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28/04/2025

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28/04/2025

*QUESTION 8*
_ORDINARY LEVEL ECONOMICS_

*(a) With the use of diagram(s) distinguish between a Progressive Tax System and a Regressive Tax System. (6 marks)*
*(b) State and explain Five (05) criteria any Government takes into account, in introducing a new form of tax. (10 marks)*
*(c) Explain any Two (02) reasons why a Government may adopt a budget deficit (4 marks)*
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*ANSWERS*

*8 (a)*
_A progressive tax system_ refer to that tax system whereby the tax rate increases as income increases while a _regressive tax system_ is a tax system whereby the tax rate decreases as income increases. Diagrammatically, a progressive tax and a regressive tax can be represented below.

`DIAGRAM`

*8(b)*
_The following are criteria or canons or principles a government will take into account, in introducing a new form of tax_
• *Equity* : Equity means that a good tax should be levied according to the tax payer ability to pay (pay as you earn – PAYE)
• *Convenience* : The time and the method of tax collection should be convenient by the tax payers.
• *Certainty* : The tax payer should know the exact amount to pay, when and how to pay.
• *Economy* : The cost of collecting the tax and the cost of administration should not be more than the tax revenue collected by the government.
• *Simplicity* : The tax should be simple and plain. It should not be too complicated to put into practice.
*8(c)*
_The following are reasons why the government should adopt a budget deficit._
• To increase the disposable income of her citizens which lead to an increase in consumption.
• To increase investment using accumulated surpluses of previous years.
• To stimulate the economy by raising the gross national product (GNP).
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28/04/2025

*QUESTION 7*
_ORDINARY LEVEL ECONOMICS_

*(a) Define the following terms as used in Economics:*
*(i) Economic planning*
*(ii) Economic development (4 marks)*
*(b) Explain Four (4) factors that hinder Economic growth. (4 marks)*
*(c) State and explain Four (4) disadvantages of Economic growth (12 marks)*
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*ANSWERS*

*7 a(i)*
*Economic planning:* It refers to the economic goods that the government usually set out and will want to achieve them within the next five years such as economic growth per capita income etc.
*7 a(ii)*
*Economic Development:* It is the measures taken to improve the quality of life of a country population.
*7 (b)*
_The following are factors or obstacles that hinder or slow down the rate of economic growth._
• *Low level of saving:* Saving in a developing economies is very low and this tends to re**rd the level of economic growth.
• *Insufficient Capital:* Insufficient capital base tends to hinder economic growth.
• *Low level of investment:* Low level of savings lead to low level of investment, which equally hinder economic growth.
• *Inadequate skill labour:* The man power development in developing countries is usually very low and this adversely affects economic growth.

*7(c)*
_Disadvantages of economic growth include:-_
• *An increase in social cost:* The increase in the number of industries increases air, eater and noise pollution.
• *Destruction of natural Beauty:* The establishment of some industries lead to the destruction of natural beauty and wildlife etc.
• *Over Exploitation of resources:* Economic growth may lead to the over exploitation of a country’s non renewable resources such as oil and minerals.
• *Rural – Urban Migration:* Not all part of the country will be growing at the same time when there is economic growth.
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28/04/2025

*QUESTION 6*
_ORDINARY LEVEL ECONOMICS_
*(a) Define the following terms as used in Economics:*
*(i) Transfer Payment*
*(ii) Investment*
*(iii) Per Capita Income*
*(iv) Consumption*
*(v) Depreciation (5 X 2 = 10 marks)*
*(b) Explain Four (4) Factors that can increase the size of a country’s National Income. (10 marks)*
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*ANSWERS*
*6 a(i)*
*Transfer Payment:* It refers to payment made for no work done to produce goods and services. Example; gifts, pensions, donations, students allowances etc
*6 a(ii)*
*Investment* : It is the spending on the production of capital goods and the net addition to stock. Example; Machinery, factory building etc.
*6 a(iii)*
*Capital Income* : It is the average income per head of the population over a given period of time.
_Per Capital Income = (National Income)/(Total Population)_

*6 a(iv)*
*Consumption* : It is that part of income spent on goods and services over a given period of time say a year.
*6 a(v)*
*Depreciation* : It is the wear and the tear of fixed assets over a given period of time say a year.

*6(b)*
_The following are the factors that will increase the size of a country’s National Income:-_

👉 *_The level of technology:_* An increase in technology will increase national income while a decrease in national income will reduce national income.
👉 *Political Stability:* If a country is stable, national income will increase, but if it is unstable, national income will fall.
Infrastructural
👉 *Development* : Good Infrastructural facilities will increase national income while a poor infrastructural facilities will reduce national income.
👉 *The quality of the resources:* Qualified labour, high quality land will give rise to a high national income while poor resources reduce national income.

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28/04/2025

*QUESTION 5*
_ORDINARY LEVEL ECONOMICS_
*(a) Distinguish between Comparative Cost Advantage and Absolutely Advantages (4 marks)*

*(b) Explain any Four (04) short term measures used by the Government to cure a Balance of Payments deficit (8 marks)*

*(c) Define the following terms as used in Economics:*
*(i) Currency appreciation*
*(ii) Currency depreciation*
*(iii) Currency devaluation*
*(iv) Currency revaluation (4 X 2 = 8 marks)*
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*ANSWER*

*5(a)*

_Absolute Cost advantage_ refer to a situation where country using the same resources produces a greater output than another country while comparative cost advantage is a situation where a country has a lower domestic opportunity cost ratio (DOCR) in the production of goods than it trading partners.

*5 (b)*
The short term or first aid measures that the government of Cameroon can use to cure a Bop deficit include the following:-
👉 By borrowing from abroad, for example, borrowing from International Monetary Fund (IMF).
👉 By selling the country’s resources
👉 By importing goods on credit
👉 By receiving gifts from friendly countries
👉 By recalling loans
👉 By selling the country’s currency reserves.
*5 c (i)*
*Currency Appreciation* : it refers to an increase on the rate at which one country’s currency can be exchange with another country’s currency under a free exchange rate.
*5 c(ii)*

*Currency Depreciation* : it refers to the reduction in the rate at which one country currency can exchange other country currencies under a free exchange rate
*5 c(iii)*
Currency Devaluation: It refers to the deliberate reduction of the official rate at which one country currency can exchange with another country under a fixed exchange rate.
*5 c(iv)*
Currency Revaluation: It refers to the deliberate increase of the official rate at which one currency can be exchange with another country under a fixed exchange rate.
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