CARIBBEAN EXAMINATIONS COUNCIL
SECONDARY EDUCATION CERTIFICATE
EXAMINATION
ECONOMICS
Paper 02—General Proficiency
2 hours
May 2010
INSTRUCTION TO CANDIDATES
- This paper consists of TWO sections.
- There are FOUR questions in Section I and FOUR questions in Section II.
- Answer ALL questions in Section I and any TWO questions from Section II.
- Write your answers in the booklet provided.
DO NOT TURN THIS PAGE UNTIL YOU ARE TOLD TO DO SO
SECTION I
Answer ALL FOUR questions in Section I. Each question is worth 15 marks.
1 (a) Describe the term ceteris paribus.
(2 marks)
(b) List THREE determinants of the supply of a commidity, OTHER than its price.
(3 marks)
(c) Explain THREE benefits that consumers may derive from the introduction of new service providers in the telecommunication industry.
(6 marks)
(d) Using a demand and supply diagram, ILLUSTRATE the impact on equilibrium quantity of a telephone company moving from a monopoly situation to one with other competitors in the market.
(3 marks)
(e) With reference to the diagram drawn at (d) above, what impact would the movement from a monopoly situation to a competitive market have on the equilibrium price?
(1 mark)
Total 15 marks
2 (a) Define the term ‘productivity’.
(2 marks)
(b) Identify THREE rewards that can be gained by the factors of production.
(3 marks)
(c) Discuss TWO reasons why a centrally-planned economy tends to be LESS efficient than a market-based economy.
(6 marks)
(d) Explain TWO advantages that may be derived from the division of labour in the tourist industry.
(4 marks)
Total 15 marks
3. (a) Define the term ‘comparative advantage’
( 2 marks)
(b) List THREE reasons why countries trade.
(3 marks)
(c) Discuss TWO problems that can arise with the balance of payments of non-oil producing Caribbean countries as a result of rising oil prices.
(6 marks)
(d) Explain TWO ways in which devaluation can impact the small, open economies of the Caribbean.
(4 marks)
Total 15 marks
4. Table 1 below provides data on the Gross Domestic Product (GDP) of country X.
(a) Define EACH of the following terms:
(i) Gross capital fixed formation
(2 marks)
(ii) Net property income from abroad
(2 marks)
(b) State the information that is needed to calculate national income at market prices, apart from the information provided in Table 1 above.
(1 mark)
(c) Discuss TWO factors than can cause the Gross National Product of a country to be greater than the Gross Domestic Product (GDP).
(6 marks)
(d) Calculate the Gross National Product for Country X using the information in Table 1 above.
(4 marks)
Total 15 marks
SECTION II
Answer any TWO of the following questions in Section II. Each question is worth 20 marks.
5. (a) Define the term ‘market structure’.
(2 marks)
(b) List TWO consequences of a market failure.
(2 marks)
(c) State THREE characteristic features of a monopoly.
(3 marks)
(d) (i) Discuss TWO factors that would affect the elasticity of demand for wheat.
(4 marks)
(ii) With the aid of a diagram, identify TWO possible effects of a shift to the left of an original supply curve, with the demand curve remaining the same.
(4 marks)
(e) Explain TWO consequences of having a cartel in the energy sector.
(5 marks)
6. (a) Define the term ‘economics’.
(2 marks)
(b) Distinguish between the terms ‘scarcity’ and ‘choice’.
(5 marks)
(c) The diagram in Figure 1 below shows the production possibility frontier for petroleum and sugar.
(i) Explain what sis taking place at Point A in the diagram.
(4 marks)
(ii) Outline TWO measures that a producer can take to attain the production level indicated at Point C in the diagram.
(4 marks)
(d) Discuss TWO economic factors that may encourage a producer of bread to remain in bread production.
(5 marks)
Total 20 marks
7. (a) Differentiate between a ‘treasure bill’ and a ‘bond’.
(4 marks)
(b) List THREE functions of money.
(3 marks)
(c) Explain how inflation can affect ALL the functions of money.
(8 marks)
(d) “The central bank is the tender of last resort.”
Discuss this statement in relation to the central bank’s role in managing the monetary sector in the economy.
(5 marks)
Total 20 marks
8. (a) List THREE benefits that Caribbean economies can gain from e-commerce.
(3 marks)
(b) Outline TWO challenges that Caribbean economies might face in developing e-commerce.
(c) Discuss TWO measures that can be employed by Caribbean governments in order to enhance e-commerce in the region.
(8 marks)
(d) For a named Caribbean country, briefly discuss TWO reasons why that country may need to implement a structural adjustment program (SAP).
(5 marks)
Total 20 marks
END OF TEST