Foundation Examination - January 2015: (52) Economics
Foundation Examination - January 2015: (52) Economics
Foundation Examination - January 2015: (52) Economics
(52) ECONOMICS
17-01-2015
Afternoon
[2.00 4.00]
Time: 02 hours
Instructions to candidates
(1)
(2)
No. of Pages
: 06
No. of Questions : 07
Answers should be in one language, in the medium applied for, in the booklets
provided.
(4)
(5)
100 Marks.
SECTION - A
Multiple Choice Questions
All questions of this Section should be answered.
40 marks
01. Select from (1), (2), (3) and (4) the most correct answer to each of the following
questions. Write the number of the selected answer in your answer booklet with the
English letter assigned to the question.
(A)
A country can produce two goods, foods and clothes, in the combinations given by
the production possibility curve, NM below:
Foods
N
Clothes
(B)
(1)
(2)
(3)
(4)
(2)
(3)
The payment made by the tenants to the owners for the use of land.
(4)
(C)
Select from the following, the sentence which describes the concept Short Run in
relation to production and cost in economics:
(1)
(2)
(3)
(4)
(D)
The price elasticity of demand of a good is inelastic. If its price increases, the effect
to consumer expenditure is:
(1)
(E)
Increase.
(2)
Decrease.
(3)
No change.
(4)
(2)
(3)
(4)
Seller can divide the market for his product into various segments to charge
different prices.
(F)
40 - 6p
Supply (Qs)
-20 + 4p
(G)
6.
(2)
4.
(3)
10.
(4)
5.
Select from the following the sentence which describes Consumer Surplus:
(1)
The diference between the price that producers are willing to charge and the
price that they actually sell.
(2)
The diference between the total amount that consumers are willing to pay for
commodities and the total amount that they actualy paid.
(H)
(3)
(4)
(1)
(2)
(3)
(4)
x is a complementary good of y.
2
(I)
(J)
Air pollution.
(2)
Hazardous wastes.
(3)
(4)
Road congestion.
You are provided with the following data pertaining to an economy of a country:
Rs. (billion)
Gross domestic product (GDP)
40
10
Depreciation
05
Imports
09
Exports
08
11
(K)
Rs.41 billion.
(2)
Rs.50 billion.
(3)
Rs.34 billion.
(4)
Rs.46 billion.
48,000
Private consumption
30,000
Government consumption
10,000
Gross investments
10,000
(L)
(1)
Rs.8,000 million.
(2)
Rs.18,000 million.
(3)
Rs.38,000 million.
(4)
Rs.58,000 million.
Select from the following the item which is not included in the Broad Money
Supply:
(M)
(1)
(2)
(3)
Demand deposits.
(4)
Debentures.
According to the Annual Report of the Central Bank of Sri Lanka for the year 2013,
the per capita income of Sri Lanka for the year 2013 was:
(1)
US $ 2,400.
(2)
US $ 3,280.
(3)
US $ 2,100.
(4)
US $ 2,923.
(N)
(O)
The money which has an intrinsic value equal to or greater than the face value.
(2)
The money which has an intrinsic value less than the face value.
(3)
(4)
The face value which is stated on the notes and coins for foreign transactions.
(2)
The special value paid to foreign curencies for investment in domestic money
market.
(3)
The quantity of foreign currency notes that will be exchanged with a unit of
the domestic currency.
(4)
The amount of goods and services that can be purchased in a foreign market
with a unit of the domestic currency.
(P)
(Q)
(R)
(1)
(2)
(3)
(4)
(2)
(3)
The rate of exchange which depends on supply and demand for foreign exchange.
(4)
(S)
Equity.
(2)
Certainty.
Simplicity.
Select from the following the most correct statement in relation to Tax Holiday:
(1)
(2)
(3)
(4)
(T)
Select from the following, a short term domestic debt instrument of the government:
(1)
Letters of credit.
(2)
Treasury bonds.
(3)
Rupee securities.
(4)
Treasury bills.
(02 marks each, Total 40 marks)
SECTION - B
Answer any four (04) questions only from this Section
60 marks
02. (a)
Briefly explain three(03) reasons for the problem of choice faced by all economies.
(06 marks)
03.
(b)
(c)
(a)
(i)
(ii)
(05 marks)
(04 marks)
(Total 15 marks)
(02 marks)
State four(04) determinants of supply (other than its price affecting the
supply).
(b)
(04 marks)
With the help of a graph, explain the relationship between the market demand
curve and the firms demand curve in a perfect competitive market.
(c)
Monopolist earns super normal profits in the long run as well as in the short run.
Can you agree with this statement? Justify your answer.
04. (a)
(05 marks)
(i)
(ii)
(04 marks)
(Total 15 marks)
(03 marks)
(03 marks)
(b)
Explain why the Indifference Curve Analysis is better than Utility Theory. (04 marks)
(c)
(i)
(02 marks)
(ii)
(03 marks)
(Total 15 marks)
05. (a)
Briefly explain the three(03) approaches (methods) used to compute the national
income of a country.
(b)
(06 marks)
The table below shows data relating to national income of a country for the year
2013.
Rs. Million at
current prices
Private consumption
Government consumption
Gross investment
Exports
Imports
Net factor income from abroad
Depreciation
15,000
12,000
8,000
1,000
2,000
1,640
2,000
(05 marks)
(ii)
(04 marks)
(Total 15 marks)
06.
(a)
(b)
(c)
Explain the difference between Intrinsic Value and Face Value in relation to
money.
(03 marks)
(i)
(02 marks)
(ii)
(06 marks)
State four(04) steps that can be adopted to control the inflation in a country.
(04 marks)
(Total 15 marks)
07.
(a)
(b)
(04 marks)
(i)
(02 marks)
(ii)
(c)
(04 marks)
State five(05) main reasons to achieve successful economic growth in Sri Lanka
during the last few years.
(05 marks)
(Total 15 marks)
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