Economics Paper 2 questions 1- 2 marks

Question 1

The increased integration and interdependence of economies is known as
A privatisation
B specialisation
C protectionism
D globalisation

Answer 1

D globalisation

Question 2

What is the main cause of frictional unemployment?
A People choosing not to work
B People having the wrong skills
C People changing jobs
D People employed at certain times of the year

Answer 2

C People changing jobs

Question 3

What is meant by the term interest rate?

Answer 3

Award 1 mark for reference to cost of borrowing and 1
mark for reference to reward for lending.
The cost of borrowing (1) and the reward for lending/saving (1)
OR
The cost of borrowing/the reward for lending/saving money (1)
An interest rate is normally expressed as a % of the total
borrowed/lent/saved (1)

Question 4

Describe one impact on consumers of a decrease in interest rates.

Answer 4

Award 1 mark for reference to the impact and 1 mark for
development of the impact.
The cost of borrowing has become cheaper (1) therefore more
consumers take out loans to buy products (1)

Question 6

What is the name of the term used to describe tax on income, wealth and profit?
A Direct taxation
B Value added tax
C Excise duties
D Indirect taxation

Answer 6

A Direct taxation

Question 7

State one way businesses can damage the environment.

Answer 7

Award 1 mark for one correct way.
* Visual pollution
* Noise pollution
* Air pollution
* Water pollution
Accept any other appropriate responses.

Question 8

What is meant by the term supply-side policy?

Answer 8

Award 1 mark for reference to increasing productive
capacity and 1 mark for reference to aggregate supply.
Policies designed to increase the productive capacity of the
economy (1) by influencing aggregate supply (1)
OR
Government measures (1) designed to increase aggregate
supply in the economy (1) (2)
Question
Number
Answer

Question 9

What is the name given to a country’s exports and imports of physical goods?
(1)
A Trade in goods
B Income flows
C Trade in services
D Transfer payments

Answer 9

A Trade in goods

Question 10

What term refers to a firm or country selling an export below the cost of production?
A Quotas
B Dumping
C Deregulation D Tariffs

Answer 10

B Dumping

Question 11

In a recovery, a country’s Gross Domestic Product (GDP)
A rises
B falls
C stays the same
D fluctuates

Answer 11

A rises

Question 12

A trade bloc is a group of countries that have
A the same interest rate
B common borders between members
C the same currency
D a reduction in trade barriers between members

Answer 12

D a reduction in trade barriers between members

Question 13

What is meant by the term multinational corporation (MNC)?

Answer 13

Award 1 mark for reference to a firm and 1 mark for
reference to different countries
An enterprise/company/firm (1) that produces/sells/operates
in more than one country/many countries (1)

Question 14

Describe one impact of economic growth on the productive potential of a country.

Answer 14

ward 1 mark for reference to the impact and 1 mark for
further development.
The productive potential will increase (1) due to greater
investment in capital goods (1)
OR
The productive potential will increase (1) as firms invest more
from greater profits (1)

Question 15

What is the name of the policy that focuses on interest rate changes?
A Deregulation
B Exchange rate
C Monetary
D Fiscal

Answer 15

C Monetary

Question 16

State one impact of a current account deficit.

Answer 16

ward 1 mark for one correct impact
* Leakage from the economy
* Problems finding foreign reserves to fund the deficit
* Can be inflationary
* Unemployment
* Falling output/GDP
Accept any other appropriate responses

Question 17

What is meant by the term absolute poverty?

Answer 17

Award 1 mark for reference to household income and 1
mark for reference to basic needs.
A condition where household income is below a necessary
level (1) to provide the basic needs for survival (1)

Question 18

Kenyans who holiday in South Africa would be shown on the Kenyan current account as
A an invisible import
B a visible export
C a visible import
D an invisible export

Answer 18

A an invisible import

Question 19

Which one of the following is an example of an indirect tax?
A Inheritance tax
B Income tax
C Business tax
D Value added tax

Answer 19

D Value added tax

Question 20

(a) International trade that takes place with no restrictions is known as
A globalisation
B protectionism
C free trade
D Foreign Direct Investment

Question 21

What is the name given to a country’s exports and imports of services?
A Visible trade
B Invisible trade
C Transfer payments
D The balance of payments

Question 22

What is meant by the term unemployment?

Question 23

What is meant by the term trade-off?

Question 24

This is an example of what type of taxation system?
A Indirect
B Progressive
C Regressive
D Value added

Question 25

To improve the standard of living, which one of the following is a government likely to reduce?
(1)
A Welfare payments
B Subsidies for housing
C Education
D Indirect taxes

Question 26

State one method of government intervention that should lead to the protection of the environment.

Question 27

What is meant by the term relative poverty?

Question 28

A fiscal surplus occurs when
(1)
A a country exports more than it imports
B government revenue is greater than government expenditure
C a country imports more than it exports
D government expenditure is greater than government revenue