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ZIMSEC A Level · 9158/2 · N2016

Economics Paper 2 November 2016

Questions
15
Total marks
40
Syllabus code
9158/2

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Questions
15
Pass mark
9
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Answer every question in the printed order, get marked at the end, then see the answers.

The questions

Question 101

[2 marks]balance of payments
State the term for a systematic record of all economic transactions between the residents of a country and the rest of the world over a period, usually one year.

Answer this when you sit the paper.

Question 102

[2 marks]international trade
State the term for the situation in which the value of a country's visible imports exceeds the value of its visible exports over a period.

Answer this when you sit the paper.

Question 103

[2 marks]international trade
Zimbabwe's imports were about US$5 billion while its exports were US$3,6 billion. Calculate the size of the trade deficit, in US$ billion.

Answer this when you sit the paper.

Question 104

[2 marks]trade policy
A tax placed on imported goods in order to raise their price and reduce the quantity imported is called
  1. Aa quota
  2. Ba subsidy
  3. Ca tariff
  4. Dan embargo

Question 105

[3 marks]international trade
Consumers may lack confidence in locally produced goods because those goods
  1. Acarry longer warranties than imported goods
  2. Bare produced on newly installed modern plant
  3. Care of inconsistent quality and often cost more
  4. Dare cheaper than imports of the same quality

Question 106

[3 marks]trade policy
A weakness of using tariffs to protect domestic industry is that
  1. Adomestic output and employment both decline
  2. Bprotected firms have less incentive to become efficient
  3. Cgovernment collects no revenue at all from the measure
  4. Dthe price of imported goods falls sharply for consumers

Question 107

[3 marks]trade policy
A favourable effect of restricting imports on the Zimbabwean economy is that
  1. Atrading partners increase their orders from Zimbabwe
  2. Bdemand switches to local producers, raising output
  3. Cconsumers gain a wider choice of cheaper goods
  4. Dlocal firms obtain imported inputs more cheaply

Question 108

[3 marks]trade policy
An unfavourable effect of restricting imports is that
  1. Athe trade deficit widens sharply in the same year
  2. Bgovernment loses all revenue from customs duty
  3. Clocal employment in protected industries falls
  4. Dmanufacturers pay more for imported raw materials

Question 201

[2 marks]inflation
State the term for the weighted index number that measures the average change over time in the prices of a representative basket of goods and services bought by a typical household.

Answer this when you sit the paper.

Question 202

[3 marks]inflation
Annual inflation fell from 46,6% in December 1998 to 44,2% in January 1999 even though prices rose by 3,8% during January itself. The best explanation is
  1. Aa high base a year earlier pulls the annual rate down
  2. Bprices actually fell during the month of January 1999
  3. Cthe basket of goods used in the index was abolished
  4. Dthe annual and monthly rates measure different baskets

Question 203

[2 marks]inflation
Between 1997 and 1999 Zimbabwe's food inflation peaked above 60% while non-food inflation ended near 37%. Over the period, food inflation was
  1. Amore volatile and the main driver of the rise
  2. Bsteadier and consistently below non-food inflation
  3. Cunchanged while non-food inflation rose sharply
  4. Dfalling while non-food inflation was rising

Question 204

[3 marks]inflation
A likely effect of the sustained rise in inflation between 1980 and 1999 was
  1. Aa rise in the competitiveness of exports abroad
  2. Ba gain for lenders at the expense of borrowers
  3. Ca fall in real incomes for those on fixed incomes
  4. Dan increase in the real value of money savings

Question 205

[3 marks]inflation
Inflation discourages saving and long-term investment because
  1. Afirms can predict their future costs with far more accuracy
  2. Breal interest rates turn negative and costs are uncertain
  3. Cbanks are forbidden by law to accept any new deposits
  4. Dthe nominal value of savings falls each month

Question 206

[3 marks]inflation
A prices and incomes policy is used against cost-push inflation because it
  1. Araises interest rates to cut consumer demand
  2. Bincreases indirect taxes on imported inputs
  3. Cdevalues the currency to help exporters compete
  4. Dattacks the wage-price spiral at its source

Question 207

[3 marks]inflation
When households expect prices to keep rising rapidly, current consumption tends to
  1. Arise, as people buy ahead of further increases
  2. Bfall, as people hold cash rather than goods
  3. Cstay unchanged, since incomes are fixed
  4. Dfall, as banks refuse to lend for purchases

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