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Assessor Use Only ASSESSMENT SCHEDULE AS 90769 Question One All countries in the world strive for economic growth because if achieved the standard of living of the population should increase. Two measures of economic growth are: an increase in productive capacity an increase in real GDP a. The economy shown in the graphs 1 + 2 below is currently operating at point A. Adjust: i. Graph 1 to show an increase in productive capacity ii. Graph 2 to show an increase in real income Graph Graph 11 Graph Graph 22 Guns Guns A Graph 1 correct = AD Graph 2 correct = AD A Butter Butter b. Choose either an increase in productive capacity or an increase in real income and describe why it is a better measure of economic growth Real income Better Measure: _______________________________ Description: eg 1. An increase in real income indicates the value of production has increased so the buying power of an economy’s citizens will have increased 2. An increase in productive capacity indicates that an economy is capable of producing more but may not be doing so meaning citizens may be no better off CETA Practice Examination Economics NCEA Level 2/Year 12 2007 A correct idea = A D 1 Assessor Use Only c. Assume the economy is operating on the PPC labeled AB the in Graph 3 Describe an event that would cause the PPC to move to the new PPC position shown in Table AD1 Correct Graph 3 = AC DC correct = AC Table 1 Guns New PPC C AD A DC B D Butter Event causing the PPC change Eg Improvement in technology affecting just butter –eg better butter making machine Eg Find a new resource that enables an increase in both butter + gun production Note: starting PPC is AB Lack of school leavers with vocational and trade skills slowing down the NZ economy "Technology is far more fundamental than just IT or design - it includes all manner of practical skills. But not many schools these days have the capacity to teach them. Inventor Sir Frank Whittle needed the very best engineers and tool makers to make a jet engine that worked," said the Northern Employers & Manufacturers Association President Colin Martin. Press Release: Employers And Manufacturers Association Monday, June 18th, 2007 d. i. Identify an example of investing in human capital referred to in the press release above. Eg. Learning practical skills Schools teaching students Correct = AC ii. Explain how an investment in human capital would increase productivity of labour eg Investment in human capital increases the skill level of workers (I) so they are able to produce more / make less mistakes / increase quality which increases the (value) of output per worker (E) Which is an increase productivity (Q) CETA Practice Examination Economics NCEA Level 2/Year 12 2007 I or E = AC I+E= MC 2 Assessor Use Only Question Two Figure 1 Investment Saving a. In Figure 1 what are sectors A and B and the money flows (i), (iii), (iv). Consumer spending Sectors 2 _________________________ Learning practical skills Sectors teaching students correct B Schools _________________________ = AC Money flows 3 (i) _________________________ Import payments Money spending (iii) Govt _________________________ flows (Direct) tax (iv) _________________________ correct = AC A NZ wins right to host Netball World Cup Supporters of NZ Netball’s application for the Netball World Cup argued that it would have a positive effect on New Zealand’s economic growth saying that teams from 16 different countries will play 48 games before the world champion is decided Others are worried about the congestion it will cause, particularly when the semi finals and final are played at the “Arena Centre” which is located near the Auckland CBD (Central Business District) b. Refer to Figure 1 to help you explain how the Netball World Cup will increase economic growth in New Zealand. eg Spectators buying tickets to world cup games will cause C to increase(R) (I) and NZ netball will need to hire venues, employ staff, train NZ players (= increase in investment (= I) in human capital (R)) all of which will increase real income (as people providing these services are paid income(= Y) (R)) (E) and so economic growth increases (Q) R = refers to figure 1 I or E + R = AC I + E +R = MC c. Explain the flow on effect the Netball World Cup will have on trade in New Zealand by referring to its effect on the current account. eg Supporters + players from oseas nations buying NZ goods and services will increase export service receipts (E) resulting in an improvement (I) In the current account (Q) CETA Practice Examination Economics NCEA Level 2/Year 12 2007 I or E = AE I+E= ME 3 Assessor Use Only d. i. What is net social welfare? Net social welfare refers to a countries overall well-being. It includes economic (or material) as well as non-economic (or nonmaterial) welfare measures. Correct = AD ii. How can net social welfare be used to measure economic growth? Net social welfare indicators are normally presented as tables as ranked country lists. Economic growth occurs when a countries rank increases. Correct = AD iii. Economists using net social welfare to measure economic growth may find that the Netball World Cup causes economic growth to fall – explain how. eg If non – economic factors like congestion are very large (I) then these negative effects may be larger than the economic effects (explained in b above) causing the net social welfare index to fall (E) And so our economic growth would decrease (Q) I or E = AC I+E= MC E (Breadth) in Question 2 = if has 1 x AC + 1 x MC + 1 x ME CETA Practice Examination Economics NCEA Level 2/Year 12 2007 4 Assessor Use Only Question 3 High Oil Price Encourages Search for Oil off the South Islands East Coast High oil prices have encouraged overseas oil explorers to search for oil off the Canterbury Bight. Three wells are planned about 100 kilometres east of Timaru. Economists expect a discovery of oil to boost the Canterbury regional economy a. Economic growth has both positive and negative effects. For each of the outcomes of economic growth below explain a positive and negative outcome that could result in Canterbury following the discovery of oil in the region. Outcome of Growth (i) Environmental Impact I or E = AE I+E= ME (ii) Inflation I or E = AE I+E= ME Positive Effect Negative Effect Eg More environmentally friendly production methods or products (I) as increased profits earned by Canterbury firms who are directly or indirectly involved in oil prodn may allow them to invest in developing (E) new techniques / products Eg May involve depletion of natural resources (I) as Increased production in Canterbury as a result of the oil discovery (eg local suppliers providing goods to oil discovery firms) increases resource use (E) Eg Increase productivity (I) as increased profits earned by Canterbury firms could be invested in new (better) production methods developed that causing AS to shift right and so decrease inflation in Canterbury (E) Eg Increased economic growth will mean increased incomes (I) for Cantabrians and so their demand for G+S will increase pushing up prices (and so cause demand pull inflation) in Canterbury (E) I or E = AE I+E= ME I or E = AE I+E= ME E (Depth) in Question 3 = if has 4 x ME CETA Practice Examination Economics NCEA Level 2/Year 12 2007 5 Sufficiency Statement Achieved Merit Excellence 1 x AD + 1 x AC + 1 x AE and 5 other A’s M’s or E’s 1 x MC + 1 x ME and D 1 x A + 1 x AC + 1 x AE and 6 other A’s M’s or E’s 1xE and C 1 x M + 1 x ME and D 1 x A + 1 x AC + 1 x AE and 7 other A’s M’s or E’s ( 8/20) (11/20) (13/20) CETA Practice Examination Economics NCEA Level 2/Year 12 2007 6