TUESDAY: 22 August 2023. Afternoon Paper. Time Allowed: 3 hours.
Answer any FIVE questions. ALL questions carry equal marks. Do NOT write anything on this paper.
QUESTION ONE
1. State FIVE advantages of a planned economy. (5 marks)
2. Explain FOUR types of unemployment. (8 marks)
3. Distinguish between “merit goods” and “public goods”. (4 marks)
4. State THREE determinants of economic development. (3 marks)
(Total: 20 marks)
QUESTION TWO
1. Outline FIVE challenges that economic planners are likely to encounter when using the income approach to estimate the level of national income in least developed countries. (5 marks)
2. Explain the term “credit creation”. (2 marks)
Describe THREE factors that limit the effectiveness of credit creation by commercial banks in your
country. (6 marks)
3. Using a well labelled diagram, illustrate the shutdown point of a firm operating under perfect competition. (7 marks)
(Total: 20 marks)
QUESTION THREE
1. Explain the term “wage control”. (2 marks)
Summarise FIVE consequences of wage control by the government in your country. (5 marks)
2. Enumerate FIVE economies of scale that may be enjoyed by a manufacturing firm. (5 marks)
3. Describe FOUR ways in which a government might restrict international trade. (8 marks)
(Total: 20 marks)
QUESTION FOUR
1. With the aid of a diagram, explain the marginal efficiency of capital. (5 marks)
2. The demand and total cost function of a firm operating under perfect competition are given as:
P = 45 – 4Q
TC = 44 + 15Q
Where;
P represents price
Q represents quantity
TC represents total cost
Required:
Determine the sufficient condition for profit maximisation of the firm. (3 marks)
Determine the firm’s price for profit maximisation. (2 marks)
3. Identify FIVE factors that limit the application of the accelerator principle in an economy. (5 marks)
4. Enumerate FIVE roles of trade unions in an economy. (5 marks)
(Total: 20 marks)
QUESTION FIVE
1. The following information relates to a hypothetical economy:
Autonomous consumption = 8000
Marginal propensity to save (MPS) = 0.45
Required:
Derive the savings function. (3 marks)
If the level of government expenditure increases by 250%, determine the change in equilibrium level of
national income. (2 marks)
2. Outline FIVE advantages of trade liberalisation to traders. (5 marks)
3. Examine THREE factors that influence the elasticity of supply. (6 marks)
4. Identify FOUR objectives of fiscal policies. (4 marks)
(Total: 20 marks)
QUESTION SIX
1. Explain the term “Structural Adjustment Programmes” (SAPs). (2 marks)
Discuss THREE criticisms of SAPs in least developed countries. (6 marks)
2. Analyse FOUR challenges that may be encountered by an economy when transitioning from a planned economy to a free enterprise system. (4 marks)
3. Explain the term “legal tender”. (2 marks)
With the aid of a diagram, explain the concept of liquidity trap. (6 marks)
(Total: 20 marks)
QUESTION SEVEN
1. Using an appropriate diagram in each case, explain the four properties of isoquants. (8 marks)
2. Analyse THREE benefits of elasticity of demand in economic decision making. (6 marks)
3. Describe SIX arguments in favour of regional integration in relation to international trade. (6 marks)
(Total: 20 marks)
