Economics
Applied economics — Paper 2
- 1.
A government introduces a maximum price for staple food below the market equilibrium price. Analyse two likely effects on consumers and producers.
[4 marks] - 2.
Discuss whether raising interest rates is likely to reduce inflation without causing significant unemployment.
[4 marks] · no calculator - 3.
A firm sells 2,000 units at $15 each. Its total costs are $24,000. Calculate the firm's profit or loss, and analyse whether it should continue producing in the short run on the basis of this figure alone.
[4 marks] - 4.
Discuss whether a government should rely more on direct taxes, such as income tax, or indirect taxes, such as a sales tax, to fund its public spending.
[5 marks] · no calculator - 5.
A country imports more goods and services than it exports, creating a persistent current account deficit. Analyse two possible consequences of this for the economy.
[4 marks] · no calculator - 6.
A country's currency appreciates in value against other currencies. Analyse the likely effect of this on its exporters.
[4 marks] - 7.
Demand for skilled plumbers rises sharply in a city, while the number of qualified plumbers stays fixed in the short run. Analyse the likely effect on the equilibrium wage rate for plumbers.
[4 marks] · no calculator - 8.
Evaluate whether introducing a national minimum wage set above the market equilibrium wage is likely to benefit low-paid workers overall.
[4 marks] · no calculator - 9.
Explain how a government could use fiscal policy to try to reduce unemployment during a recession.
[2 marks] · no calculator - 10.
Explain, other than changing interest rates, one way a central bank could use monetary policy to increase the amount of money circulating in the economy.
[2 marks] · no calculator - 11.
Explain one advantage a government might expect from privatising a state-owned telecommunications company.
[2 marks] · no calculator - 12.
Explain one reason why a government might choose to nationalise (take into public ownership) a struggling railway company rather than let it fail.
[2 marks] · no calculator - 13.
Explain one disadvantage to consumers of a single firm having a monopoly over the supply of a good, with no close competitors.
[2 marks] · no calculator - 14.
An airline charges business travellers a much higher fare than leisure travellers for very similar seats on the same flight. Explain what this is an example of, and why it can be profitable for the airline.
[2 marks] · no calculator - 15.
Explain, using government spending on worker training as an example, what is meant by supply-side policy.
[2 marks] · no calculator - 16.
Explain what is meant by a government budget deficit.
[2 marks] · no calculator - 17.
Explain one possible consequence for a country of having a very high national debt.
[2 marks] · no calculator - 18.
Explain how an initial rise in government spending on a new factory could lead to a greater overall increase in national income, through the multiplier effect.
[2 marks] · no calculator - 19.
Explain how unemployment benefits can act as an automatic stabiliser during a recession.
[2 marks] · no calculator - 20.
Country A has a real GDP of $200 billion and a population of 40 million. Country B has a real GDP of $150 billion and a population of 20 million. Calculate GDP per capita for each country, and state which suggests a higher average living standard.
[3 marks] - 21.
Distinguish between absolute poverty and relative poverty.
[2 marks] · no calculator - 22.
Explain one reason why income inequality might exist between workers within the same country.
[2 marks] · no calculator - 23.
Explain what the circular flow of income model shows about the relationship between households and firms in an economy.
[2 marks] · no calculator - 24.
Explain how a rise in interest rates is likely to affect how much households choose to save.
[2 marks] · no calculator