ECONOMICS PAPER 2 COMPREHENSIVE
ASSESSMENT 2026 FULL QUESTIONS AND
ANSWERS EXPERT REVIEWED
●● Define expansionary fiscal policy.
Answer: Expansionary fiscal policy is when the government increases
spending and/or reduces taxation to raise aggregate demand, output, and
employment.
●● Calculate the value of imports of goods and services in 2022.
Answer: Use GDP = C + I + G + (X − M). 19 700 = 14 600 + 3780 +
3700 + (5400 − M). Therefore M = 7780. Imports of goods and services
= ₱HP 7780 billion.
●● Calculate the value of net income from abroad in 2022.
Answer: Use GNI = GDP + net income from abroad. 20 500 = 19 700 +
net income from abroad. Therefore net income from abroad = ₱HP 800
billion.
●● Calculate the income elasticity of demand for rice.
Answer: Income rose from 4000 to 4200, so income changed by 5%.
Quantity demanded fell from 4.0 to 3.9, so quantity demanded changed
by −2.5%. YED = −2.5% / 5% = −0.5.
, ●● Using an AD/AS diagram, explain the likely effect on real GDP of
higher global energy prices.
Answer: Higher global energy prices raise firms' costs, so SRAS shifts
left/upward. Real GDP falls and the price level rises. Diagram: vertical
axis Price Level, horizontal axis Real GDP, draw AD, SRAS1, then shift
SRAS left to SRAS2 to show lower output and higher prices.
●● Using an international trade diagram, explain how the government
gains revenue by imposing a tariff on rice imports.
Answer: A tariff raises the domestic price above the world price. Imports
fall, but the government earns tariff revenue on the imports that still
enter. Revenue = tariff per unit × post-tariff quantity of imports.
Diagram: Price and Quantity axes, domestic demand and supply, world
price line, higher world price + tariff line, and a shaded rectangle
between them over the post-tariff import quantity.
●● Using a demand and supply diagram, explain what is likely to
happen to consumer surplus if the minimum price charged by private bus
drivers is raised further above equilibrium.
Answer: Consumer surplus falls. A higher minimum price means
consumers pay more and buy less, so the area below demand and above
price becomes smaller. Diagram: demand and supply, equilibrium, one
price floor above equilibrium, then a second higher floor; show the
smaller consumer surplus area at the higher floor.
●● Using a poverty cycle diagram, explain the likely effect of ODA on
incomes in the Philippines.
ASSESSMENT 2026 FULL QUESTIONS AND
ANSWERS EXPERT REVIEWED
●● Define expansionary fiscal policy.
Answer: Expansionary fiscal policy is when the government increases
spending and/or reduces taxation to raise aggregate demand, output, and
employment.
●● Calculate the value of imports of goods and services in 2022.
Answer: Use GDP = C + I + G + (X − M). 19 700 = 14 600 + 3780 +
3700 + (5400 − M). Therefore M = 7780. Imports of goods and services
= ₱HP 7780 billion.
●● Calculate the value of net income from abroad in 2022.
Answer: Use GNI = GDP + net income from abroad. 20 500 = 19 700 +
net income from abroad. Therefore net income from abroad = ₱HP 800
billion.
●● Calculate the income elasticity of demand for rice.
Answer: Income rose from 4000 to 4200, so income changed by 5%.
Quantity demanded fell from 4.0 to 3.9, so quantity demanded changed
by −2.5%. YED = −2.5% / 5% = −0.5.
, ●● Using an AD/AS diagram, explain the likely effect on real GDP of
higher global energy prices.
Answer: Higher global energy prices raise firms' costs, so SRAS shifts
left/upward. Real GDP falls and the price level rises. Diagram: vertical
axis Price Level, horizontal axis Real GDP, draw AD, SRAS1, then shift
SRAS left to SRAS2 to show lower output and higher prices.
●● Using an international trade diagram, explain how the government
gains revenue by imposing a tariff on rice imports.
Answer: A tariff raises the domestic price above the world price. Imports
fall, but the government earns tariff revenue on the imports that still
enter. Revenue = tariff per unit × post-tariff quantity of imports.
Diagram: Price and Quantity axes, domestic demand and supply, world
price line, higher world price + tariff line, and a shaded rectangle
between them over the post-tariff import quantity.
●● Using a demand and supply diagram, explain what is likely to
happen to consumer surplus if the minimum price charged by private bus
drivers is raised further above equilibrium.
Answer: Consumer surplus falls. A higher minimum price means
consumers pay more and buy less, so the area below demand and above
price becomes smaller. Diagram: demand and supply, equilibrium, one
price floor above equilibrium, then a second higher floor; show the
smaller consumer surplus area at the higher floor.
●● Using a poverty cycle diagram, explain the likely effect of ODA on
incomes in the Philippines.
