Lancers International School

Gurgaon

Promotion Exam
Session: 2020-21
Student Name: _____________________________________________________________

Subject: Economics (HL) Grade:

Day/Date of Test: 07/08/2021

Total Marks: 30
Duration of Test: 1hr
Materials Allowed: (select one)
No additional materials are allowed.

Materials allowed are listed below (Please tick the required material)

 Calculator
 Answer Booklet

General Instructions:
 Use only blue or black pen for writing the exam.
 Answer all questions
 Unless otherwise stated in the question, all numerical answers must be given
exactly or correct to two decimal places.
 You must show all your working.
 The maximum mark for this examination paper is [30 marks].
Answer all the questions. Take separate answer sheet to write the answers.

In the small town of South Korea, the weekly demand and supply for particular category of
cigarette packet and the effect of Government imposition of indirect tax can be illustrated
with help of this following diagram. Where quantities are in packs per week and price is in
Korean won.

Answer these following questions with help of these following diagram

(a) Calculate the change in weekly expenditure on cig Packets for an average consumers
in the small town of South Korea. [2]

(b) Calculate South Korean Government’s revenue from Cig Tax. [2]

(c) State any two methods South Korean Government can take instead of indirect tax to
reduce the consumption of cigarette. [2]
The following table reflects the level of income distribution of South Korea and Sudan.
The population is divided into five equal parts.
Table 1- Level of Income distribution in South Korea and Sudan
Quantile Total Income received in Total income received in
South Korea (%) Sudan (%)
Poorest 20% 11 3
Second 20% 13 6
Third 20% 19
Fourth 20% 27 28
Richest 20% 52

(d) Calculate the percentage of income received by richest 20% in South Korea and third
20% in Sudan. [2]

(e) Outline why South Korean Economy has higher Gini Index than Sudan, using the
information from the above table. [2]
This Information provided in table 2 relates to the country Sudan.
Table 2
Year Nominal GDP deflator Real GDP
GDP(million
$)

2015 3245 100 -

2016 2776 25.12
2017 2543 27.66

(f) Calculate the real GDP of Sudan for the year 2016 and 2017. [2]

(g) Calculate the real GDP growth rate for the year 2016 and 2017. [2]

(h) Why it is important to calculate real GDP in an economy. [2]

Table 3 reflects the direct tax structure for the country Sudan
Table 3-Income tax structure in Sudan
Level of income per annum (in $) % of tax
0 - 3000 10%
3001-4500 25%
4501-6000 30%
6001 and above 35%

(i) Jana Earns $ 7500. Calculate the average rate of tax paid by Jana. [2]

(j) The Government of Sudan decides to increase the amount sales tax in the economy.
With help of Lorenz curve explain how this will affect the level of income distribution
in the economy. (Diagram is not to scale) [2]

The following table shows the Macroeconomic performance of Sudan in the year 2020
Table 4-Macroeconomic performance of Sudan (2020)
Macroeconomic performance Percentage
Economic growth rate -2.50%
Unemployment rate 16.04%
Rate of Inflation 50.99%
Poverty Rate 30.01%

In the 2020 Global Hunger Index, Sudan ranks 94th out of the 107 countries with sufficient
data to calculate 2020 GHI scores. With a score of 27.2, Sudan has a level of hunger that
is serious [See overview of GHI calculation].

(k) Using the data provided and your knowledge of economics, recommend a policy
which could be introduced by the Government of Sudan in improving the level of
income distribution in the country. [10]