Thursday, October 11, 2018

Highly Likely Essay Questions for Section B of Paper 2 Economics CIE (CAIE)

Highly anticipated essay questions for 9708/22 this coming Wednesday (17th October):

1. How a production possibility curve can be used to illustrate economic ideas like opportunity cost, rising opportunity cost (these two are different and the latter is becoming more popular in the recent), unemployment, economic growth and unattainable position
2. Whether market economy or planned economy is more desirable/ likely to improve consumer well-being/ better in making decisions/ better in allocating resources
3.  Functions of money and whether money is able to perform all the four functions in an economy that is experiencing high rate of inflation
4. What is meant by equilibrium price and quantity and how a change in demand/ supply would alter both equilibrium

5. The right type of elasticity to determine whether two goods are substitutes or complements/ normal goods or inferior goods

6. Whether PED/ XED/ YED would be useful for firms and governments (I won't do these essays if I were you!)

7. Whether the problem of demerit goods can be dealt with an indirect tax and banning/ better information/ minimum price

8. Whether the problem of merit goods can be dealt with subsidies and maximum price

9. Whether the imposition of maximum price would be able to help low income families 

10. Using AD/ AS diagrams, explain how a fall in exchange rate/ depreciation can cause both demand-pull and cost-push inflation

11. Inter-relationships between the inflation rate, exchange rate and balance of payments

12. Whether floating or fixed exchange rate system is more desirable

13. Terms of trade and whether a fall/ increase in terms of trade is beneficial to an economy

14. Comparative advantage and how an economy can consume outside its own PPC. Illustrate with trading possibility curve

15. Fiscal/ monetary/ supply-side policies to achieve macroeconomic objectives like higher growth, lower unemployment and lower inflation

16. Expenditure-dampening vs. expenditure-switching policies in reducing current account deficit

Several important observations:
a) There is somewhat an observable trend in Paper 2. When the examination board found a new method/ technique or even question to ask, they will 'toy around' with the new concept for several exams/ years before moving on to other new techniques or questions. For instance 'increasing opportunity cost' makes its first appearance in W16 (V3). Then it was asked again in W17 (V3) and now in Feb/ March 2018 (V2)

(b) There is also an indicator that questions may no longer be asked according to chapter/ cluster. This may pose some challenges for candidates that tend to specialise in micro/ macro (which I strongly forbid!!) In W17 (V3), part (a) was about PPC (Chapter 1). However its part (b) was about supply-side policies (Chapter 5). Another one is the recent Feb/ March 2018 paper. Part (a) was about price elasticity of supply (Chapter 2) but its part (b) was regarding supply-side policies (Chapter 5)

(c) Effectiveness of fiscal/ monetary/ supply-side policies to achieve price stability is extremely popular in recent years (let's hope that the trend stays until your exam)

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