Specialized Paper Sample Questions
Occupational group: Economics (P2)

Essays

  1. The debt-servicing problem of developing countries has been a matter of continuing concern since the early 1980s. What are factors that contributed to the problem? What were the domestic effects of rising external debts? What measures have been undertaken to alleviate this problem? What kinds of policies would you recommend for alleviating the balance of payments difficulties of affected countries?

  2. There have been serious disagreements in the literature on economic development as to the strategies that developing countries should follow to foster the development process. Two unsettled issues refer to: (1) the advantages of stressing agriculture or of fostering industrialization; (2) policies that take as given the current income distribution and depend on a trickle-down of the fruits of economic growth to the poorer segments of the population, as against a strategy heavily oriented towards meeting basic needs. Discuss in detail these two controversies and how the current world economic situation affects them.

  3. What are the main determinants of the international division of labour? In which types of economic activity has this division of labour progressed the most and what are its global advantages? Give examples based on the experiences of one or more countries.

Questions

  1. The industrial development of developing countries is hampered by their lack of technologies. Give two major reasons with brief explanations as to why the developing countries lack access to appropriate technology.

  2. Briefly explain why capital formation is considered to be an essential ingredient of economic expansion and diversification.

  3. Suppose you are given a set of differential rates of inflation for a group of market-type economies. What effects might such differences have on exchange rates in the short and long run under flexible and fixed exchange rate systems?

  4. Specify under which conditions a country can show a current account surplus at the same time as a trade balance deficit. Specify also the conditions under which the current and trade accounts are in deficit while the overall balance of payments is in surplus. Briefly discuss.

  5. If the income elasticity of imports in a developing country is 1.75 and GNP is growing at 7 percent per annum, at what rate would you expect real imports to grow on average? Give two reasons why the growth of imports tend to out-strip the growth of GNP and exports in developing countries. Discuss three possible policies designed to curb the rate of growth of imports.

  6. Discuss the economic rationale and the goodness of statistical fit of the statistically estimated relationship set out below. Would the estimated relationship suggest policy recommendations? 

         C :  100.27  +  0.73 Y  -  1.25 r
      t                    t          t -1    _2
                                              R  = 0.922
                                              DW = 1.73
                                              n  =  37
          (1.06)  (4.17)  (-0.35)

     C :  private consumption in real terms;
      t

     Y :  personal disposable income deflated by the consumer price
      t   index;

     r :  Nominal interest rate minus the rate of increase in consumer
      t   prices;

     _2
     R :  coefficient of determination adjusted for degrees of freedom;

     DW:  Durbin-Watson statistic;

     t:   time;

     n:   number of observations.

     In parentheses are the values of the T-statistic.

  7. An investment project is expected to yield, in constant dollars, returns of $100, $100 and $1,100 at the end of 1, 2 and 3 years respectively and nothing thereafter. If the investment costs $1,000 now, would it be profitable at an expected real interest rate of 8 percent per annum? 12 percent?

  8. Given a fiscal deficit, describe two ways in which such a deficit could be financed and explain whether each way would have different impacts on the economy.

  9. It is said that, under fixed exchange rates, countries lose control over monetary policy, while under flexible exchange rates they have full control over this policy instrument. Explain briefly your agreement or disagreement with this statement.

  10. Many countries in the world are seeking to privatize their public sector enterprises. What difficulties do you see for a developing country in such privatization?

List of topics

Suggested reading includes basic textbooks and periodicals in the field of economics covering the following topics: 

	- Fundamental economics concepts 
	- National income and price indices
	- Consumption, saving and investment
	- Fiscal policies and taxation
	- Inflation and unemployment
	- Money supply and demand
	- Supply and demand concepts
	- Competition and monopoly
	- International trade - comparative advantage
	- Transnational corporations
	- Tariffs quotas and free trade
	- International finance
	- Growth and development
	- Income distribution
	- Resources and environmental economics

Candidates should be able to deal with economics questions related to developing countries, economies in transition and western economies.

Examination Sample: General Paper (P2)