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MINISTRY OF EDUCATION
NAMIBIA SENIOR SECONDARY CERTIFICATE
ECONOMICS
SPECIMEN PAPERS 1– 2 AND
MARK SCHEME
ORDINARY LEVEL
GRADES 11 – 12
THESE PAPERS AND MARK SCHEMES SERVE TO
EXEMPLIFY THE SPECIFICATIONS IN THE LOCALISED
NSSC ECONOMICS ORDINARY LEVEL SYLLABUS
2006
Ministry of Education
National Institute for Educational Development
Private Bag 2034
Okahandja
Namibia
©
Copyright NIED, Ministry of Education, 2005
NSSCO Economics Specimen Paper Booklet Grades 11-12
ISBN: 99916-69-93-0
Printed by NIED
Publication date: 2005
TABLE OF CONTENTS
Paper 1 Specimen Paper...........................................................................................................1
Paper 1 Mark Scheme ..............................................................................................................9
Paper 2 Specimen Paper.........................................................................................................17
Paper 2 Mark Scheme ............................................................................................................21
MINISTRY OF EDUCATION
Namibia Senior Secondary Certificate (NSSC)
ECONOMICS: ORDINARY LEVEL
PAPER 1
SPECIMEN PAPER
(Short-answered questions and questions testing enquiry skills)
TIME: 2 hours 30 minutes
INSTRUCTIONS TO CANDIDATES
Write your name, Centre number and candidate number in the spaces at the top of this page
and on all separate answer paper used.
Answer all questions.
Section A
Write your answers in the spaces provided on the question paper.
Section B
Write your answer on the separate answer paper provide.
At the end of the examination, fasten the separate answer paper securely to the question
paper.
INFORMATION FOR CANDIDATES
The number of marks is given in brackets [ ] at the end of each question or part question.
FOR EAMINER’S USE
Section A
Section B
TOTAL
1
Section A
Answer all questions in this section.
Write your answer in the space provided.
1.
Your pocket-money forces you to choose - either a ticket for a local pop concert or some
CD’s. How does this illustrate opportunity cost?
[2]
_______________________________________________________________________
_______________________________________________________________________
2.
Describe labour as a factor of production.
[1]
_______________________________________________________________________
3.
Resources are allocated by government directives for production. To which economic
system does the above statement relate?
[1]
_______________________________________________________________________
4.
State one advantage and one disadvantage of specialisation.
[2]
_______________________________________________________________________
_______________________________________________________________________
5.
Define a trade union.
[1]
_______________________________________________________________________
6.
Explain any one quality of money.
[2]
_______________________________________________________________________
_______________________________________________________________________
7.
Describe two functions of the Bank of Namibia.
[2]
_______________________________________________________________________
_______________________________________________________________________
8.
When is a market said to be in equilibrium?
[1]
_______________________________________________________________________
9.
Identify two reasons that cause the demand curve to shift.
[2]
_______________________________________________________________________
_______________________________________________________________________
2
10. Explain any one characteristic of a monopoly.
[2]
_______________________________________________________________________
_______________________________________________________________________
11. Give one factor, other than the wage rate, which will affect an individuals choice of
occupation.
[1]
_______________________________________________________________________
12. Give one reason why workers in the same occupation are paid different wages.
[1]
_______________________________________________________________________
13. Describe the differences between labour- and capital production industries.
[2]
_______________________________________________________________________
_______________________________________________________________________
14. Define the term “economies of scale”.
[1]
_______________________________________________________________________
_______________________________________________________________________
15. Give one reason why small firms may be successful.
[1]
_______________________________________________________________________
16. What type of unemployment exists when there is a fall in the demand for most goods and
services in an economy?
[1]
_______________________________________________________________________
17. Give one example of an indirect tax in Namibia.
[1]
_______________________________________________________________________
18. Country X had the following figures for its balance of trade in a given year:
Visible exports
2 000
Visible imports
1 500
Invisible imports
3 500
Invisible exports
1 000
Calculate the current account balance. (Show your calculation.)
[2]
_______________________________________________________________________
_______________________________________________________________________
_______________________________________________________________________
3
19. Interest rates in Namibia were increased three times in 2002. (January, March and June).
Give one advantage of an increase in interest rates.
[1]
_______________________________________________________________________
20. What monetary measure of economic policy does the government use to influence
economic growth?
[1]
_______________________________________________________________________
21.
Price
Quantity
Explain what would happen to demand and supply if the government sets the price of a
good at P2.
[2]
_______________________________________________________________________
_______________________________________________________________________
22. What is meant by Retail Price Index?
[1]
_______________________________________________________________________
_______________________________________________________________________
23. What is meant by Gross Domestic Product?
[1]
_______________________________________________________________________
_______________________________________________________________________
4
24. The exchange rate is defined as the price of one country’s currency in terms of another
country’s currency. Suppose the exchange rate between the Namibian dollar and the US
dollar is US$ 1 = N$ 10. How much will a car costing US$ 5 600 cost in Namibian
dollars? (Show your calculation.)
[2]
_______________________________________________________________________
_______________________________________________________________________
25. Explain why you think Namibia is a developing country.
[2]
_______________________________________________________________________
_______________________________________________________________________
26. The Namibian Population and Housing Census was conducted in 2001. The statistics
produced indicate that the Namibian population has grown to 1.8 + million. Give two
problems that may arise due to the growth in population in Namibia.
[2]
_______________________________________________________________________
_______________________________________________________________________
27. A government sometimes prevents certain economic activities due to the social cost of
such activities. Explain one example of social costs created by a manufacturing firm. [2]
_______________________________________________________________________
_______________________________________________________________________
[Total: 40]
5
Section B
Answer all questions in this section.
Write your answer on the separate answer paper provide.
QUESTION 1
The figures below shows income and expenditure for country X in Africa, in 2001 in N$.
Country X’s income and expenditure, 2001. (N$ m)
INCOME
EXPENDITURE
Income from property
Indirect taxes
Direct taxes
Transfer from:
Households
Businesses
Rest of the world
Current income
Deficit
(a)
2 200
25 500
31 300
Interest on public debt
Consumption expenditure
Subsidies
Transfer to:
Households
Rest of the world
200
150
210
59 560
1 040
60 600
9 000
42 800
3 950
4 800
50
60 600
What is meant by
(i)
consumption expenditure?
[2]
(ii)
subsidies?
[2]
(b)
Explain what is meant by direct and indirect taxes.
[3]
(c)
Why do you think a government imposes taxes?
[4]
(d)
Country X’s income and expenditure are found in the budget statement.
(e)
(i)
The above budget shows a deficit. What does “a deficit” mean?
[2]
(ii)
Explain why a government may wish to deliberately budget for a deficit.
[5]
The government wishes to raise more money to finance public expenditure. What way
would you advise the government to do this?
[8]
[26]
6
QUESTION 2
Shell Profits
The price of crude oil has varied wildly since 1991, but the profits of the oil companies have
continuously increased. Petrol (gasoline) is produced by refining crude oil. In the UK three
big petrol operators, Shell, Esso and BP, make enormous profits each year. Motorists are
punished by high petrol prices while the directors of the petrol companies are paid fat salaries
of up to £1.3 billion in 1997.
Despite the enormous profits and large salaries of the directors, Shell, Esso and BP are
allowed to take the oil from the North Sea free. A critic from the pressure group Corporate
Watch said ‘The amazing thing is that the oil companies do not have to pay for the oil they
take from the sea. In every other country royalties have to be paid to the government. In
other words the UK government has chosen to tax the consumer instead of the oil
companies.’
A spokesperson from Shell said there was no direct relationship between the price of crude
oil and the company’s huge profits. ‘The price of a barrel of oil is only a small part of the
price of a litre of petrol. Profits are made by the manufacturing process and it should be
remembered that Shell needs profits to re-invest in searching for new reserves as oil is nonrenewable.’
(The Sun 14.4.98. p.6)
(a)
(b)
Describe what happened between 1991 and 1997 to:
(i)
the price of petrol,
[2]
(ii)
the profits of Shell.
[2]
According to the article, what special advantage do oil companies have when
operating in the UK?
7
[2]
(c)
(d)
The article says that the petrol companies make enormous profits each year.
If you were asked to find out whether the profits were unreasonable what
would you need to know?
[6]
What reason is given in the article to justify the level of profits of the company?
[2]
[14]
[Total: 40]
8
MINISTRY OF EDUCATION
Namibia Senior Secondary Certificate (NSSC)
ECONOMICS: ORDINARY LEVEL
PAPER 1
MARK SCHEME
MAXIMUM MARK: 80
SECTION A
1.
2.
3.
4.
1 mark for the sacrifice because of limited pocket money
1 mark for one chosen to the other
2
1 mark for the human effort of all types
1 mark for manual an non-manual
1 mark for skilled and unskilled
1
1 mark for Command economy
1 mark for Planned economy
1
1 mark for an advantage and 1 mark for an disadvantage
Advantages
− work can be done with great speed and dexterity
− each worker has his/her own set of tools, no time is wasted by the movement of
workers
− it makes it possible to mechanise the production process
− it becomes possible to use a whole range of power tools and machines
− it has enable workers to enjoy a shorter working week
− workers work according to their particular abilities
5.
Disadvantages
− boredom and frustration
− loss of skills
− identical articles
− difficult to find another job, specialised in one job
− when strikes occur the production is disrupted
2
1 mark for trade unions are associations of workers formed
1 mark for the improving the pay and working conditions of their members
1
9
6.
1 mark for durability
1 mark for portability
1 mark for divisibility
1 mark for limited in supply
any 1 explained
7.
1 mark for receives the government’s income from taxation and other sources and
makes payments on its behalf
1 mark for settle debts between central bank and other banks
1 mark for responsible for managing he national debt
1 mark for it is the sole not issuing authority for Namibia
1 mark for it come to aid of other banks if there is a shortage of cash in the banking
system
1 mark for it influence the amount of bank lending and percentage interest charged on
bank loans
1 mark for it holds the official stock of foreign currency
any 2
8.
1 mark for when at a current market place, the amount which buyers want to buy just
equals the amount which the sellers want to sell
1 mark for demand = supply
1
9.
1 mark for changes in income
1 mark for changes in the price of other goods e.g. substitutes or complementary goods
1 mark for changes in taste and fashion
1 mark for advertising
1 mark for hire purchase
any 2
10.
1 mark for in theory there is only one supplier of a particular good or service
1 mark for there is no other competitor
1 mark for the monopoly can set the price of the product of the quantity it wishes to
sell, or both
1 mark for monopoly can control the quantity supplied to the market, and therefore it
can influence the price
1 mark for monopoly can only exist if other firms are prevented from entering the
market
any 1 explained
11.
1 mark for good opportunities for promotion
1 mark for a high degree of job security
1 mark for varied and satisfying work
1 mark for pleasant working conditions
1 mark for various payments in kind, such as subsidised housing
10
1
12.
1 mark for productivity differences
1 mark for seniority
1 mark for profit sharing
1 mark for regional differences
1 mark for woman’s wages
1
13.
1 mark for labour intensive: making use of a high proportion of labour to other factors
of production
1 mark for capital intensive: making use of a large amount of capital rather than labour
e.g. car assembly
2
14.
1 mark for it refers to a situation where an increase in the size of the firm’s output leads
to a falling average cost
1
15.
1 mark for size of market is restricted
1 mark for they act as specialist producers of parts and components for large
manufacturers
1 mark for they distribute, and provide after-sales service on, the products of large
manufacturers
1 mark for they co-operate to obtain economies of scale
1 mark for no great technical economies of scale can be achieved
1
1 mark for cyclical
1 mark for general
1
16.
17. 1 mark for VAT
1 mark for Customs and Excise duties
18.
19.
20.
21.
22.
1
1 mark for visible and invisible trade
1 mark for - 2 000
Calculation
Visible trade
Invisible trade
Current account balance
500
- 2 500
- 2 000
1 mark for the rate of inflation can decrease as well as the level of imports into the
country can also be reduced
1 mark for interest rate
1 mark for banks ability to lend money
1 mark for controlling credit
2
1
1
1 mark for excess demand
1 mark for shortage of supply
NOTE: the learner can also answer it on the graph
2
1 mark for a retail price index is the index used to measure the rate of price change
1 mark for it shows what is happening to the value of the money spent by the average
household over a period of time
1 mark for it is used as a measure of inflation
1
11
23.
24.
25.
26.
27.
1 mark for it is the total value of goods and services produced by citizens within a
country
1
1 mark for the calculation
1 mark for N$ 56 000
Calculation:
US$ 5 600 x NS 10
= N$ 56 000
2
1 mark for low income levels especially in rural areas
1 mark for poor infrastructure in rural areas
1 mark for population is mainly below 15 years of age
1 mark for high proportion of unskilled labour
1 marks for high employment
any 1 explained
1 mark for scarcity of resources e.g. land
1 mark for more government spending on social services
1 mark for congestion in towns due to urbanisation
any 2
1 mark for pollution
1 mark for loss of land to the community
any 1 explained
[Total: 40]
12
SECTION B
QUESTION ONE
(a)
(b)
(i)
2 marks for household spending on goods and services
(ii)
2 marks for the monies paid by the government to producers, e.g. farmers or to
public services, e.g. transport
2
Direct taxes:
Indirect taxes:
(c)
(d)
placed on income,
person responsible for paying bears the burden
levied on spending
burden of the tax is shifted e.g. VAT
1 mark for provide government with income
1 mark for control amount of spending in economy
1 mark for reduce inequalities of income in the economy
1 mark for protect industries from foreign competition
1 mark for to discourage consumption of a commodity (tobacco)
3
any 4
(i)
2 marks for when the government’s expenditure exceeds its income/revenue
(ii)
-
(e)
2
-
2
to reduce unemployment by increasing the demand for goods and services as
more jobs are created
to encourage economic growth as production output increase
injecting the economy by investing into the country to increase the National
Income
5
tax increase
income average afford
borrowing overseas, long term e.g. MF
borrowing local, short term e.g. treasury bills
projects to generate income e.g. Michelle McLean Children Fund
shares of government earning dividends
sell shares to obtain income
13
8
[26]
QUESTION TWO
(a)
(i)
(ii)
the price of petrol rose, but should comment on the differing rate of increase
during the period, with the largest increase between 1996 and 1997.
2
The profits of the company rose, but should comment on the differing rate of
increase during the period, rising most rapidly in 1994 and 1996 but at a much
slower rate in 1995.
2
(b)
They do not have to pay for the oil, unlike in other countries where royalties have to be
paid to the government, with the government deciding to tax the consumer rather than
the producer.
2
(c)
Comment on the level of profits, comparable profits of other large companies in the
U.K. and in other countries, the relative value of the profits compared with the value of
the assets and the risks of development of oil fields.
6
(d)
The company needs a high level of profits to re-invest in searching for new reserves,
emphasising that oil is a non-renewable resource.
2
[14]
[Total: 40]
14
ASSESSMENT OBJECTIVES GRID
QUESTION PAPER: NSSCO ECONOMICS – PAPER 1 – SECTION A
Question
Topic
Syllabus
Reference
Marks
Total
Skill
A
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
Basic economic problem
Economic systems & resources
Economic systems & resources
Specialisation & division of labour
Trade unions
Financial institutions
Financial institutions
Market forces
Market forces
Policies
Occupational choices
Earnings
Productivity
Economies & diseconomies of scale
Economies & diseconomies of scale
Employment
Government economic policies
Output
Government economic policies
Government economic policies
Market forces
Prices
Output
International trade
Living standards
Population
Conflicts
2
T1.1
T1.2
T1.2
T1.3
T2.2
T2.3
T2.3
T3.2
T3.2
T3.5
T4.1
T4.2
T5.2
T5.4
T5.4
T7.2
T6.2
T7.3
T6.2
T6.2
T3.2
T7.1
T7.3
T7.4
T8.2
T8.1
T9.1
1
1
2
1
2
2
1
2
2
1
1
2
1
1
1
1
2
1
1
2
1
1
2
2
2
40
Weighting of Assessment Objectives as prescribed:
Weighting syllabus
Marks
A - 60 %
24
B - 40 %
16
C 0%
D 0%
15
B
24
2
16
C
D
ASSESSMENT OBJECTIVES GRID
QUESTION PAPER: NSSCO ECONOMICS - PAPER 1 – SECTION B
Question
Topic
Syllabus
Reference
Marks
Total
1
Government Income and
Expenditure
2
T6
Private firm as producer and
employer
T5.1
Weighting of Assessment Objectives as prescribed:
Weighting syllabus
A
B
C
D
20 %
20 %
20 %
40 %
100 %
Marks
8
8
8
16
40
16
Skill
A
B
C
D
26
4
5
9
8
26
4
5
9
8
14
4
4
6
14
40
4
8
4
9
6
14
9
MINISTRY OF EDUCATION
Namibia Senior Secondary Certificate (NSSC)
ECONOMICS: ORDINARY LEVEL
PAPER 2
SPECIMEN PAPER
TIME: 2 hours
INSTRUCTIONS TO CANDIDATES
Write your name, Centre number and candidate number in the spaces provided on the answer
paper/answer booklet.
Answer any four questions
INFORMATION FOR CANDIDATES
The number of marks given in brackets [ ] at the end of each question or part question.
17
1.
Zimbabwe's government has diverted $18 million (US) originally intended to support
businesses struggling in the harsh economy to buy imports of grain to help feed millions
of people.
(a)
(i)
Define opportunity cost.
[2]
(ii)
What might be the opportunity cost of the reallocation of funds to buy
emergency food relief?
[2]
(iii) Describe the relationship, if any, between opportunity cost and free goods.
[4]
(b)
(c)
Explain how the government's decision might affect Zimbabwe's balance of
payments.
[7]
Assess whether you consider the decision to reallocate funds by the Zimbabwean
government to be wise?
[5]
[Total: 20]
2.
The government of Namibia plans to put a tariff on all vegetable imports to assist local
growers. It is hoped that this will promote local high quality production for export. The
Agronomic Board says that price rises would not be dramatic and that the scheme
would serve almost half the local market.
(a)
Explain two methods a government can use to discourage the import of
products.
[6]
(b)
Assess whether the demand for a product such as vegetables is price elastic or
price in-elastic.
[2]
(c)
Draw a demand and supply diagram and discuss what might happen to the price of
vegetables in Namibia as a result of the tariff.
[6]
(d)
Tariffs are a form of protection. Outline the negative effects which a policy of
protectionism might have on the economy of a country.
[6]
18
3.
It has been reported that the Zambian government sold 257 state-owned enterprises to
private companies. Already some of these have stopped production. About 61000 jobs
have been lost.
(Adapted from The Republikein, August 2002)
(a)
(b)
[3]
Justify whether or not some enterprises should be controlled by the
government.
[5]
(c)
Why do you think so many workers lost their jobs when the industries were sold
to the private sector in Zambia?
[2]
(d)
List the advantages and disadvantages for a country of a free-market
economy.
(e)
4.
Describe the economic system you would expect to find in a country
where most enterprises are government owned.
[6]
Explain how the types of goods and services which are produced are likely to
change when central planning is reduced?
[4]
[Total: 20]
The picture below shows an advertisement of Adidas shoes, and give some information
on net profit. Adidas is a multinational company. Look at the picture and answer the
following questions.
(Adapted from The Namibian, August 8, 2002, pa. 16)
(a)
Define advertising.
[2]
(b)
Describe the purposes of advertising.
[4]
(c)
Does advertising have any disadvantages? Explain your answer.
[4]
(d)
Suggest how an advertising campaign might affect a company like Adidas.
[2]
(e)
Explain what is meant by a multinational company and give an example of a
multinational company operating in Namibia.
[3]
19
(f)
5.
"Bankers look for answers to economic growth".
The dream of rapid economic growth in Namibia was the theme of a conference of
economic experts that took place in Windhoek organised by the Bank of Namibia. The
main focus was to discuss how to reduce inflation
(a)
Explain economic growth.
[3]
(b)
Consider the economic importance of economic growth for a country.
[2]
(c)
List the functions of the Central Bank of Namibia in the country's economy.
[6]
(d)
Explain what policies the Central Bank might use to improve economic
growth.
[4]
(e)
6.
Despite the existence of multinational companies, there are still many small
businesses . Discuss the reasons for the existence of small businesses.
[5]
[Total: 20]
Evaluate, with reference to the current economic situation, whether a reduction in
inflation was achieved.
[5]
[Total: 20]
The Central Statistics Office reported that Zambia's overall year on year inflation
declined from 17,1 per cent in 2000 to 16,8 per cent in 2001.
(a)
(i)
Define inflation.
[3]
(ii)
List the causes of inflation.
[3]
(b)
Explain how the inflation rate of a country is calculated?
[6]
(c)
Discuss why the government would try to achieve price stability?
[6]
(d)
Assess whether an increase in wages/salaries in Namibia, leads to a rise or fall in
inflation.
[2]
[Total: 20]
20
MINISTRY OF EDUCATION
Namibia Senior Secondary Certificate (NSSC)
ECONOMICS: ORDINARY LEVEL
PAPER 2
MARK SCHEME
QUESTION 1
1.
(a)
(i)
Opportunity cost is the sacrifice of the next best alternative; or opportunity
cost is the next most desired alternative forgone; or the sacrifice of the next
most desired thing.
[2]
(ii)
Funds could be used to finance other government projects such as schools
and health services.
Funds could also be used for other types of government spending, such as
defence and infrastructure.
[2]
(iii) No relationship exists.
Opportunity cost involves the making of choices between limited resources.
Free goods involve no choices as all goods are in abundant supply and no
prices are to be paid, e.g. oxygen in the air.
[4]
(b)
Imports increased, deficit on current account, exports decrease because firms have
less funds to finance projects for exporting commodities. Reduce foreign
investment-little disposable income for consumption. Decrease in economic
activity.
[7]
(c)
Yes or No. Answer should be motivated with relevant facts.
Short-term gains, but longer term losses to the economy of Zimbabwe should be
explained.
[5]
[Total: 20]
21
QUESTION 2
2.
(a)
(b)
(c)
(d)
Tariffs - tax on imports
exchange control - limits on foreign currency used for imports
health and safety standards
subsidies
government contracts
(any two well explained )
[6]
Price elastic because not all people eat vegetables.
For vegetarians it might be price in-elastic (no substitutes)
Expect some explanation of price elasticity of demand
[2]
labelling
(1)
equilibrium price
(2)
Shifts
(1)
Increase or decrease in price - give proper motivation
[6]
Restrict the supply and choice available to consumers - prices will be higher than
with free trade. The danger of retaliation.
The general lowering of world trade. Less efficient home industries because of
lack of competition. Lack of specialization -countries tend to import products
they do not produce.
[6]
[Total: 20]
22
QUESTION 3
3.
(a)
Planned or communistic system.
Public ownership; Planned production; Price fixing by the government;
no production for profit;
[3]
(b)
Yes or No.
Yes. To avoid wasteful duplication and competition - some industries like
telephone and electricity companies needs a lot of capital for infra-structure government can provide these. Essential industries; political arguments - reduce
inequalities; economies of scale; managing the economy ; No; Government
inefficient; lack of competition; no fear of bankruptcy; poorly managed; poor
quality;
[5]
(c)
Government enterprises do not have profit motive, and therefore employ many
inefficient workers.; private firms are more efficient - profit motive; private firms
cut production costs - reduce labour costs.
[2]
(d)
Advantages of free-market economies
- private property
- freedom of choice
- self-interest
- competition (price mechanism)
- very limited role for government
(Any 3 advantages)
Disadvantages of free-market economies
- no government-provided goods or services(health and education)
- no government planning over economy(uncontrolled booms and recessions)
- limited choice for consumers(monopolies are encouraged)
[6]
(e)
As private enterprises are now responsible for the production of goods and
services, consumers will have more choice to buy as a greater variety of goods
and services will now be available at better quality, but at higher prices.
[4]
[Total: 20]
23
QUESTION 4
4.
(a)
Advertising is the process to inform and persuade customers in order to increase
demand.
[2]
(b)
The main purpose of advertising is clearly to influence demand for a good or a
service.
Advertising aims to increase demand, that is, to move the demand curve to the
right.
[4]
(c)
Yes. High costs; misleading; harmful products like cigarettes; overspending;
leads to dissatisfaction.
[4]
(d)
Positively because of the increase in sales; increase in demand; workers get
better salaries - workers more satisfied; higher profits.
Negatively - unsuccessful campaign will increase costs - must be covered by
increase in prices.
[2]
(e)
A Multinational company is a firm that controls and owns enterprises in several
countries, e.g. Ramatex.
[3]
(f)
The size of the market; individuality such as jewellery repairs which can not be
standardised personal services by doctors and lawyers; geographical factors isolated communities; small markets for expensive goods .
[5]
[Total: 20]
24
QUESTION 5
5.
(a)
Economic growth refers to an increase in a countries annual output of goods and
services.
[3]
(b)
It improves living standards of the population attracts investors - increase per
capita income; Better social services - government gets more taxes and can spend
more money on capital ; national prestige; more military power; easier equal
distribution of wealth.
[2]
(c)
The functions of the central bank is a state owned bank with the following
functions: it’s the government's bank; the banker's bank; manage national
debt; sole note issuing authority; lender of last resort;
implement government policies on banking - bank lending and interest
rates; hold official stocks of foreign currencies; operate in the foreign exchange
market to influence exchange rates.
[6]
(d)
Monetary policy - interest rates; reduce interest rates; more and cheaper money
available for investment and credit; capital; labour; land; higher output of
production.
[4]
(e)
Either Yes or No.
However, the Yes or No answer must be clear from the evaluation and be based
on the current economic situation.
[5]
[Total: 20]
25
QUESTION 6
6.
(a)
(i)
(ii)
Inflation describes the situation when there is a persistent rising in the
average price level - fall in the value of money.
[3]
Causes of inflation
- Demand-pull inflation
- Cost push inflation
- Money supply
[3]
(b)
Typical basket of goods is taken; weights given to each item; base year of one
hundred; new price compare to base year; difference express as a percentage;
subtracted or added to base year; total weighted index divided by weights to get
new index.
[6]
(c)
To prevent acceleration - anticipate future changes; affects distribution of
wealth because members of trade unions have more bargaining power; people
with fixed income - income decrease; borrowers gain at the expense of lenders;
affects the balance of payments - exports become more expensive; inflation can
get out of control – hyperinflation;
price stability attracts foreign investors.
[6]
(d)
When wages/salaries rise faster than productivity, labour costs will increase and
so will prices(and thus inflation). Wages/salaries are the single largest element in
total cost.
[2]
[Total: 20]
Any 4 questions answered
26
(4 x 20) = [80]
ASSESSMENT OBJECTIVES GRID
QUESTION PAPER: NSSCO ECONOMICS PAPER 2
Question
Topic
Syllabus
Reference
Marks
Total
Skill
A
1
Opportunity cost
Balance of payments
Government spending
2
T1
T7
T6
Price elasticity
International trade
Demand and supply
3
T3
T7
T3
Economic systems
Business organisations
4
T1
T2
Multinationals
Marketing
5
T2
T3
Economic growth
Financial institutions
6
T6
T2
Government policies
T6
8
7
5
20
2
12
6
20
18
2
20
A
B
C
D
- 30 %
- 35 %
- 25 %
- 10 %
100 %
6
D
2
7
5
5
6
7
6
6
6
6
6
6
6
7
5
2
2
2
2
2
7
5
8
12
20
3
4
7
5
6
6
5
2
2
14
6
20
7
5
2
6
6
7
5
2
20
20
6
6
6
6
6
6
2
2
Marks per Question
6
7
5
2
20 x 4 = 80 (Total of Question paper 2)
27
C
6
The weighting of the Assessment Objectives as prescribed:
By the syllabus:
B
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