Unit 4 paper one examination questions

1. (a) Explain three factors that influence the value of a country’s exchange rate. [10 marks]

(b) Using real world examples, evaluate government/central bank intervention in the foreign
exchange market to reduce the value of the exchange rate. [15 marks]

2. (a) Suggest three reasons why a government might impose tariff barriers on imported
goods and services?  [10 marks]

(b) Using real world examples, evaluate the possible impact of a nation joining a customs
union. [15 marks]

3. (a) Illustrate the impact of two different types of trade barriers on the following: [10
marks]

 Consumers
 Government revenues
 Domestic producers 

(b) Using real world examples evaluate the argument that the maintenance of protectionist
measures contributes towards economic growth within LEDCs [15 marks]

4. (a) Explain how a nation might reduce a current account deficit using expenditure
switching policies and expenditure reducing policies. [10 marks]

(b) Using real World examples, discuss the effects of a persistent current account deficit on a
nation’s economic growth. [15 marks]

5. (a) Illustrate the impact of a fall in the world price of oil on aggregate supply and gross
domestic product (GDP) in an economy. [10 marks]

(b) Using real world examples, discuss the possible impacts of market-oriented and
interventionist policies on economic development within LEDCs. [15 marks]

6. (a) Explain three institutional factors that may contribute to potential economic growth in
developing countries. [10 marks]

(b) Using real-world examples, evaluate the view that economic growth will lead to economic
development. [15 marks]

© Mark Johnson,
InThinking www.thinkib.net/Economics 1