Economics Paper 2 November 2019

1. Aan increase in spending on imports leads to a fall in national income of the same size
2. Ba rise in the rate of interest reduces planned investment by a strictly proportionate amount
3. Can initial injection of spending leads to a larger eventual rise in national income
4. Da rise in the general price level leads to an equal rise in money wages across the economy

1. Abanks are required to lend only to companies that produce goods for export
2. Bsmall firms are barred by law from borrowing from commercial banks at all
3. Cmany small firms lack collateral security and are not formally registered
4. Dsmall firms pay a lower rate of interest on loans than large companies do

1. Ainformal firms are taxed twice over on the same earnings during the year
2. Bgovernment loses tax revenue and cannot measure the economy's output accurately
3. Cinformal firms are unable to employ any workers other than family members
4. Dinformal firms are made to sell their output at prices controlled by government

1. Athey require no finance at all, so no government spending on them is needed
2. Bthey operate outside the market, so government is able to set their prices
3. Cthey are shielded by law from any competition from imported substitutes
4. Dthey create much of the economy's new employment and widen the tax base

1. Asmall firms are labour intensive and their output per worker is lower
2. Bsmall firms pay their workers considerably more than large corporations do
3. Csmall firms use far more capital equipment per worker than large firms use
4. Dsmall firms sell most of what they produce in distant export markets

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1. Alending to them through the banks at concessionary rates of interest
2. Braising the rate of corporate tax charged on all company profits
3. Cincreasing the tariff on the machinery that small firms import
4. Draising the reserve requirement placed on the commercial banks

1. Acommercial banks are then forced to lend only to large corporations
2. Bgovernment tax revenue rises faster than the government can spend it
3. Csavers earn a poorer return, so the pool of loanable funds shrinks
4. Dborrowers are obliged to repay their loans in a foreign currency

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1. Aits exports of goods and services exceed its imports of goods and services
2. Bthe money supply grows more quickly than the country's total output
3. Cgovernment revenue exceeds government spending over the financial year
4. Dcapital flowing into the country exceeds capital flowing out of it

1. Apurchasing power parity rate, recalculated from price levels each year
2. Bforward exchange rate, agreed in advance between two trading firms
3. Cfreely floating exchange rate, set from day to day by supply and demand
4. Dfixed exchange rate, which the authorities can devalue or revalue

1. Athe central bank is obliged to sell its foreign currency reserves in the market
2. Bexports become dearer to foreign buyers while imports become cheaper at home
3. Cexports become cheaper to foreign buyers while imports become dearer at home
4. Dboth exports and imports become dearer, so trade between countries ceases

1. AChina raised tariffs sharply on every category of good entering the country
2. Bthe yuan was revalued sharply upwards against the United States dollar
3. CChinese households were switching from imports to locally made luxury goods
4. Dmuch of what China imported was inputs for its exports, and exports were falling

1. Araising the rate of interest charged to firms producing for export
2. Btraining workers so that export goods meet world quality standards
3. Cimposing a tax on each unit of output that leaves the country
4. Drequiring exporters to offer their goods on the home market first

1. Aits currency is unaffected while its foreign exchange reserves fall steadily
2. Bemployment falls at home while employment rises in the importing countries
3. Cits currency rises in value and inflationary pressure at home increases
4. Dits currency falls in value and inflationary pressure at home is reduced

1. Aan immediate rise in the price its exports fetch in foreign markets
2. Bretaliation, as trading partners raise barriers against its goods
3. Closing the ability to import raw materials of any kind from abroad
4. Da fall in its foreign exchange reserves as the volume of its exports rises

1. Athe resources used to make exports could have supplied goods for its own people
2. Bit must lend the whole of the surplus to the deficit countries free of interest
3. Cits currency can no longer be used to pay for any goods bought from abroad
4. Dit is required to raise tariffs on the goods it buys from its partner states

Answer this when you sit the paper.