Effects-of-the-Japans-311-Earthquake.docx

January 2005 1(a) Explain, with the use of an example, what is meant by division of labour. Division of labour is the specialization of labour. It means each worker specializes in different jobs. For example, X farmed, Y fished, Z weaved. Everyone was responsible for the entire production process of a certain product. (b) Identify one advantage and one disadvantage of division of labour.Advantage: There is greater chance that people will be able to do those things at which they are best and which interest them the most.Disadvantage: People come to rely on others for the provision of goods and service.2 (b)(i) What is meant by the term “inelastic”?It is used to describethe situation in whichthe supply and demand for a goodare unaffected when the price ofthat good or service changes. (ii) Give one reason why the demand for oil may be inelastic.As Venezuela is the worlds fifth largest oil producer, many countries rely on the oil as it becomes basic necessities. Therefore, the demand for oil may be inelastic.(c) Identify two possible effects the strike may have had on Venezuelas economy.(1) As there is a national strike in Venezuela, it affects the production of oil so that the output will decrease severely, which will decrease the GDP of Venezuela resulting in a loss for its economy.(2)The strike may bring unemployment on Venezuelas economy.3(a) What is meant by the term “trade gap”? It is the difference between the value of a countrys imports and that of its exports.(b) Using the data above, identify the country which:(i) increased its exports to the UKGermany (ii) experienced the greatest fall in trade with the UKUSA(c) Briefly explain two ways in which a country could decrease its imports.(1) The government can provide subsidy to the local producers so that the price of the local goods will become cheaper.(2) The government can provide import tax which will increase the price of the imported goods, as a result in decreasing its imports.4. Briefly explain two factors which affect the location of clothing factories. (1) Transportation: Transportation is a main factor affecting the location of clothing factories. For example, when there are two markets (A and B), A is near to the factories while B is far from it. The clothing factories will be located near A as it can reduce the cost of transportation, it can also save time as it is nearer.(2)Labour: For some countries, the cost of employing labour (like China) is cheaper than the others. This is a main factor as it can reduce the cost.5 (a) Identify three factors which will lead to an increase in the population of a country.(1) There is an increase in population due to net inward migration by people from overseas. (2) The number of people dying has fallen.(3) The number of babies being born has increase.(b) Identify two main differences in the age distribution of Nigeria and Austria as shown in the population pyramids.(1) The death rate and birth rate are high in Nigeria. The amount of people over 80 years old in Nigeria is smaller than the amount in Austria. The amount of people around 0-4 years old in Nigeria is greater than the amount in Austria.(2) The amount of people around 15-85 years old in Austria is greater than the amount in Nigeria.(c) What economic problems might arise from the projected changes in the population from 2003 to 2025 in:(i) Austria, The amount of people around 55-64 years old has risen; the government there may need to provide some pension which will increase the expenditure. The amount of people around 30-44 years old has decreased, the GDP may reduce.(ii) Nigeria, The birth rate of Nigeria has risen, there are not enough food for every of them. There would be famines and plagues as people lacked the strength to fight off disease which will decrease the output of the country.6. Using examples, distinguish between occupational and geographical mobility of labour.Occupational mobility of labour is the ease of workers to change form one occupation to another. For example, when there are better promotion chances, industry prospects, social status, and occupational mobility is lower for occupations. Geographical mobility of labour is the ease of workers to move from one place to another to work. For example, when the transport of some places has become convenient in A, the geographical mobility of labour among the various districts of A will increase. 7(a)(i) What are the key characteristics of a market economy?A market economy is an economy in which the prices of goods and services are determined in a free price system.This is often contrasted with a fixed price system.Market economies can range from hypothetically pure laissez-faire variants to an assortment of real-world mixed economies, where the price system is under some government control or heavily regulated. The state-led economic planning is not extensive enough to be labeled a planned economy.In the real world, market economies do not exist in pure form, as societies and governments regulate them to varying degrees rather than allow self-regulation by market forces.(ii) With reference to an economy of your choice, briefly discuss the extent to which it can be described as a market economy.The shift from a command economy to a market economy has proven to be difficult; in particular, there were no theoretical guides for doing so before the 1990s. One transition from a command economy to a market economy that many consider successful is that of the Peoples Republic of China, in which there was a period of some years lasting roughly until the early 1990s during which both the command economy and the market economy coexisted, so that nobody would be much worse off under a mixed economy than a command economy, while some people would be much better off.(b) With use of diagrams, discuss the effects of the following measures taken by a government:(i) subsidizing public transport,As the government provide subsidies to public transport, people are more willing to take it than to drive their own cars because the cost of taking public transport has decreased. The quantity demanded for buses has increased.(ii) banning cigarette advertisingAs there are no advertising anymore, some people who know nothing about cigarette may not take cigarette, it may also reduce the amount of people of taking cigarette.9(a) Using examples, explain what is meant by:(i)the public sector:The public sector in an economy is owned and controlled by a government. It consists of government organizations, and goods and services provided by the government, such as the state education, roads, public parks, the armed forces and the legal system.(ii) Direct taxesDirect taxes are taken directly from a person or firm and their incomes or wealth. They include income taxes, corporation taxes on company profits, capital gain taxes on property and other valuable assets, and inheritance taxes.(b)Apart from direct taxes, briefly describe other ways of funding improvements in the public sector.The public sector can issue debentures in order to increase the capital; people would like this as they can receive interest after a period of time, as the interest rate of the bank is low. If the public sector does not have much money, it can borrow money from other countries. Moreover, the government bonds can be increased in order to fund improvements in the public sector.(c)What are the main advantages and disadvantages of increasing direct taxes to fund the improvements?Advantages:The progressive nature of direct taxes means that wealthier members of society are taxed more heavily than poorer groups to help reduce income inequalities. The total amount of money collected from direct taxes can be estimated with reasonable accuracy in advance, which is of great help to a government when planning how much it can spend.Disadvantages:A high rate of tax on income may cause people to work less hard because they know that the more they earn the greater the proportion of their income will have to pay the tax.High tax rates increase the advantages of evading taxes and finding loopholes in tax laws. As a result, revenues are lower and the trouble of trying to catch up with tax evaders increases a governments costs.10(a) Why might a government want to encourage competition in an economy?When there is competition in an economy, the quality of goods and services will be better as firms have to improve the quality of their products in order to attract people to buy. Moreover, firms will not raise the prices easily because people will buy goods which are cheaper as the goods will become less competitive if the price is high.(b)Explain how the following may encourage competition in an economy:(i) Privatization:Nationalized industries have little or no competition may become inefficient and provide a poor service to the customer. Private industries are forced to compete for profit they will become more competitive, improve their product quality, and lower prices results in increasing the living standard of customers. (ii)the country becomes a member of a trading bloc or customs union.When a country becomes a member of a trading bloc, it leads to more trades to other countries. Competition between the countries will occur. If the country becomes a member of customs union, there is common external tariff between the countries, so that they cannot set up trade barriers by increasing tariffs. Therefore, competitions between the countries become more active.(c) What other measures might a government take to increase competition in an economy?A government can organize exhibition which is an industrial one in order to exchange technological production skills. The government can also set up immigration policy to attract talented people. 11(a)Describe, with examples, the main forms of unemployment in a country of your choice.Frictional unemployment occurs as workers change jobs and spend time looking for a new one. Workers may become unemployed for relatively short periods.Seasonal unemployment occurs because consumer demand for some goods and services is seasonal.Cyclical unemployment occurs when there is too little demand for goods and services in the economy during an economic recession.(b)How might the following affect the level of unemployment in a country:(i)the introduction of a minimum wage rate:The introduction of a minimum wage rate increase unemployment. This is because a greater number of workers are willing to work at the higher wage while a smaller numbers of jobs will be available at the higher wage. Companies can be more selective in those whom they employ thus the least skilled and least experienced will typically be excluded.(ii)a world recession:A world recession causes many firms close down and the demand of labour falls so it leads to unemployment. People who are especially low-skilled, low-educated and the young are most vulnerable to unemployment.12.(a)What is meant by inflation?Inflation refers to a general and sustained rise in the level of prices of goods and services in a period of time.(b)How might inflation affect the four functions of money?Medium of exchange:Inflation reduces the effectiveness of money as a medium of exchange. High inflation means that it becomes difficult to place a value on goods because the value of money is always falling. Store of value:As inflation increases, the volatility of the inflation rate tends to increase. This means that it is harder to place a value on money, thus it becomes more difficult to use it as a store of value.Standard of deferred payment:With a high rate of inflation, the real value of debt erodes. This means that it is effectively easier to pay back the debts.Unit of account:With high inflation there will be greater menu costs. This is the cost of changing price lists to reflect the changing value of money.(c)Discuss three policies a government might use to control the rate of inflation.A government can use monetary rule to keep inflation low. It should allow the supply of money to expand at the same rate as the increase in real output or real GDP over time, so that people have enough money to buy up extra products.An increase in government expenditure leads to an increase in aggregate demand in an economy as it may cause demand-pull inflation. The government should lower the spending of itself in order to avoid the increase of aggregate demand,.Fixed exchange rates can also be used to control inflation. When the value of currency decreases, it increases the rate of inflation. The currency should keep at a certain level in order to make the export becomes competitive so that the demand for the currency will not decrease. 13(a) Describe the role of the:(i)World Trade Organization (WTO):The World Trade Organization (WTO) is an organization that intends to supervise and liberalize international trade. The organization deals with regulation of trade between participating countries; it provides a framework for negotiating and formalizing trade agreements, and a dispute resolution process aimed at enforcing participants adherence to WTO agreements.(ii)World Bank:The World Bank is an international financial institution that provides loans to developing countries for capital programmes. The World Bank has a g