2016 - WAEC Economics Past Questions and Answers - page 5

Fiscal policy involves the government changing tax and spending levels in order to influence the level of Aggregate Demand. To reduce inflationary pressures the government can increase tax and reduce government spending.

The two main components of fiscal policy are government revenue and government expenditure. In fiscal policy, the government controls inflation either by reducing private spending or by decreasing government expenditure, or by using both. It reduces private spending by increasing taxes on private businesses.

Underdevelopment in Africa is as a result of many contributing factors which include poverty, illiteracy, very large extended families, corruption and lack of accountability. Poverty is one of the causes of underdevelopment in Africa. Unfortunate events such as slave trade, wars and other bad incidents

common constraints on development are high economic poverty, hunger, high mortality rates, unsafe water supplies, poor education systems, corrupt governments, war, and poor sanitation. 

David Ricardo developed the classical theory of comparative advantage in 1817 to explain why countries engage in international trade even when one country's workers are more efficient at producing every single good than workers in other countries.

Terms of trade, relationship between the prices at which a country sells its exports and the prices paid for its imports.

BALANCE OF PAYMENTS SURPLUS: An imbalance in a nation's balance of payments in which payments made by the country are less than payments received by the country (exports exceeds imports)  It's considered favorable because more currency is flowing into the country than is flowing out.

Foreign exchange control is the procedure by which a government intervenes in the foreign exchangemarket, banning or restricting sales and purchases of local currencies by non-residents as well as sales and purchases of foreign currencies by residents. when there is no foreign exchange to engage in international trade, imports will fall

A customs union is generally defined as a type of trade bloc which is composed of a free trade area with a common external tariff. Customs unions are established through trade pacts where the participant countries set up common external trade policy (in some cases they use different import quotas).

Balance of payments policies; The policies include devaluation, demand management, and controls of various types, all of which have frequently featured in International Monetary Fund (IMF) programmes, either in terms of their encouragement or discouragement.