PREDICTIONS & FINAL CHECK LIST FOR A/L 2015 EXAMS

A/L Economics PREDICTIONS & FINAL CHECK LIST FOR A/L 2015 EXAMS The Final Session 19 th July 2015 P.SUTHAHARAN BBA (Marketing Special) (Col), DipM ACIM Page1

Tutors Profile P.SUTHAHARAN BBA (Marketing Special) (Col) MCIM Suthaharan holds a bachelor s degree in Business Administration (Marketing Special) from the University of Colombo, and a Post Graduate Diploma in Marketing awarded by the Chartered institute of Marketing (UK). Currently he is reading for his Masters in Economics from Faculty of Arts, University of Colombo. He has 5+ years of experience in teaching economics for advanced level students, and has served as a teacher at Stafford International Colombo. Currently working as a Senior Researcher at a research organization active across the Asia Pacific. A/L Result - Economics - A / Business Statistics- A / Accounting B Z score 2.0138 Contact Number 0773461479 This material was prepared based on gut feel referring to the following sources Past exam papers Withdrawal papers of leading schools (Royal/LC/HFC/Methodist/Visaka) Prediction by the leading tutors in the industry (Tamil/Sinhala medium) Questions and suggestions in this tutorial are subjective and directional expectations of the tutor regarding the 2014 exam Economics paper. Assumption in preparing this document Examination department already under critique since there are errors in previous exam (O/L and A/L exam papers ) Since new examiner to prepare A/L 2014 exam paper, New examiner probably would avoid making experiment in his first exam paper So he would prepare his paper, based on previous past papers Higher likelihood of some of the previous past paper question being repeated Black highlighted questions in each sections are of higher importance Page2

Analysis of Previous Past Papers SECTION A Unit Section 2015 2014 2013 2012 2011 2010 2009 200 8 1 Introduction to Economics (Total) 20 20 20 30 30 15 Economic Resources 4 4 4 4 3 Factors of Production Efficiency DOL 8 8 9 5 4 Production Possibility curve / Opp.Cost 4 4 6 11 10 8 Economic Systems 4 4 10 6 15 15 2 Demand, Supply, Elasticity & Equilibrium 20 20 20 15 15 15 Demand related Questions 4 4 9 6 Supply Related Questions 4 10 Elasticity (PED/PES/XED) 3 Equilibrium Sum 12 12 8 9 15 15 (Tax(T), Subsidy(S), Mx.Con, Mn.Con Tax Mn Sb Tax Mn Mn 3 Products, Cost curves and Market 20 20 10 15 15 00 structure Production /Return to scale /Diminishing 4 4 6 2 6 Cost Curves 8 4 2 Short Run / Long run/exit 4 8 4 Market Structures 4 8 6 11 9 (PC,Mo,Mc,Op) PC All All PC PC/M 4 National Accounts 20 20 20 15 15 15 Theories related to National accounts 14 6 10 4 4 5 Avoided / Included in National Accounts 9 5 7 5 Production Approach Expenditure approach 6 5 11 Income Approach 5 4 5 5 Macroeconomic equilibrium 20 20 20 15 00 15 Conditions for equilibrium 6 6 6 5 Simple Economy 4 12 5 Closed economy 8 12 4 5 Multiplier 3 5 Other Theory Questions 4 2 2 Page3

Unit 1: Introduction to Economics This unit is simple and straight forward, could be the unit we have practised most number of questions. There will be around 5-7 MCQ from this section (6 Marks) A definite question for part 2 (10 Marks) So, altogether a section with 15-17 Marks Pay more attention for Production possibility curve and Market systems Key areas to Focus for MCQ Scarcity Positive and Normative economics Type of goods Economic goods, free goods Renewable and Non Renewable Factors of production (Entrepreneurship/Labour) PPC, Opportunity cost, showing various situ/shift in PPC Solving the basic economic problem Type of economies and their characteristics/features Productivity, optimum and actual output Charectistics and differences of market system Try to attempt the question if you are familiar with all questions, since the risk of losing marks here is comparatively lower Use diagram and chart wherever possible, briefly explain if you use such Better question to start with, since you have attempted this kind of question more number of time in last 2 years Key areas to Focus for Part 2 Economic Resources Differentiate accounting profit and economic profit Key Check List Differentiate type of goods (free/economic/public/private/merit) Factors of production Production Possibility curve Different economic system Differentiate full employment and full production? How human capital can be enhanced? Explain the type of capital, and their importance? Explain how factor returns can be optimized? Explain different type of opportunity cost with the assistance of a diagram Reason for the shape of the PPC curve Factors influence the inward and outward shift of the PPC Explain what is meant by allocation problem, production problem and distribution problem Price mechanism and its important functions? What you understand by the term optimum product mix? Characteristics and roles of the entrepreneurship? Productivity and how to enhance it? Efficiency and effectiveness, differentiate what can be done to improve? Showing different scenarios in the production possibility curve? (Exploitation of resources/mismanagement/recession/declin e etc.) Allocation of resources through the PPC How every economic system solves the basic economic problem? Diffenciate types of economic system Explain what is meant by traditional economic system, transitional economic system and emerging economies Page4

Unit 2 Analyses the rational behaviour of Households and firm in the market Roughly there will be around 8-9 MCQ from this section (8-9 Marks) A definite question for part 2 (10 Marks) So, altogether a section with 18-19 Marks Pay more attention to Elasticity calculation and Market equilibrium sum with Subsidy or maximum control price Key areas to Focus for MCQ Reasons for rightwards and leftward shift (D/S) Identifying consumer / producer surplus Elasticity (different types) Calculation based on demand and supply equation Consumer expenditure and producer income with Elasticity Excess demand/supply Excess demand/supply price Types of goods (griffin goods/inferior/ normal/luxury good) Changes in the price with tax/subsidy etc. Consumer tax burden/producer tax burden/deadweight loss Control prices This unit is has certain amount of risk, but the return also higher if you do it correctly All the calculation question might look like simple when you try to attempt, but 100% attention required when working out If nothing new and complicated, just attempt Pay attention, You can easily ensure 18-20 marks if you can do this correctly Key areas to Focus for Part 2 Demand & Supply Questions Elasticity Market Equilibrium Key Check List What are determinants of demand? Explain income effect and substitution effect? What is meant by market equilibrium Define substitution effect and income effect Explain what is meant by derived demand Explain the term Market cleaning price and Stable equilibrium? Calculation of elasticity for different type of product Elaborate the type of product based on the elasticity Highly likely to check the subsidy or Maximum control price for 10 Marks Equilibrium price and quantity before tax/subsidy Equilibrium price and quantity after tax/subsidy Consumer surplus before T/S Producer surplus before T/S Consumer surplus after T/S Producer surplus after T/S Tax income earned by the government Tax component bourn by the consumer and the producer Excess demand and Excess supply at the price Differentiate Economic surplus, consumer surplus and producer surplus Movement along the curve and the movement of the curve differentiate individual demand function and market demand function Discuss the difference between producer surplus and economic profit Why elasticity is important, discuss the economic importance of calculating elasticity ( For each elastic model) Maximum control price Minimum control price Why control price is imposed What should government do to ensure the control price Black market price Social cost Imports with exchange rate local supply, imported supply Page5

Unit 3 Production / Cost curves and Market Structures There will be 4-6 MCQ from this section (3-4 Marks) A definite question for part 2 (10 Marks) So, altogether a section with 14-16 Marks Pay more attention to Returns to scales, diminishing utility and cost curves specially AC and MC Key areas to Focus for MCQ Nature and function of curves Interaction point of AC & MC Conditions for the profit maximization point Characteristics of the market structures Short run and long run costs Explicit and implicit cost Production and cost curves for different market structures Use diagrams wherever possible and needed There might be lot indirect questions from this section, just try to related it with the content you have studied Answers should be comprehensive and should stick to the point. bluffing would not bring marks in this section Key areas to Focus for Part 2 Production /Return to scale /Diminishing Cost Curves Market Structures What is meant by Law of diminishing return? Explain your understanding of the shutdown point? When this will happen? Explain what is meant by sunk cost? Why MC curve travel through the minimum point of the average cost curve? Discuss the factors based on which the market structure is classified into? Draw the abnormal profit earning situation of the perfect competitive market? Discuss the minimum price at which the perfect competitive firm like to retain at the market? Why? Explain why perfectly competitive firm in the short run sets P=MC and in the long run set P=MC=AC Do you think the concept of perfect competition is important to understand the market behaviour of the real world? Key Check List What is meant by economic rent and transfer earning? Distinguish between normal profit and economic profit? Differentiate between return to scale and economies of scale Explain the relationship between the AFC and AVC Explain how the total product and marginal product curves function? Discuss the features of the perfect competition? How the monopolistic competition differs from the perfect competitive market? Explain the demand curve of oligopoly market? Explain what is meant by revival action? why perfect competitive firm is a price taker Explain what is meant by price differentiation and product differentiation? Explain the concepts of price war and collusion in relation to Oligopoly market? Page6

Unit 4 National Accounts with Macroeconomic framework There will be around 3-4 MCQ from this section (3-4 Marks) A definite question for part 2 (10 Marks) So, altogether a section with 13-14 Marks Pay more attention to Income approach and theories related to National accounting (Specially Underground economics, Importance of NA, dos and don ts in NA, graphical methods) Key areas to Focus for MCQ Things to be avoided in National accounting calculation Definition for GDP, GNP,NDP Value added and final output Few calculation using price index Nominal and real income Difference between pricing method (constant current) Example for the transfer payment /one sided payment Calculation of growth or inflation percentage This question should be carefully planned & approached before start writing High risk but return also high See whether you can answer the entire question If any new question given for more than 4 marks and you are not sure about answer don t attempt Do a draft calculation of the sum, before attempting it Logically structure the answer and write in brief depending on the mark allocated Key areas to Focus for Part 2 Theory in National Accounting What is mean by double counting? How to avoid double counting in National accounting calculation? How to measure the economic growth? Expected Questions Discuss the importance of national accounting calculation Discuss the limitations of the national accounts calculation Explain what is meant by green accounting? Other National Accounting Question Question on National Accounting Calculation What are the components of aggregate national income? Define each of the components? Distinguish between gross domestic fixed capital formation and gross domestic capital formation Differentiate employment income and rental income Be familiar with the followings on expenditure approach Total consumption Total investment GDE Exp.on GDP / Exp.on GNP NNP Total resources/ resource utilization Define Investment, and what factors determine the level of investment in a country? Discuss the components of the consumption? Distinguish autonomous consumption and induced consumption what factors will influence the individual demand Likely chance of Income approach to be tested this time, Be familiar with the followings, Net domestic income Gross domestic income (Factor cost/market price) Gross national income Private income Disposable income Household income Page7

Unit 5 Investigate determinants of Macroeconomic equilibrium Roughly there will be around 4-5 MCQ from this section (4-5 Marks) A definite question for part 2 (10 Marks) So, altogether a section with 14-15 Marks This question should be carefully studied Do few question with disposable income, draw C/I/E/Y/S before start writing Graphs, revise expenditure multiplier See whether you can answer the entire question Key areas to Focus for MCQ High risk but return also high Different sectors involved Do a draft calculation of the sum, before Role of the each sector and their involvement attempting it AD / AS and its components Use graphs and diagrams to explain Different types of economies ( Simple/closed/open) concepts Calculation of equilibrium national income (Short one) Try to attempt this question if you can Consumption and saving function secure over 16 marks out of 20 Multiplier effect Income, Saving and Consumption graphical presentation Key areas to Focus for Part 2 Basic Questions Multiplier Calculation Question What are the components of aggregate income and expenditure in the Simple/open economy? Injections and withdrawals/leakages in relation to circular flow of income What the difference between investment multiplier and tax multiplier? Explain the term MPC and APC? What is the relationship prevailing among both of them? This question might include a Disposable income part (Yd) Rework A/L 2009, past paper question. Distinguish between inflationary gap and recessionary gap What is meant by autonomous consumption and induced consumption? Explain the equilibrium national income in a closed economy? Discuss the difference between investment multiplier and transfer multiplier? Calculate the equilibrium level of income of this economy? If the saving changes, what will happen to the equilibrium national income? Show the changes through the diagram Calculate the investment multiplier and tax multiplier? Students should try to attempt at least one of the 2 sums questions from unit 4 and 5; this will help to save time for the rest of the questions that you are attempting. Try to complete these questions within 20-25 minutes. Page8

Unit 6 Analysis the Change of the price levels that affects macroeconomic process Maximum of 2-3 marks MCQ from this section. Since, Inflation is not tested in last few year examinations, higher possibility to be test with money and banking, unlikely to test as a spate question There will be 20 marks question incorporating monetary policy and fiscal policy with inflation Sometime, effect of exchange rate also can be tested with this section There is possible chance for a 22-23 Marks from this unit Key areas to Focus for MCQ Inflation Rate Comparing countries on inflation rate Nominal and real rate of inflation Different price index and their purpose Identify the Type of inflation for the given scenario This question is easy to answer Questions will be very straight forward and will be tested on the theory But structured and logical answer required Answers must be in detail depending on the marks offered Have to think about all the dimensional influence when answering the question Clearly differentiate the answers into sections when answering a question Higher possibility of testing current situation of the inflation Key areas to Focus for Part 2 Basic Questions 1. What is meant by price indices? How to measure the price level changes? Concepts of inflation 3. Differentiate core inflation and headline inflation, Galloping inflation and creeping inflation Different Approaches to the inflation 5. Explain and differentiate cost push inflation and demand pull inflation? 6. What are reasons for that inflation? Country specific question 9. Discuss the impact of the exchange rate devaluation on the inflation? 2. What you understand by the term inflation and what are the consequences of it? 4. What is meant by the term spiral effect of inflation or spiral inflation? 7. Explain how the inflation could be controlled? (both the cost push inflation and demand pull inflation) 8. Explain how monetary policy could be used to control inflation? 10. Discuss the measures; the government has taken to control the inflation in Sri Lanka? 11. Discuss the trend of inflation in Sri Lanka in the recent years? Page9

Unit 7 Analyses the contribution of monetary and banking system to the economic process Around 3-4 marks MCQ from this section. Part 2 will have certain question from 20 marks There is possible chance for a 23-24 Marks from this unit Key areas to Focus for MCQ Determinant of demand for money Type of Money % of some of the type of the money in the market Money multiplier Functions of commercial banks and central banks Bank rate / repo rate/ reserve rate at present Capital markets in Sri Lanka Calculations based on reserve ration This question is easy to answer and straight forward Detail writing is not required unless it s a essay type question for or 6 marks Make sure that you know the calculation question 100% if you are going to attempt the question. Must attempt this question, if you can answer more than 80% of the questions Key areas to Focus for Part 2 Basic Questions Calculation Question 1. What is meant by high geared money? 2. Explain the relationship between base money and how it related to money supply? 6. What are the tool that central bank has in order to control the money supply? 9. What is meant by moral suasion? 11. What factors that limit the credit creation ability of the banking system? 14. Explain the details of the open market operation carried out by central bank There will be a calculation question for 6-8 marks Expected Questions 3. What factors influence the demand for money 4. Discuss different ways used to calculate money supply in Sri Lanka? 5. What factors affect the expansion of money supply in a country? 7. What you understand by the term crowding out effect? 8. What are the conditions required for the banking system to create money? 10. Explain the possible macro-economic impact of selling treasury bills and bonds by banking system to the central bank? 12. Discuss the role of central bank in the countries development? 13. Functions performed by central bank differ from that of commercial bank. Explain? 15. Explain the credit creation process 16. Explain the difference between type of money M2, M2b, M4 etc. Calculation of the excess reserve Value of the loans the bank can Page10

Assets and liabilities of banking system provide Value of the money creation multiplier of the banking system Showing the balance sheet after the change The balance sheet of a single commercial bank operating in a banking system is shown below. Liabilities (Rs.Billion) Assets Deposits 500 Reserves 70 Treasury bills 130 Loans and advances 300 Total 500 Total 500 The statutory reserve requirement stipulated by the central bank is 10% a. Is this bank in a position to offer new loans? If so, what would be the amount of new loans this bank could offer? b. How does the bank s balance sheet appear after the bank had utilized its excess reserves for lending? c. Show the adjusted balance sheet after the entire amount of loans granted by this bank was deposited in other banks by drawing cheques. Page11

Unit 8 Investigate the type of intervention of the government to achieve macroeconomic objective Around 3-4 marks MCQ from this section. Part 2 will have certain question from 10 marks There is possible chance for a 13-14 Marks from this unit Likely chance of Supply side policies and Externality to be tested Key areas to Focus for MCQ Type of good Reasons for government intervention Positive and negative externalities Reasons for the market failure and government failure Fiscal policy measures Taxation Current contribution of taxation direct/indirect % % of budget deficit % of current & capital accounts Causes for the budget deficit This question is easy to answer and straight forward Detail writing is not required unless it s a essay type question for or 6 marks Maintain the logical sequence of answers if it is a long answer. Must attempt this question, if you can answer more than 80% of the questions Key areas to Focus for Expected Questions Part 2 Government failure 1. Understand the reasons why government intervene into the economic system 2. What is the role of government and why it s important in market economy? 3. Differentiate market failure and government failure 4. What is meant by imperfect information Externalities 5. Show the positive and negative externalities with the help of graph 6. List examples for positive and negative externalities Government budget and taxation Supply side policies 7. Explain the impact of following budgetary situation (Excess budget, Shortfall budged, balance budget) 8. Differentiate equity and neutrality 9. Calculation of budget deficit/ primary account balance 15. List all supply side policies and its impact? 16. How supply side policies helps to achieve economic growth in a country 10. What measures taken by government to reduce budget deficit? 11. What is meant by universal public good 12. List the purpose of taxation 13. Discuss the principals of taxation 14. Distinguish between direct tax and indirect tax. 17. Differentiate fiscal policy and monetary policy measures, Page12

Unit 9 Analysis of the effects of International trade and finance Around 6-7 marks MCQ from this section. Part 2 will have certain question from 10 marks There is possible chance for a 13-14 Marks from this unit Likely chance of Supply side policies and Externality to be tested Key areas to Focus for MCQ Advantage of International trade Absolute advantage and comparative advantage Terms of Trade Static gains and dynamic gains Export and import structure - % high imports /exports Protectionism policies Balance of payment and its composition Exchange rate system ( real and nominal) Effects of globalization Appreciation and depreciation effects Detail and logical writing is required Should attempt only if you are familiar with the question Avoid taking risk if this is a new type of question. Relate current statistics when you are answering balance of payment questions Key areas to Focus for Part 2 Theories of International Trade 1. Why countries involve in international trade 2. What is meant by economic integration? What are the different stages of integration? 3. What is the role played by IMF and WTO? 4. What are the benefits of country joining a trading blocs? Exchange Rate 7. Explain nominal and real exchange rates, nominal effective and real effective 8. Discuss advantages and disadvantages of fixed and floating exchange rate system Balance of Payment 11. Status of the current account balance of Sri Lanka 12. List the component of BOP, in which account it will be recorded BOP calculation 15. Calculation question on BOP Expected Questions 5. What are the determining factors of comparative advantage 6. Output approach question on international trade 1. Find which country has comparative advantage 2. Which country has absolute advantage 3. Exchange rate 4. What is the basis of trade 5. Show situation in PPC 9. What factors influence the exchange rate of Sri Lanka? 10. Discuss whether depreciation of the currency will bring the positive effect to the economy always 13. What are consequence of increase in imports in Sri Lanka? 14. What are consequences of decrease in exports in Sri Lanka? Protectionism 16. Discuss the arguments for and against protectionism Page13

Unit 10 & 11 Economic growth & development, SL Performance since independence Around 7-8 marks MCQ from this section. Part 2 will have certain question from 10 marks There is possible chance for a 17-18 Marks from this unit Likely chance of Multi-dimensional poverty, Poverty reduction in Sri Lanka Key areas to Focus for MCQ Poverty Rates Un employment rates Labour participation rate Government development policies Current trends in economic development Comparison between countries In equality /gini coefficient Measures of economic development Key social indicators HDI /MDPI Sectorial contribution to GDP Detail and logical writing is required Should attempt only if you are familiar with the question Avoid taking risk if this is a new type of question. Relate current statistics when you are answering balance of payment questions Key areas to Focus for Part 2 Multi-dimensional poverty index 1. What are the components of poverty index 2. How multi-dimensional poverty index is calculated? Expected Questions 5. Discuss why Sri Lanka is ahead of all south Asian countries in terms of health care indicators Population 6. Discuss the consequences to the economy due to aging population? 7. Explain the term stabilization of the population? Development Economic structural Changes 11. Differentiate economic development, economic growth and sustainable development? 3. Discuss the measures taken to reduce poverty in Sri Lanka 4. 4. Explain the difference between absolute poverty and relative poverty 8. What factors determine the population change? 9. Discuss the trend in dependency rate in Sri Lanka 10. Discuss the importance of foreign remittance and migrated population in Sri Lankan economy. 12. Importance of spending on investment 13. Explain what Is meant by inclusive economic growth? 14. Economic structural changes in the process of economic growth. Explain this statement in relation to Sri Lanka? Page14

Questions / Revisits 1. List the economic decisions made by the households, firms and government in an economic system? Economic decision by household sector... Economic decision by firms... Economic decision by government... 2. Discuss the reasons why the production possibility curve takes different shapes? a. Dis similarity in the factors of production (one factor cannot be completely replaced with another factor) b. Technology used in one product to another differs completely c. Ideal resource or factor used in one production, does not suit the other production 3. To get maximum return form the product, resources should be used in full employment and full production a. What you understand by the term full employment... b. What you understand by the term full production... c. What are conditions for production efficiency and resource allocation efficiency...... 4. Explain, what is meant by optimum product mix?... 5. Briefly explain the types of incentives available in the economic system a. Material incentives - Profit Market economic system b. Coercive incentives Superiority Command economic system c. Moral incentives - Using Patriotism, Moral believes, faith as an incentives Page15

Questions / Revisits 1. Demand and supply equations of market system is given below P=30 1/3 Qd P =6 + 1/3 Qs Calculate, equilibrium price and the quantity?.................. 2. What factors determine the elasticity of a product? List the economic importance of elasticity? Determining factors Nature of the product Economic importance No of substitutes and nature of substitutes Definition of a product To determine the price of a product Time period To predict the demand and supply Value of product as a proportion of consumers income conditions No. of uses/benefits from a product For the government to impose tax and subsidies Income level on consumers To estimate proportion of tax bared Storing facility by consumer and producer Marginal cost To understand the nature of the product 3. Explain the terms Market clearance price, stable equilibrium? To determine the significance of market forcers.............................. 4. State whether the following statement are true or false and Graphically show, how the following events will influence market equilibrium When the supply of product increased, its price also increased. Purpose of government subsidy is to bring down the price of a product Page16

Graphically explain the following events Page17

Questions / Revisits 1. Discuss the factors based on which the market is classified in to? a. No of business in the industry and their market share b. Nature of the product and services manufactured c. Entry barriers or opportunities d. Nature of completion in the market 2. Based on the short run marginal cost information of a firm, complete other information, assume fixed cost of the firm is Rs.100 Q SMC TFC TVC TC AVC AC 0-1 500 2 300 3 200 4 300 5 500 6 800 3. Product and cost curves Page18

Questions / Revisits 1. Explain, what is meant by moral suasion? Moral suasion used to persuade banks and other financial institutions to keep to official guidelines. The 'moral' aspect comes from the pressure for 'moral responsibility' to operate in a way that is consistent with furthering the good of the economy 2. Explain what is meant by multi deposit contraction? This is opposite to credit creation, when the banking system doesn t have enough reserves deposit contraction could happen. 3. What is meant by Active open market operation (AOMO)? List the features of it? The Central Bank of Sri Lanka introduced a system of active Open Market Operations (OMO) on 03 March 2003 in order to manage liquidity at its own discretion and thereby to achieve monetary policy targets. Under this system, monetary policy operations are conducted to achieve a path of reserve money targets, while maintaining short term interest rates stable around a level, which is consistent with the reserve money targets Features of Active open market operation (AOMO) Daily auctions of treasury bonds Fluctuating/free interest rate Temporary liquidity facilities Repurchase facilities 4. What is meant by recycled government monetary policy? Without allowing tax rate and government expenditure to determine automatically based on current economic situation, purposefully determining the tax rate and government expenditure in order to achieve the macroeconomic objective is called recycled government monetary policy 5. Discuss the reasons why, Sri Lankan economy witnessed much higher economic growth in 2011 and 2012 rather than 2009. Peaceful situation prevailed in the country Consumer and producer confidence improved Global recessionary situation recovered gradually Local aggregate demand increased Higher demand for the export products Infrastructure facilities expanded 6. What is meant by productivity gap? What factors will influence those? This is the gap between the potential output of a person and his actual output. Reasons Lack of skills, lack of investment in technology, lack of innovation, lack of competition, less productivity in government sector. 7. What is meant by saving and investment gap? Page19

This is the difference between the level of saving and gross capital formation. This will be equal to current account balance of BOP. 8. What is meant by global imbalances? This means there are countries with huge current account deficit in their BOP, and some countries having a much more surplus in their current account. 9. Explain what good governance is, what factors drive good governance? Transparency (government resource, economic resources and their usage should be transparent to all Accountability ( should be responsible for the action and reaction ) Participation of public in civil governance Human rights protection Drivers for good governance Bribery and corruption not taking place All expenses for development should be for the right purpose Participation of people Media freedom Non-discrimination (ethnicity. Religion Proper functioning of legal system 10. What is meant by endogenous growth theory? This say the initial growth will be driven by internal factor and not by external factors. This emphasis internal factor such as human capital, innovation, intellectual capacity are very important and primary factor for the growth. 11. Explain, what is meant by sustainable development triangle? Economic angle Development Effectiveness Stability Social angle Equity Cooperation Cultural relations Harmony Environmental angle Health environment Effective utilization of natural resources Page20

Comment on the Recent trend on Saving and Investment Gap Saving Investment Gap Trend in Saving & Investment Gap...... Page21

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