Friday, October 17, 2014

Forecast Essay Questions for CIE Economics AS Paper 2

What Will Most Likely Appear For Microeconomics?

Chapter 1: Basic Economic Ideas
1. Production possibility curve and economic concepts that can be related to it e.g. growth, unemployment of resources, opportunity cost, international trade, investment in technology and others

2. Why mixed economy is the most common economic system or the desirability of mixed economy as compared to pure capitalism and socialism

Chapter 2: The Price System and the Theory of the Firm
1. Price elasticity of demand and how it is being used to increase total revenue

Chapter 3: Government Intervention in the Price System
1. Comparison between the two types of market failure e.g. public goods vs. merit goods and demerit goods vs. merit goods. Careful in the way the question is being phrased. May confuse candidates with the terms like private, external and social benefits or private, external and social costs

2. Comparing two economic policies and their relative effectiveness in increasing the production/ consumption of merit goods or reducing the production/ consumption of demerit goods

What Will Most Likely Appear For Macroeconomics?
Chapter 4: International trade
1. Establishment of trading blocs, their merits and demerits

2. Advantages and disadvantages of imposing trade barriers

3. Principle of comparative advantage and its limitations

Chapter 5: Theory and Measurement in the Macroeconomy
1. Difference between the Claimant Count and Labour Force Survey (LFS) method of measuring unemployment. Also candidates must know their respective limitations

2. List of factors that can influence the size of a labour force and their productivity

3. The construction of CPI and what are some of the problems

Chapter 6: Macroeconomic Problems
1. Knowing the difference between demand-pull and cost-push inflation. Being aware that monetary inflation is actually a form of demand-pull inflation and imported inflation is a kind of cost-push inflation. Must also know factors that can influence all these inflations

2. Difference between anticipated and unanticipated inflation

3. Factors that can cause the exchange rate to fluctuate such as interest rate, inflation rate, speculative actions and others

4. Which is more desirable for a country? Currency appreciation or depreciation? Must know merits and demerits for both

5. Comparing between two macroeconomic issues and which matters more to the government e.g. high inflation or large current account deficit, appreciation or high inflation, depreciation or worsening terms of trade and others

Chapter 7: Macroeconomic Policies
1. Comparing between expenditure-dampening and expenditure-switching policies to fix the problem of large current account deficit. Candidates can propose any policies under both and must also know their general limitations

2. Comparing SPECIFICALLY two economic policies to fix the problem of current account deficit e.g. tariffs vs. quota or tariffs vs. currency devaluation etc

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