Section A

Answer this question.

1 China 'to be world's biggest economy by 2025' China is set to become the largest economy in the world by 2025 with a nominal gross domestic product - which is GDP that has not been adjusted for inflation - value of $38 trillion. Trends that will accelerate China's economic growth include urbanisation, a larger working age population and investment in broadband.

"By 2025, an estimated 921m people or 65.4pc of China's population, will live in cities, which is about 2.6 times of the United States' total population", says Archana Amarnath at Frost & Sullivan. She added that the growth in Chinese mega cities will supplement Asia's growing role as the world's financial centre. While next week's headlines will be dominated by the US Presidential election, something equally significant will be getting underway in Beijing where a once-in-a-decade leadership transition begins on Thursday. The key question for investors is the extent to which all this has been factored into Chinese share prices because on most measures they are historically very cheap.

(a) What are the reasons given for the trend of growth in GDP of china in the data? (2) (b) Define and differentiate between real and nominal GDP. (4) (c) Explain the causes of inflation in an economy. (8) (d) Explain the features of a stock market. (6)

Section B
Answer 2 questions from this section. 2 Pakistan and India have agreed on visa terms aimed at easing travel between the two countries. It makes it easier for businesspeople as well as those with relatives across the border to travel freely. (a) Why do countries trade with each other? [6] (b) Which account will the earning from India for cloth exporters be recorded in? Define the account. [4] (c) Explain the main causes of a current account deficit. [6] (d) Discuss whether it is likely to be better or worse for a countrys inhabitants if a country increases the tariffs and quotas it puts on international trade. [9]

3 The Canadian dollar strengthened against the majority of its 16 most-traded counterparts as rising U.S. stocks and raw materials boosted appetites for higher-risk assets. In recent years more countries have adopted freely floating exchange rates, a number of countries have been increasing the protection they are giving to their domestic industries. (a) Define the term exchange rate. Explain appreciation and depreciation with the help of examples. [6] (b) Explain what determines the value of a freely floating exchange rate. [6] (c) Since the raw materials supply has increased how will affect the equilibrium price and quantity. Show and explain with the help of demand supply diagram. [7] (d) Discuss how the concept of price elasticity of demand helps in determining the prices of the product. [6]

4 Large firms enjoy many internal economies of scale and pay different workers according to the nature of their work. (a) Discuss whether wages are the most important factor influencing the choice of occupation for many individuals. [6]

(b) Discuss whether government intervention is always successful in correcting market failure. [6] (c) Describe the functions of a trade union. [5] (d) Explain the different economies of scale a firm may enjoy when working at a large scale. [8]

5 While education is 31% privately financed in the UK, it is 97% publicly financed in Bangladesh. The population of both countries is different. (a) What features are shown in a population pyramid? Explain what causes the difference in the shape of the population pyramid of a developed and a developing country. [6] (b) Discuss what might determine why one job is paid more than another. [7] (c) Explain how economic growth might change the relative importance of the primary, secondary and service sectors. [6] (d) Is intervention by a foreign multi-national always beneficial for a country? [6]