IGCSE Economics Paper-2: Specimen Questions with Answers 12 - 13 of 100

Passage

Indonesia booked a trade surplus of US $ 1.27 billion in June as both exports and imports rose from the slump recorded in May, signaling increasing economic activity as the country and its trading partners have begun to lift coronavirus-induced restrictions.

Exports were up 2.28 percent year-on-year (yoy) in June at $ 12.03 billion, the first growth recorded in four months, thanks to rising shipments of manufactured and agricultural goods, Statistics Indonesia (BPS)

Question 12 (2 of 5 Based on Passage)

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Short Answer▾

What does slump indicate?

Explanation

Slump is a term used for a sharp decline in business activity of a country, of a country’s trade or market value. To describe both a short or sharp decline as well as a gradual prolonged period marked by low activity or value, the term slump is used. Slumps can be economic slumps, industry slumps, earnings slumps etc. In terms of economics slump usually means to the beginning of a decline phase During slump recession is not officially announced until continuous months of declining activity have been seen in the economy, so the mountains that leads up to the declaration of recession are simply described as a prolonged economic slump.

Question 13 (3 of 5 Based on Passage)

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What does the growth in the export show?

Explanation

Growth in the exports is an encouraging sign for the economy. Exports benefit the economy in the following ways.

  • Employment. Growth in exports leads to creation of employment. For example, the car exports growth has led to the creation of many jobs in car industries, such as BMW factory in Oxford, and Nissan in Sunderland.
  • Economic growth. One of the components of aggregate demand is exports. Rise in exports will lead to the increase in aggregate demand and will cause a higher economic growth. It can also influence the service industry. For example, in Sunderland the success of car exports will help the local economy from increased spending.
  • Current account deficit. In determining the current account deficits exports play a large role. If exports of a country are less than the imports then there will be a deficit in the balance of current account.

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