problem 1: The basic economic problem is best solved by a social market economy. Describe this statement pointing out the main characteristics of the social market economy.

problem 2:

a) Outline the major factors, other than price, that influence the demand for a product.

b) Describe the concepts of the given, pointing out how each is measured:

•    Price elasticity of demand.
•    Price elasticity of supply.

problem 3:

a) Define with illustrations fixed costs and variable costs.

b) By using a diagram describe how the short run average cost curve is derived from the average fixed cost and average variable cost.

problem 4: Describe why the allocation of resources in a perfectly competitive market might be more proficient than in a monopoly market.

problem 5:

a) By using a suitable diagram describe the four stages of the business cycle.
b) Outline the major causes of business cycles in a developed economy.

problem 6:

a) Differentiate with instances between direct and indirect taxes.
b) What do you understand by the term budget deficit?

problem 7:

a) Outline the major effects on the economy of a period of high inflation.
b) Describe ways in which a government might seek to decrease the rate of inflation.

problem 8:

a) Outline the main parts of the balance of payments on current account.
b) Describe the effects of changing exchange rates on business.