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a

Answer any four questions.

i

1/ (a) Explain the basic economic problem. [10]

(b) Describe how the questions on'what, for whom and how to produce' are
answered in a planned economy. [1s]

2 (a) What determines the demand for goods and services in an economy? tel

(b) Using diagrams, explain the concepts

(l) increase in quantity demanded, and

(ii) increase in demand. [16]

"l

/31 (a) With reference to population, what is

L' (l) natural growth rate, t4l

(ii) dependency ratio, and 14l

(iii) optimum population? t4l

(b) Explain the economic problems associated with the population structure of
developing countries. t1 3l

14
It |
(a) Explain the characteristic features of money.
l! [10]
\i
(b) How are the functions of money affected by inflation? l1 sl

Expiain the importance of a central bank to an economy. lzsl

,6,
t/
(a) What are the benefits of having a multinational company in an economy? [10]

(b) Why do govemments control multinational companies? [1 s]

What are the causes of differences in wages? 12s)

8 (a) With reference to the theory of the firm, explain the terms

(r) marginal cost, and t4l

(ii) average total cost. t4l

 3

(b) With the aid of a diagram, explain the short-run equilibrium position of a firm
in perf,ect competition. [1r7]

9 Why do goverrrments restrict imports? l25l

l0 (a) With reference to nationai income statistics, explain the terms

(i) Gross Domestic Product (GDP), and

(ii) Gross National Product (GNP). [0]

(b) Explain how gross dornestic product is found using the expenditure method. [15]

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