1. (a) Explain how taxes and subsidies differ in their effect on the market price and quantity of a good.

(b) “It is essential that a government supports its farmers by subsidizing agricultural output.” Evaluate this view.

2. (a) Using appropriate diagrams, explain the difference between demand-side and supply-side economic policies.

(b) Evaluate the use of supply-side policies to improve the performance of an economy.

3. (a) Explain two factors which may cause an appreciation of a country’s exchange rate.

(b) Evaluate the extent to which an appreciating exchange rate may benefit or harm an economy.

4. (a) Explain why economic growth rates may differ between developing countries.

(b) Evaluate the role of foreign direct investment in assisting a developing country to achieve greater growth and development.



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