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ECONOMICS DEPARTMENT

Objective:

To assist students identify the various topics and corresponding sections from which the 8 Questions in Paper are selected from.
To propose sample questions from the various sections

2020 REVISION QUESTIONS

Compiled by Dr Ndang Farinkia

January 2020 ADVANCED LEVEL ECONOMICS PAPER 2

Time Allowed: THREE HOURS (3Hrs)

Paper 2 is 40% of the exams and the total number of questions will be 08

QUESTIONS and candidates are required to attempt 5 Questions selecting at least 2 from either A or B.

Students check list

N^o	Number/Tick	*SECTION A*
		Microeconomics: TOPICS
1)		Nature and Scope of Economics	Question 1
2)		Economic Systems and Allocation of Resources
3)		Production and it’s organization, Combination of Factors
4)		Business Organisation
5)		Population
6)		Price Theory (DD & SS)	Question 2
7)		Theory of the firm (Cost, Revenue, Profit / Loss )	Question 3
8)		Theory of Income Distribution	Question 4
		*SECTION B*
		TOPICS
1)		National Income	Question 5
2)		Public Finance and Taxation, Budget, PSNCR, National Debt	Question 6
3)		Money and Banking	Question 7
4)		Inflation & Unemployment	Question 8
5)		Government economic objectives and policies	Question 8
6)		International Trade, BOP, Exchange Rates	Question 8
7)		Economic Growth and Development, Characteristics of Developing countries	Question 8
8)

Candidates should expect question from 1-8 from the following areas as arranged below

Microeconomics

QUESTION ONE

Topic: Nature and Scope of Economics

1) “Economics cannot be considered as a science”. Do you agree or disagree? (20marks)

2) “Even though meteorology and economics are both sciences, the meteorologists are more exact in predicting weather changes than economists can predict what will happen to an economy”. Discuss. (20mks)

3) The study of economics centres on “scarcity” and “choice”. Discuss. (20 mks)

4) Explain the significance of the “concept of opportunity cost” to your government in deciding how to use its scarce resources. (20 mks)

5) Explain the circumstances under which;

i) It is possible

ii) Impossible for an economy to produce both capital and consumer goods simultaneously (10+10 mks)

- Topic: Economic systems and Allocation of resources.

6) Which problems are likely to be faced by countries shifting from planned to market economy (or counties in tradition)? (20 mks)

7) What are the advantages and disadvantages of government provision of Health care and Education services at Zero price? (20 mks)

8) What role does the government play in a mixed economy? (20 mks)

9) What is the price mechanism? To what extent is it a means of allocating scarce resources? (20 mks)

- Topic: Population

10) How might changes in population affect the standard of living in a country? (20 mks)

11) Critically examine the relevance of market theory to your country. (20 mks)

12) Population explosion is a major handicap to economic growth in Cameroon. Explain why you agree or Disagree with this statement. (20 mks)

- Topic: Production and it’s organisation, combination of factors.

13) How and why is the domestic mobility of Labour encouraged? (20 mks)

14) Examine the economic effects or mergers to an economy like Cameroon. (20 mks)

15) What determines (a) the productivity, and (b) the size of a country’s labour force? (10+10 mks)

16) What are the beneficial claims of Division of Labour? (20 mks)

17) Identify the arguments for and against the government of your country intervening in the location of industries. (20 mks)

18) “Diseconomies of scale” are two sides of the same coin. Discuss.(20 mks)

19) Examine critically the arguments for and against the Cameroon government privatization of some of its businesses in recent times. (20 mks)

QUESTION 2

- Topic: Price Theory (DD & SS)

1) Explain the meaning of:

(a) PED

(b) YED

2) Define elasticity of supply. Why might one expect the elasticity of supply of a commodity to be greater in the long-run than in the short-run? (20 mks)

3) “An indirect tax might raise prices while a subsidy might lower prices”. Show to what extent these price changes depend on elasticity of demand. (20 mks)

4) The distribution of the burden of an indirect tax depends on the elasticity of demand for the commodity taxes. Discuss this assertion with the use of appropriate diagrams. (20 mks)

5) What are the economic consequences or government institution of;

i) Price ceiling , and

ii) Price floor? (10+10mks)

6) Critically determine the factors that will influence the demand for transport (travelling) in Cameroon (20 mks)

7) What is income elasticity of demand? How significant is the YED to the government and individuals in influencing sports? (8+12 mks)

8) Examine critically the factors that will influence the supply of housing in Cameroon. (20 mks)

9) Using demand and supply analysis, examine the problems generally faced by agricultural or farm products. Assess the likely consequences of government attempts to remedy these problems. (12+8 mks)

10) Analyse the various ways by which a greater degree of price stability might be achieved for primary products. (20 mks)

11) Explain how and why the prices of agricultural products tend to fluctuate more than those of manufactured products and explain ways by which the prices of farm products can be stabilized. (12+8 mks)

12) Demonstrate with the aid of a diagram how buffer stocks might be used to achieve a greater measure of stability in the prices of agricultural goods and explain the problems associated with buffer stocks.(12+8mk)

QUESTION THREE

- Topic: Theory of the firm

1) Discuss the relevance of average and marginal cost for the determination of price in the short run and long run. (20 mks)

2) What are the main features of monopolistic competition? How is the long run equilibrium of the firm determined in this type of market? (20 mks)

3) Compare the long-run equilibrium competition, monopolistic competition and monopoly market forms (20 mks)

4) Distinguish between monopoly and monopolistic completion. In what areas of activities and in what ways might monopolies be beneficial to your economy? (20 mks)

5) Distinguish between perfect competition and monopoly. Explain why productive and locative efficiencies are achieved in perfect competition but not in monopoly. (20 mks)

6) “In economic theory, competition between firms is more rigorans under perfect competition than under imperfect competition but in practice the reverse is true? Comment. (20 mks)

7) Why is non-price competition predominant in markets which are dominated by a few large firms? What forms does non-price competition often take? (20 mks)

8) State briefly what is meant by economies of large scale production and explain how these may lead to the growth of monopoly power in an industry. (20 mks)

9) With the aid of suitable diagrams, show how the law of variable proportions can be used to explain the traditional u-shapes of a firm’s cost curves. (20 mks)

10) What problems arise in the pricing decisions of nationalized industries? (20 mks)

11) What do you understand by Average cost pricing and marginal cost pricing? With the aid of a diagram show the effect of these price policies on a nationalized industry. (20 mks)

12) If a public utility corporation like AES Sonel was to produce in Public internet, which price will it charge? (20 mks)

13) Explain the meaning of product differentiation and show its importance to firms (20 mks)

14) Under what conditions will a firm continue to produce at a loss? (20 mks)

15) The supply curve of a firm is its marginal cost curve explain (20 mks)

16) Why are a firm’s profits maximarised when marginal cost equals, marginal revenue? In what circumstances might a firm use criteria other than profit maximization for determine the price of its product? (20 mks)

QUESTION FOUR

- Topic: Theory of income Distribution.

1) Suggest reasons for inter-industrial wage differentials. Why do wages also tend to differ within the same industry? (20 mks)

2) Discuss the principal goals of trade union activity. What are the main limitations on their ability to achieve these goals? (12+8 mks)

3) Discuss the economic basis of the differences that exist between the earnings of computer engineers and graduate teachers. Examine the long-term implications of these differences (12+8 mks)

4) What reasons are likely to determine the ability of a trade union to gain large wage increases for its members? What factors will likely limit their ability to do so? (12+8 mks)

5) Discuss the relationship between the elasticity of supply of a factor and economic rents (12+8mks)

6) Distinguish between economic rents and transfer earnings. (20Mks)

7) With reference to examples, explain what determines the economic rents received by factors of production (8+12 mks)

8) “Economic rent is a surplus but profit is a residue”. Comment on the validity of this statement (20 mks)

9) In what sense can the term “rent” be applied to labour, capital, enterprise as well as to land? (20 mks)

10) “Shops in some city-centers in Cameroon charge higher prices because land in these city-centers is more expensive”. Comment (20mks)

11) “Rent is price determined and not price determining “. Discuss (20 mks)

12) Either using the loanable funds theory or the liquidity preference theory, explain how the rate of interest is determined (20 mks)

13) Critically examine the role of profit in an economy. (20 mks)

SECTION B

Macroeconomics

QUESTION FIVE

Topic: National income:

1) Define National Income and explain how it is measured. (2+18 mks)

2) Distinguish between money national income and real national income. Outline the importance or real national income in economic planning (12+8 mks)

3) National income = National output = National Expenditure. Discuss (20 mks)

4) Define real Nation income. What difficulties arise in measuring it? (2+18mks)

5) Define the terms:

A) Marginal propensity to save

B) Average propensity to save what determines the level of savings in an economy? (3+3+14 mks)

6) Distinguish between the marginal propensity to consume and Average propensity to consume. What are the Determinants of consumption? (4+16 mks)

7) Examine the factors that influence private sector investment (20 mks)

8) Consider the effect on the National Income of a significant increase in exports. (20 mks)

9) Critically examine the view that “savings always equal investments” (20 mks)

10) Define “the multiplier”. Discuss the effect of an increase in investment in conditions of;

A) Full employment

B) Unemployment (4+8+8 mks)

11) Explain the following:

A) Inflationary gap

B) Deflationary gap

Explain the measures that can be used to close each gap (4+4+6+6 mks)

12) Explain what is meant by “withdrawals” from the circular flow of income. On what does the size of these withdrawals depend? (12+8 mks)

13) Discuss the interrelationship between income, consumption and investment and show how a change in each of them might affect the other two (20 mks)

QUESTION SIX

Topics: Money, Banking, Inflation, Unemployment.

1) What are the functions of money? How are these affected by the existence of inflation? (12+8 mks)

2) Explain what you understand by the quantity theory of money. What are its limitations? (12+8 mks)

3) Why is the control of inflation a common objective of government policy? What if any, might be said in favour of inflation? (12+8 mks)

4) What are the major determinants of the demand for money? What changes in the relative importance of these determinants are likely to occur as a result of rising prices? (12+8 mks)

5) Explain the ways by which the government of Cameroon can control the supply of money in the country (20 mks)

6) How does the central Bank like BEAC control the credit policy of the commercial banks? (20 mks)

7) Explain how the government of your country can use “Fiscal policy” and “monetary policy to achieve its desired economic objectives (10 +10 mks)

8) Using the Philip’s curve, explain the relationship between inflation and unemployment (20 mks)

9) Explain the various instruments the government can used to reduce the rate of unemployment in Cameroon (20 mks)

10) Distinguish between Discretionary fiscal policy and Build-in-automatic stabilizers. What are the limitations of automatic stabilizers? (12+8 mks)

QUESTION SEVEN

- Topic: Public Finance, Taxation, National Debt, Budget PSNCR or PSBR.

1) Critically examine the main sources of resources and areas of expenditure of the government of your country. (10+10 mks)

2) Define fiscal policy. What are the relative advantages and disadvantages of fiscal policy?(4+8+8 mks)

3) Distinguish between PSNCR or PSBR and the National Debt. (10+10 mks)

4) What is a Budget? Explain the economic significance of the budget (4+16 mks)

5) Discuss the functions of taxation and the effects of imposing taxes (10+10 mks)

6) Define VAT. What are the relative advantages and disadvantages of the introduction of VAT by your government? (4+8+8 mks)

QUESTION EIGHT

Topic: International trade, BOP, Exchange rates

1) Explain the theory of comparative advantage. What are the difficulties and benefits of international trade? (8+6+6 mks)

2) Discuss the extent to which the theory of comparative advantage explains the pattern of international trade (20 mks)

3) Discuss the forms that import restrictions may take. Evaluate the arguments for and against protectionism (8+6+6 mks)

4) Asses the advantages and disadvantages consumers may experience as a result of import restrictions (10+10 mks)

5) Discuss the meaning and causes of a favourable movement in the terms of trade. Assess the effect of a favourable movement in the terms of trade on a country’s current account on the BOP position (2+8+10mks)

6) Discuss the possible effects on the living standards of a country’s inhabitants of a change in the country’s terms of trade. (20 mks)

7) Distinguish between a fixed and floating exchange rate. Discuss whether a country would operate a fixed or a floating exchange rate (8+6+6 mks)

8) Distinguish between a “Revaluation and “Appreciation” of currency. Explain how each of the concepts can help in correcting a BOP surplus (8+12 mks)

9) Assess the cost Benefits and Cost of Economic growth. (10+10 mks)

10) Explain what could course economic growth in a country with unemployed resources? Discuss the causes of an increase in a country’s productive protection (8+12 mks)

It is better to do intensive revision and have confidence before the exams than to speculate and be in doubts

Good Luck

No Knowledge is wasted, for learning never stops.

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Assembled by

NDANG Gilbert FARINKIA, PhD

18^TH February, 2020

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