econ paper 2 qs+ms

which one of the following best defines deflation?

A continous rise in general price of goods and services

B a situation where the economy grows rapidly

C a decrease in the general price level of goods and services over time

D a period of very low economic activity and high unemployment

C A decrease in the general price level of goods and services

over time

which one of the following is an example of a supply-side policy

A investing in education and training

B asset purchasing by a central bank

C increasing taxes on a high-income earners

D increasing interest rates

A investing in educatin and training

what is meant by demand-pull inflation

inflation caused by too much demand in the economy

causing a rise in general price level

describe one advantage of privatisation for a consumer

one advantage is better quality goods and services

because private companies work harder to make their goods more effeicient

to attract more conusmers

A country has a labour force of 4.3 million with 550,000 people unemployed.

Calculate, to two decimal places, the country’s percentage rate of unemployment. You are advised to show your working

550 000 / 4 300 000 × 100

= 12.79%

Using the diagram below, draw the likely effect of an increase in imports from Europe on the equilibrium exchange rate of the UK pound (£) against the euro (€). Label the new curve, the new equilibrium exchange rate and the new equilibrium quantity.

rightward shift of supply curve

lower equilibirum exchange rate

higher equilibrium quantity

In March 2024, after 15 years of negotiations, India announced a free trade agreement with four European countries: Switzerland, Iceland, Norway and Liechtenstein. The free trade agreement is expected to create one million jobs over the coming years

Explain one advantage of free trade for a business in a country such as Iceland.

one advantage is lower input costs

this is because without tarrifs or trade barriers, a business can source raw materials more cheaply from other countries

reducing production costs

The South Korean Government is to introduce deregulation to boost the growth of industries, such as artificial intelligence (AI) and biotechnology. The country will create a regulation-free zone where firms can develop technologies without any barriers.

With reference to the data above and your knowledge of economics, analyse the advantages of deregulation for a country such as South Korea

Which one of the following describes a trade bloc?

A group of countries that use the same currency

B A group of countries that have the same tax rates

C A group of countries that have the same language

D A group of countries that reduce trade barriers between themselves

D a group of countries that reduce trade barriers between themselves

Which one of the following best describes the role of currency speculators?

A They invest in government bonds

B They trade currencies to profit from changes in exchange rates

C They lend money to countries at low interest rates

D They keep exchange rates stable by fixing the currency

B they trade currencies to profit from changes in exchange rates

State one possible role of the World Trade Organization (WTO).

trade negotiations

settling trade disputes

what is meant by economic growth

an increase in the level of output

by a nation

The Swedish economy has been in recession since 2023 and is expected to remain in recession until 2025. As a result, the demand for labour has fallen which has caused unemployment to increase.

Explain one impact of rising unemployment on government spending on benefits in a country such as Sweden.

one impact is an increase in governemnet spending on benefit payments

the government will need to allocate more funds to unemployment benefits

to support the increasing number of those without work

In 2024, the European Union (EU) increased the tariff on all electric vehicles imported from China from 10% to 37.6%.

Using the diagram below, draw the effects of the new tariff on the equilibrium price and quantity of electric vehicles imported into the EU from China. Label the new curve, the new equilibrium price and new equilibrium quantity.

left shift for supply

higher equilibrium price

lower equilibirum quantity

In August 2024, the central bank in New Zealand reduced the official base rate from 5.5% to 5.25%. It was the first cut since March 2020. New Zealand was no longer in recession but economic conditions were still difficult. An economist from the Bank of New Zealand (BNZ) said a reduction was already overdue. “The New Zealand economy is struggling under the pressure of extremely tight monetary conditions, rising unemployment, reduced investment activity and weak consumer confidence.”

With reference to the data above and your knowledge of economics, assess how effective monetary policy is likely to be in increasing output for a country such as New Zealand