2017 and 2018

2017
4. a) Define EACH of the following terms:

i) Economic growth
Sustained increase in the country’s productivity recognized by a sustained increase in
national income over a period of time it can be recognized as short term growth or long term
growth.
ii) Economic development (4 marks)
This is a process by which an economy experience is an increase in real output per head and
also major structural changes such as infrastructure development and relocation of resources.
It also involves changes in attitudes equality and eradication of absolute poverty.
b) State ONE measure of Economic Growth (1 marks)
Qualitative measures- literacy, health, freedom etc. to be used as output.
c) State TWO factors that contribute to an economic recession (6 marks)
• Decrease in spending by public and private sectors will cause GDP to fall thus contributing to
economic recession.
• Reduced consumer confidence - If consumers believe the economy is bad and have no confidence
in it, they are less likely to spend money and save causing the spending to decrease which means less
GDP.
d) Select ONE developed and ONE developing economy and describe ONE economic difference
between these two economies
Switzerland is a developed country with almost free healthcare and education, They have a high literacy
rate and freedom, meaning they have a high measurement of qualitative economic growth. They also have
high infrastructures measures and long-life expectancy with a GDP per capital of 86,601.56 USD.
Compared to India, a developing country with a GDP per capital of 1,900.71 USD, it is almost 45 times
less. There is no freedom for women and only rich can afford education and healthcare. The is almost no
modern infrastructures and a lot of areas of slums.
5. a) Define the term unemployment (2 marks)

An unemployed person or unemployment is persons in the country who are willing to work, unable to
work or actively seeking to work but unable to fine work.
b) List FIVE types of unemployment (5 marks)
Search unemployment, structural unemployment, technological unemployment, seasonal unemployment
and cyclical unemployment
c) Explain how any FOUR types of unemployment in b) occur (8 marks)
Seasonal unemployment- this is when people lose their job for certain type of labour fluctuates with the
seasons of the year as the demand for it decreases example a tourism job.
Technological unemployment this is when new technologies or machines replaces a person's job Because
the films output and profit increases but demand for labor falls.
Structural unemployment refers to people who are made jobless because of the changes in structure of
demand development, capital to labor substitution or a layoff of workers, this reduces the demand for
labor in industry.
Cyclical unemployment is when there is a general deficiency of aggregate demand resulting in general
deficiency for demand for labour in the economy, this can happen when there's a recession
d) In the table below justify your choice of TWO persons who would be considered unemployed (5
marks)
Sruart and Althea can be considered unemployed because this is considered a frictional unemployment or
search unemployment as they are moving between jobs and searching.
2018
4. (a) Define the term ‘fiscal policy’ (2 marks)
Fiscal policy is the actions and decisions taken by the government to

create the conditions necessary to attain economic objectives of the
country such as economic growth, stable prices, full employment
and favorable BOP. Instruments of the fiscal policy is government
spending and taxation to influence the level of economic activity in
the economy.
List THREE types of unemployment (3 marks)

(b)
Frictional unemployment, structural unemployment and seasonal
unemployment
Explain TWO types of inflation. (6 marks)

(c)
1.Demand Pull Inflation- caused by excess demand of all sectors in
the economy when the economy is at or close to full employment.
This creates shortages of products to meet the extra demand thus
increasing prices. This can be caused by a fall in interest rates and
tax, money inflation and expectations
2. Cost Push Inflation- when firms respond to rising costs of

production by increasing prices to meet costs or protect profit
margin a cost push inflation can occur. Cost may increase for the
following reasons: increase in labour cost, higher indirect tax and
components cost.
Determine the component of gross domestic product (GDP) that is

(d) affected by EACH of the following activities.
(i) Your aunt buys a house.

Investment
(ii) A family buys a new car
consumption
(iii) Farmer Joe grows tomatoes for his family
Investment
(4 marks)
(iv) Domestically made sugar is sold to a bakery in a foreign
country.
Export
Total 15 marks

2017 and 2018

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2017

4. a) Define EACH of the following terms:

5. a) Define the term unemployment (2 marks)

Fiscal policy is the actions and decisions taken by the government to

List THREE types of unemployment (3 marks)

Explain TWO types of inflation. (6 marks)

2. Cost Push Inflation- when firms respond to rising costs of

Determine the component of gross domestic product (GDP) that is

(i) Your aunt buys a house.

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