Question 1: The basic economic problem is best solved by a social market economy. Describe this statement pointing out the main characteristics of the social market economy.
Question 2:
a) Outline the major factors, other than price, that influence the demand for a product.
b) Describe the concepts of the given, pointing out how each is measured:
• Price elasticity of demand.
• Price elasticity of supply.
Question 3:
a) Define with illustrations fixed costs and variable costs.
b) By using a diagram describe how the short run average cost curve is derived from the average fixed cost and average variable cost.
Question 4: Describe why the allocation of resources in a perfectly competitive market might be more proficient than in a monopoly market.
Question 5:
a) By using a suitable diagram describe the four stages of the business cycle.
b) Outline the major causes of business cycles in a developed economy.
Question 6:
a) Differentiate with instances between direct and indirect taxes.
b) What do you understand by the term budget deficit?
Question 7:
a) Outline the major effects on the economy of a period of high inflation.
b) Describe ways in which a government might seek to decrease the rate of inflation.
Question 8:
a) Outline the main parts of the balance of payments on current account.
b) Describe the effects of changing exchange rates on business.