CSEC Economics Paper 2 May/June 2021 - Free CXC Past Paper with Answers

Define EACH of the following terms:

Capital

Entrepreneurial talent

Identify TWO of the main sectors in an economy.

The rent for the factory space of a manufacturing firm is decreasing. Describe how EACH of the following FOUR production costs for the firm will be affected:

Variable cost

Total cost

Average total cost

Marginal cost

An economics teacher is teaching her students the concept of cost curves. The teacher calculated the costs incurred by a small firm that sold only five pairs of shoes in the past week. She finds that the firm's fixed cost is $10 and its variable cost is $50 for making the first pair of shoes.

Using the information provided, draw a clearly labelled diagram to show the fixed, variable, and total cost curves of producing the FIRST pair of shoes.

Define EACH of the following terms:

Market structure

Market failure

Identify TWO types of market structures characterized by many sellers.

Explain why EACH of the following are considered as causes of market failure:

Externalities

Public goods

Zero economic profit is a characteristic of a certain type of market structure. For instance, the local carrot industry sells 100 pounds of carrots at $2 per pound. The local carrot industry has many sellers and many buyers. (i) Using the information given above, complete the diagram below by including the price and cost curves. (ii) Using the diagram in (d) (i), explain why there is zero economic profit in the local carrot industry.

Using the information given above, complete the diagram below by including the price and cost curves.

Using the diagram in (d) (i), explain why there is zero economic profit in the local carrot industry.

List THREE examples of EACH of the following concepts:

Financial institutions

Financial instruments

There are FOUR tools which a central bank may use as part of a country's monetary policy to control the supply of money. Explain the specific action the central bank may take to increase the supply of money, using these FOUR tools.

Table 1 shows the value of financial assets in a country.

TABLE 1: THE VALUE OF FINANCIAL ASSETS

Using the information in Table 1, calculate EACH of the following types of money. (Show all working)

M0 =

M1 =

M2 =

State the meaning of EACH of the following acronyms:

CET

WTO

Differentiate between EACH of the following pairs of economic concepts:

Absolute advantage and comparative advantage

Balance of trade and balance of payments

Explain how an increase in interest rates can improve the current account of the balance of payments.

Explain how a current account surplus on the balance of payments can increase employment.

Table 2 shows the current account for Caritopia.

TABLE 2: CURRENT ACCOUNT OF CARITOPIA

Using the information in Table 2, calculate EACH of the following:

The value of export of goods

The value of the current account

Suggest TWO policies which may be used to address the current account deficit.