[= &. TEST CODE 02216020 | FORM TP 2022224 MAY/JUNE 2022 CARIBBEAN EXAMINATIONS COUNCIL CARIBBEAN ADVANCED PROFICIENCY EXAMINATION® ECONOMICS UNIT 2 ~ Paper 02 2 hours 30 minutes READ THE FOLLOWING INSTRUCTIONS CAREFULLY. 1. This paper consists of THREE questions, one from each module. Answer ALL questions. 2. Write your answers in the spaces provided in this booklet. | 3. Do NOT write in the margins. 4. Draw ALL diagrams neatly and carefully, and clearly label ALL axes and curves, 5. You may use a silent, non-programmable calculator to answer questions. 6. If you need to rewrite any answer and there is not enough space to do so on the original page, you must use the extra lined page(s) provided at the back of this booklet. Remember to draw a line through your original answer, 7. Ifyou use the extra page(s) you MUST write the question number clearly in the box | provided at the top of the extra page(s) and, where relevant, include the question part beside the answer, DO NOT TURN THIS PAGE UNTIL YOU ARE TOLD TO DO SO. Copyright © 2021 Caribbean Examinations Council All rights reserved. At aul 02216020/MI/CAPE 2022 ‘mr * a f Answer ALL questions. | E E L i MODULE 1: MODELS OF THE MACROECONOMY : < 5 1. (@)_Define EACH of the following components of aggregate expenditure : & @ Net exports g = = es s = $ s Gi) Consumption * 8 g & < 5 [2 marks] § & (©) ()__Explain the process of deriving real GDP from nominal GDP. (Mathematical g calculations are not required.) 3 ‘DO NOT WRITE IN THIS AREA [3 marks} GO ON TO THE NEXT PAGE | (02216020/MJ/CAPE 2022E “ 1 Gi) Dis inguish between ‘an inflationary gap’ and ‘a deflationary gap’ PO NOT WRITE IN THIS AREA [3 marks} ii) Explain the relationship between the ‘unemployment rate’ and ‘inflation’ DO NOT WRITE IN THIS AREA [3 marks] DO NOT WRITE IN THIS AREA GO ON TO THE NEXT PAGE, Ln me 02216020/MJ/CAPE 2022r Z 1 (©) Using TWO diagrams of aggregate supply curves, discuss the differences between the Keynesian approach and the classical approach to macroeconomics, with regard to s ‘equilibrium price levels. = 5 is : : 's a & = § > & = 5 & s : s = § x s : z GO ON TO THE NEXT PAGE. 8 02216020/MJ/CAPE 2022 [ zlLOE On EN RUS A DO NOT WRITE IN THIS AREA PO NOT WRITE IN THIS AREA [12 marks} ‘Total 25 marks GO ON TO THE NEXT PAGE, i) (02216020/MJ/CAPE 2022MODULE 2: MACROECONOMIC PROBLEMS AND POLICIES 2 (@) — @_ Identify TWO types of unemployment. (i) Explain the equation MV = PY. "ONO T WRITE IN THIS GREE [3 marks] ‘DO NOT WRITE IN THIS AREA GO ON TO THE NEXT PAGE, Haein if 02216020/MJ/CAPE 2022 aetoa 7 (©) @_ Given that the consumer price index (CPI) for 2010 and 2011 was 100 and 105 respectively, calculate the rate of inflation, 5 PO NOT WRITE IN THIS AREA [2 marks} (i) Using TWO scenarios, explain how the unemployment rate of a country can fall while the working age population increases. DO NOT WRITE IN THIS AREA 16 marks] GO ON TO THE NEXT PAGE, ae DO NOT WRITE IN THIS AREA (02216020/MJ/CAPE 20222 “8: 1 (©) Discuss how fiscal policy can be used to address EACH of the following economic issues. (Inflation (ii) Unemployment Gi) Balance of payments crisis GO ON TO THE NEXT PAGE, 02216020/MJ/CAPE 2022 [i ip gH a ‘DO NOT WRITE IN THIS AREA DO NOT WRITE IN THIS AREA ‘DO NOT WRITE IN THIS AREA: = e : 3 : TERETICIN THES AREA [12 marks} ‘Total 25 marks | GO ON TO THE NEXT PAGE 02216020/MI/CAPE 2022r “es a MODULE 3: GROWTH, SUSTAINABLE DEVELOPMENT. AND GLOBAL RELATIONS 3. (@)_Define EACH of the following terms. (i) Terms of trade (i) Fixed exchange rate [2 marks} (>) Explain EACH of the following economic concepts. Comparative advantage [3 marks] GO ON TO THE NEXT PAGE 02216020/MJ/CAPE 2022 [et ig. gg i DG NOT WRITE IN THIS AREA DO NOT WRITE IN THIS AREA ‘DO NOT WRITE IN THIS AREA.13 - i] (i) Sustainable development 4 | DONOT WRITE IN THIS AREA a fal 2 [3 marks} = =| ‘sp ‘ Be Gi) Economic growth a = = = 2 S a q = é a : = [3 marks} & GO ON TO THE NEXT PAGE (02216020/MJ/CAPE 2022 [es aiar (©), -14- Discuss THREE ways in which economic integration may impact a country. (02216020/MJ/CAPE 2022 L | DO NOT WRITE IN THIS AREA | (PO NOT WRITE IN THIS AREA ‘DO NOT WRITE IN THIS AREAONO TENET UN THES AREA | DONOTWRITEIN TRIS AREA [12 marks} Total 25 marks END OF TEST IF YOU FINISH BEFORE TIME IS CALLED, CHECK YOUR WORK ON THIS TEST. 02216020/MJ/CAPE 2022 ih