(a) Define inflation.
(b) Identify any three causes of: (i) demand-pull inflation; (ii) cost-push inflation .
(a) What is economic development?
(b) State three features of a developing country.
(c) Explain any four factors that can speed up the economic development of your country.
(a) State two features each of: (i) free trade area; (ii) common markets.
(b) outline two advantage and two disadvantage of a common market.
The following data shows the budget of hypothetical country in2006. Study data and answer the questions that follow:
| Revenue | [$ million] |
| Company tax | 240 |
| Workers' income tax | 160 |
| Excise duties | 80 |
| Taxes on exports | 100 |
| Value added tax | 150 |
| Import duties | 90 |
| Non-tax revenue | 40 |
| Expenditure | [$ million] |
| Construction of roads | 100 |
| Building of schools | 120 |
| Payment of workers' salaries | 150 |
| Government administration | 200 |
| Maintenance of health facilities | 220 |
| Extension of electricity to rural areas | 180 |
| Maintenance of official vechicles | 70 |
(a) How many revenue was realised from:
(i) direct taxes;(3 marks) ,(ii) indirect taxes (3 marks)
(b)Calculate the total:
(i) recurrent expenditure (3 marks) ,(ii) capital expenditure (3 marks)
(c) What pencentage of total revenue was collected as indirect taxe? (3 marks)
(d) State two examples of non-tax revenue (2 marks)
(e) What was the budget surplus or deficit? Explain your answer. (3 marks).
The utility schedule of a consumer for a brand of ice cream is shown in the table below. Use the information to answer the questions that follow:
| Units Consumed (Q) | Total Utility (TU) | Marginal Utility (MU) |
| 0 | 0 | - |
| 1 | 10 | 10 |
| 2 | 19 | R |
| 3 | P | 6 |
| 4 | 30 | 5 |
| 5 | 31 | S |
| 6 | Q | 0 |
| 7 | 29 | -2 |
(a) Calculate the values of P,Q,and S. (8 marks).
(b) Given that the jprice of ice cream is $ 1.00 per unit, at what level of consumption is the consumer in equilibrium? Explain your answer. (3 marks).
(c) Use a graph sheet, draw the marginal utility curve.(3 marks).
(d) State the law of diminishing marginal utility. (3 marks).
