rIII

Economics I

o30O4 Nov. ZOLO 8.3O -11.3O am

ADVANCED LTVEL NATIONAL

SUBJECT: ECONOMICS

PAPER I: BASIC

COMBINATIONS: -

RWANDA NATIONAL EI(NVIINATIONS COI'NCIL

P.O.BOX 38 17 KIGALI-TEL/FAX: 58687 1

PRINCIPLES OF ECONOMICS

HISTORY-ECONOMICS-GEOGRAPHY: HEGMATHS-ECONOMICS-GEOGRAPIIY: MEGMATH$COMPUTER SCIENCBECONOMICS:MCEHISTORY-ECONOMICS-LITERATURE: HEL

DURATION : 3 HOURS

INSTRUCTIONS:

This paper consists of TWO sections: A and B.

Section A: Answer ALL questions.

Section B: Answer any THREE questions of your choice.

(55 marksf

(45 marks)

030 - Page I of 4

(a)(b)

(a)(b)

1.

2.

SECTION A - Answer ALL the questions. (55 marks)

3.(a)(b)

What is meant by consumer sovereignty?State any four determinants of aggregate demand

Explain how factors of production are rewarded.Given that a factor of production receives transfer earning of4,000,000 RWF and its economic rent is twice its transfer earnings.Required: Calculate the factor's actual earnings.

Distinguish between localization and delocalization of industries.State three advantages of localization of industries in your country.

(1 mark)(4 marks)

{3 marks}

(2 marks)

(2 marks)(3 marks)

(1 mark| .

{3 marks}(1 mark)

(3 marks|

(2 marks|

(3 marksf

mark)mark!

marksf

marksf

4.(a) Define income elasticity of demand.(b) When the income of a consumer increased from 120OO RWF to

18,000 RWF, the quantity demanded of commodity X changed from350kg to 42O kg per day .

Required: (i) Calculate the income elasticity of demand.(ii) What type of commodity is X?

5. (a) What are the main features of perfect competition?(b) How are profits maximized in the long-run under perfect competition?

Illustrate your answer.

6. (a) State tirree factor-s tiiat determine the size of a country's nationalIncome.

(b)study the table below which shows items of national incomeaccounts and answer the following questions.

Elements of NationalIncome Accounts

US$ Billions

Consumption 85Investment 6.Government Exoenditure 47Imports 12Exports 9

Required:(0 Calculate the current equilibrium level of national income.(ii) Calculate the total amount of injections (Domestic revenue).

7. (a) Differentiate between economic growth and economic development.12

(b) Explain why economic growth may not be necessarily accompaniedby economic development. (3

(1(1

x.n ',.' "qr

)!. .A ",^J -1 u2/ n( uu6, (. A 4,j') [* "*- a. 4.".- ituf;X ttr' q,Z

?,h'\r Y *li c +<^','iv i -lL-'()

030 - Page 2 of 4 _1;,a-\{:' \'-

..". ,i,:::,

, !;1, \ti--l:;":I

.;

8. (a) What is demand pull inflation ?(b)State anlr for11 poti"y *.asures that can be used to reduce

(1 markfdemand-pull inflation in your country. (4 marks)9' (a) Explain the marginal productivity iir.ory of wages. (2 marks|' (b)Mention any three advantages of ,"i.rg piece rate System of payment.(s marks|

" ,' 10.(a) Differentiate between tr-ade-embargo-and tariff barriers as instmments'r of protectionism in international trade.

(b) GivL three factors responsible for increased international labou , " marks)

mobility in recent years. *qLrvr (O marks)

1 1. (a) What is appropriate technologr?(b) Identisr problems associated iitr, foreign aid in developingCountries.

sEcrroN B: Answer only 3 questions of your choice (4s marks|

{2 marks}

(3 marks|

12. (,a) Explain tlre law of comparative advantage.(b) Discuss the benefits

".rd 1i*itations or tfie principles

advantages.

13. (a) What is a regressive tax?

(2 marks|of comparative

(b) Explair lry five principles of good taxation.(c) Acceunt fcr the rc.-*,lever te-y re.-:enue ia ycur ccuntry.ra' @) what are the causes of row agricultural froduction in Rwanda?(b) Suggest measures your government should take to ..,"or..g.commercial crops

(2 marks)substitution

{13 marks}

(1 mark)(5 marksl{9 marks}(7 marks|

(8 marks)

(13 marhs|

(2 marks|

(13 marks)

15* (a) Briefly explain the term "import substitution industrial strategr,,.

(b) Examine the merits and demerits of using importindustrial strategr in developing countries.

16r (a) What is price mechanism ?(b) Examine the advantages and disadvantages of price mechanism.

,. . .. | .:,. ,,'

-.rli,:\'--]tr

,lt: .., t' i

030 - Page 3 of 4