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IGCSE Economics Section C
1
Question Bank
By Ms.Dharshani Perera
Figure 2 shows the current account of the balance of payments of a country.
Visible Exports
$150 bn
Invisible Exports
$90 bn
Visible Imports
$125 bn
Invisible Imports
$100 bn
Balance of trade :
+$25 bn
Balance of invisibles:
_ $ 10 bn
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2008/
Q3
Figure 2
(a) With the aid of examples, distinguish between the terms “visible” and “invisible” in
Figure 2. (4)
(b) Calculate the balance of payments on current account. (1)
(c) Briefly explain TWO methods a government could use to increase the value of exports.
(4)
2
In Sweden the proportion of people over the age of 65 years is expected to rise from 17.4% in
2000 to 30.4% in 2050.
(a) Identify and briefly explain THREE causes of an increase in the proportion of people over
the age of 65 years. (6)
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(b) Examine the effects of an increase in the proportion of people over 65 years of age on
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I.
Government expenditure and revenue (7)
II.
Economic growth (7)
(a) Define the term “inflation” (2)
(b) Briefly explain TWO main causes of inflation (6)
(c)
4
I.
Briefly examine TWO reasons why governments try to control the rate of
inflation. (6)
II.
To what extent can interest rate changes help to control the rate of inflation?
(6)
The 2012 Olympics are to be held in London. It is estimated that the cost to the UK government
will be £5.3 bn.
(a) Briefly explain THREE advantages to the UK economy of hosting the 2012
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Q11
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Q12
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IGCSE Economics Section C
Question Bank
By Ms.Dharshani Perera
Olympics.(6)
The UK government could find the 2012 Olympics through an increase in direct and indirect
taxation.
(b)
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I.
With the aid of examples distinguish between direct and indirect
taxation (4)
II.
Identify TWO other ways in which the government could fund the 2012
Olympics. (2)
III.
Discuss the advantages and disadvantages of increasing the rate of
indirect taxation. (8)
With the aid of examples, explain the following terms:
(a)
I.
Visible trade (2)
II.
Invisible trade (2)
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(b) How is the balance of trade calculated? (2)
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(a) What is meant by a budget deficit? (2)
(b) Identify and explain one advantage and one disadvantage of an increase in
government expenditure on education. (4)
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Q7
(c)
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a)
I.
Identify two ways in which a government could fund the increase in
expenditure on education (2)
II.
Examine the advantages and disadvantages of the two ways of funding
the increase in expenditure identified in ( c) (1) above. (12))
Define:
I.
Disposable income (2)
II.
Real income (2)
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b) Briefly explain how inflation might affect:
I.
The foreign trade of a country (4)
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IGCSE Economics Section C
II.
c)
8
Question Bank
By Ms.Dharshani Perera
Borrowers and lenders in a country (4)
Explain how monetary policy can be used by a government to control inflation (8)
Study Figure 22 which shows the main interest rate in Japan during 2000-2006.
a)
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2007/
Q5
Between which years was the rate of interest unchanged? (1)
b) Suggest and briefly explain one reason why the government of Japan decided to lower
the rate of interest between 2000 and 2002. (3)
c)
In January 2006 consumer prices vegan to rise.
I.
Identify one economic problem the Japanese economy might face if consumer
prices continued to rise in 2006. (1)
II.
Briefly explain two ways in which an increase in interest rates could overcome
the problem identified in (1). (4)
a)
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With the aid of a numerical example, briefly explain the term progressive
taxation. (3)
b) Briefly explain one advantage and one disadvantage of progressive taxation. (4)
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a)
Explain the causes of the following types of unemployment:
I.
Cyclical (demand deficient) (4)
II.
Structural (4)
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Q6
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Q12
b) Discuss the policies a government could use to reduce:
I.
Cyclical unemployment (6)
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IGCSE Economics Section C
II.
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Question Bank
By Ms.Dharshani Perera
Structural unemployment (6)
Gross domestic product in Argentina increased from 2003 to 2004 whilst the total population was
unchanged. Therefore, income per head increased between 2003 and 2004.
a)
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I.
How is income per head calculated? (2)
II.
What is meant by standard of living? (2)
III.
To what extent can an increase in income per head be used to indicate an
increase in the standard of living ?(8)
The chart below compares the economic growth rate of Japan and Korea 2000 – 2003.
a)
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January
2007/
Q5
How is economic growth measured? (3)
b) In which year was economic growth highest for both countries? (1)
c)
I.
What economic term may be used to describe the state of the state of the
Japanese economy in 2002? (1)
II.
Identify two possible economic characteristics of the Japanese economy in
2002? (2)
d) Briefly explain two ways in which a government can increase the rate of economic
growth. (4)
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a)
Using examples , distinguish between direct and indirect taxation. (4)
b) Examine how changes in government expenditure and taxation might:
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IGCSE Economics Section C
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Question Bank
I.
Improve the standard of living of poor people (8)
II.
Reduce the level of inflation (8)
By Ms.Dharshani Perera
In 2004, the economic growth of Nigeria was 7.4% , compared to 3.7% in South Africa.
a)
Define the term economic growth (4)
b) Identify and briefly explain three possible reasons why economic growth in
Nigeria was higher than in South Africa. (6)
c)
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What is meant by inflation? (2)
b) Identify and briefly explain three economic problems which might result from this rise in
inflation.(6)
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2006/
Q10
Discuss whether economic growth is always good for a country. (10)
The rate of inflation in Belarus rose from 28.2% in 2003 to 46.1% in 2004.
a)
Q11
c)
Discuss monetary and fiscal measures a government might use to try to reduce the rate
of inflation. (12)
a)
What is meant by :
I.
Monetary policy (2)
II.
Fiscal policy (2)
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Q11
b) Identify and explain one measure of fiscal policy and one monetary measure that could
be used to reduce the level of unemployment in a country. (8)
c)
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Discuss two other measures a government might use to solve the problem of
unemployment.(8)
a)
What is meant by economic growth? (4)
b) Discuss, with examples , four ways in which the economic growth of a country
might be increased. (10)
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Briefly explain one effect of each of the following on the US balance of payments on current
account :
I.
Fewer US citizens travelling abroad for their holidays (2)
II.
A reduction of US tariffs on imported steel. (2)
III.
The strengthening of the Euro against the US dollar. (2)
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Q4
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IGCSE Economics Section C
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Question Bank
By Ms.Dharshani Perera
Study the following table.
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Rise in average money
incomes (%) 2003
Rate of inflation 2003
UK
3.6
2.5
Venezuela
28.9
36.6
a)
May
2005/
Q5
What is meant by the term “real incomes”? (2)
b) Calculate the change in real average incomes for Venezuela in 2003? 2)
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c)
Which country has experienced an increase in real average income in 2003? (1)
a)
With the aid of numerical examples, distinguish between a progressive and regressive
tax. (6)
b) Discuss the advantages and disadvantages of the government increasing :
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i.
The rate of a progressive income tax (7)
ii.
The tax on a packet of cigarettes (7)
In Azerbaijan in 2001 the real national income per head was $650. In 2002 this increased to $710.
a)
Income per head (2)
ii.
The standard of living.(2)
May
2005/
Q10
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2005/
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What is meant by :
i.
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b) Discuss the extent to which the real national income per head in Azerbaijan from 2001
to 2002 indicates an increase in the standard of living. (10)
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Falling exports and increasing imports pushed Britain’s trade gap to its widest in more than 300
years. The country had a trade deficit of £3.6 bn in October 2002.
Exports from the UK to:
% change*
Imports to the UK from:
% change*
USA
-6.3
USA
-5.6
Germany
-3.6
Germany
3.5
France
-8.2
France
-0.1

3 months to October 2002 compared with previous 3 months.
a)
What is meant by the term “trade gap”? (2)
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Q3
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IGCSE Economics Section C
Question Bank
By Ms.Dharshani Perera
b) Using the data above, identify the country which:
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i.
Increased its exports to the UK(1)
ii.
Experienced the greatest fall in trade with the UK.(1)
c)
Briefly explain 2 ways in which a country could decrease its imports.(4)
a)
What is meant by “inflation”? (2)
b) How might inflation affect the four functions of money? (8)
c)
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Discuss three policies a government might use to control the rate of inflation. (10)
A government imposes an indirect tax of 10% on ice cream.
a)
What is an indirect tax? Give an example. (2)
b) Draw a diagram to show the impact of an indirect tax on the demand , supply and price
of ice cream. (5)
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c)
Give two reasons why the government might impose a tax on ice cream.(2)
a)
What is meant by:
i.
The rate of interest? (2)
ii.
Real income? (2)
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Q2
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b) Using the data in the table below, calculate the real average income in 2003. (2)
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a)
What is meant by :
i.
Economic growth ? (2)
ii.
Standard of living ? (2)
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b) Briefly describe three ways in which a government can increase the economic growth in
a country. (6)
c)
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What are the advantages and disadvantages of an increase in economic growth in a
country? (10)
“In China in 1999 economic growth was not as high as in previous years, although it was still
substantial. One reason is that the Chinese are spending less and saving more of their incomes”
a)
What are the major economic consequences when the inhabitants of the country are
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IGCSE Economics Section C
Question Bank
‘spending less and saving more of their incomes’? (6)
By Ms.Dharshani Perera
Q13
b) Explain with examples:
i.
How a government can increase economic growth in a country.(7)
ii.
The possible costs of economic growth to a country. (7)
Q1(June 2009/Q3)
Figure 3a shows the Gross Domestic Product (GDP) of Greece 2001–2006.
(a)
(i) What is meant by Gross Domestic Product (GDP)? (2)
Figure 3b shows Investment in Greece 2001–2006.
(ii) With the aid of an example, define investment. (2)
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IGCSE Economics Section C
Question Bank
By Ms.Dharshani Perera
(iii) Using the data in Figures 3a and 3b, briefly explain the likely relationship between GDP and the level of
investment between 2001–2006. (4)
(iv) Explain how changes in the rate of interest might be used to increase the level of nvestment in Greece. (4)
(v) Identify and briefly explain one other measure a government could use to increase the level of investment in a
country. (2)
(vi) Does an increase in the level of investment always benefit the people of the country? Give reasons for your
answer. (5)
(b) Figure 3c shows the current account of the balance of payments of Greece in 2005 and 2006.
(i) Place a cross in the correct box to show whether the balance of payments on current account between 2005–
2006 had (1)
(ii) Examine one measure of fiscal policy a government may use to reduce a deficit on the current account of the
balance of payments. (5)
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IGCSE Economics Section C
Question Bank
By Ms.Dharshani Perera
Q2 (June 2010/Q3)
(a) (i) With reference to the data in Figure 3a, compare the rate of inflation in Armenia and Germany from 2007 to
2009. (4)
(ii) If a basket of goods in Germany cost 100 euros in 2007, how much would the same basket of goods cost in
2008? Show your calculations. (2)
(iii) Creditors and people on fixed incomes suffer more than others in an economy during times of inflation. Do you
agree with this statement? Give reasons for your answer. (5)
(iv) Which of the following government measures can reduce inflation in an economy? (1)
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IGCSE Economics Section C
Question Bank
By Ms.Dharshani Perera
(b) (i) What is happening to real Gross Domestic Product in Armenia from 2007 to 2009? Explain your answer. (3)
(ii) With reference to the data in Figure 3b identify the one similarity and one difference in the economic growth
rates of Armenia and Germany from 2007 to 2008. (3)
(iii) To what extent are the problems associated with negative economic growth greater than the problems
associated with positive economic growth? (6)
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IGCSE Economics Section C
Question Bank
By Ms.Dharshani Perera
Q3(May 2008/3)
Figure 3a shows the German government’s budget in 2006.
(a)
(i) Place a tick in the correct box to show whether the German government has a (1)
(ii) Using the data in Figure 3a, explain your answer. (2)
(iii) Complete the following sentence: “The use of government expenditure and government revenue to control the
economy is called ...................................... policy.’’ (1)
(b) A government can raise revenue by increasing direct taxation and indirect taxation. Direct taxes are often
progressive and indirect taxes are often regressive. With the aid of numerical examples distinguish between
progressive and regressive taxation.
(i) Progressive: (3)
(ii) Regressive: (3)
(iii) Explain one advantage and one disadvantage to the economy of a reduction in direct taxes. (4)
(iv) Identify one other way, apart from taxation, that a government raises revenue. (1)
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IGCSE Economics Section C
Question Bank
By Ms.Dharshani Perera
(c)
(i) The control of unemployment in an economy is a government objective. Identify one other economic objective
of a government. (1)
(ii) With the aid of examples explain what is meant by
1. structural unemployment (2)
2. seasonal unemployment. (2)
(iii) Evaluate the effectiveness of supply side policies in reducing structural unemployment. (5)
Q4(November 2007/Q3)
(a)
(i) Using the data in Figure 1, describe what happened to economic growth in Nigeria between 2003 and 2004. (2)
(ii) State two reasons why economic growth is a government objective. (2)
(b)
(i) What is meant by “human capital”? (2)
(ii) Identify two ways in which human capital can be increased. (2)
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IGCSE Economics Section C
Question Bank
By Ms.Dharshani Perera
(iii) Briefly explain how the discovery of oil reserves in a country can affect its rate of economic growth. (3)
(iv) Briefly explain one disadvantage of economic growth. (2)
(v) Do the advantages of economic growth outweigh the disadvantages? Justify your answer. (4)
(c) (i) Using Figure 2 describe what happened to the rate of interest between 1998 and 2004. (2)
(ii) Analyse how effective changes in the rate of interest may be in reducing unemployment. (6)
Q5(November 2008/Q3)
Figure 3a shows economic growth in Algeria, Gambia and Malta in 2003 and 2004.
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IGCSE Economics Section C
Question Bank
By Ms.Dharshani Perera
(a) Insert the missing words to complete the definition of economic growth below.
Economic growth is measured by the rate of change in
(iii) With reference to the level of economic growth shown in Figure 3a, describe the likely state of the economy of
Malta in 2003. (3)
(iv) Which country experienced greatest economic growth in 2004? (1)
(v) In your opinion does economic growth always lead to an increase in the standard of living? Give reasons for
your answer.(5)
(b) Study the information given in Figure 3b and 3c above.
(i) Describe what is happening to the rate of inflation and the current account balance in Malta between 2003 and
2004. (2)
(ii) Briefly explain two ways in which rising inflation might influence the current account of the balance of
payments. (4)
(c)
(i) Identify and briefly explain one monetary measure a government can use to control the rate of inflation. (3)
(ii) Examine the extent to which an increase in income tax is likely to affect the current account of the balance of
payments. (5)
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IGCSE Economics Section C
Question Bank
By Ms.Dharshani Perera
Q6(November 2009/Q3)
Figure 3a shows the price (in pence) of a litre of petrol in the UK in 2005 and 2007 and the amount of tax on each
litre of petrol.
(a) (i) Using the data in Figure 3a, describe what happened to the tax on petrol from 2005 to 2007. (2)
(ii) Place a cross in the correct box. In developed countries, a tax on petrol can be described as (1)
(iii) Explain your answer to (a)(ii). (2)
(iv) Briefly explain two reasons why a government might impose a tax on petrol. (4)
A tax on petrol might affect a government’s economic objectives.
(v) Identify one economic objective that may be affected by an increase in the tax on petrol. (1)
(vi) Examine whether the benefits of taxing petrol outweigh the disadvantages for the economy. (5)
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IGCSE Economics Section C
Question Bank
By Ms.Dharshani Perera
(b) Education and training can be used to help overcome structural unemployment in the long term.
(i) With the aid of an example, define structural unemployment. (3)
(ii) To what extent is increased expenditure on education and training likely to reduce the level of structural
unemployment? (5)
(iii) Briefly explain one other policy a government can use to overcome structural unemployment. (2)
Q7(November 2010/Q3)
Figure 3a shows the economic growth of the UK between 2005 and 2008.
(a)
(i) Complete the following definition.
Economic growth measures the change in ....................................... Gross ....................................... product. (2)
(ii) What was happening to the UK’s rate of economic growth between 2007 and 2008? (1)
(iii) Identify one other characteristic of recession apart from unemployment. (1)
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IGCSE Economics Section C
Question Bank
By Ms.Dharshani Perera
(b)
(i) To what extent can a change in the rate of interest reduce unemployment during a recession? (6)
(ii) Identify and briefly explain one fiscal measure that could be used to reduce unemployment during a recession.
(3)
A change in the rate of interest may affect other government objectives.
(iii) Identify one other government objective apart from reducing unemployment. (1)
(iv) Briefly explain how this objective may be affected by a change in the rate of interest. (3)
(c) The 2012 Olympic Games are to be held in London. They are to be funded mainly by the UK government.
(i) With the aid of an example, explain what is meant by direct taxation. (2)
(ii) Apart from direct taxation identify one method by which the government can fund the 2012 Olympics. (1)
(iii) Which is the better method of funding the 2012 Olympics, direct taxation or the method you have identified in
(c)(ii)? Justify your choice. (5)
Q8(June 2011/Q3)
Figure 3a shows the economic growth in Ireland in 2007 and 2008.
(a) (i) Define economic growth. (3)
(ii) With reference to the data in Figure 3a, explain why the economy of Ireland could be described as being in
recession. (3)
(iii) Identify two reasons why governments attempt to increase economic growth.(2)
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IGCSE Economics Section C
Question Bank
By Ms.Dharshani Perera
Figure 3b shows the government of Ireland’s expenditure and revenue in 2007 and 2008.
(b) (i) What is meant by a budget deficit? (2)
(ii) Using the data in Figure 3b, identify the year in which the budget deficit in Ireland was greater.(1)
(iii) Use of government expenditure and revenue to overcome recession in an economy is called
A monetary policy
B supply side policy
C fiscal policy
D deregulation. (1)
(iv) Briefly explain one reason why government revenue in Ireland fell during the recession of 2008. (3)
(v) Examine how a change in a government’s spending could increase economic growth in a country. (6)
Study the data shown in Figure 3c.
(i) Which country had the higher rate of VAT in 2009? (1)
(ii) Which of the two taxes shown is a direct tax? Explain your answer. (2)
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IGCSE Economics Section C
Question Bank
By Ms.Dharshani Perera
(iii) Do the advantages of indirect taxes outweigh their disadvantages? Explain your answer. (6)
(Total for Question 3 = 30 marks)
Q9(January 2012/Q3)
Figure 3a shows the rate of inflation in Vietnam from 2007 to 2009.
(a) (i) Define rate of inflation. (2)
(ii) With reference to the data in Figure 3a, describe what happened to prices in Vietnam between 2008 and 2009.
(2)
Complete the sentences below from the following list.
a decrease
cost-push
demand-pull
a deficit
a surplus
an increase
(iii) Inflation in Vietnam may have been caused by ..........................................in world oil prices. (1)
(iv) The cause identified in (iii) is called ......................................................................inflation.(1)
(v) Identify one function of money. (1)
(vi) Briefly explain one effect of inflation on the function of money you have identified in (a)(v). (2)
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IGCSE Economics Section C
Question Bank
By Ms.Dharshani Perera
Figure 3b shows the balance of payments on current account for Vietnam from 2007 to 2009.
(b) (i) Using the data in Figure 3b, describe what happened to the balance of payments on current account from
2007 to 2008. (2)
The balance of payments on a country’s current account shows the trade in visible and invisible imports and
exports.
(ii) Give an example of a visible import. (1)
(iii) Give an example of an invisible import. (1)
(iv) Inflation always worsens the balance of payments on current account. Do you agree with this statement?
Explain your answer. (6)
(c) (i) In 2008 the government of Vietnam increased the rate of interest from 6.5% to 10.25%. An increase in
interest rates is an instrument of (1)
A Fiscal policy
B Monetary policy
C Supply side policy
D Regional policy
(ii) Briefly explain two reasons why an increase in the rate of interest might lead to an increase in the level of
unemployment. (4)
(iii) To what extent are supply side policies likely to be successful in reducing unemployment? (6)
(Total for Question 3 = 30 marks)
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