Economics Paper 3 June 2004

1. Aindividual consumers, who signal their wants directly to producers through market prices.
2. Bprivate firms and entrepreneurs, competing with each other to maximise their own profit.
3. Cthe central government's planning authority, guided by the state's social and political priorities.
4. Dthe interaction of market supply and demand for goods and services in a competitive marketplace.

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1. Athe prevailing rate of interest on borrowed funds, which affects the cost of financing investment.
2. Bthe total number of consumer complaints received by the national Consumer Council in the past year.
3. Cthe level of business confidence about future demand and expected profitability.
4. Dthe level and growth of national income, through the accelerator relationship with investment.

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Answer this when you sit the paper.

1. Aliquidity preference, based on the public's demand for and supply of money balances.
2. Bpurchasing power parity, based on relative price levels between two currencies.
3. Ccomparative advantage, based on relative opportunity costs between trading countries.
4. Ddiminishing marginal utility, based on the falling satisfaction from extra units consumed.

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1. Athe highest absolute advantage over every one of its trading partners.
2. Bthe largest domestic market share among all firms producing that good.
3. Cthe greatest number of workers already employed in that industry.
4. Dthe lowest opportunity cost of production, relative to its other goods.

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1. Abenefits that accrue only to the buyer and seller who are directly party to a transaction.
2. Bgovernment subsidies paid to producers of goods and services judged to be socially beneficial.
3. Ccosts or benefits of a transaction that fall on third parties not directly involved in it.
4. Dcosts that a firm pays directly to its own suppliers for raw materials, components, and other inputs.

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1. Athe overall rate of unemployment in the economy has fallen all the way down to exactly zero for every group of workers.
2. Ball those willing and able to work at the going wage rate are employed, though frictional and structural unemployment can still remain.
3. Cevery worker in the economy is employed in the occupation of their personal first choice, regardless of the wage rate on offer.
4. Dthe total number of job vacancies advertised each month exceeds the total number of workers currently registered as unemployed nationwide.

1. Aexport diversification, since full employment requires an economy to specialise in fewer industries.
2. Bbalance of payments equilibrium, since imports typically fall as household incomes rise.
3. Cpopulation growth, since a larger population is required before more jobs can be created.
4. Dprice stability, since lower unemployment has historically been associated with higher inflation.

1. Athe proportion of the banking sector that is privately owned rather than state owned.
2. Ba greater reliance on primary-sector production, such as agriculture and mineral extraction.
3. Clower income per capita and higher rates of poverty among the population.
4. Dlower levels of education and healthcare provision relative to developed countries.