4 aeriysearnene FORM TP 2007065 [BE CARIBBEAN EXAMINATIONS COUNCIL SECONDARYEDUCATIONCERTIFICATE EXAMINATION ECONOMICS MAY/UNE 2007 Paper01~General Proficiency 75 minutes (COP TENE 2007 om)) READ THE FOLLOWING DIRECTIONS CARFFULLY Ineddition wothistest booklet, you should have ananéwershect, was four supgeoted snswers tered (A),(B),(C),(D)- ABs lstening toocreading decide which choice is best Bach ters in this ‘ach item you areaboutto ans %_padouraswetshet nd enue hich conespondso your tam andbacken he space having the same eters the answer youve chosen. Lookathowitisdoneinthesatns tax toe Samplelter Economicsmay be described asa ‘Social Science? Sample Answer sinceitdeals with & ; Oo (A) teenvironmen 5 Os eens @®0@oO (©) ainanbehaviour ©) produc consurpon ‘The bestanswerto:bisitem is“humanbehaviour",so-answer space (C) lias been blackened % _Tfvouwantto change your answer, beaureto erase yourold answer completely and i inyournew choice, senee Youstetoldtobesin rumthepageand workasquicklyandascarefly deyoutan Miyovcannot sears aa temz omititand go onto thenext one. Youcancomebacktothchanderitun ace oe Score willbe the totel number of correct anewers 6 Thistestconsistsof60items. Youwillhave 75 minutestoanswerthem, 7 Ranetbe concerned atthe answershest provides spaces formoreafswers than there are kemein thistest 3. The use ofsitentelectronie ealeulatorsisallowed. DO NOT TURN THIS PAGE UNTIL YOU ARE TOLD TO no'so Copyright© 2006 Caribbean Fxeminations Council, Allrightsreserved 12160107: 4 sumrwascieey $M4 ay. 38. many developing counties have'changed {helt econcanies Somacommandecenompia ‘amarict-based econorhy iriorderigineree, (4) govermmenteontra} (8) efficiency (subsidies @)- pricecontro) Sam and Jack started @ catering business ‘They orgenisedthe actorsofproduction svi Tesourcests produce fhe goods and services. In which thowor oe reduction will youclassify Sam und aces Worker ® i oO @) qres-ga:industyinNew landusesahigh Tetloof Iebourers to capital as inputs in she Ereductionof sugar, Which ofthe following Ssenomicquestionsisbeing answeredin the productionserangement? (A) Howniuchtoproduce ©) Forwhomtoproduce (© Whattoproduee ©) Howtopradues Mhichofthe following ¢NOTas exampleof ‘factor ofprodustion imaconamercial taney (A) Shareboldersofthebanke @) Thebuilding . (Q) Special savings account forsudents ©) Thebank's vaute An inecease in the price of flour is MOST. likely tobe followed by an immediate (A) riseinthe quantity demand forbread ®B) _ Bllintheguantity supply offiont (C) ciseinthequantty sipply of ocr @) fallin the quantity demand for flour 19, 20. 2, According to economicthenry, secondhand cigarette smoke isan example off (A) private good ®) __positiveestemality (©) negative =xtemality ©) maritgood Ashifinthe demand urveforacommédty couldresulttrom achangein (A) price @). spply (©). conditions ofcupply *@) conditionsofdemand tem 24.refers tothe following diagrams, Pr Pop r Poop ce ae a cea a mM & Which disgram aboveindicatesthatdemand isperiectlyclasic? @w oR @® s io) en © vu CO ONTOTHENEXT PAGEae 22, Hybrideleotiecersaremorsexpensivethan cars which use gazolene,However,amajar ature of electric carsisthatthey are pollo- tion free, Which costswillfallasconsummers startusing electric cars? (a) Total fixedeost (®) — Marginaleost (©) Privatecost (D) — Extemaleost 23. Allof the following are features ofperfect competition EXCEPT selling of homegencousproducts Beedomotenzy andexit many buyers andonesaller perfect knawledge of market condition tem 24 refers to the diagram below which shows themarlet for soft drinks in Country ? ‘p eh ° 24 Which ofthe following is MOST likely tobe responsible forthe shiftinthesupply curve from, to,” An Inerease in advertising of soft cicinkse A fall intheprice ofsugar Increaced wages for workers inthe softdrinkindustry Aninerease inineame 25, 26. 20 28 In which of he following situaffans will ¢ normal supply curvefor farm produceslope upwards fomlefito right? (A) Farmers’ profitmmarginsincreaseas priceincreases 2) Famersarevillingtoineresse supply + asdemand increases, (©) Farmers pass on increased cost to (D) Farmersarewillingto producemare fr prize increaren, Which of the following is NOT TRUE of perfecteompetiion? (A) Fimeareprice ukers. (B) —Profctsare homo, (O)_ Finusengageinpsicediscrimination (D)_ Thereareno banersto entry. All things betag equal, an increaze in the supply ofagoodwillesultin (A) © am bicrease in price and quantity traded (By afallin price andan inerease i the quantity raded (©) adecreaseinpriceand quantiy traded (D) _ sriseingevenveand «fallin quantity traded Whichofthefollowing will NOToccurwhen thereismarketfelure? (A) Acdeclineinsoslal welfare (8) Anincrease in poverty throughout theeconorny (©) Increasing levelsof unemployment amongslilledand unskilled labour (©) Adeguateamounts ofall goodsand services forconsumers GO ONTO THENEXT PAGE29, 30. 2 A Weasury illisan instrument forchoct-teun borowingby (A) pebiiccompanies FB) goveinments (OQ — insurnescompanies ©) importers The MAINobjective of sires (A) encouregeconsumerspending ®) provide investment funds for companies (©) Govslopthehabitofthrittarsong its members @) provide credit to government agencies Joe Brown selishisproduceatthemarketand saveshismoney until hehas enoughte buy actor. Which ofthe following finetionsis ‘ioney performing nthiseace? (A) Unitofaccount (©) Storcofvalue (©) Standard ofdeferred payment (©) Mediumofexchange Which ofthe following is NOT a financial instiruticn in anesonomy? A) Sharemarket (B) —DevelopmentBank (©) Creditusion ©) Tradeunion Which ofthe following financial inssruments istsoued by che Government?” (A) Treasury bouds (©) Corporstebonds (© Equirysecurity (©) Sharesonthestockexchange 912160105 2007 34, 36. 37 35 Oneotthe functions ofa nercial bankis (A) idsuingnotesandooing” ®B) © making loans (©. determiningthe frcigtexchangersie @)” keeping theaccountsofgovernment departments Theabilty otumanessetnto cash without lossordelay is knownae (A) csabitiy B) laiaky (©) pocabitiyy Sivshtiy Country A is experienciig a balance of payments deficit. Which ofthe following ‘measures should itaketoreduce the dation intheshort-term? (A) Engage in tradewithotheriow cost produeersof Zone, (B) ~ Imposerestistonsongoucsimported fromother counties, (© “Increase the importation of goods, ©) Reduce the volume of exports to othercounttes, Which ofthe following will be ineluded in the capital account of the balance of payments ofa country? (A) Items bought trom a forcian supplier through the internet B) Outstanding loanrepaymentis made toabankinafereign counsry (©) Investmentin alocalmanufetuting industry by forsign company (D) _ Thevalueof goods exported during the year GOON TOTHENEXT PAGE[Wear | Rarror 7 [AAR [amrton | incnnesns 25 | Bae epensael| 2004 | 40. Witch ofthe following factors will MOST Likely causes fallinacountey'sexchange rate Luntera flexible change rate required? Aniticrensed demand foritsimparts “A (B}— Amincreased demand foritsexports (C) An increased inflowef capital (D)_ Areducedrateofdomesticinflation iden 39 refers to the table helow which ‘shows the rate of inflation and the average perentage increase in wages over four 41 seapperioe. WAGE ss a easel real wages GREATEST? (A) 208 (8) 2008 (205 ©) 20x Whichofthe following measuresisMOST 43. likelyto reduce inflation? (A) Aninereacein beniclending, (B) — Anincreaceinimportduties (C)_ A reduction in government ‘expenditure (D) Areductionindirecttaxation oizieotor 2007 rem refers to tha follo ees eee ee Consumtion ‘Net income from abroad | Investment Govemmentspending Using the data provided in the table above caleulatethe Gross Domestic Product A) 300M &) 0m (C)- sziom ©) 260M Some developing countries are trying t2 achieve economic growth with less govemnimental parvicipation. Thisis MOS? likely obeachieved through increased (A) privateinvesiment ®) —publicexpencizue (©) sateplanning @) — tradebasriers ‘Large firmsachieve savingsin nitcostsfiom advertsingorpackaging, Thisisaresulta? ‘which afthe following economiesof scale? (A) | Financia! (B) Marketing (OC). Managerial (D) Technical GOON TO THENEXT PAGEtem 44 refers to che following figure P Gee x With reference tothe diagram above, sate which ofthe following is TRUE. (8) CoumtyPhasanabsoluieadvantage inGood Yoaly. Country Phasanabsoluteatvaniage inGood ¥ and Good. Country Qhasan absoluteadvantage inGood ¥ only, County Qhasan sbsoluteadvantage in Good Vend Good X. A couniry is said to have a coriparative ‘advantage inthe production afacommodity when it (A) canproducemoreofthateommodity ‘shan any othareountry (8) hasa larger share ofthe market for that commodity than any other country (©) can produce that commodity ata lower opportunity cost than any othercountry (B) accounts fora greater percentage Of total world sales of that commodity than any other commodiy N6010F 2007 46. 4. 48. 49, Country Xecides toprovestitszericulural ssetorffomoreigncompettinibyatsticting ‘thesrnountéfagricultural goodsimportedints ‘thecountry. Thismmeasureisreferred toasa (A) tradebarvier @) wadebloc (©), quotatrading {)" tradeembargo Which of the following is NOT a characteristic of Caribbeaneconomi (A) _ High levels ofunemployment (B)_ Major producers ofmanufactured ‘ood (C). Lewlevelsofeapital formation (D) Ahigh debeburden Counicy B had an increaseot$300000 009 in foreign direct investment. In which section ofiebalance of payments will this tansection berecorded? (A) Visibletrade account (®) Balanceoftradenccount (©) nvisibletrade azcount D) — Capitalaccount Whichofthe following events will esultina surplusonthe balance oftradesfacountry? (A) Volumeofexponsisgresterthan the volumeofimports, ®B)Volumeofimpors isgreaterthan the volumeofexports (C) Valueofexpotis reste then the ‘valusofimports, ©) Valueofimporesisgreaterthan the valueafexporte, GOON TO THENEXT PAGE50, [ten 50 refers to the table below which shove figures taken fom the balance of Paymentsrecords for Country Xintheyear 200. < { 5M Expt of goods 500 Imprtof goods 00 | Curent balance 300 | ‘Whaistheinvisiblebalancefor Country? (A) 8 100M (B) $2004 (© .3 300m ©) ‘51200 Which ofthe following mesaures is MOST. Jikelytoreduce indation’ (A) Aninereaseinbantetending (8) Anincreage inimportduties (©) A reduction in government sxpendioare| (D) —Areduction indirect taxation ChasaCometicsseeks to madketitspraducts in the United States, Such a move is made MOSTiikely through (A) the establishment ofthe Caribbean Single Marketand Economy (DB) clirectforeign investenentinthe United States (©) effectivemarketingsmstegies (D) trade liberalization ‘The restriction ofinternational tedethrough tariffs, embargoes, quotas and exchange controls isreferredio as, (A) struccurstadjustment (B) globalisation (©) bitateralagreesnents (D) protectionism 160102007 St 55 56.7 Which of the consumers derive as a result-of tcode liberalisation? = lowing benefits wil! A) They willenjoy greater secess ta a variery of goods, B) — Goodsandservices willbeprovided atlower cost (C)- Pricesofallgoodsand services wit! bereduced, (D) Prices ofgocdsandservices willbe morestable. Which oftie followingarecharscteristicot MOST Caribbean economies? 1. Highpeceapitaincomes IL Adiversifiedmanufsenuring sector If. Equitablectsuitutionofincomes FV. Dependency on primary product rts (A) TVeny @®) — Tandtonty (Q Tand M only ©) MandtVeniy Allofthefo lowing areexamplesofpeimary producs EXCEPT (A). bauxite @) furieure (©) bananas ©) —_povoleum GO ONTO THENEXT PAGE57. lem $7 refers to the table below which 8 eat Aad County Baretadingpaene shows a country's eurrent account eta Howwilltheirrading relationsbestocr ie balance of payments forthe years the valus 6f the currency of Counter increasesagsiatthe valu oftheeumeneyot a ConntyB Invisible imports: | 50 (A) Exports trom CounttyB to County Invisibleexpons | 30 Awillbecheier | Visite impos 70 (B)+ _ Thevalueofexport from County Visible expons 2 AtoCountyBwilldeoneapes (©) Expons fom County Bio Gren ‘Whats its balance ofmerchandise trade? Awilldecrease. =e @)__Thevolumeofexpons fromCounty (A) ss3en ‘Ate Counay Bwill decrease, ®) 20m © sam stam, 58 ret t the information below which shows import and export dts for Countryin2005. * Index of import prices 100 Index af expor priess 2 Volume nfexpore = ‘Volumecfimpors 0 58. _ | Whatwéretheterms ftradefor County inz006? ww 098 7@ 12 Or. 2 ©). 10 * Sapper Domenie sath tble now balow which showemaaufuctcing opi shashaisotGsiee Domestic Productfor foureountries, e — Yeu | comma] tomar ‘Counray | Commer — 29% BR ci | 1950 28% 40% | Whattrendiscommon te ALL countriesshowninthetable? (A) Employmentin themanufacturing sector increased, (B) There wasa decline nthe Gross Domestic Predere (5) Therewasadeclineinthe ssleafmmnufacuurad products, : (©) Therewas adeclineinmanufacturing outputasesharecf Gross Domestic Product. iP YOU FINISH BEFORE TIMIL 1S CALLED, CHECK YOUR WORK ON THIS ‘Test. 2160108 2007