CSEC Economics Paper 2 May/June 2014 - Free CXC Past Paper with Answers

Define the following terms:

Economic system

Capital goods

Give ONE example of a capital item.

Explain TWO types of economies of scale that a person might gain by moving from operating a small food stall to operating a big restaurant.

Table 2 shows the total cost of production of Firm A for each level of output.

TABLE 2: TOTAL COST OF PRODUCTION OF FIRM A AT EACH LEVEL OF OUTPUT ABOVE ZERO

Use the information in Table 2 to calculate

the average total cost (ATC) for output level 3

the marginal cost for the $4^{th}$ unit of output.

Define the following terms:

Exchange rate revaluation

Managed exchange rate

State the name of the protectionist measure that limits the quantity of goods entering a country.

Describe TWO disadvantages that may accrue to a Caribbean country if it moves from a fixed exchange rate to a floating exchange rate system.

Analyse ONE benefit of using devaluation to correct a balance of payments problem.

Define the term 'economic goals'.

List THREE economic goals of a government.

Explain TWO disadvantages of using Gross Domestic Product (GDP) as a measure of standard of living.

Table 3 shows the economic statistics for Country Y.

TABLE 3: ECONOMIC STATISTICS FOR COUNTRY Y

Calculate the Gross Domestic Product (GDP) for Country Y using the information provided in Table 3. Hint: Use the expenditure approach.

Define the following terms:

The gold standard

Equity securities

List THREE types of financial institutions.

Explain ONE way in which the informal sector contributes positively and ONE way it contributes negatively to the financial sector.

Analyse TWO benefits of electronic payments to an individual.

List THREE examples of transfers found in the current account section of the balance of payments.

Define the following terms as they relate to a country's balance of payments account:

Investment income

Balance of payments disequilibrium

Explain TWO ways in which increases in the exchange rate of a country can affect the balance of payments account.

Table 4 shows the balance of payments data for Country Z.

TABLE 4: BALANCE OF PAYMENTS DATA FOR COUNTRY Z

Use the information provided in Table 4 to calculate the current account balance.

Define the term 'market equilibrium'.

Identify the TWO main market forces in an economy.

List THREE causes of market failure.

"A price hike in gasoline has caused motorists to rethink their choice of vehicle and mode of transportation."

Explain this statement in the context of cross elasticity of demand.

Discuss TWO impacts on the market that may result from the introduction of a low cost airline carrier in the Caribbean.

Define the following terms:

Debt burden

Economic integration

List any THREE stages of economic integration.

Explain TWO benefits to the Caribbean Community (CARICOM) of adopting a common external tariff.

Analyse TWO effects of foreign direct investment on the economies of Caribbean countries.