Inflation and unemployment – Questions and Answers

Subject Title: Economics Revision Kit

TOPIC: Inflation and unemployment

QUESTION 1
April 2022 Question Five
(a) The following table shows the level of National income (Y), Consumption (C), Investment (I), Government Spending (G), Exports (X) and Imports (M) of an utopian country for the years 2020 and 2021:

National Income

Required:
Compute the following:
(i) The level of consumption in the year 2020. (3 marks)
(ii) The marginal propensity to consume. (2 marks)
(iii) The level of imports for the year 2021. (3 marks)
(iv) The marginal propensity to import. (2 marks)

(b) (i) Explain the term “per capita income”. (2 marks)
(ii) Enumerate four limitations of using per capita income as a measure of welfare.
(4 marks)
(c) Highlight four factors that limit the effectiveness of the multiplier in developing countries. (4 marks)

QUESTION 2
April 2022 Question Six C
Citing real life examples, distinguish between the following types of unemployment:
(i) “Seasonal unemployment” and “casual unemployment”. (3 marks)
(ii) “Disguised unemployment” and “unproductive unemployment”. (3 marks)

QUESTION 3
December 2021 Question Four A
Citing an example, explain the term “hidden unemployment”. (2 marks)

QUESTION 4
December 2021 Question Seven A
(a) (i) Define the term “inflation targeting”. (1 mark)
(ii) State four disadvantages of inflation targeting in a country. (4 marks)

QUESTION 5
August 2021 Question Two C
Justify five reasons why devaluation in developing countries tends to be inflationary.
(5 marks)
QUESTION 6
May 2021 Question Four C
Assess seven reasons why developing countries are concerned about the high rate of unemployment in their countries. (7 marks)

QUESTION 7
November 2020 Question Four B
Differentiate between “seasonal unemployment” and “frictional unemployment”.
(4 marks)
QUESTION 8
November 2019 Question Five D
With the aid of a well labelled diagram, explain the trade-off between inflation and unemployment level (4 marks)

QUESTION 9
May 2019 Question A
Differentiate between “demand deficient unemployment” and “disguised unemployment” as used in economics. (2 marks)

QUESTION 10
May 2019 Question B
Enumerate four effects of inflation on the functions of money. (4 marks)

QUESTION 11
November 2018 Question Six A
Suggest six measures that developing countries could adopt to curb against high levels of urban unemployment. (6 marks)

QUESTION 12
November 2018 Question Seven A
(i) Explain the term “hyperinflation” as used in economics. (1 mark)
(ii) With the help of a diagram, describe demand pull inflation. (4 marks)
(iii) Highlight three causes of demand pull inflation in an economy. (3 marks)

QUESTION 13
May 2018 Question One A
Discuss five negative effects of inflation in an economy. (10 marks)

QUESTION 14
May 2018 Question One A
Explain five conditions that could favour effective use of price discrimination in an economy. (10 marks)

QUESTION 15
May 2018 Question Four C
Discuss five ways in which inflation ‘night cause unemployment in an economy.
(10 marks)
QUESTION 16
May 2018 Question seven A
Highlight five negative effects of unemployment in an economy. (5 marks)

QUESTION 17
May 2018 Question seven B
Summarise five consequences of wage control. (5 marks)

QUESTION 18
May 2017 Question Seven C
Summarise nine reasons why unemployment is a major policy issue in developing countries. (9 marks)

QUESTION 19
November 2016 Question Six C
Suggest five policy measures that could be adopted to reduce the level of unemployment in a developing country. (10 marks)

QUESTION 20
November 2016 Question seven A
Explain the relationship between money supply and the level of inflation in an economy.
(2 marks)

QUESTION 21
May 2016 Question Two A (i)
Differentiate between the following sets of terms as used in economics:
(i) “Structural unemployment” and “keynesian unemployment”. (2 marks)

QUESTION 22
May 2016 Question seven A
Summarise five causes of inflation in developing countries. (5 marks)

QUESTION 23
November 2015 Question Six A
Explain four effects of inflation on the functions of money. (8 marks)

QUESTION 24
September 2015 Question Four C
Briefly explain the effects of high levels of inflation in an economy. (6 marks)

QUESTION 25
September 2015 Question Six B
Explain three types of unemployment. (6 marks)

QUESTION 26
September 2015 Question Six C
Using the Phillips curve, explain the relationship between unemployment and inflation.
(4 marks)

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