نمونه 2

UNIVERSITY OF LONDON
SESSIONAL EXAMINATION FOR THE EXTRA-MURAL CERTIFICATE/DIPLOMA IN ECONOMICS 2004


Economic Principles


Answer THREE questions, at least ONE from Section A and at least ONE from Section B.


Section A

1. “Economics is the study of the allocation of scarce resources amongst competing wants”. What does this sentence mean? What do you understand by the phrases “positive economics” and “normative economics”? Is economics a science?

2. Explain the concepts of equilibrium price and equilibrium output in a market. Use demand and supply diagrams to illustrate your answer. Again using demand and supply diagrams analyse the potential impact of the following changes on the market for package holidays in Majorca:

a) the introduction of a tourist tax of 10 euros per person per day
b) an outbreak of legionnaires disease on Majorca
c) the introduction of cheap package holdays to the Caribbean
d) the building of a new resort on Majorca with a major increase in hotel capacity
e) an economic boom in Western Europe

3. Explain what conditions are necessary for a market to be “perfectly competitive”. How does a firm operating in a perfectly competitive market set its price and output? What happens in such a market if firms are able to achieve high levels of profitability?

4. Tobacco products are addictive and therefore are price inelastic. What does this sentence mean? Why do you think therefore that historically governments have sought to tax tobacco consumption? Is taxing tobacco products likely to reduce deaths from cancer and heart disease? What alternative economic policies could a government use to deter people from smoking?

5. What do economists mean by oligopolistic markets? What are the economic arguments for and against allowing an increasing level of concentration of UK industrial output in the hands of fewer firms?

6. What do economists mean when they refer to market failure? What are the economic arguments for and against charging for entrance to museums?




PLEASE TURN OVER


Section B



7. Explain how a simple model in which prices are fixed, consumption depends on income and investment is dependent on exogenous decisions by investors could be used to explain the level of national output within an economy. Use the model to analyse the effect on an economy of

a) An increase in government spending
b) A cut in the tax rate
c) An increase in exports
d) A collapse in investment

8. Using the aggregate demand and aggregate supply model examine the effect of each of the following on real GDP and the price level:

a) An increase in government spending and cut in taxation
b) An increase in exports
c) A collapse in investment
d) An increase in wage rates
e) A fall in the price of oil

Explain what this model would predict would happen in the long run in the absence of government policy change.

9. What is the Phillip’s curve? What is the difference between the short run and long run Phillip’s curve? What determines the Non-Accelerating Rate of Inflation rate of Unemployment (NAIRU) and what could be done to lower it?

10. What is money? What determines the demand for money within an economy? Why does raising and lowering interest rates have an effect on the economy? Why do you think that control of interest rates has been given to the Monetary Policy Committee of the Bank of England?

11. What is meant by the term “balance of payments deficit”? Identify ways in which a country can attempt to reduce a deficit. Would you consider such options to be costless?

12. Explain the theories of “absolute advantage” and “comparative advantage”. What are the economic arguments put forward by proponents of free trade? In what circumstances might a country not want to promote free trade?

نمونه سوال 1

University of London Extra Mural Examinations
Economic Principles


Students should complete THREE questions. At least one of which should be
from Part A and one from Part B. Students are asked not to answer questions
which are substantially the same as coursework submitted for examination

Section A:
What is the difference between price elasticity, cross elasticity and income elasticity of demand

If the market for Big Mac Meals had the following elasticities what would it mean and what would your advice to MacDonald’s management be?

Price elasticity = -0.2
Income elasticity = -0.8
Cross elasticity with respect to Pizza Hut Meals = 1.0

2. Recently the market for coffee has seen both increasing production and declining demand. Use supply and demand analysis to show how these factors will affect the price of coffee.

What steps might be taken by coffee producers to improve their situation?

3. With the aid of examples explain what is meant by an externality? With reference to the introduction of congestion charging in Central London explain how the market mechanism can be used to address externalities. Apart from the market mechanism how else could environmental problems generated by externalities be addressed?

4. What defines a perfectly competitive industry? How does a firm operating in a perfectly competitive industry determine what level of out put to produce? If there is a sudden increase in demand for the industry’s output how will this effect the firm’s output, price and profitability?

5. Why are monopolies regulated? How are they regulated in the UK? Are there any economic arguments in favour of tolerating low levels of competition in certain UK industries?

6. In what sort of circumstances do free markets not provide the best way of allocating scarce resources? Illustrate your answer with some relevant examples.





Turn over
Section B:

7. Using a Keynesian macroeconomic model in which prices are fixed explain what will happen to the level of national output if:
· There is a collapse in investment
· There is a boom in exports
· There is an increase in government spending
· The government cuts the tax rate
What are the limitations of this model?

8. Using the aggregate demand and supply model analyse the impact of:

a) a decline in world trade
b) a fall in labour costs
c) a government policy of consistently running fiscal deficits

Your answer should consider both the short-run and the long-run impacts of these factors.

9. What is money? For what reasons are people prepared to hold money rather than interest-bearing assets? If the Bank of England cut interest rates what would this do to the demand for money? If the money supply remained unchanged what would happen?

10. What is the Phillip’s curve? Why do economists argue that there is no long run trade-off between the level of inflation and unemployment? What are the relative economic costs of inflation and unemployment?

11. What do economists mean when they distinguish between involuntary and voluntary unemployment. If you thought that most unemployment was involuntary what sort of policies would you recommend a government should adopt to promote full employment?

12. Britain should join the Euro at the earliest opportunity. What are the economic arguments for and against this statement
.