Long Essays

May 1990 May 2015

Microeconomics

1.
What alternative solutions might an economist suggest to the
problem
of
traffic
congestion?
What
are
the
advantages
and
disadvantages of each of these solutions?
[M 90, 6]
2.
Under what conditions
different prices?

can

firm

sell

the

same

product

at

[N 90, 5]
3.
European governments have a policy of supporting farm incomes
with artificially higher prices for certain foodstuffs. What are the
economic effects of this on Europe and the rest of the world?
[M 91, 4]
4.
Pollution is sometimes said to be an example of market failure.
What is meant by this? How might governments encourage markets to work
towards helping solve environmental problems?
[M 93, 3]
5.
In what circumstances might a government use price controls to
influence a market?
[N 93, 3]
6.
Is the existence of monopoly in an industry likely to improve or
worsen resource allocation?
[N 93, 4]
7.
Why are many industries, such as car manufacturing, becoming
more oligopolistic? How are the price and output decisions of firms
affected by this trend?
[M 94, 3]
8.
Economic
theory
makes
certain
assumptions
about
market
conditions, in order to study how firms decide on prices and output.
Are these assumptions realistic, and do firms always behave in the
real world as Economics textbooks predict?
[M 95, 5]
9
Briefly explain what economists mean by the word market. What
kind of problems are markets good at solving, and what are they bad at
solving?
[N 95, 3]
10.
Why does there appear to be a movement towards oligopoly in
certain markets? How does this movement affect the way in which
producers make decisions, and how does it affect the welfare of
consumers?
[N 95, 5]
11.
Evaluate the roles of markets and planning in an economy
today? How are these roles likely to change?
[M 96, 6]

12.
What are the assumptions behind the model of a perfectly
competitive industry in long-run equilibrium? Why do economists make
assumptions of this sort? Are such assumptions realistic?
[N 96, 3]
13.
a.
Why are profits important in a market economy? (15 marks)
b.
What problems might a country experience if it tries to use the
profit motive to produce everything? (15 marks)
[M 97, 3]
14.
a.
What are economies of scale, and why have they become so
important in modern economics? (12)
b.
In view of this importance, why do so many small
enterprises operate successfully in the world today? (13)
[M 97, 5]
15.
a.
Explain what externalities are and how they may arise. (15
marks)
b.
Discuss
whether
governments
should
always
involve
themselves in markets with substantial externalities. (15 marks)
[Spec, 3]
16.
a.
What are the main features of an oligopolistic market? (15
marks)
b.
Do oligopolies work in favor of, or against the interest of
consumers? (15 marks))
[Spec, 4]
17.
a.
What do economists mean by externalities or spillover effects?
(15 marks)
b.
How does an understanding of externalities (spillover effects)
assists economists in analyzing environmental problems? (15 marks)
[M 98, 4]
18.
a.
What are natural monopolies and why are they considered a
danger if left unregulated? (15 marks)
b.
Is nationalization of natural monopolies the best method of
improving their economic efficiency? (15 marks)
[N 98, 3]
19.
a.
Distinguish between private costs and benefits and social
costs and benefits. (8)
b.
Explain how an increase in the number of cars n the roads of a
country might lead to a misallocation of resources. (8)
(c)
Evaluate the ways in which a government might remedy this
misallocation. (9)
[M 99, 3]
20.
a.
Carefully explain what is it that price, income and cross
elasticities of demand are meant to measure. (15 marks)
b.
Discuss the practical importance of the concept of price
elasticity of demand for
(i)
business organizations
(ii) the government (15 marks)
[M 99, 4]

21.
a.
Why do environmental issues cause problems to economists?
(15 marks)
b.
Discuss solutions an economist might suggest to the problem of
overfishing? (15 marks)
[N 99, 3]
22.
a.
State the law of demand and distinguish between movements along
the demand curve and shifts of the demand curve. (15 marks)
b.
Explain, with the help of diagrams, the effect of an increase in
the price of petrol is likely to have on
(i)
The market for cars.
(ii) The market for coal. (15 marks)
[M 00, 3]
23.
Monopoly price is higher and output smaller than is socially ideal.
The public is a victim. (J.K. Galbraith, 1974)
a.
Explain the economic reasoning behind the statement that
monopoly price is higher and output smaller than is socially ideal.
(10 marks)
b.
To what extent do you agree that the public is always the victim
of monopoly? (15 marks)
[M 00, 4]
24.
a.
Explain why environmental problems are considered to be examples
of market failure? (15 marks)
b.
To what extent can government intervention correct this failure?
(15 marks)
[N 00, 3]
25.
a.
Under what conditions is price discrimination possible and
profitable? (12)
b.
Who gains and who loses from price discrimination? Illustrate
your answer with examples. (13)
[N 00, 4]
26.
a.
Using suitable diagrams, explain why there is likely to be an
absence of long run economic profits in perfect competition. (10
marks)
b.
To what extent might consumers benefit from increased
competition between firms? (15 marks)
[M 01, 3]
27.
a.
How does a monopoly maintain supernormal (or abnormal) profit
in the long run? (10 marks)
b.
Discuss whether monopoly is always undesirable? (15 marks)
[N 01, 3]
28.
Discuss and evaluate the proposition that perfect competition is a
more efficient market structure than monopoly.
[M 02, 3]
29.
a.

Explain why pollution is an example of a market failure?

(10 marks)

b.

To what extent can the market system protect the environment?

(15 marks)
[N 02, 3]

30.
a.
Explain what does an economist means by efficiency? (10 marks)
b.
Discuss whether the achievement of efficiency is possible and
desirable. (15 marks)
[N 02, 4]
31.
a.
Explain the role that prices
resources in free market economies?

play

in

the

allocation

of

(10 marks)
b.
Evaluate, using examples, the options available to governments
to overcome the failure of markets arising from the production and
consumption of demerit goods.
(15 marks)
[M03, 1]
32.
a.

Explain how monopoly power might arise.

(10 marks)
b.
Evaluate the extent to which governments should seek to control
the growth of monopoly power.
(15 marks)
[M03, 2]
33.
National policies and international agreements must be implemented
in order to reduce global environmental problems.
a.
Using the concepts of market failure, explain the statement
above from an economists point of view.
(10 marks)
b.
With references to both national policies and international
agreements, evaluate three solutions that could be recommended by
economists.
(15 marks)
[N 03, 1]
34.
Discuss the economic arguments for and against imposing substantially
higher levels of taxation on the sale of alcohol.
[M04, 1]
35.
a.
In what ways do firms operating in different market
structures compete?
b.
Discuss the view that the more competition there is within each
industry, the better.
[M04, 2]
36.
a.

Explain the concepts of maximum and minimum price controls.

(10 marks)
b.
Evaluate the idea that government intervention in the form of
price ceilings and price floors is well intentioned, but often leads
to undesirable side effects.
(15 marks)
[N 04, 1]

37a.
a.
Explain how a monopolist may be able to earn supernormal
(abnormal) profits in the long run
(10 marks)
b.
Production by a monopolist will always be against the interests
of consumers. Discuss.
(15 marks)
[Spec]
37.
a.

Explain how profit is determined in perfect competition

(10 marks)
b.
Whatever the type of market structure, profit maximization will
always be the only goal of firms. Discuss.
(15 marks)
[May 2005]

38.
a.
Explain the differences between monopolistic competition and
oligopoly as market structures
(10 marks)
b.
Discuss the differences between a collusive and a non-collusive
oligopoly
(15 marks)
[Nov 2005]
39.
a.

Carefully distinguish between merit goods, demerit goods

and public goods
(10 marks)
b.
Evaluate the view that governments should always intervene in
markets for such goods as cigarettes and alcohol
(15 marks)
[May 2006]
40.
a.
Explain the necessary conditions for price discrimination to
take place
(10 marks)
b.
Discuss the advantages and disadvantages of price discrimination
for consumers and producers
(15 marks)
[Nov 06]
41.
a.
Explain how barriers to entry may affect market structure
(10 marks)
b.
Evaluate the view that monopoly is an undesirable type of market
structure
(15 marks)
[May 07]
42.
a.
Explain the difference between short run equilibrium and long
run equilibrium in monopolistic competition
(10 marks)
b.
Perfect competition is a more desirable market form than
monopolistic competition. Discuss.
(15 marks)
[Nov 07]

43.
a.
Explain how a firm operating in an oligopolistic market might
attempt to increase its market share
(10 marks)
b.
Evaluate the view that producers, and not consumers, are the
main beneficiaries of oligopolistic market structures
(15 marks)
[May 08]
44.
a.

Explain the determinants of price elasticity of demand.

(10 marks)
b.
A deterioration in a countrys terms of trade will always be
disadvantageous for the current account balance. Evaluate this
statement using the concept of price elasticity of demand. (15 marks)
[Nov 08]
45.
a.
Explain the concepts of allocative and productive (technical)
efficiency.
(10 marks)
b.
Monopolies are inefficient and therefore always act against the
public interest. Discuss this statement.
(15 marks)
[Nov 08]
46.
a.
In the theory of the firm, a distinction is made between short
run cost curves and long run cost curves. Using appropriate cost
curve diagrams, explain this distinction.
(10 marks)
b.
Evaluate the view that greater economic efficiency will always
be achieved in perfect competition as compared to monopoly.
(15 marks)
[May 09, 1]
47.
a.
Explain why a firm may practice price discrimination and the
necessary conditions for it to take place
(10 marks)
b. Although a firm may pursue a range of goals, economists
usually assume that profit maximization is the main goal. Discuss
this statement.
(15 marks)
Nov 09
48.
a.
Explain the importance of price elasticity of demand and cross
price elasticity of demand for business decision making
(10 marks)
b.
Studies have shown that the demand for tobacco tends to be
highly price inelastic. Evaluate the view that governments can best
reduce smoking by substantially increasing taxes on cigarettes.
(15 marks)
May 10, 1

50.
a.
Explain why negative externalities of production are an example
of market failure
(10 marks)
b.
Evaluate three policies that governments might implement to
reduce negative externalities associated with the environment
(15 marks)
Nov 10, 1
50a.
a.
Using an appropriate diagram, explain how a monopolist might be
able to make supernormal (abnormal) profits in the short run, and why
these profits might continue to be earned in the long run
(10 marks)
b.
Evaluate the view that monopolistic competition is a more
economically desirable market form than monopoly
(15 marks)
May 11 TZ1
50b.
a.
Using at least one diagram, explain why a firm in perfect
competition might only be able to make supernormal (abnormal) profits
in the short run and not in the long run
(10 marks)
b.
Evaluate the view that perfect competition is a more desirable
market form that oligopoly
(15 marks)
May 11 TZ2

51.
a.
Using an appropriate diagram, explain how a monopolist might be
able to make supernormal profits in the short run, and why these
profits might continue to be earned in the long run.
(10 marks)
b.
Evaluate the view that monopolistic competition is a more
economically desirable market form than monopoly.
(15 marks)
TZ1 May 12
51a.
a.
Explain the economic factors which may encourage the formation
of a monopoly
(10 marks)
b.
Evaluate the view that natural monopoly is a more desirable
market structure than perfect competition
(15 marks)
May 12 TZ1
52.
a.
Using at least one diagram, explain why a firm in perfect
competition might only be able to make supernormal(abnormal) profits
in the short-run and not in the long-run.
(10 marks)
b.
Evaluate the view that perfect competition is a more desirable
market form than oligopoly.
(15 marks)
TZ2 May 12

52a.
a.
Explain why, in markets dominated by a few firms, prices may
remain relatively stable
(10 marks)
b.
An industry with a larger number of firms will experience lower
prices and greater efficiency than an industry with a smaller number
of firms. Evaluate this view.
(15 marks)
TZ2 May 12
52b.
a.
Explain why firms in monopolistic competition can make economic
(abnormal) profits only in the short run
(10 marks)
b.
Compare and contrast the market structures on monopoly and
monopolistic competition
(10 marks)
Specimen for 2013
52c.
a.
Explain the possible negative externalities that might arise
from the increased use of cars
(10 marks)
b.
Discuss economic policy options that a government might use to
reduce negative externalities that might arise from the increased use
of cars
(15 marks)
Specimen for 2013

53.
a.
Explain why a monopoly can earn supernormal (abnormal) profits
in the long-run.
(10 marks)
b.
Evaluate the reasons why a government might allow a competitor
into an industry that was previously a monopoly.
(15 marks)
TZ1 May 13
54.
a.

Explain how welfare loss might result from monopoly power

(10 marks)
b.
Discuss the effectiveness of government policies (legislation
and regulation) to reduce monopoly power
(15 marks)
May 13 TZ1
55.
a.
Using a price ceiling diagram, analyze the impact a maximum
price may have on the market for food
(10 marks)
b.
Discuss the policies a government might use to make food more
affordable to low income groups
(15 marks)
Nov 13

56.
a.

Explain why governments impose indirect taxes

(10 marks)
b.
Discuss two possible government responses to threats to
sustainability
(15 marks)
Nov 13
57.
a.
Using diagrams, explain how a change in one of the determinants
of demand might increase the price of rice and how a change in one of
the determinants of supply might decrease the price of rice
(10 marks).
b.
Discuss the consequences of providing a subsidy on the
production of rice for producers, consumers and the government
(15 marks)
May 14 TZ1
58.
a.
Using diagrams, explain why a perfectly competitive firm can
make economic (abnormal) profits only in the short run
(10 marks)
b.
Discuss the consequences of a perfectly competitive industry
becoming a monopoly
(15 marks)
May 14 TZ1
59.
a.
Analyze the private and external benefits associated with the
consumption of university education
(10 marks)
b.
Evaluate the policies a government might use to increase the
consumption of university education
(15 marks)
May 14 TZ2
60.
a.
Using a diagram, explain why firms in monopolistic competition
are neither allocatively nor productively efficient
(10 marks).
b.
Examine the view that the market for food is more beneficial to
consumers if dominated by a monopoly retailer (supermarket) rather
than a by a large number of small shops operating under monopolistic
competition
(15 marks)
May 14 TZ2
61.
a.
Using diagram(s), explain the signaling and incentive functions
of price
(10 marks)
b.
Evaluate the view that the market failure cause by the
consumption of demerit goods is best dealt with through the use of
taxation
(15 marks).
Nov 14

62.
a.

Explain why firms might wish to collude

(10 marks)
b.
Discuss the view that governments should always try to prevent a
monopoly from occurring in a market
(15 marks)
Nov 14
63.
a.
Explain how changes in price work to reallocate resources in a
market
(10 marks)
b.
Discuss the view that the overuse of common access resources is
best addressed by government
(15 marks).
TZ1 May 15
64.
a.
Explain why prices tend to remain stable in oligopolistic
markets
(10 marks)
b.
Oligopolists often possess too much monopoly power. Evaluate
whether governments should intervene in oligopolistic markets
(15 marks).
TZ1 May 15
65.
a.
Explain two possible government responses to the abuse of
monopoly power
(10 marks)
b.
Evaluate the view that monopolies, despite their inefficiencies,
may often be considered desirable
(15 marks)
TZ2 May 15
66.
Nov 15

Macroeconomics

1.
Discuss whether government macroeconomic demand management policies
raise the real output of an economy in the long-run?
[M 89, 4]
2.
Most nations tax personal income. What are the arguments for and
against personal income taxes? At what rates would you recommend
setting income taxes? How would considerations of equity and
efficiency influence your decision?
[M 90, 5]
3.
Unemployment can either be structural or cyclical. Explain how would
government intervention differ in each case?
[N 90, 4]
4.
Under what conditions are high interest rates likely to benefit
or damage a country's economy?
[M 91, 5]
5.
A reduction in unemployment is desirable, but it is certain to lead
to other problems, such as inflation or balance of payments
difficulties. Discuss.
[M 91, 6]
6.
Discuss the view that unemployment is a more serious economic problem
that inflation.
[M 92, 5]
7.
Distinguish between supply side policies and demand management
policies. Explain why many governments focus on the supply side?
[M 93, 4]
8.
Discuss whether there is a relationship between money supply and
inflation.
[N 93, 5]
9.
Explain why might knowledge of the value of the multiplier be
useful to government policy makers? Should governments make more use
of this and other Keynesian ideas, or should they adopt non-Keynesian
policies?
[N 95, 6]
10.
Explain why investment is important to a country? Explain why
the rates of investment differ in countries and what is the role of
the government in encouraging investment?
[M 96, 3]
11.
Explain the social costs of unemployment? In view of these costs,
explain why some countries give higher priority to tackling other
problems such as inflation and balance of payments difficulties?
[M 96, 4]

12.
A government introduces supply side policies in order to have a
flexible work force. Discuss the effectiveness of such policies.
[N 96, 4]
13.
a. What is monetarism? (15 marks)
b. Explain how would a monetarists view of economic problems (such as
inflation and unemployment) and policies differ from that of a
Keynesian?
(15 marks)
[M 97, 4]
14.
Evaluate the costs and benefits for a country if its government
adopts privatization as a major policy.
[M 98, 3]
15.

a.
Is full employment possible? (8)
b.
Is full employment desirable (8)
(c)
Do international trading blocs such as
reduce unemployment? (9)

NAFTA

or the

EU

increase or
[M 98, 5]

16.
To what extent is it wise for governments to follow a policy of
always balancing their national budgets?
[N 98, 4]
17.
a.

Briefly explain the various objectives of macroeconomic policy.

(15 marks)
b. Critically examine the view that the control of inflation should
always be the most important objective of governments.
(15 marks)
[M 99, 5]
18.
Is there a long-term trade-off between inflation and unemployment?
[N 99, 4]

19.
a.
Explain how governments can use fiscal policy to redistribute
income.
(10 marks)
b.
Evaluate the advantages and disadvantages of policies aimed at
reducing income inequalities
(15 marks)
[M 01, 5]
20.
What is wanted is not inflation (a rise in the general price level)
or deflation (a fall in the general price level) but price
stability. Discuss.
(15 marks)
[N 01, 4]

21.
a.
b.

What are the consequences of unemployment in an economy?

(15 marks)
Examine the policies that may be used to reduce unemployment.
(15 marks)
[M 02, 4]

22.
a.

What are the main macroeconomic objectives of government?

(15 marks)
b.
Assume the government chooses to pursue one of these
objectives. Evaluate the possible consequences for the other
objectives.
(15 marks)
[N 02, 5]
23.
Evaluate the view that the achievement of price stability should be
the major objective of government economic policy.
(15 marks)
[M03, 3]
24.
a.
With the help of diagrams distinguish between demand-pull and
cost-push inflation.
(10 marks)
b.
Explain which policies would be appropriate to deal with these
two types of inflation
(15 marks)
[N03, 3]
25.
Unemployment remains persistently high in a majority of countries
throughout the world
a.
Explain the economic problems that high unemployment may cause
for a country.
(10 marks)
b.
Discuss the reasons why governments find the goal of full
employment difficult to achieve.
(15 marks)
[M04, 3]
26.
Evaluate the effectiveness of demand-side and supply-side policies in
the short and long run.
(15 marks)
Nov 04
27.
a.

Explain the possible causes of inflation?

(10 marks)
b.
Evaluate possible policies that might be used to lower the
natural rate of unemployment
(15 marks)
[Spec]
28.
a.
Using suitable examples, explain the difference between the
multiplier effect and the crowding-out effect.
(and explain the significance of automatic stabilizers)
(10 marks)

b.
Evaluate the proposition that the most effective way to reduce
unemployment is through the use of demand-side policies.
(15 marks)
[May 05]
29.
a.
Explain the relationship between the Lorenz curve and the Gini
coefficient
(10 marks)
b.
Evaluate the effectiveness of the various methods that
government may use to redistribute income
(15 marks)
[Nov05]
30.
a.
Explain the difference between demand-side and supply-side
policies
(10 marks)
b.
Higher economic growth can only be achieved through the
implementation of supply-side policies. Discuss.
(15 marks)
[May06]
31.
a.
Explain how interest rates can be used to bring about an
increase in economic activity
(10 marks)
b.
Discuss the strengths and weaknesses of demand-side policies
(15 marks)
[Nov 06]
32.
a.

Explain possible causes of inflation

(10 points)
b.
Evaluate the possible effects of a persistently high inflation
rate on a countrys current account balance and its exchange rate
(15 points)
[Nov 06]
33.
a.
Explain why a government might find it difficult to maintain a
low rate of inflation as the economy approaches full employment
(10 marks)
b.
Evaluate the proposition that the priority in economic
management should be the maintenance of low unemployment
(15 marks)
[May 07]
34.
a.
Using one or more diagrams, explain the difference between the
equilibrium level of national income and the full employment level of
national income
(10 marks)
b.
Evaluate the policies a government may use to increase the
full employment level of national income
(15 marks)
[Nov 07]
35.
a.
The effect of an increase in aggregate demand on output and the
price level depends on the shape of the aggregate supply curve.
Explain this statement.
(10 marks)

b.
Evaluate the likely effects of a falling rate of inflation (or,
separately, of deflation) on the performance of an economy
(15 marks)
[May 08]
36.
a.
Explain the difference between progressive taxation and
regressive taxation.
(10 marks)
b.
Evaluate the possible effects of a decrease in direct taxation
on a countrys inflation rate, unemployment rate and balance of
payments.
(15 marks)
[Nov 08]
37.
a.
Explain the possible causes of a rise in the rate of inflation
in an economy.
(10 marks)
b.
Evaluate the possible impact on economic performance that may
result from a government decision to bring inflation under control.
(15 marks)
[May 09]
38.
a.
Explain how the rate of inflation might be measured and the
factors which might make accurate measurement difficult
(10 marks)
b.
Evaluate the extent to which an individual government can
influence the rate of inflation in its country
(15 marks)
[Nov 09]
39.
a.

Explain why a country may wish to reduce its rate of inflation

(10 marks)
b.
Evaluate the likely impact on the economy of relying on higher
interest rates to reduce the rate of inflation
(15 marks)
May 10, 2 TZ1
40.
a.

Explain why a country may wish to reduce its unemployment rate

(10 marks)
b.
Evaluate the likely impacts on the economy of relying on demandside policies to reduce the unemployment rate
(15 marks)
May 10, 2, TZ2
41.
a.
Explain how supply-side improvements to an economy may be
achieved through the use of taxes and government spending
(10 marks)
b.
Evaluate the use of supply-side policies to reduce unemployment
(15 marks)
Nov 10

41a.
During the global
consumer spending
a.
Explain the
consumer spending

financial crisis of 2008-2009, there was a fall in

in many countries.
factors which might be responsible for causing
to fall
(10 marks)
b.
Evaluate the possible consequences of falling consumer spending
for a countrys macroeconomic performance
(15 marks)
May 11 TZ1
41b.
a.
Explain two policies a government might use to redistribute
income
(10 marks)
b.
Measures to promote greater income equality should be a key
feature of government economic policy. Evaluate this statement.
(15 marks)
May 11 TZ2

42.
During the global financial crisis of 2008-2009, there was a
fall in consumer spending in many countries.
a.
Explain the factors which might be responsible for causing
consumer spending to fall
(10 marks)
b.
Evaluate the possible consequences of falling consumer spending
for a countrys macroeconomic performance
(15 marks)
May 2012 TZ1
42a.
a.

Explain why governments may view deflation as a threat

(10 marks)
b.
Evaluate the view that a low and stable rate of inflation is
beneficial for an economy
(15 marks)
May 12 TZ1
43.
a.
Explain why governments may pursue the macroeconomic goals of
low inflation and low unemployment
(10 marks)
b.
Evaluate the extent to which the use of expansionary demand-side
policies may lead to conflicts between the various goals of
macroeconomic policy
(15 marks)
May 12 TZ2
44.
a.
Explain how a government
distribution of income

could

bring

about

more

equal

(10 marks)
b.
Evaluate the effectiveness of government policies designed to
reduce inequalities in income
(15 marks)
Nov 12

44a.
a.
Explain what might happen to the level of inflation if a
government decides to move from a budget surplus to a budget deficit
(10 marks)
b.
To what extent is an increase in interest rates the most
effective cure for inflation?
(15 marks)
Specimen for May 13
44b.
a.

Analyze the methods by which GDP may be measured

(10 marks)
b.
Using real GDP data, is a very useful means of comparing
economic activity between countries. Discuss this statement.
(15 marks)
Specimen for May 13

45.
a.
Explain why the market system may not result in an equitable
distribution of income
(10 marks)
b.
Evaluate government policies to promote equity in terms of
their effects on efficiency in the allocation of resources
(15 marks)
May 13
46.
a.
Using a diagram, explain how expansionary monetary policy might
be used to close a deflationary (recessionary) gap
(10 marks)
b.
Discuss why, in contrast to the monetarist / new classical
model, an economy can remain stuck in a deflationary gap according to
the Keynesian model
(15 marks)
May 13 TZ2
47.
a.
Explain how labor market reforms may be used to promote
economic growth
(10 marks)
b.
Market-oriented supply-side policies will always be more
effective in promoting economic growth than demand-side policies. To
what extent do you agree with this statement?
(15 marks)
May 13 TZ2
49.
a.
Explain how changes in the size of the circular flow depend on
the relative size of injections and leakages
(10 marks)
b.
Evaluate the use of national income statistics for making
comparisons of the standard of living over time
(15 marks)
Nov 13
50.
a.
Explain why measuring the rate of inflation using a consumer
price index (CPI) may not be accurate
(10 marks)
b.
Evaluate two government policies to reduce inflation
(15 marks)
Nov 13

51.
a.
Using two AD/As diagrams, explain cost=push and demand-pull
inflation
(10 marks)
b.
The rate of inflation can be most effectively reduced through
the use of monetary policy. To what extent do you agree with this
statement?
(15 marks)
May 14 TZ1
52.
a.

Explain two factors which might cause economic growth

(10 marks)
b.
Evaluate the view that the benefits of economic growth will
always outweigh the costs.
(15 marks)
May 14 TZ1
53.
a.
Distinguish between structural and demand-deficient (cyclical)
unemployment
(10 marks)
b.
Discuss the view that the problem of unemployment can be
reduced through the use of supply-side policies
(15 marks)
Nov 14

54.
a.
Using an appropriate diagram, explain how a recession might
lead to more poverty
(10 marks)
b.
Evaluate the view that attempts to achieve greater equity in
the distribution of income will reduce economic efficiency
(15 marks)
Nov 14

55.
a.

Explain what is meant by natural rate of unemployment

(10 marks)
b.
Discuss the view that there is no trade-off between inflation
and unemployment
(15 marks)
TZ1 May 15
56.
a.
Explain how business spending on research and development and
government expenditure on infrastructure might shift the ong-run
aggregate supply curve
(10 marks)
b.
Evaluate the effectiveness of interventionist supply-side
policies to achieve economic growth
(15 marks)
TZ1 May 15
57.
a.
Using the concept of the Keynesian multiplier, explain the
possible impact of a rise in government spending on economic growth
(10 marks)

b.
To what extent might unemployment represent an economic and
social problem?
(15 marks)
TZ2 May 15
58.

Nov 15