Search
Home
Saved
0
801 views
Sign In
Upload
Join
RELATED TITLES
0
Cape Economics Past Paper Solutions June 2008
Uploaded by Akeemjoseph
Top Charts
Books
Audiobooks
Save
Embed
Share
Print
Download
Magazines
News
Documents
Spec 2008 - Unit 2 - Paper 1
1
of 11
CAPE Economics Past Papers Unit
CAPE Economics unit 2 2008 paper
Search document
CAPE ECONOMICS PAST PAPER SOLUTIONS June 2008 – 2008 – Unit 2 – 2 – Paper 2
Sheet Music
1 a) Real Gross Domestic Product (GDP) measures the value of output produced by an econ using a base year or constant price level. The base year price level refers to the price level i
particular year. This is done to compare the value of output produced in different years usin
the same set of prices. As such differences in the value of output would be attributable pur
to differences in the quantity of goods and services produced. Nominal GDP measures the v
of output produced by an economy using the current prices of goods and services. If the sam quantity of goods and services are produced in two consecutive years and the price level increases over the period, then the value of nominal GDP would increase in the volume of output produced is the same. Nominal GDP can be converted to real GDP using the GDP
deflator which is a price index to remove the effects of price changes in the measurement o
national income. The formula used in the conversion is given by: Nominal GDP 100 Real GD GDP Deflator 1
1b) Two methods of calculating National Product The expenditure approach in calculating g
domestic product focuses on summing all expenditures on goods and services generated w
an economy. This includes: consumption expenditure, investment expenditure, Governmen
expenditures as well as expenditure by foreigners in the form of exports. Imports are deduc
as this represents goods and services which are consumed domestically but produced in for
countries. By using the expenditure approach, appr oach, Gross Domestic Product Product = AE = C + I + G + X − Under the income approach gross domestic product is measured by summing all forms of
income throughout the economy. This basically consists of the factor incomes of: wages, re
interest, and profit By using the income approach, Gross Domestic Product Product = wages + rent +
interest + profit Gross National Product is then calculated by adjusting gross domestic prod
for net property income from abroad. This requires that receipts of factor incomes from the Master your semester with Scribd Read Free Foron 30 Days Sign up to vote wo rest of the world are added to GDP, while payments of factor incomes tothis thetitle rest of the & The New York Times Useful Not useful are subtracted. Special offer for students: Only $4.99/month.
Cancel anytime.
1ci) Injections/withdrawals approach of determining national income equilibrium
Home
Saved
Top Charts
Books
Audiobooks
Magazines
News
Documents
Sheet Music
Master your semester with Scribd & The New York Times Special offer for students: Only $4.99/month.
Upload
Sign In
Read Free For 30 Days Cancel anytime.
Join
Search
Home
Saved
0
801 views
Sign In
Upload
Join
RELATED TITLES
0
Cape Economics Past Paper Solutions June 2008
Uploaded by Akeemjoseph
Top Charts
Books
Audiobooks
Save
Embed
Share
Print
Download
Magazines
News
Documents
Spec 2008 - Unit 2 - Paper 1
1
of 11
CAPE Economics Past Papers Unit
CAPE Economics unit 2 2008 paper
Search document
2a) i) Natural rate of unemployment or equilibrium unemployment
Sheet Music
2a) ii) and iii) Equilibrium and Disequilibrium Unemployment 4. EDWARD BAHAW CAPE ECONOMICS PAST PAPER SOLUTIONS Labour Supply – Average Excluding Natural Wage Unemployment Rate Disequilibrium Labour Supply – Unemployment Including Natural Unemployment Equilibrium W2 Unemployment WE Labour Demand Number of workers employed
2 b) If the average wage rate is above the market equilibrium wage rate then disequilibrium
unemployment is created. This is because at the higher wage rate the amount of labour wh
firms hirer would be a smaller than the amount of labour being supplied to the market. As l as the wage rate remains above the equilibrium, the surplus labour or disequilibrium unemployment would continue to exist in the market.
2c) Any disequilibrium unemployment that exists in the economy implies that a surplus am
of labour exists in the labour market. This surplus would induce workers to offer their labou services at lower wage rates to employers. In response, firms would be encouraged to hire more labour as labour cost decline. Overall wages would continue to fall and firms would continue to hire more labour up to aYou're pointReading where all a surplus Previewlabour or disequilibrium unemployment is eliminated from the market.
Unlock full access with a free trial.
2d) Types of Unemployment
Download With Free Trial 1. General or Cyclical unemployment - this is unemployment which is associated with the tr
cycle. The trade cycle refers to the tendency of national income to fluctuate both upwards
downwards in a sequential fashion. As economic activity varies in this fashion, so too does t
level of employment, since labourScribd requirements in production processes adjust to suit Master your semester with Read Foron 30this Days Sign up to vote title aggregate aggregate demand levels in the economy. Particularly during aFree recession, when & The New York Times Useful Not useful demand is low, this type of unemployment would be high, while in times of recovery when Cancel anytime.
Special offer foraggregate students: Only $4.99/month. demand is high, cyclical unemployment would be low.
Home
Saved
Top Charts
Books
Audiobooks
Magazines
News
Documents
Sheet Music
Master your semester with Scribd & The New York Times Special offer for students: Only $4.99/month.
Upload
Sign In
Read Free For 30 Days Cancel anytime.
Join
Search
Home
Saved
0
801 views
Sign In
Upload
Join
RELATED TITLES
0
Cape Economics Past Paper Solutions June 2008
Uploaded by Akeemjoseph
Top Charts
Books
Audiobooks
Save
Embed
Share
Print
Download
Magazines
News
Documents
Spec 2008 - Unit 2 - Paper 1
1
of 11
CAPE Economics Past Papers Unit
CAPE Economics unit 2 2008 paper
Search document
other operations in many industries which previously required manual skills, now require
Sheet Music
labour with a higher mental capacity.
3. Technological - this occurs when an improvement in technology reduces the demand for
labour and hence many workers become unemployed. New technologies affect unemploym in two ways:
Secondly, new technology creates new jobs that require different skills, which many of the unemployed do not possess and are incapable of doing. In this case technological progress perpetuates unemployment similar to structural unemployment. 4. Seasonal unemployment - this type of unemployment arises due to seasonal patterns in consumer demand in various markets. In such cases, production follows a similar seasonal
nature and thus the demand for labour in these industries would vary accordingly. In period low seasonal demand, production may decline and hence seasonal employment would be
Conversely, during peak demand seasons, production would have to be increased and thus unemployment declines. Although it may be possible to smooth out production and thus You're Reading a Preview employment over an entire year by building up inventories during low seasonal demand fullstocks access with a free demand trial. periods and consequently using theUnlock buffer in peak periods, this may not be
applicable to all cases. The provision of services for instance, may not be practical to Download Free Trial manipulate in this way. Tourism services in theWith Caribbean are very susceptible to seasonal
demand conditions. During tourism off seasons, tourism capacity may be highly underutilize and thus labour requirements would follow suit.
5. Frictional unemployment – ThisScribd type of unemployment is purely short term associated w Master your semester with Free For 30this Days Sign up to vote on titlelabour marke the normal working of the labour market. It occurs whenRead individuals enter the & The New York Times Useful Not useful for the first time, say on completion of schooling and are thus unemployed for the period it Cancel anytime.
Special offer fortakes students: Only them to$4.99/month. find a satisfactory job. Frictional unemployment also occurs when people fro
Home
Saved
Top Charts
Books
Audiobooks
Magazines
News
Documents
Sheet Music
Master your semester with Scribd & The New York Times Special offer for students: Only $4.99/month.
Upload
Sign In
Read Free For 30 Days Cancel anytime.
Join
Search
Home
Saved
0
801 views
Sign In
Upload
Join
RELATED TITLES
0
Cape Economics Past Paper Solutions June 2008
Uploaded by Akeemjoseph
Top Charts
Books
Audiobooks
Save
Embed
Share
Print
Download
Magazines
News
Documents
Spec 2008 - Unit 2 - Paper 1
1
of 11
CAPE Economics Past Papers Unit
CAPE Economics unit 2 2008 paper
Search document
Medium of exchange 2. Standard of deferred payment 3. Unit of account
Sheet Music
3b) Four Tools used to Influence the Money Supply 1. Issue of Notes and Coins – the Central Bank can increase the money supply by print new
notes and minting new coins. The Central Bank is the only institution which has the authori
create new cash. As this money is spent by the government, the amount of money in circula within the economy increases. 2. Reserve Requirements –This is a banking regulation which requires that a percentage of
commercial banks’ deposits must be kept at the Central Bank. As the reserve requirement r changes, so too does the banking multiplier. As the reserve requirement ratio is increased, banking multiplier decreases, as banks are obligated to keep a larger proportion of their
deposits in liquid form. As a consequence, less money is lent and the credit creation proces diminished. As a result, the money supply contracts and this causes the rate of interest to
increase lead to a contraction of aggregate expenditure. This may not have any impact on t
banking multiplier if commercial banks kept excess reserves. As such as reserves requireme commercial banks would be able to meet the new level without reducing lending. This can therefore make the use of this instrument ineffective. You're Reading a Preview full Operations access with a free trial. the buying and selling of 3. Open Market Operations – OpenUnlock Market involve
Government securities in the open capital market. If the Central Bank purchases securities f Download With Free Trial the public, then this increases the amount of money in circulation which eventually finds its
into the commercial banking system. This therefore leads to a multiple expansion of deposi and hence an increase in the money supply. The rate of interest consequently decreases an
the aggregate expenditure expands. If however, as the Central purchases securities and the
Master your semester withit abroad Scribd recipients of the money invests instead then the domestic money supply would n Read Free Foron 30this Days Sign up to vote title increase rendering this tool ineffective. & The New York Times Useful Not useful Cancel anytime.
Special offer for4.students: Only $4.99/month. Moral suasion – the Central Bank may attempt to extend its monetary policy stance on th
Home
Saved
Top Charts
Books
Audiobooks
Magazines
News
Documents
Sheet Music
Master your semester with Scribd & The New York Times Special offer for students: Only $4.99/month.
Upload
Sign In
Read Free For 30 Days Cancel anytime.
Join
Search
Home
Saved
0
801 views
Sign In
Upload
Join
RELATED TITLES
0
Cape Economics Past Paper Solutions June 2008
Uploaded by Akeemjoseph
Top Charts
Books
Audiobooks
Save
Embed
Share
Print
Download
Magazines
News
Documents
Spec 2008 - Unit 2 - Paper 1
1
of 11
CAPE Economics Past Papers Unit
CAPE Economics unit 2 2008 paper
Search document
are used to purchase goods and services. As this money is spent EDWARD BAHAW CAPE
Sheet Music
ECONOMICS PAST PAPER SOLUTIONS 7. EDWARD BAHAW CAPE ECONOMICS PAST PAPER SOLUTIONS the economic agents who collect these sums make deposits at the commercial banks. Therefore the money which is l
out is returned to the bank in the form or derivative deposits. As such money is received th
bank keeps some in cash reserves as determined by the cash reserve ratio and then lends o
the rest. The cash reserve ratio refers to the proportion of cash to total deposit is which the bank must maintained in liquid form. This ratio is set by the Central Bank. Each time a loan
made from a derivative deposit the sum is smaller. If the total deposits increase by ten time the initial deposit then the money multiplier is ten. The money multiplier is given by the
following formula: Money Multiplier = 1 / (Cash Reserve Ratio) 3c) ii) If a bank receives an i
deposit of $100 and the cash reserve ratio is 10 percent it would lend out $90 to a borrowe Subsequently the $90 would be returned to the bank by another party in the form of a
derivative deposit. Here the $10 or the 10 percent not lent out is called the cash reserve or
proportion of a deposit which is kept in the form of cash at the bank. As the $90 derivative deposit is collected, 10 percent is kept in liquid form at the Depositor Deposits Loans Reser
Initial Deposit 1st $100 $90 $10 Derivative Deposit 2nd $90 $81 $9 Derivative Deposit 3rd $ You're Reading a Preview $73 $8 Derivative Deposit 4th $73 $64 $7 Derivative Deposit . . . Derivative Deposit . . .
Unlock full access with a free trial. Derivative Deposit ∞ . . . Total Deposits $1000 $900 $100 commercial bank. This amounts t
and the remaining $81 is lent out. Eventually the remaining $81 lend out, is re -deposited at Download With Free Trial commercial bank of which $73 is lent out and $7 kept in liquid form. 3d) i) Quantity theory
money - Irving Fisher’s equation of exchange as given by: MV = PY, 3d) ii) where: M – is the
money stock (supply of money). V – is the velocity of circulation or the number of times eac
unit of money is used to purchase a final good or service. P – is the general level of prices. Y
Master your semester Scribd PAS the number of final goodswith and services produced. EDWARD CAPE ECONOMICS Read Free For 30this Days SignBAHAW up to vote on title PAPERYork SOLUTIONS & The New Times Useful Not useful Special offer for students: Only $4.99/month.
Cancel anytime.
8. EDWARD BAHAW CAPE ECONOMICS PAST PAPER SOLUTIONS 4 a) i) Monetary policy is o
Home
Saved
Top Charts
Books
Audiobooks
Magazines
News
Documents
Sheet Music
Master your semester with Scribd & The New York Times Special offer for students: Only $4.99/month.
Upload
Sign In
Read Free For 30 Days Cancel anytime.
Join
Search
Home
Saved
0
801 views
Sign In
Upload
Join
RELATED TITLES
0
Cape Economics Past Paper Solutions June 2008
Uploaded by Akeemjoseph
Top Charts
Books
Audiobooks
Save
Embed
Share
Print
Download
Magazines
News
Documents
Spec 2008 - Unit 2 - Paper 1
1
of 11
CAPE Economics Past Papers Unit
CAPE Economics unit 2 2008 paper
Search document
increase in the interest rate. This is because if the rate of interest is increases private inves
Sheet Music
are discouraged from undertaken investments. An increase in the interest rate also dampe private consumption, especially expenditure on consumer durables which are typically
purchased through hire purchase or borrowed funds. These two responses to the rise in th
rate of interest would lead to a downward shift of the aggregate demand curve resulting in
fall in the average price level which would have a positive effect on inflation. A positive effe
on aggregate demand would be needed when there is a recession and the economy needs
boost. This would require a lowering of the interest rate which encourages greater investm as the cost of borrowing to finance capital formation is lowered. Furthermore a lower rate interest makes it cheaper to borrow for consumption purposes especially for consumer durables. As a result of these two effects the overall level aggregate demand increases. A
positive effect on unemployment requires an increase in aggregate demand in the econom
aggregate demand increases cyclical unemployment is eliminated as the increase in produc requires an increase in the level of employment. This would also require a decrease in the of interest which would encourage greater consumption and investment. Such increase in spending would stimulate the increase in production. 4b) Macroeconomic Variable Fiscal Policy You're Reading a Preview i)
Budget Deficit ExpansionaryUnlock fiscalfull policy access with a free trial.
ii) iii)
Aggregate Demand Contractionary monetary policy With Free Trial Inflation Expansionary fiscalDownload policy
iv)
Unemployment Contractionary monetary policy Fiscal
Policy is the management of the economy through the level of Government expenditure an
taxation. A negative effect on the budget deficit arises from the implementation of Master your semester with Scribd expansionary fiscal policy. This requires an increase in the level ofvote government Read Free Foron 30this Days Sign up to title spending an & The New York Times Not useful decrease in taxation. Although this would result in an increase in the of aggregate Useful level Cancel anytime.
Special offer forexpenditure students: Only in $4.99/month. the economy the budget deficit would increase. This is considered negative
the government may have to resort to borrowing. A negative effect on aggregate demand
Home
Saved
Top Charts
Books
Audiobooks
Magazines
News
Documents
Sheet Music
Master your semester with Scribd & The New York Times Special offer for students: Only $4.99/month.
Upload
Sign In
Read Free For 30 Days Cancel anytime.
Join
Search
Home
Saved
0
801 views
Sign In
Upload
Join
RELATED TITLES
0
Cape Economics Past Paper Solutions June 2008
Uploaded by Akeemjoseph
Top Charts
Books
Audiobooks
Save
Embed
Share
Print
Download
Magazines
News
Documents
Spec 2008 - Unit 2 - Paper 1
1
of 11
CAPE Economics Past Papers Unit
CAPE Economics unit 2 2008 paper
Search document
injection into the economy falls causing a fall in the level of aggregate demand. This leads t
Sheet Music
fall in the level of output produced which causes an increase in the rate of unemployment.
4c) i) Automatic stabilizers are mechanisms that automatically increase the net injection fro the government sector during recessions and contract it during booms. In other words an
automatically stabilizer offsets the current economic climate without any active policy deci by the government. 4c) ii) Two examples of automatic stabilizers 1. Unemployment Benefits 2. Direct taxes 4d) i) The National Debt also known as the public sector debt is the accumulated debt built
by the Government over a number of years that has not yet been repaid. Governments typ
borrow to finance its expenditure when its revenue is insufficient. The national debt theref represents the total amount owed by the Government which can be domestic debt as well the amount owed to foreigners which is external debt. 4d) ii) Burden of Public Debt
You're Reading a Preview Unlock full access with a free trial.
1. Recurrent vs Capital Expenditure - The money borrowed may be used for recurrent Download expenditure by the government which benefitsWith onlyFree the Trial current populations and the not th
future generation. If however the borrowed funds is used for capital expenditure in the form improvements to infrastructure which last several decades then this can benefit future generations.
Master your semester with Scribd 2. Interest Payments - interest payments and the repayment ofFree principal on debt Read Foron 30this Days Sign up to vote title reduces th amount of money which the government has to devote towards uses such as spendin & The New York Times useful Usefulother Not Cancel anytime.
Special offer foreducational students: Onlyfacilities $4.99/month. for instance. This may also result in an increase in taxes which may no
favoured by tax payers.
Home
Saved
Top Charts
Books
Audiobooks
Magazines
News
Documents
Sheet Music
Master your semester with Scribd & The New York Times Special offer for students: Only $4.99/month.
Upload
Sign In
Read Free For 30 Days Cancel anytime.
Join
Search
Home
Saved
0
801 views
Sign In
Upload
Join
RELATED TITLES
0
Cape Economics Past Paper Solutions June 2008
Uploaded by Akeemjoseph
Top Charts
Books
Audiobooks
Save
Embed
Share
Print
Download
Magazines
News
Documents
Spec 2008 - Unit 2 - Paper 1
1
of 11
CAPE Economics Past Papers Unit
CAPE Economics unit 2 2008 paper
Search document
2. Earn income from Larger Markets – exports enable producers in the domestic economy t
Sheet Music
access larger foreign markets especially when the domestic market is small. Access to these markets are extremely beneficial as it enables large scale production and hence the achievement of economies of scale. In this context, the exporting country benefits from increased competitiveness and increased income. 5 a) ii) Two problems resulting from the importation of goods and services
1.Current account deficits. If imports become greater than export then a current account de would exist. This is problem as it represents a major drain in foreign exchange.
2.Competition with Domestic Producers. Imported goods and services may provide serious
competition to domestically produced goods and services. This may put domestic firms out business and thus cause unemployment.
5a) iii) Commodity Terms of Trade This is relative measure of export prices and import price
is calculated as an index number using the following formula: XPI The terms of trade index = 100 MPI where : XPI - Average export price index MPI - Average import price index 5 a) iv) Two factors which determine export revenue You're Reading a Preview Unlock full access with a free trial. markets 1. The price of exported goods as determined in international
Download With Free Trial 2. World income or the level of income in export markets.
5b) Factors Influencing Economic Growth Economic growth implies a rise in the productive
capacity of an economy, which results in an outward shift of the production possibility fron
Three factors which can lead to an increase in the productive capacity of the economy are: Master your semester with Scribd Read Free Foron 30this Days Sign up to vote title 1. Increase in Labour Resources Economic growth depends on the quality and size ofthe l & The New York Times Useful Not useful force. Increasing the quality of the workforce through better education and training increas Special offer for students: Only $4.99/month.
Cancel anytime.
the value of human capital and makes workers more productive. Also as the labour force
Home
Saved
Top Charts
Books
Audiobooks
Magazines
News
Documents
Sheet Music
Master your semester with Scribd & The New York Times Special offer for students: Only $4.99/month.
Upload
Sign In
Read Free For 30 Days Cancel anytime.
Join
Search
Home
Saved
0
801 views
Sign In
Upload
Join
RELATED TITLES
0
Cape Economics Past Paper Solutions June 2008
Uploaded by Akeemjoseph
Top Charts
Books
Audiobooks
Save
Embed
Share
Print
1
Download
Magazines
News
Documents
Spec 2008 - Unit 2 - Paper 1
of 11
CAPE Economics Past Papers Unit
CAPE Economics unit 2 2008 paper
Search document
which would reduce the amount of money the government has available for spending on ot
Sheet Music
important uses such as housing programs or unemployment relief programs. Imports
manufactured goods, capital goods and technology - Caribbean countries import manufactu
goods and technology from abroad such as computers and other electronics, machinery, to
cars, and even food and clothing. Technology is very important for economic growth. Caribb countries however do not create their own technology instead they depend on foreign countries for technological innovations.
Exports mainly primary products and tourism -
countries of the Caribbean export mostly primary products and tourism. This is different fro
the exports of most developed countries which export a lot more manufactured goods and services.
Unstable Growth - Economic growth in the Caribbean has been quite unstable
where growth is achieved in some years followed by economic recession in other years. Thi means economic growth in these countries is not stable. This is a major economic problem which the Caribbean faces. In developed countries such as the United States, the United Kingdom and Canada growth is more stable as national income increases year after ye ar.
labour to improve. This implies that labour productivity rises, enabling greater output from labour resources.
3. Improvements in Technology Technological advances enable the production of more out You're Reading a Preview
from a given amount of resources. This means that scarce resources are more productively Unlock full access with a free trial.
utilized which reduces the real costs of supplying goods and services and this leads to an outward shift in a country’s production possibility frontier. This means that technological Download With Free Trial progress accelerates economic growth for any given rate of growth in the labour force and capital stock. 5c) Low rates of growth in the Caribbean Countries due to restrictions in:
Master your semester with Scribd Free For 30this Days Sign up to vote on title 1. Limited Improvement in Technology – one reason whyRead Caribbean countries may not alwa & The New York Useful Not useful have high ratesTimes of growth is because of limited improvements in technology. Caribbean Cancel anytime.
Special offer forcountries students: Only $4.99/month. mostly rely on foreign more developed countries for technological improvements
Home
Saved
Top Charts
Books
Audiobooks
Magazines
News
Documents
Sheet Music
Master your semester with Scribd & The New York Times Special offer for students: Only $4.99/month.
Upload
Sign In
Read Free For 30 Days Cancel anytime.
Join
Search
Home
Saved
0
801 views
Sign In
Upload
Join
RELATED TITLES
0
Cape Economics Past Paper Solutions June 2008
Uploaded by Akeemjoseph
Top Charts
Books
Audiobooks
Save
Embed
Share
Print
Download
Magazines
News
Documents
Spec 2008 - Unit 2 - Paper 1
1
of 11
CAPE Economics Past Papers Unit
CAPE Economics unit 2 2008 paper
Search document
6 a) i) The balance of trade – This is the difference between the monetary value of exports
Sheet Music
imports in an economy over a certain period of time.
6a) ii) Trade Deficit – This refers to the difference between imports and exports if imports a greater than exports
6a) iii) Trade Surplus – This refers to the difference between imports and exports if exports greater than imports
6b) i) Absolute Advantage Absolute advantage is enjoyed by a country if it can produce mor
goods and services compared to other countries with the same amount of resources. In suc
case, the country would be able to produce the good cheaper than other countries. In this c it makes sense for the country to specialise in the production of that good.
6 b) ii) Comparative Advantage A country has a comparative advantage in the production of
good if the opportunity cost from producing the good is lower than that in other countries. this case it makes sense for the country to specialise in the production of that good.
6 b) iii) The exchange Rate An exchange rate is simply the price of a foreign currency. In 200
the exchange rate between the Trinidad Tobago dollar and the United States dollar was You'reand Reading a Preview TT$6.30 = US$1.00 or TT$1.00 = US$0.16
Unlock full access with a free trial.
6 c) Determination of the Free -Floating Exchange Rate Under the free-floating exchange ra Download With Free Trial system, the exchange rate between the domestic currency and the foreign currency is
determined by the demand and supply in the foreign exchange market. The demand for for
currency arises whenever there is need to exchange domestic currency in return for foreign currency. The supply of foreign currency arises from all inflows of foreign exchange in the
Master your semester with Scribd rate. balance of payments. Jamaica is one county which ahs adopted theFor floating exchange Read Free 30this Days Sign up to vote on title Determination of the Fixed Exchange Rate The fixed exchange rate or pegged exchange rate & The New York Times Not useful Useful Cancel anytime.
means by$4.99/month. which an exchange rate can be determined. Under the fixed exchange rate Special offer forone students: Only system, the exchange rate is set by the Government and maintained by Government
Home
Saved
Top Charts
Books
Audiobooks
Magazines
News
Documents
Sheet Music
Master your semester with Scribd & The New York Times Special offer for students: Only $4.99/month.
Upload
Sign In
Read Free For 30 Days Cancel anytime.
Join
Search
Home
Saved
0
801 views
Sign In
Upload
Join
RELATED TITLES
0
Cape Economics Past Paper Solutions June 2008
Uploaded by Akeemjoseph
Top Charts
Books
Audiobooks
Save
Embed
Share
Print
Download
Magazines
News
Documents
Spec 2008 - Unit 2 - Paper 1
1
of 11
CAPE Economics Past Papers Unit
CAPE Economics unit 2 2008 paper
Search document
induced i.e. rise as income increases and likewise fall as income decreases. Exports on the o
Sheet Music
hand are said to be autonomous to the level of national income. Hence, as income decrease
imports fall while exports remain unchanged causing the deficit to be e liminated. Expenditu
switching – This includes all measures designed to switch expenditure away from imports a
towards domestically produced goods such as a devaluation or depreciation of the exchang
rate. A devaluation applies if there is a fixed exchange rate, while a depreciation occurs if th
is a floating exchange rate regime. Both measures result in an increase in the price of foreig
currencies and by extension, imports become more expensive and domestic exports becom cheaper in foreign markets. Assuming that demand for imports is elastic, then overall, as
imports become more expensive and exports become cheaper, expenditure on imports wo
fall, leading to a decline in outflows in the current account. If the demand for exports is elas
export revenues would rise, leading to an increase in inflows in the current account. Both o
these effects reinforce each other as a means of eliminating the deficit in the current accou
e) A Free Trade Area refers to an organization of nations whose members engage in free tra
among themselves. That is, member countries belonging to the free trade area have no trad barriers among themselves but have individual trade barriers with countries outside the fre
trade area. (CARIFTA) A Customs Union is a trade agreement among countries whose mem You're Reading a Preview have no trade barriers among themselves but impose common trade barriers on non memb Unlock full access with a free trial. For instance, the member of the customs union may impose common external tariff (CET)
imports from countries outside the customs union. An example of this type of economic Download With Free Trial integration is Caricom. A Common Market is a trading bloc is a customs union, which includ
the additional feature of the free movement of factors of production such as labour and cap between the member countries without restriction. The intended Caribbean Single Market
Economy (CSME) arrangement among countries of the Caribbean region is another example
Master your semester with Scribd a common market. & The New York Times Special offer for students: Only $4.99/month.
Read Free Foron 30this Days Sign up to vote title
Not useful Cancel anytime.
Useful
Home
Saved
Top Charts
Books
Audiobooks
Magazines
News
Documents
Sheet Music
Master your semester with Scribd & The New York Times Special offer for students: Only $4.99/month.
Upload
Sign In
Read Free For 30 Days Cancel anytime.
Join
