A2 Economics Revision

Limits to Growth and Development 1.Why are investors in Kenya reluctant to build new offices? 2.What happened in Kenya at the start of 2010? 3.What is disappointing about the fact that black children in South Africa still lag behind their white counterparts in terms of educational attainment? 4.How was Angola’s GDP growth between 2006 and 2009 affected by the recession? 5.How has oil helped Angola? 6.Why has a whole generation in Angola missed their education? 7.Why did hyperinflation occur in Zimbabwe? 8.Why have malaria nets campaigns damaged economic growth in many African countries? 9.How did the HIPC initiative help Uganda? 10.By 2012, what proportion of Rwandan children aged between 9 and 12 will have a laptop?

Limits to Growth and Development 1.Why are investors in Kenya reluctant to build new offices? Patchy electricity service 2.What happened in Kenya at the start of 2010? 3 new fibre-optic cables arrived 3.What is disappointing about the fact that black children in South Africa still lag behind their white counterparts in terms of educaitonal attainment? There has been significant investment 4.How was Angola’s GDP growth between 2006 and 2009 affected by the recession? 20% to 1.5% 5.How has oil helped Angola? Helped to bring peace and prosperity, the port is being modernised and new roads and railways are being built 6.Why has a whole generation in Angola missed their education? 14 year war of independence with Portugal followed by 3 decades of fighting between communists and pro-Western groups 7.Why did hyperinflation occur in Zimbabwe? Government began printing money 8.Why have malaria nets campaigns damaged economic growth in many African countries? Nets were imported, which led to the loss of local manufacturers 9.How did the HIPC initiative help Uganda? Money saved from debt relief was spent on improved education and healthcare including a programme about HIV and AIDS 10.By 2012, what proportion of Rwandan children aged between 9 and 12 will have a laptop? All

Draw the Harrod-Domar Model

Put these in the correct order

Supply-Side Policies Explain how each of the following will remove labour market imperfections and achieve a lower equilibrium rate if unemployment:Explain how each of the following will remove labour market imperfections and achieve a lower equilibrium rate if unemployment: –Reform the welfare system to reduce the risk of the poverty trap. –Reduce trade unions’ collective bargaining power. –Reduce income tax. –Relax immigration laws.

Expectations-augmented Phillips Curve

Long-Run Phillips Curve

D

D A The economy is operating at the NRU and workers expect inflation to be 3.5%. B Workers expect inflation to increase to 4.5% and demand higher wages. Firms mistakenly expect sales to rise due to the price rises and hire extra workers. C Workers refuse to supply labour at 4.5% inflation and firms refuse to demand labour. D There is an increase in aggregate demand due to government subsidies for new industries, which causes workers to seek new jobs and firms to re-employ workers.

Cost-push inflation Demand-pull inflation

Match the Definitions The government’s annual announcement of changes to its planned levels of spending and taxationThe government’s annual announcement of changes to its planned levels of spending and taxation The proportion paid in tax falls as income increases.The proportion paid in tax falls as income increases. People or firms with the same income and/or financial circumstances pay the same amount of tax.People or firms with the same income and/or financial circumstances pay the same amount of tax. When taxes are earmarked for a specific purpose eg Labour 1990s (education)When taxes are earmarked for a specific purpose eg Labour 1990s (education) Taxes should be linked to the benefits received by taxpayers.Taxes should be linked to the benefits received by taxpayers. The proportion of income paid in tax stays the same as income increases.The proportion of income paid in tax stays the same as income increases. The characteristics of a ‘good tax’ (Adam Smith).The characteristics of a ‘good tax’ (Adam Smith). The amount people or firms pay is based upon their ability to pay.The amount people or firms pay is based upon their ability to pay. Modern list of characteristics of a ‘good tax’.Modern list of characteristics of a ‘good tax’. The proportion paid in tax increases as income increases.The proportion paid in tax increases as income increases. Proportional taxProportional tax Principles of taxationPrinciples of taxation Benefit principleBenefit principle Canons of taxationCanons of taxation Progressive taxProgressive tax The BudgetThe Budget HypothecationHypothecation Horizontal equityHorizontal equity Vertical equityVertical equity Regressive taxRegressive tax