May/June 2009

The significance of copper production in Chile

6.3

An economy is able to make agricultural and industrial goods. Explain what may happen to its production possibility curve if the productivity of agricultural workers rises.

Production possibility curves

Explain, with the help of a diagram, how consumer surplus changes when an indirect tax is introduced.

Maximum and minimum prices

Explain why an economy may encounter problems if the internal value of its money is unstable.

Balance of payments

Explain whether the money sent to Kenya by Kenyans working in the UK would count in Kenya’s GDP.

National income statistics

Explain the various ways economists categorise profits and assess whether a newspaper that is handed out free of charge can still make a profit.

7.5

Discuss what might cause inequalities in wage rates in an economy.

Long-run costs and economies of scale

Explain why Airbus is more likely to operate in an imperfect market structure than in a perfect one.

7.6

Explain what factors may result in unemployment.

Price stability and inflation

Discuss whether governments should give up their traditional macroeconomic aims in favour of the alternatives mentioned in the statement above.

Efficiency

Explain the effect on national income when spending on infrastructure increases.

Fiscal policy