Advanced level 2025 CASPA mock Economics 3
Advanced level 2025 CASPA mock Economics 3
In a given hypothetical four sector open economy, the follwing values were obtain in million FCFA.
Consumption ……………………….. 400 + 0.8yd
Investment ………………………….. 400
Government spending … …………… 100
Income tax …………………………. 50% of income
Export ………………………………. 600
Imports ……………………………… 20% of income
Determine
a) The equilibrium level of national income of this economy using the injection and withdrawal method
(4marks)
b) The actual value of consumption expenditure (2marks)
c) Give four factors that will influence consumption expenditure in the economy (4 marks)
d) What is the total value of leakages from this ecomony (3marks)
e) What is the value of the multiplier (3marks)
f) State four determinant of multiplier in this economy (4marks)
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2. This question is based on the following figure which shows the different combination of goods available
to a country before and after specialization
a) Identify line (1) and (2) defining each of them. (6marks)
b) State two factors that will improve on the terms of trade for this country (2 marks)
c) Which good should this country specialize in to produce? (2marks)
d) After specialization and exchange,
i. What quantity and of what good to export? (2marks)
ii. What additional quantity of the imported good has been gained? (2marks)
iii. What quantity of clothing will be left for domestic consumption? (2marks)
e) Differentiate between absolute advantage and comparative cost advantage (4marks)
3. The weekly cost schedule of a perfectly competitive firm is presented below. The unit price of the
product is 90.000FCFA.
Table 1
| Output (units) |
Total cost (000FCFA) |
Total revenue(000FCFA) |
Marginal cost (000FCFA) |
Marginal revenue (000FCFA) |
| 0 | 100 | |||
| 1 | 150 | |||
| 2 | 180 | |||
| 3 | 201 | |||
| 4 | 228 | |||
| 5 | 260 | |||
| 6 | 300 | |||
| 7 | 350 | |||
| 8 | 440 | |||
| 9 | 630 | |||
| 10 | 900 |
a) What is the fixed cost of this firm and why? (3marks)
b) Complete the table above by calculating the values of total revenue, marginal cost, marginal revenue
(6marks)
c) Explain why the price in the perfect market is constant at 90,000FCFA? (2marks)
d) At what level of output will profits be maximized and why? (3marks)
e) What is the main difference between a high cost firm and a marginal cost firm in a perfect market
(4marks)
f) State two merits of a perfect market structure (2marks)
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4. The information on the table below represents the balance sheet of an imaginary commercial bank
Table 2
| Liabilities (million FCFA) | Assets (million FCFA) |
| Current account = 600 | Cash in the bank’s coffees = 60 |
| Saving account = 400 | Operational balance at the central bank = 120 |
| Fixed term deposit account = 450 | Money at call and at short notice = 350 |
| Capital account = 350 | Treasury bills = 350 |
| Special deposit = A | |
| Investment = 300 | |
| Advances = 400 | |
| Total = 1800 | Total = B |
a) Determine the value of special deposit (3marks)
b) Identify and briefly explain the most liquid asset and the most profitable assets of this bank (6marks)
c) Calculate the bank’s
i) Required cash reserve ratio
