16. 2(d)(ii)3 marksExplain The accelerator as a determinant of the variability of investment.
17. 2(d)(iii)3 marksExplain Irregularity of innovation as a determinant of the variability of investment.
18. 3(a)(i)2 marksDefine the concept 'Velocity of money'.
19. 3(a)(ii)2 marksDefine the concept 'Currency substitution'.
20. 3(a)(iii)2 marksDefine the concept 'Monetary transmission mechanism'.
21. 3(b)6 marksOutline THREE reasons for holding money or THREE types of demand for money.
22. 3(c)5 marksAssess how the Central Bank can use monetary policy to positively impact aggregate demand.
23. 3(d)8 marksDiscuss TWO reasons why the Central Bank's policy options to combat inflation may achieve only limited success.
24. 4(a)(i)2 marksDefine the term 'balanced budget multiplier'.
25. 4(a)(ii)3 marksExplain the term 'automatic stabilizer'.
26. 4(a)(iii)2 marksIdentify TWO examples of automatic stabilizers.
27. 4(b)(i)3 marksExplain how government borrowing to finance fiscal deficits can have a negative impact on Inflation.
28. 4(b)(ii)3 marksExplain how government borrowing to finance fiscal deficits can have a negative impact on Domestic investment.
29. 4(b)(iii)3 marksExplain how government borrowing to finance fiscal deficits can have a negative impact on Domestic interest rates.
30. 4(c)(i)2 marksDefine the term 'fractional reserve banking system'.
31. 4(c)(ii)7 marksWith the use of an example, describe how commercial banks use a 'fractional reserve banking system' to create money.
32. 5(a)4 marksDifferentiate between 'economic growth' and 'economic development'.
33. 5(b)6 marksOutline THREE determinants of economic growth.
34. 5(c)3 marksExplain the concept 'human development index'.
35. 5(d)12 marksDiscuss THREE ways in which policymakers can enhance the wellbeing of society.
36. 6(a)(i)4 marksDistinguish between 'nominal exchange rate' and 'real exchange rate'.
37. 6(a)(ii)2 marksAssume that the nominal exchange rate between Trinidad (TT) and Barbados (BBD) currency is TT 3 equivalent to BBD 1 and Barbados is the domestic country. Given that a bottle of wine costs TT $60 in Trinidad and BBD…
38. 6(a)(iii)a)1 markState the effect on the price of Jamaican goods relative to foreign goods.
39. 6(a)(iii)b)1 markState the effect on Jamaican imports.
40. 6(a)(iii)c)1 markState the effect on Jamaican exports.
41. 6(b)4 marksUse the diagram below to explain the effect of an increase in demand for imported cars in Trinidad and Tobago on the demand for foreign exchange and the price of the TT dollar (nominal exchange rate).
42. 6(c)12 marksDiscuss TWO advantages and ONE disadvantage of globalization on developing countries.