DP Economics Questionbank

Using a production possibilities curve (PPC) diagram, explain how the production possibilities (potential output) of the DRC might be affected if there were greater access to electricity (paragraph [4]).

Assuming that 25 000 pencils are produced initially, identify the opportunity cost for Country H if the production of rice is to be increased by 100 %.

State one reason why the production possibility curve (frontier) for Country H might shift outwards.

Using a production possibilities curve (PPC) diagram, explain how the importing of “new technology and capital equipment” might affect Thailand’s production possibilities (paragraph [3]).

Sketch a production possibilities curve (PPC) diagram to show the effect of improved human capital on Malawi’s potential output (Text D, paragraph [2]).

Discuss the view that competitive markets will always achieve allocative efficiency.

A government decides to impose an indirect tax on unhealthy drinks. Discuss the consequences for the stakeholders in these markets.

Explain two factors that might give rise to economies of scale for a firm.

Discuss the view that legislation is the best way of dealing with the problem of monopoly power.

Examine the significance of price elasticity of demand for the decision making of firms and government.

Explain two reasons why a government might want to subsidize a good or service.

Discuss the view that governments should tax the consumption of gasoline (petroleum).

Explain why some firms might choose the goal of profit maximization while others might choose to adopt satisficing behaviour.

Discuss whether price will always be lower and output will always be higher in perfect competition compared to monopoly.

To what extent is advertising the most effective way of increasing the consumption of merit goods?

Discuss whether an oligopolistic firm should collude rather than compete.

Using a demand and supply diagram, explain the effect of government subsidies on the US corn market (paragraph [5]).

Using a cost diagram, explain how membership in the common market may allow producers in South Sudan to gain economies of scale (paragraph [6]).

Define the term total revenue indicated in bold in the text (paragraph [6]).

Using an externalities diagram, explain how the widespread use of solar panels will decrease the negative externalities of consumption caused by the use of kerosene lamps (paragraph [5]).

Using a theory of the firm diagram, explain the output and pricing decision of M-Kopa if it chooses to pursue the goal of revenue maximization (paragraph [6]).

Define the term social (community) surplus.

Calculate the social (community) surplus in the market for cotton in San Marcus.

Draw and label the new supply curve following the granting of the subsidy to domestic cotton producers on Figure 3.

Calculate the cost to the government of San Marcus of providing this subsidy to domestic cotton producers.

Calculate the resulting change in producer surplus following the introduction of the subsidy to cotton producers in San Marcus.

Calculate the change in the consumer surplus resulting from the subsidy.

Examine the view that the best allocation of resources, from society’s point of view, occurs where the marginal private benefit equals the marginal private cost.

Explain why a government might decide to impose a price ceiling on goods and services such as essential foods or rented housing.

Evaluate the view that monopoly is an undesirable market structure as it fails to achieve productive and allocative efficiency.

Explain why price elasticity of demand varies along the length of a straight-line demand curve.

Examine the significance of price elasticity of demand for the decision-making of firms and governments. 

Discuss the view that the provision of subsidies by the government on goods such as agricultural products will always be beneficial to stakeholders.

Discuss the view that imposing an indirect tax on gasoline (petrol) is the most effective way of reducing the market failure caused by cars.

Using an appropriate externalities diagram, explain why a government might decide to impose a price floor on a demerit good.

Examine the role of barriers to entry in making monopoly a less desirable market structure than perfect competition.

Define the term excess demand indicated in bold in the text (paragraph [3]).

Using a supply and demand diagram and data from the text, explain how a “disequilibrium in the domestic US tinplate steel market” would occur if there were no imports (paragraph [3]).

Using a demand and supply diagram, explain how the “imposition of the preliminary tariff” may have affected the market for new homes built in Canada (paragraph [4]).

Using an externalities diagram, explain how the Chinese infrastructure projects have caused negative externalities (paragraph [6]).

Calculate the change in expenditure on imported oranges as a result of the increase in demand.

Calculate the change in consumer surplus in Country Z as a result of the increase in demand for oranges.

Calculate the change in social (community) surplus as a result of the increase in demand for oranges.

Discuss the implications of the direct provision of public goods by a government.

Discuss the significance of price elasticity of demand (PED) for a government imposing an indirect tax on a good.

Discuss the view that barriers to entry in a monopoly will always lead to abnormal profits in the long run.

Define the term sustainability indicated in bold in the text (paragraph [6]).

Using an externalities diagram, explain why the percentage of infants receiving measles vaccinations in Nigeria indicates the existence of a market failure (Table 1).

Using a demand and supply diagram, explain why the increase in the minimum wage might affect Cambodia’s garment manufacturing competitiveness against other countries in the region (paragraph [4]).

Using an externalities diagram, explain why the garment industry is a source of market failure (paragraph [8]).

Using information from Figure 1, calculate Firm A’s total fixed costs.

The market price of almonds is $11 per kilogram. Using Figure 1, identify the quantity of almonds Firm A must produce in order to maximize profits.

Calculate the economic profit/loss when Firm A is producing at the output level identified in part (b)(i).

Based on the information in Figure 2, state whether the firms in this market are making normal profits, economic profits or economic losses.

On Figure 2, draw and label appropriate additional curves to show how a perfectly competitive market will move from short-run equilibrium to long-run equilibrium.

Using your answer to part (c)(ii), explain how the market adjustment takes place.

State two assumed characteristics of a monopoly.

Explain two reasons why a monopoly may be considered desirable for an economy.

Using Figure 3, calculate the economic profit when Firm B is maximizing its profits.

Using Figure 3, calculate the total revenue when Firm B is maximizing its revenue.

Sketch and label a diagram to illustrate the long-run equilibrium for a firm in monopolistic competition.

Discuss whether government regulation is the most effective way to deal with negative externalities of consumption.

Explain the impact of a price floor on market outcomes.

Discuss the consequences for different stakeholders when the government imposes a price ceiling on a market.

Explain how knowledge of price elasticity of demand could be used by a firm that is considering changing the price of its product.

Discuss how the introduction of a subsidy in a market will affect consumers, producers and the government.

Explain how a natural monopoly may arise.

Discuss how governments restrict monopoly power.

Using an externalities diagram, explain how “greater access to education” for girls in Pakistan could reduce market failure (paragraph [5]).

Define the term economies of scale indicated in bold in the text (paragraph [3]).

Using an externalities diagram, explain why “business pollution” is leading to market failure in STP (paragraph [5]).

Define the term asymmetric information indicated in bold in the text (paragraph [6]).

Using a costs diagram, explain how the expansion of the coconut industry could lead to economies of scale (paragraph [4]).

Evaluate the view that the threat to sustainability, caused by economic activity requiring the use of fossil fuels, is best addressed through the use of carbon taxes.

Explain two reasons why a government might impose indirect taxes.

Explain why governments impose price floors in the market for agricultural products.

Explain why a monopolistically competitive firm can make economic (abnormal) profit in the short run, but not in the long run.

Discuss the consequences of a perfectly competitive market becoming a monopoly market.

Explain why the price elasticity of demand for primary commodities is often relatively low while the price elasticity of demand for manufactured goods is often relatively high.

Discuss the view that tradable permits are more effective than taxes in reducing pollution.

Explain why governments provide subsidies.

Discuss the view that governments should always try to prevent the creation of barriers to entry in a market.

Using a demand and supply diagram, explain the impact on households of “removing some subsidies on food” (paragraph [5]).

Using an AD/AS diagram, explain how the construction of the China–Laos railway will contribute to economic growth in Laos (paragraph [1]).

Using a perfect competition diagram, explain whether farmers in the Philippines are making an economic profit or loss (Table 1).

Using an externalities diagram, explain the benefits of hygiene and sanitation education programmes (paragraph [5]).

Using a perfectly competitive firm diagram, explain the effect of declining prices of coffee beans on the profits of Honduras’ coffee farmers in the short run (paragraph [2]).

Country D is an economically less developed country that specializes in the production of primary products. 

Explain two implications for Country D of a relatively low income elasticity of demand for its primary products.

Calculate the shortage resulting from the imposition of the maximum price.

Calculate the change in producer surplus resulting from the imposition of the maximum price.

Calculate the change in consumer expenditure on rice resulting from the imposition of the maximum price.

State two methods of non-price rationing.

Explain how a decrease in income might affect the demand for normal goods and the demand for inferior goods.

Discuss the significance of income elasticity of demand for producers of primary products and producers of manufactured goods when incomes are rising.

Explain the impact on consumers, producers and the government of a price floor being introduced in an agricultural market.

Explain why merit goods tend to be under-provided in a free market.

Evaluate the use of carbon taxes to reduce threats to sustainability.

Explain why producers in an oligopolistic market might choose to engage in non-price competition.

Evaluate the view that the use of legislation and regulation by government is the most effective way to control monopoly power.

Using a demand and supply diagram, explain why the global price of coffee beans dropped when “countries such as Vietnam, Indonesia and Ethiopia increased their exports” (paragraph [2]).

Using an externalities diagram, explain how coal-fired power plants in the US might be causing market failure (paragraphs [3] and [4]). 

Using a demand and supply diagram, explain how a subsidy changes the consumer surplus for a good (paragraph [6]).

Using an externalities diagram, explain how manufacturing companies in Brazil are contributing to market failure (paragraph [7]). 

Calculate the price elasticity of demand for chia seeds in Nofiberland following the imposition of the tariff.

Using real-world examples, evaluate different approaches to managing common access resources.

Explain two reasons why a government might set a price ceiling (maximum price) on a good.

Using real-world examples, discuss the consequences of a price ceiling on stakeholders.

Governments intervene in markets to support firms and to promote equity. Explain one policy that could be used to support firms and one policy that could be used to promote equity.

Using real-world examples, evaluate the effects for stakeholders of a government imposing an indirect tax on a particular good.

Distinguish between perfect competition and monopolistic competition.

Using real-world examples, discuss the impact of large firms having significant market power.

Using an externalities diagram, explain how dependence on coal could be a source of market failure (Text B, paragraph [3]).

Using a demand and supply diagram, explain how modern farming practices could affect the market for rice (Text E, paragraph [3]).

Sketch a demand and supply diagram to show the effect on revenue earned by Vietnamese farmers with improved access to the Japanese market (Text B, paragraph [1]).

Explain two economies of scale which may not be available to smaller farms (Text A, paragraph [2]).

Using a demand and supply diagram, explain how the rise in the maximum price of maize would change the welfare loss associated with the maximum price (Text E, paragraph [2]).

Using the information in Figure 1, calculate the price elasticity of demand for gold in Burundi when price increases from US$1500 per oz to US$1800 per oz.

Using a diagram and the information above, explain why traffic congestion in India may be considered an example of market failure.

Using Figure 2, calculate the revenue (in rupees per day) collected from the indirect taxes on petrol in New Delhi.

Using Figure 2 and your answer to part (a)(ii), calculate the loss in consumer surplus which results from the imposition of indirect taxes on petrol in New Delhi.

Using Figure 2 and your answer to part (a)(ii), show that in the absence of indirect taxes the supply of petrol in New Delhi would be price inelastic.

Using Figure 2 and the information in Table 4, calculate the total profit earned by petrol suppliers in New Delhi per day.

With reference to the use of cars in India, explain how one limitation of the assumptions of rational consumer choice might result in the overuse of cars in New Delhi.

Using the text/data provided and your knowledge of economics, recommend a policy which could be introduced by the government of India in order to address the problem of traffic congestion in New Delhi.

Evaluate the view that the best way to reduce income inequality in a country is by using progressive taxation.

Explain how expansionary fiscal policy could be used to close a deflationary (recessionary) gap.

Explain the possible impact of an increase in wealth and consumer confidence on aggregate demand.

Examine why, in contrast to the monetarist/new classical model, the economy will not automatically return to the full employment level of output in the Keynesian model.

Explain how an increase in investment might lead to economic growth.

Discuss the possible consequences of economic growth on living standards, unemployment and inflation.

Explain how expansionary fiscal policy could be used to close a deflationary (recessionary) gap.

Evaluate government policies to deal with the different types of unemployment.

Using Table 1, calculate the unemployment rate.

Using the graph, determine short-run values for the unemployment rate in 2016 and the inflation rate in 2018. Enter your answers in Table 2 below.

Table 2

The government in Country Alpha reduces income taxes in 2019.
Using information from the graph to support your answer, explain the likely effect on the inflation rate and the unemployment rate.

The natural rate of unemployment in Country Alpha is 5 %.

On the diagram draw and label the long-run Phillips curve (LRPC).

The price of oil is expected to rise significantly, causing a sustained increase in energy costs.

Describe the likely effect of this sustained cost increase on the short-run Phillips curve (SRPC).

Explain the reason for your answer to part (d) (i).

Using the data in Table 3, calculate the level of investment.

The following diagram illustrates the long-run aggregate supply curve (LRAS), short-run aggregate supply curve (SRAS) and aggregate demand curve (AD) for Country Beta before the increase in investment.

The increase in investment results in both short-run and long-run effects on the economy. On the diagram above, draw and label the two curves that illustrate these effects.

In Country Beta, investment by firms increases in the first quarter of 2019.

The following diagram illustrates the long-run aggregate supply curve (LRAS), short-run aggregate supply curve (SRAS) and aggregate demand curve (AD) for Country Beta before the increase in investment.

The increase in investment results in both short-run and long-run effects on the economy. On the diagram above, draw and label the two curves that illustrate these effects.

Calculate the real growth rate in 2018 using the figures in Table 4 below.

Table 4

Calculate the maximum possible increase in gross domestic product (GDP) that could result from the rise in investment.

Country Delta is an open economy with a government sector. Investment rises by $2 billion in both Delta and Beta. Explain how the size of the multiplier and the resulting effect on gross domestic product (GDP) might be different in the two countries.

To what extent is the use of national income statistics an effective way of comparing the standard of living between countries?

Using the concept of the multiplier, explain how an increase in investment might affect aggregate demand.

Discuss the effectiveness of supply-side policies in reducing unemployment.

Explain the potential effects on the economic growth rate from a substantial increase in the number of skilled people of working age entering a country.

Discuss the view that, apart from indicating economic growth rates over time, national income statistics are of little use.

Define the term monetary policy indicated in bold in the text (paragraph [5]).

Using a production possibilities curve (PPC) diagram, explain the effect on economic growth of the “destruction of much of the country’s physical, social and human capital” (paragraph [1]).

Using an AD/AS diagram, explain why the “decrease in the prices of imports, especially oil” might reduce inflationary pressure (paragraph [5]).

Calculate gross domestic product (GDP) for Country X in 2015.

Calculate gross national income (GNI) for Country X in 2015.

Calculate the rate of consumer price inflation in 2016.

Using the GDP deflator, calculate the percentage change in real GDP between 2014 and 2015.

Identify the term represented in Figure 4 by the letter V.

Identify the term represented in Figure 4 by the letter M.

State the four factor payments which constitute the income flow in the circular flow of income model.

Determine the size of the budget surplus/deficit and state which using Figure 4.

Calculate the average tax rate for an individual who earns $64 000 per year.

Draw and label the Lorenz curve diagram for Country A on Figure 5.

Explain how aggregate demand in an economy might be affected by a rise in the exchange rate and a decrease in the income of major trading partners.

To what extent is expansionary fiscal policy the best policy to achieve a reduction in the rate of unemployment?

Explain the role of improved productivity in achieving economic growth.

Discuss the view that economic growth can only be achieved at the expense of other macroeconomic objectives such as a low and stable rate of inflation and equity in the distribution of income.

Explain how a deflationary gap might occur.

Using the monetarist/new classical model and the Keynesian model, discuss the view that increases in aggregate demand will inevitably be inflationary.

Explain how government spending might promote greater equity in an economy.

Evaluate the view that government policies to promote greater equity will always have a negative effect on efficiency.

Explain how increased investment by the government in education and training can affect both aggregate demand and aggregate supply.

Evaluate the view that inflationary pressures in an economy are best reduced using supply-side policies.

Discuss the view that economies will always return to the full employment level of output in the long run.

Explain how an increase in unemployment might lead to a loss of gross domestic product (GDP) and a budget deficit.

Discuss the view that there will always be a trade-off between the unemployment rate and the inflation rate.

Define the term structural unemployment indicated in bold in the text (paragraph [4]).

Define the term real gross domestic product (GDP) indicated in bold in the text (paragraph [2]).

Using a production possibilities curve (PPC) diagram, explain how rising numbers of university graduates will affect Bhutan’s potential output (paragraph [5]).

Define the term absolute poverty indicated in bold in the text (paragraph [2]).

List two functions of the central bank (paragraph [2]).

Define the term fiscal policy indicated in bold in the text (paragraph [5]).

Explain the difference between a current account deficit and a budget deficit (paragraph [5]).

Define the term interest rates indicated in bold in the text (paragraph [5]).

Define the term investment indicated in bold in the text (paragraph [2]).

Define the term productivity indicated in bold in the text (paragraph [5]).

Using an AD/AS diagram, explain how expansionary monetary policy might lead to economic growth (paragraph [1]).

Explain the difference between economic growth and economic development (paragraph [7]).

Calculate the unemployment rate in Fairland using Table 1.

Outline two difficulties in measuring unemployment.

Draw and label a curve that illustrates Fairland’s minimum wage on Figure 6.

Calculate the resulting unemployment among the low-wage workers.

Fred is a low-wage worker in Fairland. As a result of the minimum wage his income will increase from $15 000 per year to $19 000 per year.

Calculate how much additional income tax Fred will need to pay.

Using an AD/AS diagram to support your answer, explain the mechanism through which monetary policy can help an economy reduce the level of unemployment.

State two interventionist supply-side policies that are likely to increase the demand for low-wage labour in Fairland.

State two market-based supply-side policies that are likely to increase the supply of labour in Fairland.

Using this information, calculate the value of the Keynesian multiplier.

Using your answer to part (i), calculate the increase in government spending necessary to increase nominal GDP by $100 billion.

Explain, using a production possibilities curve (PPC) diagram, an increase in the actual output of an economy.

Discuss the view that economic growth always leads to a rise in living standards.

Explain the impact that a cut in taxation and an increase in government spending might have on the circular flow of income.

Discuss whether the real gross national income (GNI) per capita of a country is a good indicator of its standard of living.

Explain the effect an increase in investment might have on real gross domestic product (GDP) using the Keynesian multiplier.

Discuss the view that interventionist supply-side policies are the most effective way for a government to achieve economic growth.

Using an AD/AS diagram, explain the impact of the trade agreement between Japan and the EU (JEEPA) on Japan’s economic growth (paragraph [1]).

Outline two roles of a country’s central bank (paragraph [1]).

Using an AD/AS diagram, explain the likely impact on the Canadian economy of the increase in the official interest rate (paragraph [1]).

State the reason for the difference between Ghana’s GNI per capita and its GDP per capita (Table 1).

Define the term economic growth indicated in bold in the text (paragraph [2]).

Calculate the inflation rate for 2014 and for 2015. Enter your results in Table 1.

Calculate the unemployment rate for 2012 and for 2013. Enter your results in Table 1.

Explain two reasons why low and stable inflation is desirable.

Using the data in Table 1 to support your answer, identify two reasons why many economists would consider Country A’s economy to be performing poorly in 2012.

State one reason why monetary policy is considered to have limited effectiveness in increasing aggregate demand if an economy is in a deep recession.

Explain two reasons why fiscal policy may prove effective in lifting an economy out of a deep recession.

Using the information in Table 2 for Country B calculate nominal GDP in 2014. Enter your result in Table 2.

Using the information in Table 2 for Country B calculate nominal GNI in 2015. Enter your result in Table 2.

Using the information in Table 2 for Country B, determine real GDP in 2014 and in 2015. Enter your results in Table 2.

Using the information in Table 2 for Country B, calculate the rate of economic growth between 2014 and 2015.

Gardia is aiming to increase its economic growth rate. Explain two sources of economic growth for economically less developed countries.

Gardia’s investment (in plant and equipment) increased by 11 million gamma in the last month. In the same month, its government spending decreased by 8 million gamma. It has been estimated that the marginal propensity to consume (MPC) on domestic goods and services in Gardia is 0.75.

Calculate the maximum possible increase in real gross domestic product (GDP) in Gardia that could result from the changes in investment and government spending.

Calculate the cost of the typical basket in 2016.

The cost of the typical basket was $50 in 2017. Calculate the consumer price index (CPI) for 2017.

The consumer price index for 2014 was 101.23. Calculate the rate of inflation between 2014 and 2015 (the base year).

In 2019, nominal GDP was $102 874.55 million. Using data from Table 2, identify whether Country A experienced inflation or deflation or disinflation in 2019.

Using data from Table 2, state the reason why there is a difference between the real GDP growth rate and the real GDP per capita growth rate between 2015 and 2019.

An economist forecasts that the real GDP growth rate in 2020 will be 3.41 %. Using the data in Table 2, calculate the forecast for real GDP ($ million) in 2020.

Calculate the estimated value of the multiplier used by the economist.

Calculate the estimated value of the multiplier used by the economist.

Using Figure 5, state two likely causes for the change in Mexico’s spending on imports of goods and services in 2009.

Explain why there is a possible trade-off between the unemployment rate and the inflation rate in the short run.

Discuss the view that the redistribution of income is the most important impact that inflation has on an economy.

Explain why measuring unemployment in a country is difficult. 

Discuss whether the most important consequence of unemployment is a loss of income for individuals.

Define the term budget deficit indicated in bold in the text (paragraph [2]).

Using an AD/AS diagram, explain the desired impact of China’s “eased monetary policy” on its economic growth (paragraph [5]).

Define the term gross domestic product (GDP) indicated in bold in the text (paragraph [3]). 

Define the term inflation indicated in bold in the text (paragraph [2]).

Using a Lorenz curve diagram, explain the possible impact on the distribution of income in the Philippines when “the income tax for the highest income earners has been raised from 30 % to 35 %” (paragraph [4]).

Using an AD/AS diagram, explain the impact on the potential output of the Philippines of the government increasing its “spending on new airports, roads and bridges” (paragraph [4]).

Define the term interest rate indicated in bold in the text (paragraph [2]).

Using an AD/AS diagram, explain how the use of fiscal policy could lower “the high rates of youth unemployment” in South Korea (paragraph [5]).

Define the term relative poverty indicated in bold in the text (paragraph [2]).

Using a production possibility curve (PPC) diagram, explain how damage to Fiji’s infrastructure has affected its production possibilities (paragraph [1]).

Explain how the size of the circular flow of income in an economy is likely to be affected by a decrease in the rate of interest.

Evaluate the effectiveness of fiscal policy as a means of achieving long-term economic growth.

Explain how aggregate demand is likely to be affected by an increase in the wealth of consumers and an increase in business confidence.

Evaluate the effectiveness of monetary policy in reducing an economy’s rate of unemployment.

Explain two causes of demand-pull inflation.

Evaluate the effectiveness of interventionist supply-side policies in reducing demand-pull inflation.

Explain two causes of structural unemployment.

Discuss the consequences of different types of unemployment.

Explain why cyclical (demand-deficient) unemployment may occur in an economy.

Evaluate the effectiveness of interventionist supply-side policies in reducing the level of unemployment in an economy.

Explain how expansionary monetary policy could be used to close a deflationary (recessionary) gap.

Evaluate the effectiveness of monetary policy in reducing an economy’s rate of inflation.

Explain the causes of cost-push inflation.

Discuss the view that deflation is more harmful than inflation.

Explain how the Lorenz curve and the Gini coefficient are used to measure differences in income inequality between countries.

Discuss the view that taxation is the most effective means of achieving equity in the distribution of income.

Define the term consumption indicated in bold in the text (paragraph [3]).

Using an AD/AS diagram, explain how an increase in oil prices “could worsen inflationary pressures” (paragraph [4]).

Define the term recession indicated in bold in the text (paragraph [1]).

Define the term privatization indicated in bold in the text (paragraph [2]).

Using a Lorenz curve diagram, explain the likely impact on income distribution of “plans to encourage investment in rural areas”  (paragraph [5]).

Define the term economic growth indicated in bold in the text (paragraph [1]).

Using an externalities diagram, explain why the construction of dams on the Mekong River might lead to market failure (paragraph [2]).

Using an AD/AS diagram, explain how removing “the import quota will reduce the inflation rate in the Philippines” (paragraph [5]).

Define the term monetary policy indicated in bold in the text (paragraph [2]).

Using an AD/AS diagram, explain how “increasing China’s interest rate” could affect its economic growth (paragraph [5]).

Define the term gross domestic product (GDP) per capita indicated in bold in the text (paragraph [1]).

Define the term absolute poverty indicated in bold in the text (paragraph [2]).

With reference to the data in Table 2, explain why the GNI per capita for Guatemala is lower than its GDP per capita.

Calculate Averna’s nominal gross domestic product (GDP) in 2019.

Using your answer to part (a), calculate Averna’s real GDP per capita in 2019.

Explain two reasons why an increase in real GDP per capita may not lead to an improvement in living standards.

Table 3 provides information relating to the labour market in the country of Buranda.

Table 3

Calculate the unemployment rate in Buranda.

Identify a period in which Country Y experienced disinflation.

Evaluate the view that fiscal policy is the best way to reduce unemployment.

Evaluate the view that progressive income tax is the best way to increase equity in an economy.

Explain how rising commodity prices and wages might lead to cost-push inflation.

Discuss the possible consequences of deflation for an economy.

Explain how a better trained and educated labour force might affect economic growth.

Discuss the view that economic growth always leads to rising living standards.

Using an AD/AS diagram, explain how the change in the balance of trade in goods and services from 2018 to 2019 could have affected South Korea’s economy (Table 1 and paragraph [1]).

List two responsibilities of a central bank (paragraph [4]).

Define the term unemployment indicated in bold in the text (paragraph [6]).

Define the term budget deficit indicated in bold in the text (paragraph [2]).

Define the term human capital indicated in bold in the text (paragraph [7]).

Using an AD/AS diagram, explain how “lower prices for food and raw materials” might put downward pressure on inflation (paragraph [1]).

Using a Lorenz curve diagram, explain what is meant by an “increase in income inequality from 2015 to 2019” (paragraph [6]).

Define the term gross domestic product indicated in bold in the text (paragraph [4]).

Define the term human capital indicated in bold in the text (paragraph [5]).

Using a Lorenz curve, explain how a progressive tax system could change Vanuatu’s income distribution (paragraph [7]).

Using a business cycle diagram from 2010 to 2019, explain how cyclical unemployment may have changed during the economic boom (paragraph [1]) and the recession (paragraph [2]) in Brazil.

Using the data in Table 2, calculate factor income sent (paid) abroad in 2019.

If the government increased expenditures by K$21 billion, calculate the new level of GDP achieved.

Explain two possible positive consequences of economic growth in Kanyaland.

In many developing countries GNI figures are lower than GDP figures. Outline how this may be due to the high levels of foreign direct investment (FDI) in developing countries.

Using Table 3, calculate the rate of inflation in 2017 and in 2018.

With reference to the CPI data in Table 3, describe the most likely monetary policy response adopted at the end of 2018 by the central bank of Kanyaland.

Using Table 4, identify the marginal tax rate for Rufus.

Using Table 4, calculate the average tax rate for Sammy.

Using real-world examples, evaluate the effectiveness of monetary policy to achieve low unemployment.

Using real-world examples, evaluate the effectiveness of monetary policy to achieve low inflation.

Explain how the use of supply-side policies might encourage greater domestic competition and improve the international competitiveness of a country.

Using real-world examples, evaluate the view that the use of interventionist supply-side policies is the most effective way of reducing a country’s rate of unemployment.

Define the term unemployment rate indicated in bold in the text (Text A, paragraph [6]).

Using information from Table 1, calculate North Macedonia’s annual rates of inflation between 2016 and 2019.

Using your answer to part (b)(i), identify the year disinflation set in.

Using an AD/AS diagram, explain the likely impact of North Macedonia’s supply-side policies on its full employment level of output (Text B, paragraph [2]).

Define the term gross domestic product (GDP) indicated in bold in the text (Text D, paragraph [1]).

Using the information in Table 3, calculate Sierra Leone’s rate of economic growth between 2017 and 2018.

Using an AD/AS diagram, explain how the increase in the price of fuel might have contributed to inflation (Text D, paragraph [5]).

Using a demand and supply of money diagram, explain the likely effect on interest rates of a reduction in the minimum reserve requirement for banks (Text C, paragraph [1]).

Using information from Table 3, calculate real GDP (at 2010 prices) in 2019 using the price deflator.

Using an AD/AS diagram, explain how a reduction in government spending may reduce inflation (Text D, paragraph [4]).

Using the information provided in Table 1, calculate the rate of unemployment for Burundi in 2019.

Calculate the amount of VAT which was paid on the purchase of this equipment.

Sketch an AD/AS diagram to illustrate the possible effect on the Burundian economy in the long run if the government reduces the rate of corporate income tax from 30 % to 26 %.

Using the text/data provided and your knowledge of economics, recommend a policy which could be introduced by the government of Burundi to reduce income inequality in Burundi.

Using the diagram, calculate the opportunity cost of producing one tonne of bananas in Country A.

Calculate the value of V (exports of services) for Urbania in 2017.

Using the information in Table 5, calculate the financial account balance.

Using your answer to part (g)(i), calculate the value of W (reserve assets) in Table 5.

Using your answer to part (g)(ii), describe how the level of reserve assets in Urbania changed by the end of 2017.

Explain how a depreciation of the Urbanian dollar ($) might result in a J-curve effect.

Define the term depreciation indicated in bold in the text (paragraph [6]).

Define the term current account indicated in bold in the text (paragraph [6]).

Using an exchange rate diagram, explain how “the need to import corn” will affect the value of the South African rand (paragraph [3]).

Using information from the text/data and your knowledge of economics, evaluate the economic impacts of trade protection in the South African corn market.

List two components of the Human Development Index (HDI) (paragraph [2]).

Using information from the text/data and your knowledge of economics, evaluate the challenges to economic growth and economic development faced by Burundi.

Define the term monetary union indicated in bold in the text (paragraph [1]).

Define the term comparative advantage indicated in bold in the text (paragraph [5]).

Using a cost diagram, explain how membership in the common market may allow producers in South Sudan to gain economies of scale (paragraph [6]).

Using information from the text/data and your knowledge of economics, evaluate the likely impact on South Sudan of its membership of the EAC common market. 

Define the term poverty trap indicated in bold in the text (paragraph [2]).

Using information from the text/data and your knowledge of economics, examine the extent to which access to credit and appropriate technology can contribute to economic development in Kenya.

State two functions of the WTO.

Plot and label the world cotton supply curve that San Marcus now faces on Figure 3.

With reference to your answer to question (b)(ii), calculate the change in the cost of financing the $8 per kg subsidy to the government of San Marcus following the decision to import cotton from the world market.

Using an international trade diagram, explain the effect of a tariff on the imports of tinplate steel (paragraph [1]).

Using information from the text/data and your knowledge of economics, discuss possible economic impacts of the tariff on tinplate steel.

Define the term concessional long-term loans indicated in bold in the text (paragraph [2]).

Explain two possible disadvantages for Bhutan in receiving India’s tied aid (paragraph [3]).

Using information from the text/data and your knowledge of economics, evaluate the government policies being used to promote economic development in Bhutan.

Define the term foreign direct investment (FDI) indicated in bold in the text (paragraph [4]).

Explain two reasons why Chinese companies may have been attracted into Peru (paragraph [4]).

Using a poverty cycle diagram, explain how increased foreign direct investment might break the cycle (paragraph [4]).

Using information from the text/data and your knowledge of economics, evaluate the factors that may allow Peru to continue to achieve high rates of economic growth in the future.

Define the term dumping indicated in bold in the text (paragraph [2]).

Using a tariff diagram, explain the effect of the “preliminary tariffs” on Canadian consumers of drywall (paragraph [3]).

Using information from the text/data and your knowledge of economics, evaluate the effect of the tariff on drywall on different stakeholders.

Using an exchange rate diagram, explain how the central bank might depreciate the value of the rupee (paragraph [3]).

Explain the difference between a current account deficit and a budget deficit (paragraph [5]).

Using information from the text/data and your knowledge of economics, discuss the effects of the increasing current account deficit on Pakistan’s economy.

Describe the nature of foreign direct investment (paragraph [6]).

Using information from the text, explain two reasons why Chinese multinational corporations (MNCs) are investing in Bolivia.

Using information from the text/data and your knowledge of economics, discuss the possible effects of Chinese involvement on economic growth and development in the Bolivian economy. 

Explain the difference between economic growth and economic development (paragraph [7]).

Using information from the text/data and your knowledge of economics, discuss the extent to which continued economic growth may lead to economic development in Kenya.

Sketch and label a diagram to illustrate comparative advantage between Country X and Country Y on Figure 4.

Figure 4

Outline the reason why Country X should specialize in the production of apples and Country Y should specialize in the production of bananas.

State one administrative barrier that Country Z could use in order to restrict imports.

Explain two possible economic consequences for the eurozone if the euro appreciates.

Calculate the quantity of EU€ she will receive for her US$300 000.

Calculate, in US$, the loss made by Tanya as a result of these transactions.

Explain two reasons why a government might prefer a floating exchange rate system for its currency.

Define the term quota indicated in bold in the text (paragraph [4]).

Using an international trade diagram, explain the likely impact of Japan “removing the current 30 % tariff” on the level of cheddar cheese imports. (paragraph [4]).

Using information from the text/data and your knowledge of economics, evaluate the possible consequences of the trade agreement between Japan and the EU (JEEPA).

Define the term current account deficit indicated in bold in the text (paragraph [4]).

Using an exchange rate diagram, explain one reason for the appreciation of the Canadian dollar (paragraph [3]).

Using information from the text/data and your knowledge of economics, discuss the possible effects on the Canadian economy of the strengthening of the Canadian dollar against the US dollar.

State two functions of the International Monetary Fund (IMF) (paragraph [1]).

Define the term depreciation indicated in bold in the text (paragraph [3]).

Using an AD/AS diagram, explain how Turkey’s reliance on energy imports is putting “further pressure on inflation” (paragraph [4]).

Using an exchange rate diagram, explain what is likely to have happened to the Turkish lira when Turkish citizens “bought US$1 billion worth of foreign currency” (paragraph [5]).

Using information from the text/data and your knowledge of economics, discuss the implications of Turkey’s persistent current account deficit.

Using information from the text/data and your knowledge of economics, compare and contrast the level of economic development in Ghana and Nigeria.

Define the term diversification indicated in bold in the text (paragraph [5]).

Using information from the text/data and your knowledge of economics, evaluate export promotion as a strategy for achieving economic development in Cambodia.

The data in Table 2 suggest that Country B may have attracted significant foreign direct investment (FDI).

Outline one possible disadvantage of foreign direct investment (FDI) for economically less developed countries.

If a visitor to Gardia from the US buys a towel that costs 23 gamma, calculate the cost in US$.

State two factors that could cause Gardia’s current account to be in deficit, even though its balance of trade in goods is in surplus.

Determine the size of Gardia’s current account surplus/deficit when the sum of the financial and capital accounts is US$ 2 billion.

Calculate the additional cost of paying back the loan in gamma in 2019, due to the interest and the change in the exchange rate.

Calculate the equilibrium exchange rate for the US$ in terms of the gamma.

Plot and label the new supply curve on Figure 2.

Using Figure 2, calculate how many US$ are needed to buy one gamma at the new exchange rate.

State two reasons that could have caused an increase in the supply of US$.

Plot and label the production possibility curves for Country J and for Country H, assuming constant opportunity costs, on Figure 4.

Calculate the value of the Mexican peso (US$ per MX$) in 2015. Enter your result in Table 3.

Using Table 3, state one possible effect on Mexican consumers and one possible effect on Mexican producers from the change in the value of the Mexican peso (US$ per MX$) between 2014 and 2016.

Using information from Figure 5, sketch an exchange rate diagram to show how the change in Mexico’s spending on imports in 2010 would have affected its exchange rate (US$ per MX$), ceteris paribus.

Using Figure 6, identify the equilibrium price when Country B engages in free trade.

Using Figure 6, calculate the consumer surplus and the producer surplus when Country B engages in free trade.

Using Figure 7, identify the equilibrium quantity being consumed following the imposition of the tariff.

Using Figure 7, calculate the revenue received by the government as a result of the imposition of the tariff in Country B.

Using Figure 7, calculate the change in consumer surplus as a result of Country B imposing the tariff.

Using Figure 7, calculate the welfare loss as a result of Country B imposing the tariff.

Define the term tariff indicated in bold in the text (paragraph [2]).

Using an international trade diagram, explain the outcome on US producers of the introduction of a tariff on imports from China (paragraph [2]).

Using information from the text/data and your knowledge of economics, discuss the arguments for and against the trade protection measures imposed by the US on China.

Using an exchange rate diagram, explain how raising interest rates would “stop the fall in the peso’s value” (paragraph [4]).

Using an AD/AS diagram, explain how the peso’s weakness is “raising inflation” (paragraph [6]).

State two functions of the International Monetary Fund (IMF) (paragraph [2]).

Define the term human capital indicated in bold in the text (paragraph [5]).

Using a poverty cycle diagram, explain how the government of Pakistan could intervene to “break out of the poverty cycle” (paragraph [3]).

Using information from the text/data and your knowledge of economics, evaluate the potential impact of the IMF and the World Bank on economic development in Pakistan.

State two functions of the World Trade Organization (WTO) (paragraph [1]).

Using information from the text/data and your knowledge of economics, evaluate the use of export promotion as a means of achieving economic development in the Philippines.

List two components of the financial account (paragraph [4]).

Using an exchange rate diagram, explain how South Korea’s current account surplus could have “helped increase the South Korean won’s value” (paragraph [2]).

Using information from the text/data and your knowledge of economics, discuss the possible implications on South Korea’s economy of a current account surplus.

Define the term free trade area indicated in bold in the text (paragraph [1]).

Define the term quotas indicated in bold in the text (paragraph [2]).

Using price elasticity of demand (PED) data from the text and the J-curve effect, explain the most likely impact of “the falling value of the Australian dollar” on Australia’s current account (paragraph [4]).

Using an international trade diagram, explain how “increased quotas for the export of rice to Japan” will affect the price of rice in Japan (paragraph [2]).

Using information from the text/data and your knowledge of economics, evaluate the view that free trade is beneficial to Japan’s economy.

Using information from the text/data and your knowledge of economics, discuss the role of aid in achieving economic development in STP.

Define the term absolute advantage indicated in bold in the text (paragraph [3]).

Using information from the text/data and your knowledge of economics, discuss the view that government intervention is the best way to achieve economic development in Fiji.

Define the term trade war indicated in bold in the text (paragraph [1])

Using an international trade diagram, explain how US tariffs could affect the export of Chinese steel and aluminium to the US (paragraph [2]).

Using a demand and supply diagram, explain how reduced tariffs on “imported factors of production” would affect the price of Chinese goods (paragraph [7]).

Using information from the text/data and your knowledge of economics, evaluate the impacts of free trade measures on China’s economy.

Define the term current account indicated in bold in the text (paragraph [1]).

Define the term depreciation indicated in bold in the text (paragraph [4]).

Using an exchange rate diagram, explain how higher interest rates could “protect the rupee from further depreciation” (paragraph [5]).

Using information from the text/data and your knowledge of economics, discuss the possible economic consequences on the Indian economy of a depreciating rupee.

Using information from the text/data and your knowledge of economics, evaluate the effectiveness of market-oriented policies in achieving economic development in Angola.

Define the term poverty trap indicated in bold in the text (paragraph [4]).

Using information from the text/data and your knowledge of economics, evaluate the role of foreign direct investment in promoting economic development in Laos.

State two functions of the World Trade Organization (WTO) (paragraph [1]).

Define the term free trade indicated in bold in the text (paragraph [1]).

Using information from the text/data and your knowledge of economics, evaluate the impact on the economy in the Philippines of removing the rice quota.

Define the term fixed exchange rate indicated in bold in the text (paragraph [1]).

Using an exchange rate diagram, explain why the “widening trade deficit in services” could lead to a depreciation of the renminbi (paragraph [3]).

Using information from the text/data and your knowledge of economics, discuss the view that a depreciating currency is good for the Chinese economy.

List two components of the Human Development Index (HDI) (paragraph [1]).

Using information from the text/data and your knowledge of economics, evaluate the effectiveness of interventionist policies as a means of achieving economic development in the DRC.

Define the term investment indicated in bold in the text (paragraph [5]).

Using information from the text/data and your knowledge of economics, contrast the potential for economic development in Guatemala and Honduras.

Define the term trade war indicated in bold in the text (paragraph [1]).

List two functions of the World Trade Organization (WTO) (paragraph [2]).

Using a tariff diagram, explain the likely effect on consumer surplus of a 25 % tariff on all wooden furniture imported into the US (paragraph [5]).

Using a foreign exchange diagram, explain the possible effect of China’s large current account surplus in 2007 on the exchange rate of China’s currency (the renminbi) (paragraph [6]).

Using information from the text/data and your knowledge of economics, evaluate China’s use of subsidies as a form of trade protection.

List two responsibilities of a central bank (paragraph [4]).

Using an exchange rate diagram, explain the effect on the South Korean won’s exchange rate of South Korea’s central bank selling US dollars (paragraph [6]).

Using information from the text/data and your knowledge of economics, evaluate the South Korean central bank’s decision to intervene in order to prevent the South Korean won from depreciating again.

List two functions of the World Bank (paragraph [3]).

Using information from the text/data and your knowledge of economics, discuss the extent to which foreign aid from the US may assist economic development in Honduras.

Using information from the text/data and your knowledge of economics, evaluate the impact on economic development of the Tanzanian government’s policy of spending on infrastructure projects. 

Define the term current account surplus indicated in bold in the text (paragraph [7]).

Using an exchange rate diagram, explain how a decrease in the interest rate might influence the value of the Thai baht (paragraph [6]).

Using information from the text/data and your knowledge of economics, evaluate the implications of the strong Thai baht on Thailand’s economy.

Define the term tariffs indicated in bold in the text (paragraph [5]).

State two functions of the World Trade Organization (WTO) (paragraph [6]).

Using a demand and supply diagram for processed food, explain how the EU’s tariff on palm oil might impact the market for processed food in the EU (paragraph [5]).

Using a production possibilities curve (PPC) diagram to illustrate comparative advantage, explain why the EU would export cars to Indonesia and Indonesia would export clothing to the EU (paragraph [2]).

Using information from the text/data and your knowledge of economics, discuss the economic effects on Indonesia of establishing a free trade agreement with the EU.

Define the term foreign direct investment indicated in bold in the text (paragraph [3]).

Using information from the text/data and your knowledge of economics, discuss the effectiveness of foreign aid in achieving economic development in Vanuatu.

Define the term multinational corporations indicated in bold in the text (paragraph [5]).

Define the term green GDP indicated in bold in the text (paragraph [7]).

Using information from the text/data and your knowledge of economics, evaluate the impact of market-oriented policies on economic development in Brazil.

State one example of a debit item from the financial account of the balance of payments.

Using Table 5, calculate the value of net current transfers for Laylaland in 2020.

Using Table 5, calculate the net exports of goods and services for Laylaland in 2020.

Calculate the change in consumer expenditure on imported chia seeds in Nofiberland resulting from the imposition of the tariff.

Calculate the total welfare loss resulting from the imposition of the tariff on chia seeds.

Explain how the increase in world demand for quinoa would likely affect the current account balance of Proteinland.

Using real-world examples, discuss the possible implications of a persistent current account deficit.

Using real-world examples, discuss the consequences of a fall in a country’s exchange rate.

Explain how political and social factors can act as barriers to economic growth and economic development.

Using real-world examples, discuss the significance of economic barriers for a country’s economic growth and economic development.

Countries often specialize and trade according to the theory of comparative advantage. Explain the limitations of this approach.

Using real-world examples, discuss the advantages and disadvantages for a country of being a member of a trading bloc. 

Define the term foreign direct investment (FDI) indicated in bold in the text (Text A, paragraph [3]).

Using information from Text A, paragraph [4], calculate North Macedonia’s balance of trade in 2018.

Using an exchange rate diagram, explain how the central bank of North Macedonia is preventing an appreciation of the denar against the euro (Text B, paragraph [4]).

Using an international trade diagram, explain the likely impact of the removal of import quotas on North Macedonia’s production of wine (Text C).

Using information from the texts/data and your knowledge of economics, discuss the likely economic effects on North Macedonia of its entry into the European Union (EU) Common Market.

List two dimensions of the Inequality adjusted Human Development Index (IHDI) (Text D, paragraph [3]).

Using the information in Table 3, calculate the change in Sierra Leone’s current account balance from 2017 to 2018.

Using an exchange rate diagram, explain how the fall in export revenue contributed to the depreciation of the leone (Text D, paragraph [4]).

Using a poverty cycle diagram, explain how the provision of free primary and secondary education may help households break the poverty cycle (Text E, paragraph [2]).

Using information from the texts/data and your knowledge of economics, evaluate the impact of government intervention in promoting economic growth and economic development in Sierra Leone.

Using information from Table 1, calculate the change in the surplus on Vietnam’s balance of trade in goods with Japan between 2015 and 2019.

Using a production possibilities curve (PPC) diagram to show comparative advantage, explain why Vietnam would export seafood to Japan while Japan would export machinery to Vietnam (Text B, paragraph [1]).

Using an exchange rate diagram, explain how the central bank in Vietnam could prevent the dong from depreciating by using its reserve assets (Text C, paragraph [2]).

Using information from the texts/data and your knowledge of economics, discuss the view that trade with Japan is more beneficial for Vietnam’s economic development than foreign direct investment (FDI) from Japan.

List two of the Sustainable Development Goals (Text D, paragraph [1]).

Define the term tariffs indicated in bold in the text (Text D, paragraph [5]).

Using a poverty cycle diagram, explain how an increase in funds for the education of teenage girls could break the poverty cycle (Text D, paragraph [2]).

Using an exchange rate diagram, explain how a reduction in the current account deficit could affect the exchange rate for the kwacha (Text D, paragraph [5]).

Explain why dependence on primary sector production may be considered a barrier to economic development.

Using the information in Figure 1, calculate the change in the value of Burundi’s gold exports resulting from the increase in the price of gold from US$1500 per oz to US$1800 per oz.