Samoa College
Year 13 Final Exam
ECONOMICS
2020
QUESTION and ANSWER BOOKLET
Time allowed: 3 Hours & 10 minutes
INSTRUCTIONS
1. You have 10 minutes to read before you start the exam.
2. Write your Student Name in the space provided.
3. Answer ALL QUESTIONS. Write your answers in the spaces provided in this booklet.
4. If you need more space, ask the Supervisor for extra paper. Write your Name on all
extra sheets used and clearly number the questions. Attach the extra sheets at the
appropriate places in this booklet.
CURRICULUM STRANDS Time (min) Weighting
STRAND 1: PROUCTION 54 30
STRAND 2: CONSUMPTION 45 25
STRAND 3: MARKET 81 45
TOTAL 180 100
Check that this booklet contains pages 2-21 in the correct order and that none of these pages is blank.
YOU MUST HAND THIS BOOKLET TO THE SUPERVISOR AT THE END OF THE EXAMINATION
1|Page
STRAND 1: PRODUCTION Weighting 30
1. Economic Concepts
Study the diagram below and use it to answer the questions that
follow.
Scarcity
Choice
Opportunity Cost
This is the subject matter of economics
(a) Define the term “Scarcity”.
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SL 1
(b) Define the term “Opportunity Cost”
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SL 1
(c) What is the opportunity cost of a student staying up watching
a late-night TV bingo?
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(d) Explain the relationship between these basic economic
concepts: scarcity, choice and opportunity cost using your
own examples.
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SL 3
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2. Production Possibilities
Imagine the choices available to Shekinah, a shipwrecked sailor on
a deserted island. We assume that Shekinah can either collect
cocoa or go fishing. On any particular day she can spend all her
time collecting cocoa, or all her time fishing or she can spend some
time on each.
Use the diagram and your knowledge of Production Possibilities to
answer the questions that follow.
Production Possibility Curve
30
25 J
20
15
Fish
10
K
5
0
0 1 2 3 4 5 6
Cocoa
7|Page
(a) Describe the shape of the production possibility curve for
fish and cocoa.
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SL 2
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SL 2
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(c) Describe the significance of a movement from point J to K.
SL 2
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3. Markets
(a) Define the term Oligopoly.
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SL 1
(b) Compare the goods market and factor market in the table
below by identifying the buyers and sellers in each market.
Seller Buyer
Type of Market SL 3
Goods Market
Factor Market
(c) Differentiate between final demand and derived
demand. Write derived demand or final demand next
to its appropriate example.
(i) Demand for COVD19 medicine______________
(ii) Demand for bus driver ___________________
(iii) Demand for Mortein insect spray_________________
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SL 3
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4. The Basis of Trade and Terms of Trade
Study the information in the table below and use it to answer the
questions that follow.
Comparative Advantage Will specialize Absolute Advantage
in:
Taro Taro Taro AND Cocoa
Samoa
Cocoa Cocoa
Fiji
Fiji has a comparative advantage in Cocoa.
(a) Define the term Comparative Advantage.
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Samoa has the absolute advantage in both Taro and
Cocoa.
(b) Define the term Absolute Advantage.
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SL 1
(c) What does the Terms of Trade measure?
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5. Government Aims and Policies
Government may use two (2) policies to accomplish its economic
aims. These policies can have an expansionary effect and/or a
contractionary effect on the economy.
How can a government reduce unemployment and increase
growth of its nation? Discuss by answering the following:
(a) Give an example of a monetary policy that can be used to
reduce unemployment and increase growth.
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SL 4
(b) Explain the expansionary effect of the monetary policy in (a)
above on employment and growth.
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(c) Give an example of a fiscal policy that can be used to
reduce unemployment and increase growth.
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(d) Explain the expansionary effect of the fiscal policy in (c)
above on employment and growth.
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STRAND 2: CONSUMPTION Weighting 25
6. The Government Budget
Study the table below of the Government Expenditures and
Revenues for Samland Economy and answer the questions that
follow.
Government Expenditures and Revenues for Highland Economy
th
ending 13 Oct 2020
2020 2019
Items
($millions) ($millions)
Administration 600 584
Education 700 1300
Health 1000 1137
Transport 800 1084
Communication 400 866
Social Services 200 1755
Foreign Relations 400 563
Total Expenditures 4100 7289
Income Taxes 1580 3735
Sales Taxes 200 2491
Profit/Interest 862 731
Internal Borrowing 900 500
External Borrowing 500 500
Total Revenue 4042 7957
(a) Name ONE national source of revenue.
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SL 1
(b) List the four larges t categories of government revenues in SL 2
2019.
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(c) Identify the MOST source of government spending in 2020.
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SL 1
(d) A contractionary fiscal policy often results in a budget
surplus
Define the meaning of budget surplus.
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SL 1
(e) A current government budget deficit puts more
burdens on the next government financial period.
Define the term budget deficit.
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SL 1
(f) Calculate the operating balance for both 2019 and 2020.
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SL 2
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(g) Describe both results of your calculations for 2019 & 2020 balance.
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SL 2
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(h) Explain the effect of a government budget deficit.
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SL 3
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SL 1
Tom’s hot-dog and a cola can budget is $5.00 a week. The price of a
hot-dog is 0.50 and the price of a cola can is $1.00.
Use the consumption possibility schedule below to answer the
questions that follow.
Possibility Hot-dog Cola Can
(Quality per week) (quantity per week)
A 0 5
B 2 4
C 4 3
D 6 2
E 8 1
F 10 0
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(b) Draw a fully labeled graph of Tom’s Budget Line on the
grid below with the quantity of hot-dogs plotted on the y-axis.
Label Tom’s Budget Line, BL1.
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SL 3
Use the information below to help you answer the questions
which follow.
SL 1
(c) Mark the following combinations of consumption possibilities on
your graph in question (c) above.
(i) Possibility V (2 hot-dog and 2 cola can)
(f) Illustrate on your graph above, how the budget line,
will change given the following changes assuming other things
remain unchanged.
(i) The price of hot-dogs increases. Label it BL2.
(ii) Tom’s income level increase. Label it BL3
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SL 4
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(e) Using your graph in (b), explain the relationship between
scarcity, choice and opportunity cost when moving from BL1 to
BL3. .
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SL 3
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SL 1
SL 1
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(c) Identify a price level that enables New Zealand to
achieve a surplus.
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(d) Calculate consumer spending at the market equilibrium.
Show all working.
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SL 2
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(e) Suppose the government decides to set the price of apple
at $1.70. Describe the effect of this government policy on
the market for apple in New Zealand.
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SL 2
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(f) Explain the statement, “Market equilibrium will not be re-
established if government sets a maximum price for
apple.”
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9. Role of Money
(a) Define store of value as a function of money.
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SL 1
(c) Name ONE function of the Central Bank of Samoa that cannot
be administered by the tradin or commercial banks currently
exist in Samoa.
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The diagram below shows further definitions of the money
supply, M1, M2 and M3 and how they relate to each other.
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SL 1
Use the information provided in the diagrams to answer the
questions that follow.
3 months term deposit 2.5 millions
Notes and coins 20 millions
Financial assets, shares worth 60 millions
Money in checkable account 30 millions
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(d) Calculate M1.
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SL 2
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SL 2
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(f) Define the term deflation.
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SL 1
(g) Name ONE monetary policy that is often used by governments
to control inflation.
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SL 1
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Explain the impact of the following events on the money supply
and inflation.
(h) Government borrowing from overseas.
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SL 3
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SL 3
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10. GNE, GNI and GDP
(a) Define Gross National Expenditure as a measure of the
circular flow.
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(b) Define GDP at constant prices as a measure of
economic performance.
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(c) Define GDP per capita as a measure of circular flow.
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Define the following concepts as they are used in economics.
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(d) Floating exchange rate system.
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(e) Currency Depreciation
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(f) Currency Revaluation
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(g) Explain the effect of Appreciation on Balance of Payments.
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SL 3
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SL 4
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11. Economic Development
(a) Define the term ‘negative economic development’.
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(b) Identify a one characteristic of a least developing country.
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(c) Name a feature of a least developing country.
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d) Discuss the development of Samoa’s economy with
reference to the Social and Economic indicators of
development.
Complete the table below by:
Describing each indicator and
Describing how each indicator can be used to indicate the levels of
development.
SL 4
Social or Descriptor of How it indicates
Economic Indicator levels of
Indicator development
Eg Access to Whether students The higher the
education can easily get to a level of education
school to get an that student can
education at get, the higher the
primary, secondary level of
or tertiary development OR
the higher the % of
students who can
go to primary or
secondary school,
the higher the level
of development.
(a) Access to quality
water supply and
Sanitation.
(b) Healthcare and
Disease.
(c) Proportion of
GDP saved
each year.
(d) Government
expenditure on
education as a
percentage of
GDP.
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