MINISTRY OF EDUCATION, HERITAGE & ARTS

FIJI YEAR 12 CERTIFICATE EXAMINATION 2022

ECONOMICS

Time allowed: 3 hours

(An extra 10 minutes is allowed for reading this paper)

INSTRUCTIONS

1. Write your Index Number on the front page and inside the back flap of the Answer Booklet.

2. Write all your answers in the Answer Booklet provided.

3. If you use extra sheets of paper, be sure to show clearly the question number(s) being answered and
to tie each sheet in your Answer Booklet at the appropriate places. Ensure that your Index Number
is written on the extra sheets.

4. Answer all the questions with a blue or black ballpoint or ink pen. Do not use red ink pen. You may
use a pencil only for drawing.

5. You may use a calculator, provided it is silent, battery-operated and non-programmable.

6. There are five strands in this paper. Note the options in Part C of each strand.

SUMMARY OF QUESTIONS
STRAND GUIDELINES MARK SUGGESTED
TIME
1 Introduction to Economics 8 14 minutes

2 Microeconomics 26 46 minutes

3 Macroeconomics 21 38 minutes

4 International Economics 14 26 minutes

5 Development Economics 11 20 minutes

Essay Essay Writing 20 36 minutes

Writing (Choose any 2 questions from Strand 1 – 5)

TOTAL 100 180 minutes

COPYRIGHT: MINISTRY OF EDUCATION, HERITAGE & ARTS, FIJI, 2022.

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INSTRUCTIONS FOR MULTIPLE-CHOICE QUESTIONS

The multiple-choice questions are compulsory. Each question is worth 1 mark.

(1) In your Answer Booklet, circle the letter which represents the best answer.
If you change your mind, put a line through your first choice and circle
the letter of your next choice.

For example: 2 A B C D

(2) If you change your mind again and like your first answer better, put a line
through your second circle and tick () your first answer.

For example: 2 A B C D


(3) No mark will be given if you circle more than one letter for a question.

INSTRUCTION FOR ESSAY QUESTIONS

There are five essay questions in this paper. Answer any two questions from
Strand 1 - 5. Write an essay of approximately 180 – 200 words to answer each question.
Each question is worth 10 marks. ½ mark is allocated to introduction and ½ mark
allocated to conclusion.

STRAND 1 INTRODUCTION TO ECONOMICS [8 marks]

Part A Multiple Choice Questions [2 marks]

Circle the letter of the best answer in the Answer Booklet.

1. Scarcity in economics describes a situation where there is insufficient

A. time to study and play sports in school.
B. food to keep people above the poverty line.
C. money to buy goods and services from firms.
D. productive resources to fully satisfy all wants of life.

2. Marginal rate of transformation is the

A. opportunity cost.
B. measure of efficiency.
C. slope of transformation curve.
D. rate of return of investment in the public company.

© MEHA, FY12CE 2022: ECONOMICS.

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Part B Short Answer Questions [6 marks]

Answer all the questions.

1. Use the information in the graphs and your knowledge to answer the questions
that follow.

Production Possibility Curve 1 Production Possibility Curve 2

Source: Google Images http://papnet.papanui.school.nz

(i) Compare the growth patterns shown by the two different curves. (2 marks)

(ii) Identify one factor that may cause the shift in the Production
Possibility Curve 2. (1 mark)

(iii) State one reason why production possibility curves bow outward. (1 mark)

(iv) What is the opportunity cost of producing dalo? (1 mark)

(v) State one assumption on which production possibility curve is based. (1 mark)

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Strand 1 (continued)

Part C ESSAY WRITING QUESTION [10 marks]

The production possibility curve (PPC) is used as a tool for many societies in
allocation of economic resource.

With reference to the above statement, discuss:

 three main economic concepts illustrated by the PPC; (3 marks)

 production efficiency, allocative efficiency and trade –off in relation to the

PPC; (3 marks)

 three causes of inward shift of production possibility curve. (3 marks)

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STRAND 2 MICROECONOMICS [26 marks]

Part A Multiple Choice Questions [7 marks]
1. Which of the following production formula listed below is not true?

A. TC= TFC+ TVC B. AVC= TVC/ Price

C. AC=AFC + AVC D. AFC= TFC/output

2. Diseconomies of scale occur if an increase in plant size causes

A. an output decrease.
B. diminishing returns.
C. long -run average cost to decline.
D. long -run average cost to increase.

3. Industries that processes raw material into semi -finished or finished goods are
known as

A. export. B. primary.
C. tertiary. D. secondary.

4. If the income elasticity of demand of a particular good is greater than one,

it is assumed to be a/an ____________ good.

A. luxury B. substitute
C. inferior D. complement

5. If the price elasticity of demand of an item is equal to 1, it is known to be

A. elastic. B. inelastic.
C. unitary. D. perfectly inelastic.

6. Which of the following is a characteristic of a perfectly competitive industry?

A. Small number of sellers B. Ease of entry into market

C. Product differentiation D. Firms are price searchers

7. An oligopoly market structure has

A. one firm. B. two firms.

C. few firms. D. many firms.

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STRAND 2 (continued)

Part B Short Answer Questions [19 marks]

Answer all the questions.

1. Consider the following information.

Production (no of units ) Total Cost Marginal Cost Average Cost

1 10 10 10
2 18 A 9
3 B 3 7
4 28 C 7
5 25 17 D

(i) Compute the missing values. (4 marks)

(ii) State the formula to calculate productivity. (1 mark)

2. Complete the table by writing the missing items for (i) - (iii).

Price Changes Effect on Total Revenue Type of Elasticity

Increases/decrease) (Increase, decrease or no change) of demand
Increase (i) Elastic
(ii) Increase Inelastic
Decrease No change (iii)
(3 marks)

3. Tracey, who owns the only hair saloon on the island of Majuro in the Marshall
Islands, has recently changed her charges from US$4 to a new price of US$6 for
a haircut. Her customer numbers dropped from 300 to 280 in a week.

(i) Calculate the price elasticity of demand for Tracey’s hair saloon using the
above information. (2 marks)

(ii) Explain if it was a good decision to increase the price by Tracey? (2 marks)

4. Define the following concepts:

(i) Natural monopoly

(ii) Cross elasticity

(2 marks)

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5. Examine the graph given below for bagels (doughnut bread) and answer the questions
that follow.

Price MC

$7.00
ATC

$5.50

$4.00

$2.00

MR Demand
0 160 230 280
Quantity (Bagels)

Source: https://econ20abasiceconomics.wordpress.com

(i) Identify the market structure given above. (1 mark)

(ii) What is the equilibrium price and output of the firm? (2 marks)

(iii) Calculate the profit or loss of the firm. (2 marks)

Part C Essay writing [10 marks]

Monopoly is the condition of every successful business.

With reference to the above statement, discuss three:

 barriers of monopoly preventing entry of other firms in the industry; (3 marks)

 characteristics of the above market structure; (3 marks)

 advantages of having this kind of market structure in the economy. (3 marks)

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STRAND 3 MACROECONOMICS [21 marks]

Part A Multiple Choice Questions [5 marks]

1. An approach of determining GDP by calculating how much value is contributed

at each stage of production is known as

A. income.
B. expenditure.
C. value added.
D. export added.

2. A fiscal policy tools used by government to control the fluctuation in the trade
cycle is the

A. interest rate.
B. reserve ratio.
C. national budget.
D. open market operation.

3. _________________ surplus is when total receipts are more than total

expenditure.

A. Capital
B. Budget
C. Revenue
D. Receipts

4. Purchase of bonds and securities by RBF will _________________ money

supply.

A. increases
B. decrease
C. not change
D. fluctuates

5. In the quantity theory of money, MV equals

A. real GDP.
B. nominal GDP.
C. GDP at factor cost.
D. GDP at market price.

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Part B Short Answer Questions [16 marks]

Answer all the questions.

1. Use the model given below on the national income and your knowledge to answer
questions (i) - (iii).

Adapted from: economicshelp.org

(i) Calculate the GDP using expenditure approach. (2 marks)

(ii) List two limitations of GDP as a measure of economic welfare. (2 marks)

(iii) Differentiate between GDP at factor cost and GDP at market price. (2 marks)

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STRAND 3 (continued)

2. Refer to the picture and answer the following questions.

Tax

Tax
Tax
Tax Expenditure
$ $
$ $ $
$ $

Adapted from: signsolutiongroups.com

(i) Describe the type of budget in the picture above. (2 marks)

(ii) Identify the major source of revenue for the government. (1 mark)

(iii) Explain why it may not be healthy for an economy to have a surplus
budget. (2 marks)

3. Define the following concepts:

(i) Crowding out of investment

(ii) Debt servicing

(2 marks)

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4. Use the graph given below to answer the questions that follow.

The Money Market

Money Supply (MS)
Interest
rate (%)

Demand for
Money (MD)

Quantity of Money ($m)

(i) State one reason why money supply curve is vertical. (1 mark)

(ii) Describe one cause for upward shift of demand for money curve (MD). (2 marks)

Part C Essay writing [10 marks]

Money plays an important role in the economic development.

With reference to the above statement, discuss three:

 medium of money supply measurement; (3 marks)

 motives of money demand; (3 marks)

 factors affecting money supply. (3 marks)

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STRAND 4 INTERNATIONAL ECONOMICS [14 marks]

Part A Multiple Choice Questions [3 marks]

1. Foreign reserves are part of

A. current account. B. capital account.
C. balance of Trade. D. foreign currency.

2. A current account deficit implies that the capital account is

A. zero. B. surplus.
C. infinite. D. negative.

3. Money brought to Fiji by immigrants is treated in the balance of payment as

A. an income receipts. B. net services account.
C. an unrequited transfer. D. balance of trade account.

Part B Short Answer Questions [11 marks]

Answer all the questions.
1. Refer to the images of exports and imports of goods and services in Fiji and answer the
question that follows.

Adapted from: corporate.fijitravel.com

(i) Calculate balances on current account. (2 marks)

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2. Identify the economic concept illustrated by the diagram below. (1 mark)

Domestic market Global Market

Economic
Transaction with
rest of the world

Adapted from: slideplayer.com

3. Use the following hypothetical balance of payment data to calculate the value of
non-official capital (X). (2 marks)

Items $M
Balance on current account (deficit) -10
Official capital transaction 3
Non-official capital transaction X

4. Refer to the table given below and answer the questions that follow.

Source: //www.google.com

(i) Explain the type of trade balance US has experienced from 2007 to 2011. (2 marks)
(ii) Suggest one possible measure the US government can take to solve the above
situation. (1 mark)

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STRAND 4 (continued)

5. Study the flow diagram given below and answer the questions that follow.

Source: //www.google.com

(i) State one type of foreign investment shown in the diagram. (1 mark)

(ii) Explain one way in which foreign trade can lead to economic growth. (2 marks)

Part C Essay writing [10 marks]

Multinational companies are the base of economic growth for any developing countries.

With reference to the above statement discuss three:

 features of multinational companies; (3 marks)

 ways in which multinational companies contribute to Fiji’s economic development; (3 marks)

 drawbacks of the multinational companies to Fiji’s economy. (3 marks)

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STRAND 5 DEVELOPMENT ECONOMICS [11 marks]

Part A Multiple Choice Questions [3 marks]

1. Cultural industry involves trade of

A. labour and capital. B. foreign currency.
C. traditional activities. D. goods and services.

2. The type of development that does not deplete natural resource is called
A. future development. B. modern development.
C. sustainable development. D. environmental development.

3. Economic development is
A. concerned with the real GDP.
B. focused on changes in real GDP.
C. the increase in GDP plus quality of life.
D. a measure in real GDP per capita plus production.

Part B Short Answer Questions [8 marks]

Answer all the questions.

1. Study the diagram given below and answer the question that follows.

EDUCATION

BETTER LIVING
HEALTH STANDARDS

HUMAN DEVELOPMENT INDEX (HDI)

Adapted from: researchgate.net

(i) Identify two indicators that measures economic development. (2 marks)

(ii) Explain one relationship between HDI and economic development shown. (2 marks)

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STRAND 5 (continued)

2. Explain one government policy to promote economic development. (2 marks)

3. Explain one importance of Intellectual Property Right (IRP) to society. (2 marks)

Part C Essay writing [10 marks]

Cultural industries are driving factors for local development.

With reference to the above statement, discuss three:

 examples of cultural industries which are currently thriving in our economy; (3 marks)

 challenges associated with the development of cultural industries; (3 marks)

 ways in which cultural industries contribute positively to economic

development in Fiji. (3 marks)

THE END

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COPYRIGHT: MINISTRY OF EDUCATION, HERITAGE & ARTS, FIJI, 2022.