Economics · Oct / Nov 2023 · Paper 22 · Question 1
0455
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1(a)[1]
Calculate what percentage of Honduran people did not have access to electricity in 2020. 8.3%. 1 Accept 8.0 or 8.3.
1(b)[2]
Identify two benefits the Honduran economy could gain from a growth in the US economy. Sell more exports to the US (1). Receive more money from Honduran workers in the US (1). More job opportunities for Honduran workers in the US (1). 2 If more than two benefits are given, consider the first three. Accept increase trade for more exports. Accept increase employment / lower unemployment for more job opportunities.
1(c)[2]
Explain one advantage of an economy specialising. Gain skills (1)
raise productivity / raise efficiency / ‘practice makes perfect’ / lower costs of production / raise quality / increase output / supply / less waste (1). Gain a good reputation (1)
increase demand (1). 2 One mark for an advantage identified and one mark an explanation. Identification mark must come directly from the source material. A relevant explanation mark can be given even in the absence of an identification.
1(d)[4]
Explain two ways a government could redistribute income. Logical explanation which might include: Provision of unemployment benefit / state benefit / welfare benefit / benefits (1)
raise income of those on low or no income / enable the unemployed to buy basic necessities / reduce absolute poverty (1). Progressive income tax system (1)
takes a higher proportion of the income of the rich / use some of tax revenue raised to increase spending to help those on low incomes (1). 4 One mark each for each of two ways identified and one mark each for each of two explanations. If more than two reasons given, consider the first three. One mark for taxing the rich and giving to the poor.
1(e)[4]
Draw a demand and supply diagram to show how a report stating that bananas are good for health would affect the market for bananas. Coherent analysis which might include: Demand and supply diagram: Axes correctly labelled – price and quantity or p and q (1). Original demand and supply curves correctly labelled (1). Demand curve shifted to the right (1). Equilibriums – shown by lines P1 and Q1 and P2 and Q2 or equilibrium points marked as E1 and E2 (1). If a candidate draws two diagrams, they may be able to get 3 marks: 1 mark for axes 1 mark for D & S labelled correctly 1 mark for the demand curve shifted to the right. They would not get the mark for the equilibriums as the two diagrams are likely to conflict on this.
1(f)[5]
Analyse the relationship between the percentage of population living in poverty and life expectancy. Coherent analysis which might include: Expected relationship: Inverse / negative (1)
the higher the level of poverty, the lower the life expectancy / the lower the level of poverty, the higher the life expectancy (1). Supporting evidence: Sweden has the lowest % of population living in poverty and the highest life expectancy / The country / two countries / three countries / four countries with the lowest levels of poverty head had the longest life expectancy (1)
the two countries, Chad and South Sudan, with the highest level of poverty had the lowest life expectancy (1). Analysis of expected relationship: A high level of poverty is likely to mean poor healthcare (1)
low nutrition / poor housing / poor sanitation / low levels of education (1). Exception: Chad / South Sudan (1)
Chad had a lower level of poverty but also a lower level of life expectancy than South Sudan (1)
Analysis of exception: Life expectancy is determined by other influences e.g. wars (1). 5 Responses do not have to be in the format suggested but they should address the expected/normal relationship, offer supporting evidence of that, highlight any exceptions to that, and analyse the overall data.
1(g)[6]
Discuss whether or not the cost of producing clothes in Honduras will fall in the future. Award up to 4 marks for logical reasons why it might, which may include:
more training (1)better working conditions (1)
may increase labour productivity / efficiency / skills (1)
reduce labour costs (1)
more use of capital goods (1)may reduce disruption to production / make fewer mistakes / less waste (1)
speed up production / increase productivity / efficiency (1)
improved working conditions (1)may reduce industrial action (1)
more motivation (1)
successful clothes industry so firms may grow in size (1)more able to take advantage of economies of scale (1). Award up to 4 marks for logical reasons why it might not, which may include:
price of raw materials may rise (1)may be subject to bad weather (1)
exchange rate may fall / tariffs may be imposed on imported raw materials (1)
reduce supply (1)
country has experience of inflation (1)
unemployment may fall (1)making it more difficult for the clothes industry to recruit labour (1)
strengthening the bargaining power of workers (1)
raising wages / increasing labour costs (1)
providing training (1)and better working conditions will involve a cost (1)
more use of capital goods may involve initial high spending on equipment (1)firms may experience diseconomies of scale (1)
higher indirect tax / tax may be imposed (on clothes / clothes firms) (1). 6 Allow higher productivity / efficiency once either in connection with labour or capital. Some points may be given in reverse e.g. price of raw materials may fall. Not accepting subsidising the clothes industry as the source material indicates that it is a successful industry. Apply this example to all questions with the command word DISCUSS (1 (g), 1 (h), 2 (d), 3 (d), 4 (d) and 5 (d)) Each point may be credited only once, on either side of an argument, but separate development as to how/why the outcome may differ is rewarded. Generic example Mark Tax revenue may decrease… ...because of reason e.g. incomes may be lower. Tax revenue may increase because incomes may be higher i.e. reverse of a previous argument. Tax revenue may increase because of a different reason i.e. not the reverse of a previous argument e.g. government spending on subsidies may stimulate the economy more than spending on education.1(h)[6]
Discuss whether or not a fall in unemployment in Honduras is likely to cause inflation. Award up to 4 marks for logical reasons why it might, which may include:
unemployment is already low (1)may move towards full employment (1)
may push up wages (1)
increase (average) costs (1)
cause cost-push inflation / total supply less than total demand (1)
lower unemployment may increase incomes (1)causing a rise in consumer spending / purchasing power (1)
increasing total demand (1)
causing demand-pull inflation / total demand higher than total supply (1).
inflation already exists (1)which may lead workers to expect it to continue (1)
increasing wage claims (1). Award up to 4 marks for logical reasons why it might not, which may include:
may be higher investment (1)could increase total supply / total supply may rise in line with total demand (1)
reducing cost-push inflation (1)
lower unemployment could reduce spending on unemployment benefit (1)increase tax revenue (1)
reduce the budget deficit (1)
reduce the growth in total demand (1)
some of higher tax revenue could be spent on supply-side policy / unemployment may have fallen due to supply-side policy (1)
the extra income may be saved / spent on imports (1)due to uncertainty about the future (1)
A fall in unemployment does not necessarily mean a rise in employment (1)the unemployed could have e.g. retired / emigrated (1).
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