CAPE Economics Unit 2 · 2018 · Paper 2

20 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)(i)2 marksDefine 'Value added'.
2. 1(a)(ii)2 marksDefine 'Gross investment'.
3. 1(b)6 marksOutline THREE factors that influence aggregate demand.
4. 1(c)(i)2 marksLabel the three curves in Figure 1 to show the aggregate demand curve AD1 in Year 1, AD2 in Year 2 (after shifting), and falling back to AD1 in Year 3.
5. 1(c)(ii)2 marksOutline what will happen to equilibrium price and equilibrium quantity from Year 1 to Year 2.
6. 1(c)(iii)3 marksIn Year 3, assume that prices and wages are completely flexible downward. On Figure 1, identify the equilibrium point and label it 'b'. Also, label the equilibrium price and quantity of output on the axes of the graph.
7. 1(d)(i)4 marksEvaluate the statement: 'The expanding underground economy creates problems for economic policymakers.'
8. 1(d)(ii)4 marksEvaluate the statement: 'Economists are concerned about 'double counting' and the 'value added' in the production process.'
9. 2(a)2 marksDefine the term 'frictional unemployment'.
10. 2(b)2 marksState TWO limitations of monetary policy.
11. 2(c)(i)6 marksCalculate the labour force participation rate (to one decimal place) in Year 1 and Year 2.
12. 2(c)(ii)3 marksCalculate the unemployment rate (to one decimal place) for Year 1 and Year 2.
13. 2(c)(iii)4 marksDiscuss how it is possible that the number of persons employed increased yet the unemployment rate also increased rather than decreased.
14. 2(d)8 marksAnalyse how the money market responds to BOTH a shortage of money and a surplus of money.
15. 3(a)2 marksState TWO reasons why nations trade.
16. 3(b)(i)2 marksOutline ONE major component of the current account in the balance of payments (BOP).
17. 3(b)(ii)3 marksExplain how the official reserves account is used in the balance of payments.
18. 3(c)(i)3 marksExplain the effects of import tariffs on consumers from the importing country.
19. 3(c)(ii)3 marksExplain the effects of import tariffs on producers from the importing country.
20. 3(d)12 marksAnalyse THREE consequences of balance of payments disequilibria.