Section A
Case study
Can economic growth in Chile reduce income and wealth inequality?
In the extracts: Chile, OECD, GDP, Organisation for Economic Co-operation, Gross Domestic Product, Haiti and El Salvador, United States, Chilean, Gini
Q1(a)Identify2 marks
Identify two possible reasons why the current account on the balance of payments in Chile is in deficit in the first quarter of 2022 despite the surplus on the balance of trade in goods.
TopicCurrent account of the balance of payments
Q1(b)Consider4 marks
Consider the likely success of one policy that Chile could use to reduce the imports of consumer goods.
TopicPolicies to correct imbalances in the current account4.3 Aggregate demand and aggregate supply analysis
Q1(c)Explain2 marks
Explain what is meant by the fall in Chile’s Gini coefficient from 52.1 to 44.4.
TopicAddressing income and wealth inequality6.3 Current account of the balance of payments
Q1(d)Assess6 marks
Assess the extent to which ‘the government increasing its education spending’ may improve the incomes of poorer households in Chile.
TopicAddressing income and wealth inequality4.3 Aggregate demand and aggregate supply analysis
Q1(e)Assess6 marks
Assess the likely impact of the rise in the world copper price from 2020 on the future economic growth of Chile.
TopicEconomic growth6.3 Current account of the balance of payments
Section B
Q2(a)OptionalExplain8 marks
With the help of a diagram(s), briefly explain how the cause of a movement along the demand curve differs from the cause of a shift in the demand curve and consider the impact on the demand for one good of price changes in other goods.
Mark splitKnowledge 3Analysis 3Evaluation 2
TopicDemand and supply curves
Q2(b)OptionalAssess12 marks
Assess whether knowledge of income elasticity of demand or price elasticity of demand for its product is more useful to a business aiming to increase the total expenditure on its product during a period of economic growth.
TopicPrice elasticity, income elasticity and cross elasticity of demand
Q3(a)OptionalExplain8 marks
With the help of a production possibility curve (PPC) diagram(s), explain the difference between constant and increasing opportunity costs and consider how choices in deciding which type of goods to produce in the short run may influence future economic growth.
Mark splitKnowledge 3Analysis 3Evaluation 2
TopicProduction possibility curves1.1 Scarcity, choice and opportunity cost4.4 Economic growth
Q3(b)OptionalAssess12 marks
Assess whether a market economy is always the best economic system to effectively answer the three basic questions of resource allocation.
TopicResource allocation in different economic systems
Section C
Q4(a)OptionalExplain8 marks
Explain two methods of measuring unemployment and consider the extent of the possible difficulties in obtaining an accurate measurement of unemployment.
Mark splitKnowledge 3Analysis 3Evaluation 2
TopicUnemployment
Q4(b)OptionalAssess12 marks
Assess whether supply-side policy is likely to be equally successful in reducing both structural and cyclical unemployment.
TopicSupply-side policy
Q5(a)OptionalExplain8 marks
With the help of examples, explain the difference between the marginal rate of taxation and the average rate of taxation and consider whether a government should decide to increase the rate of indirect tax to raise additional revenue.
Mark splitKnowledge 3Analysis 3Evaluation 2
TopicMethods and effects of government intervention in markets
Q5(b)OptionalAssess12 marks
Assess whether the achievement of a balanced budget should always be a main government macroeconomic objective.
TopicGovernment macroeconomic policy objectives
