Economics · May / June 2026 · Paper 22 · Question 1

Calculate Kuwait’s current account surplus as a percentage of its GDP. 40%. 1 Accept 40.

Identify two items that appear in Kuwait’s trade in services.

2 If more than two items are given, consider the first three. Accept Tourism (1)

Explain the opportunity cost of exporting products. The opportunity to consume the products at home/in Kuwait (1)

is given up (1). 2 A correct generic explanation of opportunity cost can be awarded 1 mark.

Explain two reasons why living standards may be high in Kuwait. High income (1)

able to purchase many/good quality goods and services (1). Good quality education (1)

high wages/good job opportunities/range of interests (1). Good quality healthcare (1)

long life expectancy (1). Inexpensive range of products (cheaper than in Europe and US) (1)

low cost of living/access more/better quality products (1). Low unemployment rate (2023) (1)

most individuals earn a regular income (1). 4 One mark each for each of two reasons identified and one mark for each of two explanations. If more than two ways are given, consider the first three. Any correct development connected to the standard of living can be credited.

Draw a demand and supply diagram to show how an increase in the indirect tax on jeans will affect the market for jeans. Coherent analysis which might include: D and S diagram: Axes correctly labelled – price and quantity or P and Q or P1 Q1 (1). Original demand and supply curves correctly labelled (1). New supply curve shifted to the left and labelled/correct arrow (1). Equilibriums – shown by lines P1 and Q1 and P2 and Q2 or equilibrium points marked as E1 and E2 (1). 4 If there is no correct shift of a correct supply curve the equilibriums mark cannot be awarded, even if the ‘equilibriums’ are included in the diagram.

Analyse the relationship between the unemployment rate and the youth unemployment rate. Relationship (up to 2 marks) Direct relationship/positive relationship (1)

the higher the unemployment rate, the higher the youth unemployment rate (1). Evidence (up to 2 marks) Eswatini had the highest unemployment rate and the highest youth unemployment rate (1)

Jordan had the second highest unemployment rate and the second highest youth unemployment rate (1)

A direct comparison of two countries e.g., Jordan has a higher unemployment rate (19.2%) than Argentina (6.8%), and it also has a higher youth unemployment rate (40.5% compared to 30.0%) (1)

The two/three/four countries with the highest unemployment rate also have the highest youth unemployment rate or the two/three/four countries with the lowest unemployment rate also have the lowest youth unemployment rate (1). Explanation (up to 2 marks) High unemployment rate suggests a lack of jobs in the country (1)

youth unemployment is included in the unemployment rate (1). Exception (up to 2 marks) Australia/Kuwait (1)

Kuwait had a lower unemployment rate than Australia but a higher youth unemployment rate (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. Note: Only allow the evidence of a direct comparison once. Guidance Explanation of exception (1 mark) In Kuwait, young people may take time to find their first job after education. OR Australian firms are more willing to hire younger workers (1).

Discuss whether or not workers would benefit from moving from the public sector to the private sector. Award up to 4 marks for logical reasons why it might, which may include:

due to productivity/skills rewarded (1)

may be opportunity to earn bonuses/fringe benefits in the private sector (1)

higher living standards (1)

comfortable offices/factories (1)

due to profit/motivation (1)

may have better relationships at work (1).

to develop skills/raise productivity (1). Award up to 4 marks for logical reasons why it might not, which may include:

due to formal labour markets/defined career structures (1)

higher living standards (1).

private sector may be less concerned about health and safety (1)

may have longer working hours/greater stress (1)

more concerned about cost/spending reductions (1)

more likely to be made redundant due to lack of profit (1)

private sector may not be concerned about the overall unemployment rate (1)

operate short term/zero hour/day labour contracts (1)

less concerned about equality (1)

increasing risk of poverty/low standard of living in old age (1)

reducing the ability to benefit from collective bargaining (1)

6 Higher wages, better working conditions and more training opportunities can be awarded on either side as described in the guidance below. 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 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. Guidance

to provide ongoing professional development (1).

Discuss whether or not a new port will benefit an economy. Award up to 4 marks for logical reasons why it might, which may include:

increase tourism (1)

may create jobs/reduce unemployment (1)

increase total demand (1)

increase output/cause economic growth (1)

raise incomes/standard of living (1)

lower cost of imports/exports/ increase international competitiveness (1)

increase exports/export revenue (1)

improves the current account position (1)

increase consumer choices (1). Award up to 4 marks for logical reasons why it might not, which may include:

negative externality/social cost/negatively affect health/standard of living (1)

reduce biodiversity/negatively affect wildlife (1)

increase imports (1)

worsen the current account position (1).

lower incomes/standard of living (1)

resources could be used e.g. to build hotels/conservation area/education/healthcare (1). 6 An increase in imports can be awarded on either side as described in the guidance below. 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 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.