CSEC Economics Paper 2 May/June 2012 - Free CXC Past Paper with Answers

Define EACH of the following terms:

Terms of trade

Balance of trade

State ONE factor that can affect the terms of trade of a country.

Table 1 below illustrates import and export figures for the years 1990, 1991, 1992 and 1993 for Country X.

TABLE 1: IMPORTS AND EXPORTS FOR COUNTRY X (US $)

Calculate the balance of trade for the years 1990, 1991, 1992 and 1993.

Analyse the trend in the balance of trade from 1990 to 1993.

Explain TWO economic effects of an adverse balance of trade on a country.

Define the following terms:

Investment

Savings

Identify ONE factor that affects investment.

An economy records a rise in unemployment and a fall in business investment. Explain how TWO fiscal policies can be used to address these conditions.

Explain TWO factors that could have caused the state of the economy mentioned in (c) above.

Differentiate between 'fixed' and 'variable' costs. Give ONE example of EACH type of cost.

List THREE types of business organization.

Distinguish between 'economies of scale' and 'diseconomies of scale'.

Draw a well-labelled diagram showing the regions of economies of scale and diseconomies of scale.

Explain how a baker would respond to the THREE resource allocation decisions that arise in a free market economy.

Define EACH of the following terms as it relates to international trade:

Common external tariff

Import quota

Identify THREE reasons why governments adopt protectionist measures.

Explain, with examples, TWO items that would be found in EACH of the following sections of the Balance of Payments Account:

Current Account

Capital Account

By what name will EACH of the following transactions be known in the Balance of Payments Account of St Lucia?

A St Lucian travels to France on holiday.

British visitors attend the 20/20 cricket match at the Beausejour Cricket Ground in St Lucia.

A St Lucian buys shares in Microsoft in the United States of America.

Vanguard Atlantic earns US $2 million in profits in St Lucia and transfers these profits to its parent company in the United Kingdom.

An American citizen sets up a company in the capital of St Lucia.

Write EACH of the following acronyms in full:

CSME

OECS

IMF

FDI

Identify THREE characteristics of Caribbean economies.

Discuss TWO potential benefits of trade liberalisation to an economy.

Explain TWO ways in which e-commerce may encourage economic activity in an economy.

Define the following terms:

Stock exchange

Credit union

List THREE functions of a Central Bank.

Using a diagram, explain the circular flow of income.

Explain TWO ways in which an insurance company can contribute to the economic development of a country.