Question 4

Reducing unemployment and inflation is top priorities for most of the governments.

a) Explain what is meant by demand-pull and cost-push inflation. (4 marks)

b) Discuss the policies a government may use to reduce unemployment. (6 marks)

Question 5

a) Explain two reasons why aggregate demand curve slopes downwards. (2 marks)

b) Discuss two factors which determines the Short Run (SR) aggregate supply. (8 marks)

Question 6

Even though it is mutually beneficial for countries to engage in international trade, countries put restrictions on international trade.

a) Briefly explain 3 reasons for placing restrictions on international trade by countries. (6 marks)

b) Discuss two arguments against trade protection. (4 marks)

Question 7

a) What is Balance of Payments? Define the three components of the Balance of Payments. (4 marks)

b) Discuss whether trade deficits in a country's BOP is a problem. (6 marks)