2016 EXAMINATIONS ACCOUNTING TECHNICIAN PROGRAMME PAPER TC 5: ECONOMICS

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EXAMINATION NO. 2016 EXAMINATIONS ACCOUNTING TECHNICIAN PROGRAMME PAPER TC 5: ECONOMICS FRIDAY 3 JUNE 2016 TIME ALLOWED: 3 HOURS 2:00 PM - 5:00 PM INSTRUCTIONS 1.

1 EXAMINATION NO EXAMINATIONS ACCOUNTING TECHNICIAN PROGRAMME PAPER TC 5: ECONOMICS FRIDAY 3 JUNE 2016 TIME ALLOWED: 3 HOURS 2:00 PM - 5:00 PM INSTRUCTIONS 1. You are allowed 15 minutes reading time before the examination begins during which you should read the question paper and, if you wish, make annotations on the question paper. However, you are not allowed, under any circumstances, to open the answer book and start writing or use your calculator during this reading time. 2. Number of questions on paper The paper is divided into sections A and B. 4. FIVE questions ONLY to be answered; TWO from Section A and THREE from Section B. 5. Each question carries 20 marks. 6. Begin each answer on a fresh page. 7. DO NOT OPEN THIS PAPER UNTIL YOU ARE INSTRUCTED BY THE INVIGILATOR. This question paper contains 6 pages This question paper must not be removed from the examination hall

2 SECTION A Answer two questions only from this section 1. (a) List the three questions that any resource allocation mechanism must answer. 3 Marks (b) Describe the three primary methods of resource allocation that have evolved to answer the three questions listed in 1(a), above. 6 Marks (c) (d) What are the three primary ways in which resources are owned? Describe each one of them. 9 Marks Explain any two economic concepts illustrated by the production possibilities boundary. 2 Marks 2. (a) Suppose that demand is given by the equation, where is quantity demanded, and P is the price of the goods. Supply is described by the equation where is quantity supplied. Calculate: (i) the equilibrium price; 3 Marks (ii) the quantity. 3 Marks (b) Professor Phiri observes the following equilibrium price quantity combinations in the market for restaurant meals in Blantyre city over a four year period as follows: Year Price (K) He concludes that the market defies the law of demand. Is he right? Give a reason for your answer. Quantity (meals) Marks (c) State the law of diminishing marginal utility. 3 Marks (d) Mention two kinds of change which will shift or rotate the budget line. 2 Marks (e) State three limitations of the marginal productivity theory. 6 Marks Page 2 of 6

3 3. (a) What does growth of a firm refer to? 1 Mark (b) State five reasons why firms grow. 5 Marks (c) What are the main means of achieving growth in a firm? 2 Marks (d) State four benefits of horizontal integration. 4 Marks (e) What are the four economic advantages of small firms? 4 Marks (f) Explain two types of labour immobility. 4 Marks Continued/ Page 3 of 6

4 SECTION B Answer three questions only from this section 4. (a) Define the term economic growth. 2 Marks (b) Define the term aggregate expenditures. 2 Marks (c) Using carefully labelled aggregate demand and supply diagrams, explain what will happen to the equilibrium price level and real GDP if: (i) both aggregate demand and aggregate supply increase. 6 Marks (ii) aggregate demand increases and aggregate supply decreases. 6 Marks (d) List any four expenditures that influence aggregate demand. 4 Marks 5. (a) Define the term business cycle. 2 Marks (b) Name and explain any three phases of a business cycle. 6 Marks (c) Define the term unemployment rate. 2 Marks (d) Suppose 500 people were surveyed, and of those 500, 450 were working full time. Of the 50 not working, 10 were full-time college students, 20 were retired, 5 were under 16 years of age, 5 had stopped looking for work because they believed there were no jobs for them and 10 were actively looking for work. (i) How many of the 500 people surveyed are in the labour force? 2 Marks (ii) What is the unemployment rate among the 500 people surveyed? 2 Marks (e) Use a supply and demand diagram to illustrate and explain the cost-push inflation caused by a labour union successfully negotiating for a higher wage. 6 Marks Continued/ Page 4 of 6

5 6. (a) State the difference between comparative advantage and absolute advantage in international trade. 4 Marks (b) Use the following table below to answer the questions which follow it: Amount of Beef or number of Computers Produced by One Worker in a Day Canada Japan Beef 6 5 Computers 2 4 (i) (ii) (iii) (iv) Calculate the opportunity cost of producing beef and computers in both countries. 4 Marks Which country has the absolute advantage in beef production and which one has the absolute advantage in computer production? 2 Marks Which country has the comparative advantage in beef production and which one has the comparative advantage in computer production? 2 Marks If each country specializes in a product in which it has a comparative advantage, how much of each product will it produce? 4 Marks (c) Define the term terms of trade. 2 Marks (d) What determines the limits of the terms of trade? 2 Marks Continued/ Page 5 of 6

6 7. (a) Define M1 money supply. 2 Marks (b) Define M2 money supply. 2 Marks (c) Study carefully the table below and answer the questions that follow it. Money Component Traveller s cheques Currency Small-denomination time deposits Savings deposits Demand deposits Amount (K) 100,000 20,000 35, , ,000 From the table above, isolate the components of: (i) M1 money supply; 3 Marks (ii) M2 money supply. 2 Marks (iii) (1) What is the value of M1 money supply? 3 Marks (2) What is the value of M2 money supply? 3 Marks (d) State any five characteristics of money. 5 Marks (TOTAL 20 MARKS) E N D Page 6 of 6

Specific Learning Goals/Benchmarks and Student Assessment. AP Macroeconomics

Unit Bartram Trail HS Specific Learning Goals/Benchmarks and Student Assessment AP Macroeconomics # Benchmark Assessment 1 1 1 2 1 3 1 4 2 5 2 6 3 7 3 8 3 9 3 10 3 11 4 12 4 13 4 14 4 15 4 16 4 17 Define