Economics · May / June 2020 · Paper 21 · Question 2
0455
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The question as text
Japan has a low immigration rate and a declining population. In recent years, it has experienced deflation and a rise in child poverty. By 2017, one in six Japanese children lived in a household with less than half of the average household income. Japan operates a national minimum wage which increased every year between 2010 and 2017. This may have affected the level of poverty in the country.
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2(a)[2]
State two benefits a country may gain from immigration. One mark each for two from:
larger labour force, reduced dependency rate, higher demand, higher tax revenue, more skilled workers, greater utilisation of resources.
2(b)[4]
Explain two consequences of deflation. Logical explanation which might include: Output may fall (1)
if due to lower demand firms will cut back production (1). Unemployment may rise (1)
fewer workers will be needed to produce fewer goods and services (1). Economic growth may decline / a recession may occur (1)
due to lower total (aggregate) demand (1). Output may rise (1)
if due to lower costs of production / advances in technology (1). Exports may increase (1)
if domestic products have become more price- competitive (1).
2(c)[6]
Analyse why children from low-income families may have low incomes as adults. Coherent analysis which might include: Likely to receive less education (1)
likely to have lower quality healthcare (1)
nutrition is likely to be poor (1)
likely to gain fewer qualifications/skills (1)
be less productive (1)
have fewer employment opportunities (1)
may be in low paid jobs (1)
may be unemployed (1).
2(d)[8]
Discuss whether or not a national minimum wage will reduce poverty. In assessing each answer, use the table below. Level Description A reasoned discussion which accurately examines both sides of the economic argument, making use of economic information and clear and logical analysis to evaluate economic issues and situations. One side of the argument may have more depth than the other but, overall, both sides of the argument are considered and developed. There is thoughtful evaluation of economic concepts, terminology, information and/or data appropriate to the question. The discussion may also point out the possible uncertainties of alternative decisions and outcomes. 6–8 A reasoned discussion which makes use of economic information and clear analysis to evaluate economic issues and situations. The answer may lack some depth and development may be one-sided. There is relevant use of economic concepts, terminology, information and data appropriate to the question. 3–5 There is a simple attempt at using economic definitions and terminology. Some reference may be made to economic theory, with occasional understanding. 1–2 A mark of zero should be awarded for no creditable content. Why it might:
is set above the equilibrium level, will raise the pay of the low-paidmay reduce relative poverty by reducing the gap between high and low- income earnersmay reduce absolute poverty by enabling low paid workers greater access to basic necessitiesmay raise employment, if it motivates workers and raises productivitymay raise employment if it increases total (aggregate) demand. Why it might not:may not have any impact if set below the equilibrium levelunemployment may rise as it may increase firms’ costs of productionwill not help the poor who are unable to workmay not reduce relative poverty if it results in other workers pressing for, and getting, wage rises to maintain their wage differentialssome receiving it may not be in poor households. Reward, but do not expect, a national minimum wage diagram which shows the effect on pay and employment.
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