9708 - Skill Exercise X1
9708 - Skill Exercise X1
9708 - Skill Exercise X1
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Contents
Introduction ................................................................................................................................4
Knowledge and understanding (AO1) ......................................................................................5
Exercise 1: Key terms and definitions ...................................................................................5
Exercise 2: Understanding formulas ...................................................................................18
Exercise 3: Understanding and explaining syllabus content ............................................. 21
Skills Exercises
Introduction
Cambridge International AS & A Level Economics attracts a variety of learners from many different
backgrounds. For some learners Economics is a new subject and an opportunity to explore an area of study
that interests them, while developing a set of transferable skills. Other learners have previously studied
Economics and are looking to continue developing their knowledge of the subject. Either way, the study of
Economics allows learners to experience the diverse and dynamic world within which different economies
exist and gain the knowledge needed to understand how governments and markets operate within real
contexts, analyse alternative courses of action and develop the ability to make justified recommendations.
4
Skills Exercises
Give learners Worksheet 1: Economic terms and ask them to define the terms.
Learners could peer assess each other’s work using the answer sheet.
Lead a group discussion to ensure understanding of the terms and definitions.
Challenge learners to apply the terms to the correct context.
5
Skills Exercises
2.
Actual production Production potential
3.
Ad valorem tax Specific tax
4.
Asym m etric inform ation Moral hazard
5.
Devaluation of currency Depreciation of currency
6.
Direct taxes Indirect taxes
7.
Econom ic grow th Econom ic developm ent
6
Skills Exercises
8.
Econom ies of scale Increasing returns to scale
9.
Equality Equity
10.
Free goods Econom ic goods
11.
Free trade area Custom union
12.
Governm ent borrowing National debt
13.
Inflation Disinflation Deflation
14.
Internal value of m oney External value of m oney
15.
Kinked dem and curve The Kuznets curve
7
Skills Exercises
16.
Laffer curve Lorenz curve
17.
Liquidity trap Poverty trap
18.
Market equilibrium Consum er equilibrium
19.
Money Cheques Credit cards
20.
Multiplier Accelerator
21.
Norm al goods Inferior goods Necessities
22.
Price elasticity of dem and Price elastic dem and
23.
Prim ary incom e Prim ary sector
8
Skills Exercises
24.
Production Productivity
25.
Profits Profitability
26.
Public goods Private goods
27.
Qualities of m oney Functions of m oney
28.
Real incom e Disposable incom e
29.
Secondary incom e Secondary sector
30.
Social cost External cost
31.
Tax rate Tax am ount
9
Skills Exercises
32.
Term s of trade Balance of trade
33.
Trade creation Trade diversion
34.
Trade deficit Budget deficit Current account deficit
35.
Transfer paym ents Transfer earnings
36.
Universal benefits Means tested benefits
37.
X-efficiency Dynam ic efficiency
10
Skills Exercises
Activity 1: Formulae
Give learners Worksheet 2: Formulae and ask them to provide the correct formula for each
economic term.
18
Skills Exercises
Learners identify which statements are correct and which are incorrect, explaining their choice in each
case.
Lead a group discussion to embed learners’ knowledge and understanding of the syllabus content.
21
Skills Exercises
For each of the following statements, identify which ones are correct and which are not. Explain your
choice in each case.
1. An outward shift in production possibility curves (PPC) may initially raise unemployment.
3. A falling inflation rate does not mean that the price level is falling as well.
4. There is a higher number of people in employment in a country where the unemployment rate is
low compared to a country with a high unemployment rate.
5. For the price level to be stable, the rate of inflation must be stable.
8. Roads and motorways are examples of public goods; thus, they must be provided by the
government.
9. Higher income taxes force consumers to consume less and save more.
10. A product has price elastic demand (PED) when a rise in its price causes a fall in its quantity
demanded.
22
Skills Exercises
11. A perfectly competitive firm maximizes profits where its sale price equals the marginal cost of the
last unit produced.
12. The higher the Gini Coefficient, the greater would be the income inequalities.
13. According to the law of diminishing returns, adding more and more variable inputs will result in
falling output.
14. Lowering income taxes and lowering interest rates are demand side tools as well as supply side
tools.
16. A comparatively higher inflation rate in country X than country Y necessarily means that the price
level in country X is higher.
17. Minimum price should be imposed on demerit goods and maximum prices should be imposed on
merit goods to change their consumption to the optimal level.
18. According to Keynesians, a market economy is inherently unstable and the government must play
a stabilising role through monetary and fiscal policies.
23
Skills Exercises
22. Increased government expenditures financed by borrowing from the central bank raises the
money supply by an amount higher than the increase in government expenditures.
23. Decreasing the period when the unemployed are eligible for welfare payments will help reduce the
natural rate of unemployment.
24. According to Phillips curve, it is possible to achieve low inflation and high economic growth at the
same time.
25. The exchange rate should be raised and interest rate should be decreased to reduce
unemployment.
24
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