ECONOMICS EXAM – 2

INSTRUCTIONS: Please READ the instructions carefully and answer each question appropriately.

Exam length:1 and a half hours

1. (a) Classify the items listed below as EITHER ‘goods’ OR ‘services’.

(i) Hairdressing (1 mark)

(ii) Hairdryers (1 mark)

(iii) Tourism (1 mark)

(iv) Island tours (1 mark)

(v) Tractors (1 mark)

(b) Explain the THREE resource allocation decisions that are often made under a free market

system. (6 marks)

2. (a) Define EACH of the following terms:

(i) Monetary policy (2 marks)

(ii) Fiscal policy (2 marks)

3. (a) Define EACH of the following terms:

(i) Barter (2 marks)

(ii) Money (2 marks)

(b) List THREE characteristics of money. (3 marks)

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4. (a) Identify the central problem in economics. (1 mark)

(b) Define EACH of the following terms:

(i) Need (2 marks)

(ii) Want (2 marks)

(iii) Opportunity cost (2 marks)

5. (a) Identify two determinants of the demand for laptop computers. (2marks_

(b) Explain each determinant of demand stated. (4marks)

(c) Using one of the determinants of demand for laptop computers given in part a above, explain
how this determinant can cause an increase in demand. (6 marks)

(d) With the aid of a diagram, explain the effect of a fall in price on quantity demanded. (3 marks)