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ZIMSEC A Level · J2009

Economics Paper 2 June 2009

Questions
8 of 42
Total marks
40

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Questions
8
Pass mark
5
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The questions

Section B

Section B, Question 1

[1 marks]market structures / price controls
A maximum price (price ceiling) set by the government in a market is only effective in altering the market outcome if it is set...
  1. Abelow the equilibrium price, creating excess demand.
  2. Babove the equilibrium price, creating excess supply.
  3. Cequal to the equilibrium price, leaving the market unchanged.
  4. Dequal to the average cost of production for firms in the market.
[1 marks]market structures / price controls
The Bulawayo Public Transport Association is made up of a small number of commuter omnibus operators who coordinate to charge similar fares along shared routes, resembling a cartel arrangement. This is most consistent with which market structure?
  1. AMonopolistic competition, since operators offer slightly differentiated services.
  2. BOligopoly, since a few large operators coordinate pricing through an association.
  3. CMonopoly, since a single operator controls the entire route network.
  4. DPerfect competition, since there are many independent small operators.

Section B, Question 2

[1 marks]national income / GDP
GDP at factor cost is obtained from GDP at market prices by...
  1. Aadding depreciation and subtracting net property income from abroad.
  2. Badding indirect taxes and subtracting subsidies.
  3. Csubtracting indirect taxes and adding subsidies.
  4. Dsubtracting depreciation and adding net property income from abroad.
[1 marks]national income / GDP
Net National Income (NNI) is obtained by taking Gross National Income (GNI) and subtracting an allowance for capital equipment that has been used up (worn out) during production over the period. What is this deduction called?

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[1 marks]national income / GDP
When comparing living standards between countries, economists often prefer Net National Income (NNI) over GDP because NNI...
  1. Ameasures only output produced by the informal sector of the economy.
  2. Baccounts for capital used up in production and reflects income that actually belongs to residents of the country.
  3. Cexcludes all taxes paid to the government, making it easier to calculate.
  4. Dis always numerically higher than GDP, giving a more generous estimate.
[1 marks]national income / GDP
According to the table of Zimbabwe's national income data for 1980 to 1990, as Net Government Current Expenditure rose over the period, GDP...
  1. Aremained unchanged, indicating no relationship between the two.
  2. Brose only in years when Net Exports were positive.
  3. Calso rose, indicating a positive relationship between the two.
  4. Dfell, indicating a negative relationship between the two.
[1 marks]national income / GDP
Zimbabwe's net exports of goods and services were negative between 1980 and 1983 even though the country was exporting sizeable quantities of primary commodities. Which of the following best explains this?
  1. AZimbabwe was exporting unprocessed raw goods while importing more expensive processed goods.
  2. BZimbabwe had no formal trade agreements with any neighbouring countries.
  3. CZimbabwe imposed high tariffs on all its imports, which increased import volumes.
  4. DZimbabwe's currency was overvalued, making its exports artificially cheap to sell.
[1 marks]national income / GDP
In a simple national income model where income (Y) is either consumed (C) or saved (S), assuming income stays constant, an increase in Private Consumption (C) implies that Savings (S) will...
  1. Astay the same, because consumption and saving are determined independently of income.
  2. Bincrease, because higher consumption stimulates further economic growth.
  3. Cincrease, because higher consumption boosts business revenue and household income.
  4. Ddecrease, because income not spent on consumption is the source of saving.

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