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MAY/JUNE 20I7

CARIBBEAN EXAMINATIONS COUNCIL


CARIBBEAN ADVANCED PROFICIENCY EXAMINATION@

ECONOMICS

UNIT 2 -Paper O2

2 hours 30 minutes

READ THE FOLLOWING INSTRUCTIONS CAREFULLY.

I . This paper consists ofTHREE questions, one from each module. AnswerALL questions.

2. Write your answers in the spaces provided in this booklet'

3. Do NOT write in the margins.

4. You may use a silent, non-programmable calculator to answer questions'

on the
5. If you need to rewrite any answer and there is not enough space to do sobooklet.
original page, you must use the extra lined page(s) provided at the back of this
Remember to draw a line through your original answer'

6. If you use the extra page(s) you MUST write the question number clearly in the box
provided at the topolthe extra page(s) and, where relevant, include the question
part beside the answer.

DoNoTTURNTHISPAGEUNTILYoUAREToLDToDoSo.
Copyright @ 2016 Caribbean Examinations Council
ffi All rights reserved.

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0221602003
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MODULE 1: MODELS OFTHE MACROECONOMY

l. (a) (i) State TWO determinants of investment.

[2 marks]
(ii) Distinguish between 'gross domestic product'(GDP) and 'gross national product'
(GNP).

[4 marksl

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0221602004 J
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Describe EACH of the following approaches which are used to measure GDP:
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(i) Income approach

[3 marksl

(ii) Expenditureapproach

[3 marksl

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(c) Explain ONE way in which growth in a country's GDP may negatively impact the country's
standard of living.

[3 marks]

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0221602006
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Using a standard 45" Keynesian cross diagram, explain how equilibrium is reached between
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actual expenditure (AE) and income (Y).

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[10 marksl

Total25 marks
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0221602007 J
r MODULE 2: MACROECONOMIC PROBLEMS AND POLICIES
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2. (a) (i) Distinguish between 'monetary policy'and 'fiscal policy'

[4 marks]

(ii) State THREE costs of unemployment.

[3 marks]

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0221602008
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Explain ONE way in which high or rising oil prices may impact EACH of the following:
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(i) Inflation rate

[3 marksl

(ii) Unemployment rate

[3 marksl

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0221602009 J
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(c) Discuss THREE tools of monetary policy that Central Banks can use to help control
inflation.

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[12 marksl

Total25 marks
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0221602011 J
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3. (a) (i)
-12-

Define the term 'balance of payments'.


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[2 marksl
(ii) List THREE main accounts that are included in the balance of payments.

[3 marksl
(b) (i) Outline TWO ways in which Caribbean countries benefit from increased exports.

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[4 marks]

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(ii) Outline TWO advantages and TWO disadvantages of an economic partnership


agreements for the Caribbean region-

Advantages:

[4 marksl

Disadvantages:

[4 marksl
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0221602013 J
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-14-

Discuss TwO policy options that a country may adopt to correct a trade deficit and boost
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employment.

GO ON TO THE NEXT PAGE


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[8 marksl

Total25 marks

END OF TEST

TEST'
IF YOU FINISH BEFORE TIME IS CALLED, CHECK YOUR WORK ON THIS

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