Use this ZIMSEC O-Level Economics Paper 2 June 2020 marking scheme for checking answers, revision, and exam preparation in Zimbabwe.
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This is the ZIMSEC O-Level Economics marking scheme for Paper 2 from June 2020. It shows how marks are awarded, so you can mark your own answers.
SENZERE A THE HUNTER THAT GATHERS
TINOFAMBA NEVANOFAMBA
ECONOMICS PAPER 2 JUNE 2020 MS
Question 1
a. With reference to the extract, explain the term propensity to consume (2)
-This is the natural tendency of households, the private and public sectors to consume that has resulted in them dissaving.
2 marks for a well explained term with reference to the extract
b. (i) According to the extract, Zimbabwe's debt was representing $\mathbf{7 9 \%}$ of the GDP .Explain the meaning of the statement. (2)
The economy's total output is funded by domestic market as the government borrows from it.
2 marks for a well explained point
ii) Give reasons for low saving rates in Zimbabwe (4)
-lack of public confidence in the financial sector
-low levels of income
-low interest rates
-policy inconsistencies
-lack of variety of savings attractive plans
A mark will be awarded for just listing the point
ORA
C (i)' Savings are necessary condition for growth of any economy.'Explain the validity of this statement (2)
The existence of savings is a necessary and sufficient condition for investment creation. If savings go up investment increases and then economic growth follows.
(ii) Comment on two policy measures that the government can implement to improve the level of savings (4)
Personal income tax cuts-the saving power rises when taxation rates are normal and reasonable.
However, a reduction in personal income tax results in an increase in consumer disposable income. Hence consumer's demand on goods and services increases which in turn result in an increase in AD, thus demand pull inflation.
Contractionary monetary policy-high interest rates encourage savings, since savers earn a lot simply by keeping their cash in the bank. However increasing interest rates discourages investment.
Award 2 marks for a detailed two sided response
d. Examine the effects of an increase in government spending in the economy (6)