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6.
Is
the
existence
of
monopoly
in
an
industry
likely
to
improve
or
worsen
resource
allocation?
7.
Why
are
many
industries,
such
as
car
manufacturing,
becoming
more
oligopolistic?
How
are
the
price
and
output
decisions
of
firms
affected
by
this
trend?
8.
Economic
theory
makes
certain
assumptions
about
market
conditions,
in
order
to
study
how
firms
decide
on
prices
and
output.
Are
these
assumptions
realistic,
and
do
firms
always
behave
in
the
real
world
as
Economics
textbooks
predict?
9.
Briefly
explain
what
economists
mean
by
the
word
market.
What
kind
of
problems
are
markets
good
at
solving,
and
what
are
they
bad
at
solving?
10.
Why
does
there
appear
to
be
a
movement
towards
oligopoly
in
certain
markets?
How
does
this
movement
affect
the
way
in
which
producers
make
decisions,
and
how
does
it
affect
the
welfare
of
consumers?
11.
Evaluate
the
roles
of
markets
and
planning
in
an
economy
today?
How
are
these
roles
likely
to
change?
12.
What
are
the
assumptions
behind
the
model
of
a
perfectly
competitive
industry
in
long-run
equilibrium?
Why
do
economists
make
assumptions
of
this
sort?
Are
such
assump-tions
realistic?
13.
(a)
Why
are
profits
important
in
a
market
economy?
(b)
What
problems
might
a
country
experience
if
it
tries
to
use
the
profit
motive
to
produce
everything?
14.
(a)
What
are
economies
of
scale,
and
why
have
they
become
so
important
in
modern
economics?
(b)
In
view
of
this
importance,
why
do
so
many
small
enterprises
operate
successfully
in
the
world
today?
15.
(a)
Explain
what
externalities
are
and
how
they
may
arise.
(b)
Discuss
whether
governments
should
always
involve
themselves
in
markets
with
substantial
externalities.
16.
(a)
What
are
the
main
features
of
an
oligopolistic
market?
(b)
Do
oligopolies
work
in
favor
of,
or
against
the
interest
of
consumers?
17.
(a)
What
do
economists
mean
by
externalities
or
spillover
effects?
(b)
How
does
an
understanding
of
externalities
(spillover
effects)
assists
economists
in
analyzing
environmental
problems?
18.
(a)
What
are
natural
monopolies
and
why
are
they
considered
a
danger
if
left
unregulated?
(b)
Is
nationalization
of
natural
monopolies
the
best
method
of
improving
their
economic
efficiency?
IB
Economics
City
Honors
School
2015-2016
19.
(a)
Distinguish
between
private
costs
and
benefits
and
social
costs
and
benefits.
(8)
(b)
Explain
how
an
increase
in
the
number
of
cars
n
the
roads
of
a
country
might
lead
to
a
misallocation
of
resources.
(8)
(c)
Evaluate
the
ways
in
which
a
government
might
remedy
this
misallocation.
(9)
20.
(a)
Carefully
explain
what
is
it
that
price,
income
and
cross
elasticities
of
demand
are
meant
to
measure.
(b)
Discuss
the
practical
importance
of
the
concept
of
price
elasticity
of
demand
for
(i)
business
organizations
(ii)
the
government
21.
(a)
Why
do
environmental
issues
cause
problems
to
economists?
(b)
What
solutions
might
an
economist
suggest
to
the
problem
of
overfishing?
22.
(a)
State
the
law
of
demand
and
distinguish
between
movements
along
the
demand
curve
and
shifts
of
the
demand
curve.
(10)
(b)
Explain,
with
the
help
of
diagrams,
the
effect
of
an
increase
in
the
price
of
petrol
is
likely
to
have
on
(i)
The
market
for
cars.
(ii)
The
market
for
coal.
(15)
23.
Monopoly
price
is
higher
and
output
smaller
than
is
socially
ideal.
The
public
is
a
victim.
(J.K.
Galbraith,
1974)
(a)
Explain
to
economic
reasoning
behind
the
statement
that
monopoly
price
is
higher
and
output
smaller
than
is
socially
ideal.
(12)
(b)
Do
you
agree
that
the
public
is
always
the
victim
of
monopoly?
Justify
your
answer.
(13)
24.
(a)
Why
are
environmental
problems
considered
to
be
an
example
of
market
failure?
(10)
(b)
To
what
extent
can
government
intervention
correct
this
failure?
25.
(a)
Under
what
conditions
is
price
discrimination
possible
and
profitable?
(12)
(b)
Who
gains
and
who
loses
from
price
discrimination?
Illustrate
your
answer
with
examples.
(13)
26.
(a)
Using
suitable
diagrams,
explain
why
there
is
likely
to
be
an
absence
of
long
run
economic
profits
in
perfect
competition.
(12)
(b)
To
what
extent
might
consumers
benefit
from
increased
competition
between
firms?
(13)
27.
(a)
How
does
a
monopoly
maintain
supernormal
(or
abnormal)
profit
in
the
long
run?
(12)
(b)
Is
monopoly
always
undesirable?
(13)
28.
Discuss
and
evaluate
the
proposition
that
perfect
competition
is
a
more
efficient
market
structure
than
monopoly.
29.
(a)
Why
is
pollution
an
example
of
market
failure?
(10)
(b)
To
what
extent
can
the
market
system
protect
the
environment?
(15)
30.
(a)
What
does
an
economist
mean
by
efficiency
in
the
operation
of
a
firm?
(10)
IB
Economics
City
Honors
School
2015-2016
(b)
Discuss
whether
the
achievement
of
efficiency
is
possible
and
desirable.
(15)
31.
(a)
What
role
do
prices
play
in
the
allocation
of
resources
in
free
market
economics?
(b)
Evaluate
the
options
available
to
governments
to
overcome
the
failure
of
markets
arising
from
the
production
and
consumption
of
demerit
goods.
Illustrate
your
answer
with
the
examples
where
possible.
32.
(a)
Outline
the
ways
in
which
monopoly
power
might
arise.
(b)
Evaluate
the
extent
to
which
governments
should
seek
to
control
the
growth
of
monopoly
power.
33.
National
policies
and
international
agreements
must
be
implemented
in
order
to
reduce
global
environmental
problems.
(a)
Using
the
concepts
of
market
failure,
explain
the
statement
above
from
an
economists
point
of
view.
(b)
With
references
to
both
national
policies
and
international
agreements,
present
and
evaluate
three
solutions
that
could
be
recommended
by
economists.
34.
Discuss
the
economic
arguments
for
and
against
imposing
substantially
higher
levels
of
taxation
on
the
sale
of
alcohol.
35.
(a)
In
what
ways
do
firms
operating
in
different
market
structures
compete?
(b)
Discuss
the
view
that
the
more
competition
there
is
within
each
industry,
the
better.
36.
(a)
Explain
the
concepts
of
maximum
and
minimum
price
controls.
(b)
Evaluate
the
idea
that
government
intervention
in
the
form
of
price
ceilings
and
price
floors
is
well
intentioned,
but
often
leads
to
undesirable
side
effects.
37.
(a)
Explain
how
a
monopolist
may
be
able
to
earn
supernormal
(abnormal)
profits
in
the
long
run
(10
marks)
(b)
Production
by
a
monopolist
will
always
be
against
the
interests
of
consumers.
Discuss.
(15
marks)
38.
(a)
Explain
how
profit
is
determined
in
perfect
competition
(10
marks)
(b)
Whatever
the
type
of
market
structure,
profit
maximization
will
always
be
the
only
goal
of
firms.
Discuss.
(15
marks)
39.
(a)
Explain
the
differences
between
monopolistic
competition
and
oligopoly
as
market
structures
(10
marks)
(b)
Discuss
the
differences
between
a
collusive
and
a
non-collusive
oligopoly
(10
marks)
40.
(a)
Carefully
distinguish
between
merit
goods,
demerit
goods
and
public
goods
(10
marks)
(b)
Evaluate
the
view
that
governments
should
always
intervene
in
markets
for
such
goods
as
cigarettes
and
alcohol
(15
marks)
IB
Economics
City
Honors
School
2015-2016
41.
(a)
Explain
the
necessary
conditions
for
price
discrimination
to
take
place
(10
marks)
(b)
Discuss
the
advantages
and
disadvantages
of
price
discrimination
for
consumers
and
producers
(15
marks)
42.
(a)
Explain
how
barriers
to
entry
may
affect
market
structure
(10
marks)
(b)
Evaluate
the
view
that
monopoly
is
an
undesirable
type
of
market
structure
(15
marks)
43.
(a)
Explain
the
difference
between
short
run
equilibrium
and
long
run
equilibrium
in
monopolistic
competition
(10
marks)
(b)
Perfect
competition
is
a
more
desirable
market
form
than
monopolistic
competition.
Discuss.
(15
marks)
43.
(a)
Explain
how
a
firm
operating
in
an
oligopolistic
market
might
attempt
to
increase
its
market
share
(10
marks)
(b)
Evaluate
the
view
that
producers,
and
not
consumers,
are
the
main
beneficiaries
of
oligopolistic
market
structures
44.
(a)
Explain
the
determinants
of
price
elasticity
of
demand.
(10
marks)
(b)
A
deterioration
in
a
countrys
terms
of
trade
will
always
be
disadvantageous
for
the
current
account
balance.
Evaluate
this
statement
using
the
concept
of
price
elasticity
of
demand.
(15
marks)
45.
(a)
Explain
the
concepts
of
allocative
and
productive
(technical)
efficiency.
(10
marks)
(b)
Monopolies
are
inefficient
and
therefore
always
act
against
the
public
interest.
Discuss
this
statement.
(15
marks)
Short
Essays
MICROECONOMICS
46.
Compare
the
operation
of
a
cartel
with
the
operation
of
a
competitive
market.
47.
Outline
the
factors,
which
determine
the
shape
of
a
firm's
cost
curves,
using
diagrams
and
an
example.
48.
In
what
circumstances
will
price
discrimination
be
profitable
for
a
firm?
49.
Why
might
the
elasticity
of
supply
for
a
given
product
vary
over
time?
Give
an
example.
50.
Explain
why
economists
distinguish
between
the
short-run
and
long-run
when
examining
how
the
costs
of
a
firm
behave
as
output
increases.
51.
Use
supply
and
demand
analysis
to
demonstrate
why
lines
of
people
often
form
when
prices
are
controlled.
52.
With
the
aid
of
a
diagram
describe
how
knowledge
of
supply
and
demand
analysis
might
help
a
city
council,
which
is
looking
for
ways
of
reducing
traffic
congestion
in
its
city
centre.
IB
Economics
City
Honors
School
2015-2016
53.
Explain
how
the
law
of
diminishing
returns
is
relevant
to
the
problem
of
insufficient
food
production
in
certain
countries.
54.
How
might
the
elasticity
of
a
demand
curve
affect
the
shape
of
its
total
revenue
curve?
55.
In
the
short-run,
at
what
price
level
will
a
perfectly
competitive
firm
be
prepared
to
produce?
56.
A
government
is
thinking
of
raising
revenue
through
expenditure
taxes.
Why
would
knowledge
of
price
elasticitys
of
demand
be
useful?
57.
Using
supply
and
demand
curves,
explain
how
buffer
stocks
might
be
used
to
try
to
stabilize
agricultural
prices.
58.
Under
what
circumstances
might
consumers
benefit
from
the
existence
of
a
monopoly?
59.
In
many
developed
countries
the
price
of
house
has
risen
steadily
over
the
recent
years,
while
more
and
more
people
have
been
buying
houses.
Use
supply
and
demand
analysis
to
explain
why
this
has
happened.
60.
Explain
the
difference
between
diseconomies
of
scale
in
the
long-run
and
diminishing
returns
in
the
short-run.
61.
Define
the
word
cartel
and
with
an
example
explain
what
cartels
try
to
achieve.
62.
What
would
be
the
main
externalities
of
a
decision
to
build
a
new
international
airport
near
your
school
or
home.
63.
Discuss
how
a
monopoly
might
produce
a
higher
output
at
a
lower
price
than
a
perfectly
competitive
industry.
64.
Briefly
state
what
is
meant
by
the
productivity
of
a
factor.
For
what
reasons
might
the
productivity
of
land
change
over
time?
65.
A
government
tries
to
deal
with
the
problem
of
homelessness
by
putting
rent
controls
on
housing.
Use
a
supply
and
demand
diagram
to
explain
why
other
policies
will
also
be
necessary.
66.
Explain
why
an
oligopolistic
firm
might
not
wish
to
alter
its
prices.
67.
What
determines
whether
the
supply
of
a
product
is
price
elastic
or
price
inelastic?
68.
A
government
imposes
an
indirect
tax
on
the
supply
of
a
good
with
zero
price
elasticity
of
demand.
Using
a
diagram,
explain
why
consumers,
not
producers,
could
in
the
end
pay
this
tax.
69.
A
monopolist
decided
to
maximize
total
revenue
instead
of
maximizing
profit.
Predict
the
effect
this
will
have
on
price
and
output.
Use
a
diagram
to
support
your
prediction.
70.
Why
is
the
concept
of
scarcity
important
in
rich
countries
as
well
as
poor
ones?
IB
Economics
City
Honors
School
2015-2016
71.
A
businessperson
believes
that
halving
her
prices
will
double
her
revenue.
Explain
why
this
might
not
happen.
72.
A
perfectly
competitive
industry
is
turned
into
a
monopoly.
Predict
the
effect
on
price
and
output.
73.
In
what
circumstances
might
the
existence
of
a
monopoly
benefit
the
public?
74.
In
some
countries
the
price
of
houses
rises
while
the
demand
for
houses
rises.
Using
supply
and
demand
analysis,
explain
why
this
statement
does
not
contradict
the
law
of
demand.
75.
How
might
a
firm
be
able
to
stay
in
business
in
the
short-run,
even
if
it
is
not
covering
all
of
its
costs?
76.
What
are
the
distinguishing
features
of
a
pure
public
good?
77.
Show
how
a
supply
and
demand
diagram
could
be
used
by
an
economist
to
help
predict
the
possible
results
of
introducing
a
national
minimum
wage.
78.
A
survey
among
200
passengers
on
an
aircraft
reveals
that
people
might
have
paid
50
different
prices.
Why
has
this
happened?
79.
The
choice
between
military
products
and
the
provision
of
health
care
illustrates
the
problem
of
opportunity
cost.
Explain
the
nature
of
the
problem,
using
a
production
possibility
frontier
to
help
you.
80.
Using
a
suitable
diagram,
predict
what
will
happen
to
efficiency
when
a
competitive
industry
is
monopolized.
81.
Explain
why
countries
with
different
economic
systems
face
the
same
fundamental
economic
problems.
82.
Why
might
a
firm
be
interested
to
know
the
various
elasticities
of
demand
for
its
product?
83.
What
is
meant
by
market
failure?
Explain
why
pollution
may
cause
market
failure.
84.
Explain
why
the
price
elasticities
of
both
demand
and
supply
of
primary
commodities
tend
to
be
relatively
low
in
the
short-run.
85.
In
what
ways
might
a
company
operating
within
an
oligopolistic
market
structure
attempt
to
increase
its
share
in
the
market?
86.
Why
does
the
weekly
price
of
a
hotel
room
in
a
popular
holiday
resort
vary
through
the
year?
87.
What
are
the
distinctions
between
decreasing
returns
to
scale
and
diminishing
marginal
returns?
IB
Economics
City
Honors
School
2015-2016
88.
Distinguish
between
the
law
of
diminishing
returns
and
decreasing
returns
to
scale.
89.
Why
is
pollution
an
example
of
market
failure?
Use
a
diagram
to
illustrate
your
answer.
90.
The
price
of
tickets
for
a
major
tennis
tournament
is
fixed
by
the
organizing
body.
At
the
set
price,
many
more
people
wish
to
attend
the
tournament
than
there
are
seats
available.
Draw
a
diagram
to
illustrate
this
situation
and
use
your
diagram
to
examine
the
likely
consequences.
91.
A
bus
company
decided
to
reduce
passenger
fares.
Explain
the
possible
outcomes
of
this
decision
using
economic
concepts.
92.
What
is
a
positive
externality?
Give
an
example
and
illustrate
your
answer
with
a
diagram.
93.
Why
do
some
oligopolistic
firms
engage
in
non-price
rather
than
price
competition?
94.
Economics
is
primarily
concerned
with
the
allocation
of
scarce
resources
which
have
alternative
uses.
Use
a
production
possibility
curve
to
help
you
explain
this
statement.
95.
Explain
how
indirect
taxation
may
be
an
appropriate
response
to
the
problem
of
negative
externalities.
96.
Explain
why
firms
operating
in
a
perfectly
competitive
market
would
be
able
to
make
only
normal
profits
in
the
long
run.
97.
Why
do
the
prices
of
agricultural
goods
tend
to
fluctuate
more
than
those
of
manufactured
goods?
98.
A
government
increases
taxation
on
the
sale
of
tobacco.
Using
a
diagram
explain
how
this
might
affect
consumers
and
producers
of
tobacco.
99.
Using
a
diagram
explain
how
allocative
and
productive
efficiency
will
be
achieved
in
long
run
equilibrium
in
perfect
competition.
100.
As
price
falls,
quantity
supplied
falls.
As
supply
increases,
price
falls.
Use
supply
and
demand
analysis
to
explain
why
these
two
statements
do
not
contradict
each
other.
101.
Why
is
the
concept
of
income
elasticity
of
demand
likely
to
be
important
for
a
producer
of
an
agricultural
product?
Use
supply
and
demand
analysis
in
your
answer.
102.
A
firm
in
perfect
competition
is
producing
at
the
profit
maximizing
output
but
making
a
loss.
Using
diagrammatic
analysis
explain
how
this
is
possible.
103.
Use
a
diagram
to
explain
why
the
under
provision
of
merit
goods
is
considered
to
be
an
example
of
market
failure.
IB
Economics
City
Honors
School
2015-2016
104.
Use
a
diagram
to
explain
how
producers
and
consumers
might
benefit
from
a
government
subsidy
to
an
industry.
105.
With
the
help
of
a
diagram,
explain
how
a
buffer
stock
scheme
is
expected
to
work.
106.
A
monopolist
decides
to
maximize
profits
rather
than
revenue.
Using
a
diagram,
explain
how
price
and
quantity
will
change.
107.
a.
Explain
why
Veblen
goods
are
an
exception
to
the
law
of
demand
b.
To
what
extent
can
a
firm
in
monopolistic
competition
earn
supernormal
(abnormal)
profits?
c.
Compare
the
impact
of
an
indirect
tax
on
the
market
for
cigarettes
with
the
impact
of
an
indirect
tax
on
the
market
for
holidays.
108.
Use
production
possibility
curve
diagrams
to
explain
the
differences
between
actual
output
and
potential
output
and
between
economic
growth
and
economic
development.
109.
Explain
the
relationship
in
the
short-run
between
the
marginal
costs
of
a
firm
and
its
average
total
costs.
110.
Using
appropriate
diagrams,
explain
the
difference
between
the
law
of
diminishing
returns
and
economies
of
scale.
111.
Using
demand
and
supply
analysis,
explain
how
resources
are
allocated
through
changes
in
prices
in
a
market
economy.
112.
Define
cross
elasticity
of
demand
and
using
diagrams
explain
what
determines
whether
cross
elasticity
is
positive
or
negative.
113.
Using
appropriate
diagrams,
discuss
whether
monopoly
is
more
efficient
or
less
efficient
than
perfect
competition
114.
Use
a
diagram
to
explain
how
the
incidence
(burden)
of
a
tax
is
shared
among
producers
and
consumers
when
an
ad
valorem
indirect
tax
is
placed
on
a
good
which
has
relatively
inelastic
demand.
115.
A
monopoly
firm
decides
to
maximize
revenue
rather
than
profit.
Use
a
diagram
to
explain
what
will
happen
to
price
and
quantity.
116.
Normally,
it
would
be
expected
that
more
would
be
demanded
at
lower
prices
as
opposed
to
higher
prices,
all
other
things
being
equal,
but
this
may
not
always
be
the
case.
Explain
this
statement.
117.
Explain
the
law
of
diminishing
returns
using
average
and
marginal
product
curves.
118.
Explain
how
scarce
factors
of
production
are
allocated
by
the
free
market.
IB
Economics
City
Honors
School
2015-2016
119.
With
the
help
of
a
diagram,
explain
when
a
firm
should
shut
down
in
the
short
run.
120.
Explain
the
concept
of
a
natural
monopoly
121.
Explain
what
is
meant
by
a
production
possibility
curve
and
use
a
production
possibility
curve
diagram
to
explain
the
concepts
of
scarcity,
efficiency,
choice
and
opportunity
cost.
122.
A
concert
is
being
held
in
a
stadium
with
limited
seating
capacity.
The
organizers
set
the
ticket
prices
at
a
level
below
the
equilibrium
price.
Using
a
diagram,
explain
the
possible
consequences
of
their
decision.
123.
Using
at
least
one
diagram,
explain
the
difference
between
profit
maximization
and
sales
revenue
maximization
as
goals
of
the
firm.
124.
Explain
how
the
three
basic
economic
questions
would
be
answered
in
a
free
market
economy
and
in
a
centrally-planned
economy.
125.
Using
diagrams,
explain
the
difference
between
the
short-run
and
long-run
profit
maximizing
positions
of
a
firm
in
monopolistic
competition.
126.
Explain
how
the
burning
of
fossil
fuels
(e.g.
coal)
by
industries
could
create
a
market
failure
and
a
threat
to
sustainable
development.
127.
Draw
a
diagram
of
a
perfectly
competitive
firm
in
short-run
equilibrium.
Assume
this
firm
is
earning
economic
profits.
Be
sure
to
identify
all
relevant
cost
and
revenue
curves
and
the
area
of
profit.
SECTION
TWO
QUESTIONS
(MACROECONOMICS)
1.
Can
government
macroeconomic
demand
management
policies
raise
the
real
output
of
an
economy
in
the
long-run?
2.
Most
nations
tax
personal
income.
What
are
the
arguments
for
and
against
personal
income
taxes?
At
what
rates
would
you
recommend
setting
income
taxes?
How
would
considerations
of
equity
and
efficiency
influence
your
decision?
3.
Unemployment
can
either
be
structural
or
cyclical.
How
would
government
intervention
differ
in
each
case?
4.
Under
what
conditions
are
high
interest
rates
likely
to
benefit
or
damage
a
country's
economy?
5.
A
reduction
in
unemployment
is
desirable,
but
it
is
certain
to
lead
to
other
problems,
such
as
inflation
or
balance
of
payments
difficulties.
Discuss.
IB
Economics
City
Honors
School
2015-2016
6.
Discuss
the
view
that
unemployment
is
a
more
serious
economic
problem
that
inflation.
Why
might
Keynesian
and
Monetarist
economists
disagree
on
questions
like
this?
7.
Distinguish
between
supply
side
policies
and
demand
management
policies.
Why
do
many
governments
now
appear
to
wish
to
focus
increasingly
on
the
supply
side?
8.
Discuss
whether
there
is
a
relationship
between
money
supply
and
inflation.
9.
Why
might
knowledge
of
the
value
of
the
multiplier
be
useful
to
government
policy
makers?
Should
governments
make
more
use
of
this
and
other
Keynesian
ideas,
or
should
they
adopt
non-
Keynesian
policies?
10.
Why
is
investment
important
to
a
country?
Why
do
some
countries
have
lower
rates
of
investment
than
others
and
what
is
the
role
of
the
government
in
encouraging
investment?
11.
What
are
the
social
costs
of
unemployment?
In
view
of
these
costs,
why
do
some
countries
give
higher
priority
to
tackling
other
problems
such
as
inflation
and
balance
of
payments
difficulties?
12.
A
government
introduces
supply
side
policies
in
order
to
have
a
flexible
work
force.
Describe
the
policies,
which
might
be
introduced.
Consider
whether
such
policies
would
be
worthwhile.
13.
(a)
What
is
monetarism?
(10)
(b)
How
would
a
monetarists
view
of
economic
problems
(such
as
inflation
and
unemployment)
and
policies
differ
from
that
of
a
Keynesian?
(15)
14.
Evaluate
the
costs
and
benefits
for
a
country
if
its
government
adopts
privatization
as
a
major
policy.
15.
(a)
Is
full
employment
possible?
(b)
Is
full
employment
desirable
(c)
Do
international
trading
blocks
such
as
NAFTA
or
the
EU
increase
or
reduce
unemployment?
16.
To
what
extent
is
it
wise
for
governments
to
follow
a
policy
of
always
balancing
their
national
budgets?
17.
(a)
Briefly
explain
the
various
objectives
of
macroeconomic
policy.
(b)
Critically
examine
the
view
that
the
control
of
inflation
should
always
be
the
most
important
objective
of
governments.
18.
Is
there
a
long-term
trade-off
between
inflation
and
unemployment?
19.
(a)
Explain
how
governments
can
use
fiscal
policy
to
redistribute
income.
(b)
Evaluate
the
advantages
and
disadvantages
of
policies
aimed
at
reducing
income
inequalities
IB
Economics
City
Honors
School
2015-2016
20.
What
is
wanted
is
not
inflation
(a
rise
in
the
general
price
level)
or
deflation
(a
fall
in
the
general
price
level)
but
price
stability.
Discuss.
21.
(a)
What
are
the
consequences
of
unemployment
in
an
economy?
(b)
Examine
the
strategies
that
may
be
used
to
reduce
unemployment,
referring
to
more
developed
countries
and
less
developed
countries
in
your
answer.
22.
(a)
What
are
the
main
macroeconomic
objectives
of
government?
(b)
Assume
the
government
chooses
to
pursue
one
of
these
objectives.
Evaluate
the
possible
consequences
for
the
other
objectives.
23.
Evaluate
the
view
that
the
achievement
of
price
stability
should
be
the
major
objective
of
government
economic
policy.
24.
(a)
With
the
help
of
diagrams
distinguish
between
demand-pull
and
cost-push
inflation.
(b)
Explain
which
policies
would
be
appropriate
to
deal
with
these
two
types
of
inflation
25.
Unemployment
remains
persistently
high
in
a
majority
of
countries
throughout
the
world
(a)
Explain
the
economic
problems
that
high
unemployment
may
cause
for
a
country.
(b)
Discuss
the
reasons
why
governments
find
the
goal
of
full
employment
difficult
to
achieve.
26.
Evaluate
the
effectiveness
of
demand-side
and
supply-side
policies
in
the
short
and
long
run.
27.
(a)
What
are
the
possible
causes
of
inflation?
(b)
Evaluate
possible
policies
that
might
be
used
to
lower
the
natural
rate
of
unemployment
28.
(a)
Using
suitable
examples,
explain
the
difference
between
the
multiplier
and
the
accelerator
(b)
Evaluate
the
proposition
that
the
most
effective
way
to
reduce
unemployment
is
through
the
use
of
demand-side
policies.
29.
(a)
Explain
the
relationship
between
the
Lorenz
curve
and
the
GINI
coefficient
(b)
Evaluate
the
effectiveness
of
the
various
methods
that
government
may
use
to
redistribute
income
30.
(a)
Explain
the
difference
between
demand-side
and
supply-side
policies
(b)
Higher
economic
growth
can
only
be
achieved
through
the
implementation
of
supply-side
policies
31.
(a)
Explain
how
interest
rates
can
be
used
to
bring
about
an
increase
in
economic
activity
(b)
Discuss
the
strengths
and
weaknesses
of
demand-side
policies
IB
Economics
City
Honors
School
2015-2016
32.
(a)
What
are
the
causes
of
inflation
(b)
Evaluate
the
possible
effects
of
a
persistently
high
inflation
rate
on
a
countrys
current
account
balance
and
its
exchange
rate
33.
(a)
Explain
why
a
government
might
find
it
difficult
to
maintain
a
low
rate
of
inflation
as
the
economy
approaches
full
employment
(b)
Evaluate
the
proposition
that
the
priority
in
economic
management
should
be
the
maintenance
of
low
unemployment
34.
(a)
Using
one
or
more
diagrams,
explain
the
difference
between
the
equilibrium
level
of
national
income
and
the
full
employment
level
of
national
income
(b)
Evaluate
the
policies
a
government
may
use
to
increase
the
full
employment
level
of
national
income
35.
(a)
The
effect
of
a
decrease
in
aggregate
demand
on
output
and
the
price
level
depends
on
the
shape
of
the
aggregate
supply
curve.
Explain
this
statement.
(b)
Evaluate
the
likely
effects
of
a
falling
rate
of
inflation
on
the
performance
of
an
economy
36.
(a)
Explain
the
difference
between
progressive
taxation
and
regressive
taxation.
(b)
Evaluate
the
possible
effects
of
a
decrease
in
direct
taxation
on
a
countrys
inflation
rate,
unemployment
rate
and
balance
of
payments.
Short
Essay
Questions
MACROECONOMICS
37.
What
difficulties
arise
in
measuring
unemployment?
38.
Outline
the
difference
between
a
short-run
long-run
Phillips
curve.
(HL
Only)
39.
Once
statisticians
have
collected
data
on
the
different
types
of
expenditure
within
a
country,
what
are
the
main
problems
that
have
to
be
overcome
in
order
to
use
these
figures
to
arrive
at
an
estimate
of
national
income?
40.
Explain
how
the
multiplier
and
the
accelerator
might
be
linked
to
each
other.
41.
Explain
the
concept
of
the
Natural
Rate
of
Unemployment.
42.
Explain
how
double
counting
can
occur
in
calculating
national
income,
and
how
measuring
value
added
can
overcome
this
problem.
IB
Economics
City
Honors
School
2015-2016
43.
Explain
why
some
countries
might
find
it
difficult
to
achieve
full
employment
at
the
same
time
as
avoiding
a
balance
of
payments
problem.
44.
Why
might
knowledge
of
the
shape
of
a
countrys
Phillips
Curve
might
be
useful
to
government
officials?
45.
What
is
demand-deficient
(cyclical)
unemployment
and
what
can
be
done
about
it?
46.
Keynesians
and
Monetarists
have
different
views
of
the
likely
shape
of
a
countrys
aggregate
supply
curve.
Using
diagrams,
show
how
these
shapes
can
affect
macroeconomic
policy.
47.
What
measures
would
you
need
to
take
in
order
to
calculate
the
value
of
a
countrys
multiplier?
48.
How
would
a
change
in
the
marginal
propensity
of
import
affect
the
value
of
the
multiplier?
49.
Explain
why
a
country
coming
out
of
a
recession
might
experience
a
balance
of
payments
deficit.
50.
What
are
the
main
problems
involved
in
obtaining
a
measure
of
inflation?
51.
For
what
reasons
might
a
countrys
Gross
Domestic
Product
at
factor
cost
be
higher
than
its
Gross
National
Product
at
factor
cost?
52.
State
what
Keynesian
economists
mean
by
the
equilibrium
level
of
income
and
the
full
employment
level
of
income
and
explain
why
these
two
levels
of
income
might
not
be
equal
to
each
other.
53.
Discuss
why
higher
interest
rates
may
be
good
news
for
some
people,
but
bad
news
for
others.
54.
Why
might
an
increase
in
government
expenditure
have
a
greater
multiplier
effect
than
a
corresponding
reduction
in
direct
taxes?
55.
What
is
structural
unemployment
and
what
measures
might
governments
take
to
combat
it?
56.
A
company
builds
a
new
production
unit
in
a
certain
country.
Explain
how
this
investment
is
likely
to
have
a
multiplier
effect,
and
discuss
reasons
why
this
effect
might
take
time
to
work.
57.
Why
might
an
increase
in
a
countrys
budget
deficit
be
followed
by
an
increase
in
its
external
trade
deficit?
58.
What
is
crowding
out
and
why
do
some
economists
consider
it
important?
59.
What
is
the
natural
rate
of
unemployment?
60.
What
is
demand
pull
inflation
and
what
can
governments
do
about
it?
IB
Economics
City
Honors
School
2015-2016
61.
Define
crowding
out.
What
is
its
importance
in
macroeconomic
policy
modelling?
62.
Use
an
aggregate
demand/aggregate
supply
diagram
to
analyse
the
likely
effects
of
an
increase
in
interest
rates.
63.
Examine
two
reasons
why
a
government
might
wish
to
control
increases
in
its
expenditure.
64.
Use
an
aggregate
demand
/
aggregate
supply
diagram
to
analyse
the
likely
effects
of
an
increase
in
income
tax.
65.
Explain
why
might
the
goal
of
full
employment
conflict
with
the
goal
of
economic
growth?
66.
Use
an
aggregate
demand/aggregate
supply
diagram
to
explain
how
cost
push
inflation
may
occur
and
outline
two
ways
in
which
it
might
be
controlled.
67.
Explain
two
policies
that
a
government
might
use
to
deal
with
the
problem
of
demand-
deficient
(cyclical)
unemployment.
68.
What
are
the
likely
consequences
of
deflation
for
a
countrys
economy?
69.
Using
an
appropriate
diagram,
explain
how
economists
measure
income
distribution.
70.
Use
the
Phillips
Curve
to
explain
the
concept
of
the
natural
rate
of
unemployment.
71.
Explain
the
multiplier
effect
of
an
increase
in
government
spending.
72.
Using
AD/AS
diagrams,
analyze
the
likely
impact
on
an
economy
of
the
following:
(a)
a
general
rise
in
wage
costs
(b)
the
discovery
of
new
raw
material
sources
(c)
capital
stock
increases.
73.
Explain
how
an
increase
in
government
spending
can
lead
to
crowding
out.
74.
Explain
how
a
progressive
tax
system
may
be
used
to
redistribute
income.
75.
Macroeconomic
equilibrium
does
not
necessarily
occur
at
full
employment.
Explain
this
statement
using
the
concepts
of
inflationary
and
deflationary
gaps.
76.
With
the
use
of
example,
explain
the
difference
between
a
progressive
and
a
regressive
tax.
77.
A
government
decides
to
raise
personal
income
tax
rates.
Using
diagrams,
explain
one
possible
demand
side
consequence
and
one
possible
supply
side
consequence
of
this
decision.
78.
Explain
two
ways
a
government
can
reduce
its
natural
rate
of
unemployment.
IB
Economics
City
Honors
School
2015-2016
15.
(a)
What
problems
might
a
country
face
if
it
experiences
a
persistent
deficit
in
the
current
account
of
its
balance
of
payments?
(b)
Evaluate
the
alternative
ways
in
which
such
a
deficit
might
be
reduced
or
eliminated.
16.
Whether
the
exchange
rate
rises
or
falls
there
are
always
losers.
Evaluate
this
statement
from
a
domestic
and/or
global
perspective.
17.
(a)
Explain
the
various
factors
that
could
cause
a
change
in
the
terms
of
trade
for
a
country.
(b)
Discuss,
with
reference
to
less
developed
countries,
the
possible
consequences
of
a
deterioration
in
the
terms
of
trade.
18.
Evaluate
the
extent
to
which
the
international
trading
system
has
contributed
to
economic
growth
in
developed
countries?
19.
Explain
the
factors
which
cause
the
value
of
a
currency
to
change
under
a
floating
exchange
rate.
Evaluate
the
extent
to
which
an
appreciation
of
a
currency
may
harm
an
economy?
20.
(a)
Explain
the
components
of
the
balance
of
payments.
(b)Evaluate
the
extent
to
which
the
balance
of
payments
may
be
controlled
by
the
manipulation
of
interest
rates.
21.
(a)
Explain
the
theory
of
comparative
advantage
(b)
Given
the
benefits
of
specialization,
evaluate
reasons
why
countries
might
choose
not
to
specialize
22.
(a)
Describe
the
factors
which
might
cause
a
change
in
a
countrys
terms
of
trade
(b)
Evaluate
the
significance
for
less
developed
countries
of
a
deterioration
in
the
terms
of
trade
23.
(a)
Explain
the
concepts
of
trade
creation
and
trade
diversion
(b)
Explain
the
advantages
and
disadvantages
of
joining
a
trading
bloc
24.
(a)
Explain
why
an
improvement
in
a
countrys
terms
of
trade
does
not
always
lead
to
an
improvement
in
its
balance
of
payments
on
current
account
(10
marks)
(b)
An
economy
is
currently
experiencing
a
deficit
on
the
current
account
of
its
balance
of
payments.
The
government
is
considering
either
allowing
the
exchange
rate
to
fall
or
reducing
aggregate
demand.
25.
(a)
What
are
the
causes
of
inflation
(b)
Evaluate
the
possible
effects
of
a
persistently
high
inflation
rate
on
a
countrys
current
account
balance
and
its
exchange
rate
IB
Economics
City
Honors
School
2015-2016
26.
(a)
Explain
the
various
factors
which
may
affect
an
exchange
rate
in
a
floating
exchange
rate
system
(b)
Evaluate
a
government
decision
to
adopt
a
floating
exchange
rate
system
as
opposed
to
a
fixed
exchange
rate
system
27.
(a)
Explain
three
factors
that
influence
the
value
of
a
countrys
exchange
rate
(b)
Evaluate
government/Central
Bank
intervention
in
the
foreign
exchange
market
to
reduce
the
value
of
the
exchange
rate
28.
(a)
Explain
the
principle
of
comparative
advantage
and
the
benefits
which
might
arise
from
free
trade
(b)
Evaluate
the
importance
of
membership
of
a
trading
bloc
for
the
export
performance
of
a
country
Short
Essays
INTERNATIONAL
ECONOMICS
29.
Outline
the
principle
of
comparative
advantage.
Does
it
explain
modern
international
trade?
30.
Examine
the
argument
that
floating
exchange
rates
are
preferable
to
fixed
exchange
rates.
31.
How
do
tariffs
affect
economic
welfare?
32.
What
is
meant
by
an
improvement
in
the
terms
of
trade?
Does
it
necessarily
improve
a
nations
balance
of
trade?
33.
Explain
why
a
current
account
balance
of
payments
deficit
may
or
may
not
be
a
problem.
34.
Distinguish
carefully
between
what
is
measured
by
the
terms
of
trade
and
the
balance
of
trade.
35.
Using
supply
and
demand
curves,
explain
how
a
government
might
try
to
keep
the
exchange
rate
of
a
currency
at
an
artificially
high
level.
36.
What
economic
theories
could
be
used
to
justify
WTOs
promotion
of
more
free
trade
in
services?
37.
What
are
the
main
features
of
a
free
trade
area?
38.
A
firm
is
trying
to
sell
in
export
markets.
What
factors
can
influence
its
competitiveness?
39.
Explain
how
changes
in
interest
rates
can
be
expected
to
affect
exchange
rates.
40.
Many
people
never
travel
to
another
country
and
never
need
to
exchange
currencies.
Explain
how
their
everyday
lives
can
still
be
affected
by
exchange
rates.
41.
Explain
why,
in
theory,
freely
floating
exchange
rates
would
automatically
correct
a
balance
of
payments
disequilibrium?
IB
Economics
City
Honors
School
2015-2016
42.
With
the
aid
of
a
supply
and
demand
diagram
explain
how
changes
in
imports
and
exports
can
be
expected
to
affect
a
floating
exchange
rate.
43.
A
country
wishes
to
improve
its
comparative
advantage
in
producing
manufactured
goods.
What
does
this
mean
and
how
it
might
be
achieved?
44.
Explain
why
deterioration
in
the
terms
of
trade
could
bring
about
an
improvement
in
the
balance
of
payments
on
current
account.
45.
For
what
reasons
might
a
countrys
exchange
rate
rise?
46.
What
factors
determine
the
competitiveness
of
a
country
in
international
trade?
47.
Use
demand
and
supply
analysis
to
explain
the
possible
effects
of
currency
speculation
on
a
countrys
exchange
rate.
48.
A
government
decides
to
raise
interest
rates.
How
might
this
affect
the
external
account?
49.
Explain
why
deterioration
in
the
terms
of
trade
could
bring
about
an
improvement
in
the
balance
of
payments
on
current
account.
50.
Explain
why
the
depreciation
of
a
countrys
exchange
rate
might
not
improve
its
balance
of
payments?
51.
Explain
the
effects
of
inflation
on
a
countrys
international
competitiveness.
52.
What
is
a
voluntary
export
restraint
and
who
is
likely
to
benefit
from
it?
53.
What
impact
is
a
substantial
rise
in
the
level
of
interest
rates
in
a
country
likely
to
have
on
its
balance
of
payments?
54.
Why
might
a
countrys
current
account
balance
worsen
as
it
approaches
full
employment?
55.
Explain
two
benefits,
which
might
arise
from
international
trade.
56.
Explain
how
in
theory
balance
of
payments
deficits
and
surpluses
on
current
account
are
automatically
adjusted
under
a
system
of
flexible
exchange
rates.
Illustrate
your
answer
using
supply
and
demand
analysis.
57.
How
would
deterioration
in
the
terms
of
trade
affect
the
current
account
of
a
country?
58.
Why
are
the
concepts
of
trade
creation
and
trade
diversion
important
for
a
country
that
is
considering
joining
a
customs
union?
59.
Why
might
a
government
prefer
to
negotiate
Voluntary
Export
Restraints
(VERs)
rather
than
impose
tariffs
as
a
means
of
restricting
international
trade?
IB
Economics
City
Honors
School
2015-2016
60.
Using
an
example,
explain
how
the
concept
of
opportunity
cost
is
a
key
element
in
the
theory
of
comparative
advantage
61.
With
reference
to
the
Marshall-Lerner
condition,
explain
how
the
depreciation
of
a
countrys
exchange
rate
might
affect
its
current
account
balance.
62.
Using
an
appropriate
diagram,
explain
who
gains
and
who
loses
from
the
introduction
of
a
tariff
63.
Explain
the
link
between
the
Marshall-Lerner
condition
and
the
J-curve
effect.
64.
Using
the
principle
of
comparative
advantage,
explain
why
economic
theory
suggests
that
countries
should
specialize
and
trade
with
each
other.
65.
Explain
two
reasons
for
an
improvement
in
a
countrys
terms
of
trade.
66.
Explain
why
a
depreciation
of
a
countrys
exchange
rate
may
not
always
lead
to
an
improvement
in
its
current
account
of
the
balance
of
payments.
67.
Using
a
diagram
or
a
numerical
example,
explain
how
the
concept
of
comparative
advantage
determines
which
goods
or
services
a
country
should
export.
SECTION
FOUR
QUESTIONS
(DEVELOPMENT
ECONOMICS)
1.
How
could
industrialized
countries
best
assist
less
developed
countries
to
achieve
higher
levels
of
real
income?
2.
What
are
the
determinants
of
economic
growth?
3.
Do
the
activities
of
multinational
companies
help
or
hinder
the
progress
of
economic
development?
Justify
your
answer.
4.
Some
economists
have
begun
to
refer
to
some
countries
as
Newly
Industrialized
Countries
(NICS).
Explain
and
discuss
the
strategies
that
a
Less
Developed
Country
(LDC)
might
adopt
if
it
wishes
to
become
a
NIC.
5.
A
multinational
enterprise
decides
to
make
a
large
investment
in
Gondomar,
a
less
developed
country.
Examine
the
possible
economic
costs
and
benefits
of
this
decision
for
the
economy
of
Gondomar.
6.
Some
countries,
such
as
India,
have
tended
to
use
inward
orientated
development
strategies,
while
others,
such
as
South
Korea,
have
used
outward
orientated
strategies.
Describe
the
main
features
of
each
type
of
strategy,
and
discuss
and
evaluate
their
ad-vantages
and
disadvantages.
7.
What
government
policies
can
encourage
rapid
and
sustainable
economic
development?
Is
development
possible
without
government
intervention?
IB
Economics
City
Honors
School
2015-2016
8.
As
an
economist,
how
would
you
tackle
the
task
of
comparing
the
welfare
of
a
citizen
of
a
country
like
India
with
that
of
a
citizen
of
a
country
like
the
United
States?
What
would
be
the
main
problems
involved?
9.
What
are
the
economic
costs
and
benefits
which
a
less
developed
country
can
expect
when
it
receives
aid
from
a
more
developed
country?
Explain
whether
aid
or
trade
would
be
more
effective.
10.
Explain
how
and
why
economists
are
attempting
to
find
ways
of
measuring
economic
development
as
distinct
from
growth.
11.
(a)
What
are
the
different
forms
that
international
aid
might
take?
(b)
Discuss
the
view
that
giving
aid
simply
creates
the
need
for
further
aid.
12.
(a)
What
are
the
main
forms
of
aid
provided
for
Less
Developed
Countries?
(b)
What
is
more
effective
in
promoting
development,
aid
or
trade?
13.
(a)What
is
foreign
direct
investment
(FDI)
and
what
role
does
it
play
in
the
economic
development
of
less
developed
countries?
(b)
Compare
the
effectiveness
of
FDI
with
other
sources
of
investment.
14.
(a)
What
factors
explain
the
growth
in
importance
of
multinational
corporations
over
recent
decades?
Illustrate
your
answer
where
possible
by
making
reference
to
your
own
or
other
countries.
(b)
Do
multinational
corporations
work
in
favor
of,
or
against
the
interests
of
Less
Developed
Countries?
15.
A
country
decides
to
change
from
an
inward
oriented
development
strategy
to
an
outward
oriented
development
strategy.
(a)
What
changes
in
economic
policy
would
be
made?
(b)
Discuss
the
likely
consequences
of
this
change
in
policy.
16.
(a)Discuss
the
main
problems
involved
in
measuring
he
national
income
of
a
country.
(b)
Why
do
many
economists
prefer
to
use
composite
indexes,
such
as
the
Human
Development
Index,
as
well
as
national
income
figures,
to
indicate
living
standards?
17.
Is
economic
growth
compatible
with
the
protection
of
the
environment?
Discuss
with
reference
to
sustainable
development.
18.
(a)
Under
what
circumstances
might
a
country
achieve
economic
growth
without
economic
development?
(b)
Evaluate
the
effectiveness
of
outward-orientated
strategies
in
achieving
growth
and
development.
19.
(a)
Why
have
multinational
corporations
grown
so
rapidly
in
recent
decades?
(b)
Do
multi-national
corporations
help
or
hinder
the
less
developed
countries?
IB
Economics
City
Honors
School
2015-2016
20.
(a)
What
are
the
arguments
in
favor
of
unrestricted
flows
of
financial
capital
between
countries?
(b)
How
might
unrestricted
capital
flows
be
damaging
to
less
developed
countries?
21.
According
to
the
World
Bank,
an
extra
10
billion
dollars
in
aid
could
lift
25
million
people
a
year
out
of
poverty
-
so
long
as
it
went
to
poor
countries
that
manage
their
economies
well.
The
same
sum
spent
across
the
current
distribution
of
aid
recipients
would
lift
only
7
million
out
of
poverty.
(a)
What
are
the
economic
arguments
in
favor
of
using
aid
as
part
of
a
development
policy
for
less
developed
countries?
(b)
How
far
would
you
agree
with
the
World
Bank
view
that
aid
has
failed
as
a
development
policy
because
of
the
poor
economic
management
policies
that
less
developed
countries
have
adopted?
22.
(a)
Using
examples,
explain
the
difference
between
economic
growth
and
economic
development.
(b)
Is
economic
growth
always
a
desirable
policy
objective
for
a
government?
23.
To
what
extent
has
the
international
trading
system
contributed
to
economic
growth
and
development
in
less
developed
countries?
24.
(a)
Describe
the
main
barriers
to
economic
development
that
countries
may
experience.
(b)
Evaluate
the
view
that
countries
with
a
more
equal
distribution
of
income
and
wealth
are
more
likely
to
experience
higher
levels
of
development.
25.
Evaluate
the
view
that
investment
in
human
capital
is
the
most
effective
way
to
promote
economic
development.
26.
(a)
Explain
how
economists
might
measures
the
extent
to
which
living
standards
vary
between
countries.
(b)
Evaluate
the
ways
in
which
More
Developed
Countries
might
help
Less
Developed
Countries
to
raise
living
standards.
27.
(a)
Explain
the
different
forms
of
aid
that
may
be
available
to
a
developing
nation.
(b)
To
what
extent
is
aid
effective
in
terms
of
addressing
the
problems
faced
by
LDCs?
28.
(a)
Using
examples,
describe
various
sources
of
funds
available
to
developing
countries
through
trade
and
aid
(b)
Evaluate
trade
and
aid
as
a
means
of
achieving
economic
growth
and
development.
29.
(a)
Explain
the
main
characteristics
of
a
market
economy
(b)
Evaluate
the
proposition
that
economic
development
is
best
achieved
through
the
market
system
IB
Economics
City
Honors
School
2015-2016
30.
31.
(a)
Explain
how
an
increase
in
the
quantity
and
quality
of
a
nations
factors
of
production
can
promote
economic
development
(b)
Evaluate
the
impact
of
globalization
on
the
economic
development
of
developing
countries
32.
(a)
explain
why
a
firm
may
benefit
from
becoming
a
multinational
corporation
(b)
evaluate
the
effectiveness
of
FDI
as
a
means
of
achieving
economic
growth
and
economic
development
in
a
less
developed
country
33.
(a)
Explain
the
various
types
of
aid
which
a
developing
country
might
achieve)
(b)
Aid
is
an
effective
means
of
promoting
the
development
of
poorer
countries.
Evaluate
this
statement.
34.
(a)
Explain
three
institutional
factors
that
may
contribute
to
potential
economic
growth
in
developing
countries
(b)
Evaluate
the
view
that
economic
growth
will
lead
to
economic
development
35.
(a)
Explain
how
economic
development
might
be
measured
(b)
Evaluate
the
view
that
the
most
effective
way
that
a
government
could
improve
the
welfare
of
its
citizens
is
through
the
pursuit
of
faster
economic
growth.
36.
(a)
Explain
three
barriers
to
economic
development
for
developing
countries
(b)
Evaluate
the
view
that
trade
is
more
effective
than
aid
in
achieving
economic
development
Short
Essays
DEVELOPMENTAL
ECONOMICS
37.
In
1980
Country
A
(a
hypothetical
economy)
had
a
Gross
National
Product
of
$100
billion,
and
by
1988
its
Gross
National
Product
was
$150
billion.
What
factors
must
be
considered
in
comparing
welfare
in
1980
with
that
in
1988.
38.
Outline
the
operations
of
the
International
Monetary
Fund
in
the
world
economy.
39.
Why
is
the
concept
of
income
elasticity
of
demand
useful
to
economists
studying
the
economic
development
of
countries?
40.
How
might
an
economy
be
affected
by
an
increase
in
the
average
age
of
a
population?
41.
Gondomar
and
Bayona
are
two
neighboring
countries.
Gondomar
has
a
higher
rate
of
investment
whereas
Bayona
spends
a
higher
proportion
of
its
national
income
on
consumer
goods.
How
might
these
differences
affect
their
relative
growth
rates
in
the
future?
42.
Which
indicators,
other
than
National
Income,
might
be
used
to
measure
welfare?
IB
Economics
City
Honors
School
2015-2016
59.
Explain
why
primary
school
education
for
girls
is
considered
by
many
economists
to
be
particularly
worthwhile
investment
in
Less
Developed
Countries?
60.
What
do
you
understand
by
the
term
sustainable
development?
Give
an
example
of
development,
which
you
believe
is
not
sustainable,
and
explain
why.
61.
The
government
of
a
Less
Developed
Country
decides
to
reduce
the
extent
of
income
and
wealth
inequality.
What
methods
could
the
government
use
to
achieve
its
goal?
62.
Distinguish
between
the
forms
of
aid
which
a
developing
country
might
receive.
63.
As
countries
reach
an
advanced
stage
of
development,
the
tertiary
sector
tends
to
expand
relatively
faster
than
the
primary
and
secondary
sectors.
Why
is
this
the
case?
64.
Poor
people
in
less
developed
countries
often
derive
little
benefit
from
economic
growth.
Why
might
this
be
so?
65.
What
is
human
capital?
Explain
its
importance
in
economic
development.
66.
In
what
ways
might
a
more
equal
distribution
of
income
contribute
to
economic
development?
67.
Why
might
a
less
developed
country
find
difficulty
in
maintaining
stable
export
revenues?
68.
Explain
two
reasons
why
international
indebtedness
is
a
problem
for
less
developed
countries.
69.
Explain
two
ways
in
which
multinational
corporations
might
hinder
the
development
of
less
developed
countries.
70.
Use
a
production
possibility
curve
to
explain
the
distinction
between
economic
growth
and
economic
development
71.
Use
the
Harrod-Domar
model
to
explain
the
barriers
to
growth
that
may
be
faced
by
developing
countries.
(HL
Only)
72.
Use
production
possibility
curve
diagrams
to
explain
the
differences
between
actual
output
and
potential
output
and
between
economic
growth
and
economic
development.
73.
Explain
how
overdependence
on
primary
products
may
act
as
a
barrier
to
economic
development.
74.
Explain
why
economic
growth
is
likely
to
generate
external
costs,
which
are
a
threat
to
sustainable
development.
75.
Explain
the
difference
between
outward-oriented
and
inward-oriented
growth
strategies.
76.
Explain
two
ways
in
which
the
international
indebtedness
of
developing
countries
might
hinder
their
growth
and
development.
IB
Economics
City
Honors
School
2015-2016
77.
Explain
which
is
likely
to
be
higher
in
a
Less
Developed
Country,
Gross
National
Product
or
Gross
Domestic
Product?
78.
Distinguish
between
an
outward
oriented
growth
strategy
and
an
inward
oriented
growth
strategy.
79.
Explain
the
role
of
Fair
Trade
organizations
and
micro
credit
schemes
in
promoting
economic
development.
80.
Indebtedness,
non-convertible
currencies
and
capital
flight
are
all
significant
barriers
to
economic
development.
Explain
two
of
these
three
factors.
81.
Explain
how
the
burning
of
fossil
fuels
(e.g.
coal)
by
industries
could
create
a
market
failure
and
a
threat
to
sustainable
development.
82.
Using
the
Harrod-Domar
growth
model,
explain
how
a
country
can
increase
its
rate
of
economic
growth.
(HL
Only)