P220/1

ECONOMICS
Paper 1
Jul / Aug. 2019
3 hours

RESOURCEFUL MOCK EXAMINATIONS 2019

Uganda Advanced Certificate of Education

ECONOMICS

Paper 1

3 hours

INSTRUCTIONS TO CANDIDATES:

Answer FIVE questions in all.

Section A is compulsory.

Answers to this Section A should be concise and precise.

Answer FOUR questions from Section B.

All questions in Section B carry equal marks.

Credit will be given for use of relevant diagrams.

Turn Over
 SECTION A (20 MARKS)

1. (a) Under what circumstances may the concept of opportunity cost be applied?
 When consumers are making consumption decisions ie making choice
of what to produce
 When firms are making choice on what to produce ie determining
what when how from where and for whom to produce
 Used when labour is deciding on whether to work or enjoy leisure
 Used when a country is deciding on what to produce on international
mkt ie specialisation
(04 marks)
(b) (i) Differentiate between credit multiplier and credit creation. (02 marks)
(ii) Given that final deposit in a bank is 500,000shs. and initial deposit as
100,000shs, calculate the credit multiplier. (02
marks)
(c) (i) What is meant by “divestiture”? (01 mark)
(ii) Give three reasons for divestiture of public enterprises. (03 marks)
(d) (i) Define the term optimum population. (01 mark)
(ii) Give three demerits of under population in an economy. (03 marks)
(e) (i) Define the term ‘commercial policy’. (01 mark)
(ii) Give any three instruments of commercial policy in an economy.
(03 marks)
SECTION B (80 MARKS)

2. (a) Distinguish between maximum price legislation and minimum price

legislation. (04 marks)
(b) Examine the effects of price legislation in an economy. (16 marks)

3. (a) Show how a monopolistic firm determines output, price and profits in the short
run. (08 marks)
(b) Assess the impact of monopoly in Uganda. (12 marks)

4. (a) Why do countries compile National income statistics? (08 marks)

(b) Explain the problems encountered when measuring National income.
(12 marks)

5. (a) Distinguish between export promotion industrial development strategy and

import substitution industrial development strategy. (04 marks)
(b) Explain the merits and demerits of adopting import substitution strategy
of industrial development. (16 marks)

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6. (a) Explain the quantity theory of money as developed by Irving fisher.
(06 marks)
(b) Identify the weaknesses of the quantity theory of money. (14 marks)

7. (a) Account for the formation of Economic integration among developing

countries. (10 marks)
(b) Explain the factors that limit the formation of economic integration among
developing countries. (10 marks)
END