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0% found this document useful (0 votes)
861 views17 pages

Wec12 01 Rms 20240815

Uploaded by

jayaksmco
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
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You are on page 1/ 17

https://bit.

ly/APEdexcel

Mark Scheme (Results)

Summer 2024

Pearson Edexcel International Advanced Level


In Economics (WEC12) Paper 01
Unit 2: Macroeconomic performance policy
https://bit.ly/APEdexcel

Edexcel and BTEC Qualifications

Edexcel and BTEC qualifications are awarded by Pearson, the UK’s largest awarding body. We
provide a wide range of qualifications including academic, vocational, occupational and specific
programmes for employers. For further information visit our qualifications websites at
www.edexcel.com or www.btec.co.uk. Alternatively, you can get in touch with us using the
details on our contact us page at www.edexcel.com/contactus.

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Pearson aspires to be the world’s leading learning company. Our aim is to help everyone
progress in their lives through education. We believe in every kind of learning, for all kinds of
people, wherever they are in the world. We’ve been involved in education for over 150 years,
and by working across 70 countries, in 100 languages, we have built an international reputation
for our commitment to high standards and raising achievement through innovation in
education. Find out more about how we can help you and your students at:
www.pearson.com/uk

Summer 2024
Question Paper Log Number P75889A
Publications Code WEC12_01_2406_MS
All the material in this publication is copyright
© Pearson Education Ltd 2024
https://bit.ly/APEdexcel

Section A
Question Quantitative skills Answer Mark
assessed
1 QS9: Interpret, apply and The only correct answer is D
analyse information in
A is not correct as investment and the
written, graphical, tabular
profits of firms are likely to fall
and numerical forms
B is not correct as real income is likely to fall
and government expenditure is likely to rise
C is not correct as unemployment is likely to
rise and consumer confidence is likely to fall (1)
2 QS9: Interpret, apply and The only correct answer is B
analyse information in
A is not correct as this implies higher
written, graphical, tabular
consumption and therefore leads to an
and numerical forms
increase in the average price level
C is not correct as this would lead to higher
consumption and therefore an increase in
the average price level
D is not correct as this would lead to higher
consumption/investment and therefore an
increase in the average price level (1)
3 QS1: Calculate, use and The only correct answer is C
understand ratios and
A is not correct as this is calculated using
fractions
an incorrect formula: 44 / 1.5
QS9: Interpret, apply and
analyse information in B is not correct as this is calculated using
written, graphical, tabular an incorrect formula: 44 x 1.5
and numerical forms
D is not correct as this is calculated using
an incorrect formula: (44 x 1.5 x 1000) (1)
4 QS9: Interpret, apply and The only correct answer is B
analyse information in
A is not correct because this will lead to a
written, graphical, tabular
reduction in the deficit on the balance of
and numerical forms
trade for Honduras
C is not correct because this will lead to a
reduction in the deficit on the balance of
trade for Honduras
D is not correct because this will lead to a
reduction in the deficit on the balance of
trade for Honduras (1)
5 QS9: Interpret, apply and The only correct answer is C
analyse information in
A is not correct as incomes will fall and
written, graphical, tabular
reduce national happiness
and numerical forms
B is not correct as profits for firms will fall
as consumer spending decreases
D is not correct as welfare payments will
increase (1)
https://bit.ly/APEdexcel

6 QS2: Calculate, use and The only correct answer is A


understand percentages,
B is not correct as consumer confidence is
percentage changes and
likely to decrease
percentage point changes
QS9: Interpret, apply and C is not correct as average house prices
analyse information in fell by 1.65% between November 2022
written, graphical, tabular and December 2022
and numerical forms
D is not correct as there will be less
incentive for construction companies to
build new houses
(1)

Section B

Question In 2021 net migration in Nepal was approximately 300 000. Mark

Explain one impact of this net migration on employment in Nepal.

7 Knowledge 1, Analysis 2, Application 1

Quantitative skills assessed:


QS9: Interpret, apply and analyse information in written, graphical
and tabular forms

Knowledge and analysis


1 knowledge mark for defining net migration, e.g.:
• Immigration minus emigration (1K)
OR
1 knowledge mark and up to 2 marks for linked analysis, e.g.:
• It will result an increase in employment (1K) if immigrants
come to Nepal to fill job vacancies (1AN) that people in Nepal
are unable to fill (1AN)
• Firms employ more people (1K) to increase output as positive
net migration results in an increase in population/more people
(1AN) causing higher levels of household consumption (1AN)
• Higher employment (1K) as increased immigration could
increase the size of the labour force/increase labour supply
(1AN) meaning more people are available for work (1AN)

Application
1 mark for appropriate reference to Nepal, e.g.:
• In 2021 net migration in Nepal was approximately 300 000 (1) (4)
https://bit.ly/APEdexcel

Question Between May 2022 and April 2023 the central bank of Nigeria Mark
increased the country’s base rate of interest by six percentage
points.

Draw an AD and LRAS diagram to show the effect of this increase


in the base rate of interest on consumption, the price level and
real output.

8 Knowledge 1, Application 3

Quantitative skills assessed:


QS4: Construct and interpret a range of standard graphical forms
QS9: Interpret, apply and analyse information in written, graphical
and tabular forms

Knowledge
Correctly drawn diagram with correctly labelled AD/LRAS curves
showing the original equilibrium price level and real output (1)

Application
Up to 3 marks for the following information included on the diagram:
• Drawing AD shifted to the left (1)
• Showing correct lower price level (1)
(not rewarded if ‘price’ is used on the axis)
• Showing correct real output (1)
(not rewarded if ‘quantity’ is used on the axis) (4)
https://bit.ly/APEdexcel

Question Calculate the change in Thailand’s balance of trade between 2020 and Mark
2021. Show your workings.

9 Knowledge 1, Application 3

Quantitative Skill assessed


QS2: Calculate, use and understand percentages, percentage changes
and percentage point changes
QS9: Interpret, apply and analyse information in written, graphical
and tabular forms

Knowledge
1 mark for correct formula/implicit understanding, e.g.:
• Net trade balance = (X-M) /
• Value of exports – value of imports (1)

Application
Up to 3 marks for use of data in calculation from the following, e.g.:

• 2020 → $208bn - $187bn = $21bn (1)


• 2021 → $257bn - $230bn = $27bn (1)
• Change → $27bn – $21bn = $6bn (1)

NB: if correct answer ($6 billion/percentage change of 28.6%)


is given, award full marks regardless of working.

NB: award only 3 marks if billion or % is not included in the


final answer or if answer is written as - $6 billion (4)
https://bit.ly/APEdexcel

Question With reference to the chart, explain one likely effect of this trend in Mark
the rate of inflation.

10 Knowledge 1, Analysis 2, Application 1

Quantitative skills assessed:


QS2: Calculate, use and understand percentages, percentage
changes and percentage point changes
QS9: Interpret, apply and analyse information in written, graphical,
tabular and numerical forms

Knowledge and Analysis


1 knowledge mark for defining inflation, e.g.:
• Increase in the general price level of the economy/a rise in
average prices of goods and services in an economy (1K)
OR
1 knowledge mark for identifying one likely effect of rising inflation
and up to 2 marks for linked explanation of the effect identified,
e.g.:
• Increased inequality (1K) those who have fixed incomes
(1AN) who are not protected by inflation – e.g. students,
dependents, pensioners are often the poorest (1AN)
• May worsen trade balance (1K) as price of Colombia’s
exports may rise more than the price of other countries’
goods (1AN) making their exports less internationally
competitive (1AN)
• Fall in real incomes (1K) resulting in lower consumer
confidence/purchasing power/affordability (1AN) and
hence reducing living standards/happiness (1AN)
• Greater uncertainty (1K) would lead to a loss of business
confidence (1AN) which reduces or postpones investment/
spending and hence may reduce economic growth (1AN)

Application
1 mark for appropriate use of the chart, e.g.:
• For identifying an increase in the rate of inflation /
Between Jan 2021 and Jan 2023, the rate of inflation
increased from approximately 1.8% to 13% /
Between Jan 2021 and Jan 2023, the rate of inflation
increased by 11.2 percentage points (1) (4)
https://bit.ly/APEdexcel

Question Between 2015 and 2023 the European Central Bank increased its Mark
asset purchases (quantitative easing) programme by approximately
€3.5 trillion.

With reference to the data, explain what is meant by quantitative


easing.

11 Knowledge 2, Application 2

Quantitative skills Assessed:


QS9: Interpret, apply and analyse information in written, graphical
and tabular forms.

Knowledge
Up to 2 marks for defining quantitative easing, e.g.:
• Central bank buys government bonds/gilts/securities/
corporate bonds (1)
• Increases money supply /
digital/virtual/electronic creation of money /
increases cash deposits of commercial banks /
injects more liquidity in financial markets (1)

Application
Up to 2 marks applying this to data, e.g.:
• It is a reflationary/monetary policy instrument (1)
• The European Central Bank increased its asset purchases
(quantitative easing) programme by €3.5 trillion (1)
• Reduces interest rate/borrowing costs/reward for saving (1)
• This would result in greater consumption/investment/AD (1) (4)
https://bit.ly/APEdexcel

Section C

Question Define the term ‘corporation tax’ (Extract A, lines 4 and 5). Mark

12 (a) Knowledge 2

1 mark for, e.g.


• tax charged by the government /
a direct tax /
tax on a firm/business/company (1)
1 mark for,
• profits (1) (2)

Question Explain what is meant by Gross National Income (Extract A, line 24). Mark

12 (b) Knowledge 2, Application 2

Quantitative Skill Assessed


QS9: Interpret, apply and analyse information in written, graphical
and tabular forms.

Knowledge
Up to 2 marks for explaining Gross national income (GNI), e.g.
• It is GDP (1) plus net income (positive or negative) from
overseas/abroad (1)
• It is GDP (1) plus net receipts from abroad from compensation
of employees, property income and net taxes less subsidies on
production (1)
• It is GDP (1) plus money flowing from foreign countries minus
money flowing to foreign countries (1)

Application
Up to 2 marks for application to Extract A, e.g.:
• An alternative measure of economic growth (1)
• This measure removes the impact of international companies
/ provides a better understanding of domestic demand (1)
• According to the GNI estimate, Ireland’s rate of economic
growth was much lower / at 5.9% in 2022 (1)
(4)
https://bit.ly/APEdexcel

Question With reference to Extract A, analyse two reasons for the improvement Mark
in living standards in Ireland between 2015 and 2022.

12(c) Knowledge 2, Application 2, Analysis 2

Quantitative Skill Assessed


QS9: Interpret, apply and analyse information in written, graphical,
tabular and numerical forms

Knowledge and analysis


Up to 1 knowledge for identifying a reason and 1 analysis mark for
linked development of the reason, e.g.:
• Increase in employment (1K) as there will be greater demand
for domestic workers when international companies set up their
operations in Ireland: higher incomes for workers (1AN)
• Increased government tax revenues (1K) as workers will pay
taxes on their earnings and firms will pay taxes on their profits:
more spending on public goods and services (1AN)
• Increase in real incomes (1K) since there is positive economic
growth/an increase in real GDP (1AN)
• Increase in FDI by TNCs (1K) resulting in an increase in the
productive capacity of the economy (1AN)
• Consumers may have access to high quality/innovative goods
(1K) due to greater innovation by TNCs (1AN)

Application
Up to 2 marks for use of Extract A, e.g.,
• Employment: 2.06 million to 2.55 million (1)
• Corporation tax receipts: €22.6 billion (1)
• Attracted over 1500 international companies / Apple Inc., the
world’s largest technology company, moved its European base
to Ireland in 2015 (1)
• The activities of international companies had a positive impact
on living standards in Ireland (1)
(6)
https://bit.ly/APEdexcel

Question With reference to Figure 1 and Extract A, examine two reasons why Mark
Ireland’s rate of economic growth was expected to decrease in 2023.

12 (d) Knowledge 2, Application 2, Analysis 2, Evaluation 2

Quantitative Skill Assessed


QS2: Calculate, use and understand percentages, percentage changes
and percentage point changes
QS9: Interpret, apply and analyse information in written, graphical,
tabular and numerical forms

Knowledge and analysis


Up to 1 knowledge for identifying a reason and 1 analysis mark for
linked development pf the reason, e.g.:
• A high rate of inflation (1K) could create greater uncertainty
in Ireland, hence reducing investment/AD (1AN) /
A high rate of inflation (1K) could reduce real incomes and
hence consumption/AD (1AN) /
A high rate of inflation (1K) could increase export prices and
hence reducing net trade/AD (1AN)
• Rising interest rates (1K) increases reward for savings/cost
of borrowing, hence decreases C/I/AD (1AN)
• Weakening state of the global economy (1K) may reduce the
demand for Ireland’s exports, hence net trade/AD (1AN)

Application
1 mark for reference to Figure 1, e.g.:
• In 2022 Ireland’s annual real GDP growth rate was 12.2% (1)
AND
1 mark for reference to Extract A, e.g.:
• rate of economic growth is expected to decrease to just 4% /
Forecasts also suggest that between 2024 and 2027, the
economy is likely to grow by an average of 3.5% per year (1)

Evaluation
Up to 2 marks for evaluative comments (1+1 or 2+0), e.g.:
• The size of the decrease in the rate of economic growth is large
(1) as between 2022 and 2023, it has fallen by 8.2 percentage
points / from 12.2% in 2022 to 4% in 2023 (1)
• These are forecasts and may not happen (1) as inflation falls/
state of the global economy improves (1)
• Ireland’s rate of economic growth may not be low if Ireland’s
Government increases its spending e.g. fiscal policy (1) at a
faster rate than other components of AD (1)
• Economic growth may not be low in the long-run (1) given
forecasts also suggest that between 2024 and 2027, GDP is
likely to grow by an average of 3.5% per year (1)
• It is likely to be a combination of reasons that would lead to a
(8)
lower rate of economic growth for Ireland (1)
https://bit.ly/APEdexcel

Question With reference to Figure 2, Extract A and your own knowledge, discuss
the limitations of using GDP to compare living standards between countries.

12(e) Indicative content guidance


Answers must be credited by using the level descriptors (below) in line with the
general marking guidance.
The indicative content below exemplifies some of the points that candidates
may make but this does not imply that any of these must be included.
Other relevant points must also be credited.

Quantitative Skill Assessed


QS2: Calculate, use and understand percentages, percentage changes and
percentage point changes
QS9: Interpret, apply and analyse information in written, graphical, tabular
and numerical forms

Knowledge, Application and Analysis (8 marks) – indicative content

Reference to Figure 2: In 2022 Ireland’s rate of economic growth was


approximately 12.2% and approximately 2% for Germany and USA

Limitations include:
• Percentage changes are misleading without any reference to total GDP
• Differences in the composition of GDP: most of Ireland’s GDP is made up of
investment by international companies, where their output produced can be
volatile – “Some of these companies are so large that the country’s GDP
figures may be overstated”
• Fails to indicate whether the nation’s rate of growth is sustainable or not –
“Apple Inc., the world’s largest technology company, moved its European
base to Ireland in 2015”
• Differences in distribution of income as growth varies between countries –
“mislead analysis of matters related to income inequality”
• Quality of life issues, such as pollution from manufacturing: impact is hard
to measure – “mislead analysis of matters related to the environment”
• Methods of calculation and reliability of data may differ between countries –
“large fluctuations in Ireland’s industrial production data. It rose or fell by
more than 10% from one month to the next”
• Currency values do not effectively calculate accurate purchasing power
parity/exchange rates might not accurately reflect these differences in
purchasing power of currencies
• Presence of an informal and unpaid economy will imply that some output is
unrecorded as it is not bought or sold and there is no resulting income
• Does not consider differences in the size of population/population growth
• Subsistence, barter and the hidden economy will undervalue the real output
and national income will not reflect true living standards between countries
• Differences in quality of housing/education/healthcare between countries
• The size of the public sector spending, especially in developed countries
such as Ireland, which may or may not improve living standards
• Standard of living is subjective and therefore cannot be measured accurately

Level Mark Descriptor


0 No rewardable material.
https://bit.ly/APEdexcel

Level 1 1–3 Displays isolated, superficial or imprecise knowledge and understanding


of economic terms, principles, concepts, theories and models.
Use of generic material or irrelevant information or inappropriate
examples. Descriptive approach which has no chains of reasoning.
Level 2 4–6 Displays elements of knowledge and understanding of economic terms,
principles, concepts, theories and models. Ability to apply knowledge
and understanding to some elements of the question. Some evidence
and contextual references are evident in the answer.
Chains of reasoning in terms of cause and/or consequence are evident,
but they may not be developed fully, or some stages are omitted.
Level 3 7–8 Demonstrates an accurate and precise knowledge and understanding of
economic terms, principles, concepts, theories and models.
Ability to link knowledge and understanding in context using relevant
examples which are fully integrated to address the broad elements of
the question.
Analysis is clear, coherent, relevant and focused. The answer
demonstrates logical and multi-stage chains of reasoning in terms of
cause and/or consequence.

Evaluation (6 marks) – indicative content

• Benefits of using GDP for comparison – e.g., it is a standard measure used


by all countries and is well understood by policymakers
• GDP is an accurate indicator of the size of an economy and the GDP growth
rate is probably the best indicator of economic growth
• GDP is internationally recognised as it is the most reliable method of
comparing living standards between countries
• Simpler to measure GDP than any other composite indicators
• Ease of using GDP data for comparison over time between countries
• Other measures may be better, e.g., GNI/GDP per capita gives an indication
of average incomes, which is a key determinant of living standards
• GDP is dynamic and enables policymakers/central banks to determine
whether their economy is contracting or expanding and promptly take
necessary action to ensure living standards are maintained
• GDP allows policymakers, economists, and businesses to analyse the impact
of changes in monetary and fiscal policy, economic shocks, etc.
• SR v LR considerations: The global health crisis of 2020 may have affected
GDP of countries

Level Mark Descriptor


0 No rewardable material.
Level 1 1–2 Identification of generic evaluative comments.
No supporting evidence/reference to context.
No evidence of a logical chain of reasoning.
Level 2 3–4 Evidence of evaluation of alternative approaches.
Some supporting evidence/reference to context.
Evaluation is supported by a partially-developed chain of reasoning.
Level 3 5–6 Evaluation recognises different viewpoints and/or is critical of the
evidence. Appropriate reference to evidence/context.
Evaluation is supported by a logical chain of reasoning.
https://bit.ly/APEdexcel

Section D

Question Evaluate supply-side policies that a government could use to increase the rate
of economic growth and to decrease the rate of inflation. Refer to a country of
your choice in your answer.

13 Indicative content guidance


Answers must be credited by using the level descriptors (below) in line with the
general marking guidance.
The indicative content below exemplifies some of the points that candidates
may make, but this does not imply that any of these must be included. Other
relevant points must also be credited.

Knowledge, Application and Analysis (12 marks) – indicative content

• Supply-side policies are designed to increase productivity, competition, and


incentives in an economy
• It can be shown via a shift outward of the LRAS creating potential growth
and lower inflation; credit use of relevant AD/AS diagrams

Policies include:
• Increased government spending on skills through investment in education
and/or training – this would increase human capital and raise productivity
• Increased government spending on infrastructure investment (e.g. roads or
broadband) – this would reduce industry costs or improve access to markets
• Reducing the level of welfare benefits – this will incentivise the unemployed
to take jobs, work harder and increase output per worker of those in work
• Privatisation – this may lead to increased competition, greater innovation
resulting from higher R&D spending, and therefore higher productivity
• Cutting cost of bureaucracy and/or deregulation of firms – this would raise
efficiency and productivity by increasing competition between firms
• Reducing regulation and/or increasing competition by reducing barriers to
entry in product markets
• Reducing corporation tax – this incentivises firms to innovate by investing in
technological advancements and therefore increasing potential output
• Reducing income tax – this may motivate employees to work harder/longer

NB Award a maximum of level 3 if no reference to a specific country

Level Mark Descriptor


0 No rewardable material.
Level 1 1–3 Displays isolated, superficial or imprecise knowledge and
understanding of economic terms, principles, concepts, theories and
models.
Use of generic material or irrelevant information or inappropriate
examples.
Descriptive approach, which has no chains of reasoning.
Level 2 4–6 Displays elements of knowledge and understanding of economic terms,
principles, concepts, theories and models.
Limited application of knowledge and understanding to economic
problems in context.
A narrow response or superficial, only two-stage chains of reasoning in
terms of cause and/or consequence.
https://bit.ly/APEdexcel

Level 3 7–9 Demonstrates accurate knowledge and understanding of economic


terms, principles, concepts, theories and models.
Ability to apply knowledge and understanding to some elements of the
question. Some evidence and contextual references are evident in the
answer.
Analysis is clear and coherent. Chains of reasoning in terms of cause
and/or consequence are evident, but they may not be developed fully,
or some stages are omitted.
Level 4 10–12 Demonstrates accurate and precise knowledge and understanding of
economic terms, principles, concepts, theories and models.
Ability to link knowledge and understanding in context using
appropriate examples which are fully integrated to address the broad
elements of the question.
Analysis is clear, coherent, relevant and focused. The answer
demonstrates logical and multi-stage chains of reasoning in terms of
cause and/or consequence.
Evaluation (8 marks) – indicative content

• Government has to spend a significant amount of money to come out of this


period of low rates of economic growth as it has been ongoing since 2022
• Significant time lags and implementation lags for supply-side policies
• Creates an opportunity cost for the government: funds may not be spent in
areas that would contribute to high productivity
• Asymmetric information may mean that supply-side policies are targeted in
the wrong areas of the economy and will not have the desired outcome
• Supply-side policies are less effective when there are large amounts of spare
capacity in an economy: they create potential growth but no actual growth
• Consideration of the effectiveness of supply-side policies such as
infrastructure and education at delivering economic growth
• Depends on the quality of education, training and infrastructure projects
• Privatisation may lead to private monopolies, leading to lower productivity
• Cut in welfare benefits designed as an incentive to work may be ineffective
if the unemployed are willing to receive lower payments and do not work
• Reducing bureaucracy may create unemployment in the short-term
• Reducing corporation tax rates would be ineffective if the companies are
uncertain about the prospect of making profit in the future
• Reducing income tax rates may result in employees taking more leisure time
• Supply-side policies are more effective than demand-side policies as there is
unlikely to be a trade-off between economic growth and low rates of inflation

Level Mark Descriptor


0 No rewardable material.
Level 1 1–3 Identification of generic evaluative comments.
No supporting evidence/reference to context.
No evidence of a logical chain of reasoning.
Level 2 4–6 Evidence of evaluation of alternative approaches.
Some supporting evidence/reference to context.
Evaluation is supported by a partially developed chain of reasoning.
Level 3 7–8 Evaluation recognises different viewpoints and/or is critical of the
evidence, leading to an informed judgement.
Appropriate reference to evidence/context.
Evaluation is supported by a logical chain of reasoning.
https://bit.ly/APEdexcel

Question Evaluate the likely macroeconomic effects of a government using deflationary


policies to achieve a balanced budget. Refer to a country of your choice in your
answer.

14 Indicative content guidance


Answers must be credited by using the level descriptors (below) in line with the
general marking guidance.
The indicative content below exemplifies some of the points that candidates
may make, but this does not imply that any of these must be included. Other
relevant points must also be credited.

Knowledge, Application and Analysis (12 marks) – indicative content

• Understanding of balanced government budget


• “In February 2023 Argentina’s government spending exceeded its tax
revenue by approximately $1 billion”
• To achieve a balanced budget, the Argentinian Government is likely to
reduce government spending and increase taxation

Possible effects include:


• Reduction in Argentina’s real output/economic growth as a result of
the lower injections into, and greater withdrawals from, the country’s
circular flow of income
• Rising unemployment/falling real wages of workers in Argentina’s
public sector: the government may introduce spending cuts
• Fall/slow increase in real incomes and lower standard of living of the
population of Argentina
• Deflationary effects/lower demand-pull inflationary pressures
• Increase in income inequality if Argentina’s government cuts welfare
payments: it receives lower taxation revenue from the unemployed
• Lack of government investment is likely to impact long-term economic
growth e.g. spending on infrastructure, education, healthcare, etc
• Positive impact on the environment e.g. less pollution as a result of
the lower consumption and production of goods and services
• Greater undesirable consequences in Argentina’s society e.g. crime

Credit use of relevant AD/AS diagrams

NB Candidates may consider the positive effects for KAA and the
negative effects for evaluation (or vice versa)

Level Mark Descriptor


0 No rewardable material.
Level 1 1–3 Displays isolated, superficial or imprecise knowledge and
understanding of economic terms, principles, concepts, theories and
models.
Use of generic material or irrelevant information or inappropriate
examples.
Descriptive approach which has no chains of reasoning.
Level 2 4–6 Displays elements of knowledge and understanding of economic terms,
principles, concepts, theories and models.
Limited application of knowledge and understanding to economic
problems in context.
https://bit.ly/APEdexcel

A narrow response or superficial, only two-stage chains of reasoning in


terms of cause and/or consequence.
Level 3 7–9 Demonstrates accurate knowledge and understanding of economic
terms, principles, concepts, theories and models.
Ability to apply knowledge and understanding to some elements of the
question. Some evidence and contextual references are evident in the
answer.
Analysis is clear and coherent. Chains of reasoning in terms of cause
and/or consequence are evident, but they may not be developed fully,
or some stages are omitted.
Level 4 10–12 Demonstrates accurate and precise knowledge and understanding of
economic terms, principles, concepts, theories and models.
Ability to link knowledge and understanding in context using
appropriate examples which are fully integrated to address the broad
elements of the question.
Analysis is clear, coherent, relevant and focused. The answer
demonstrates logical and multi-stage chains of reasoning in terms of
cause and/or consequence.

Evaluation (8 marks) – indicative content

• Impact on macroeconomic objectives depends on the magnitude of the


reduction in government spending and the increase in taxation
• Time lags for the policy to come into effect – up to 18 to 24 months
• Budget deficit may increase in the long-run as a result of the reduction
in government spending and increase in taxation
• Impact on real output and economic growth depends on the size/value
of the multiplier
• Fall in wages can make Argentinian economy more competitive in LR
• Impact on inflation/real output depends on where the AD lies on the
Keynesian LRAS / on the level of spare capacity
• Reduction in welfare payments by the government could reduce the
level of frictional/voluntary unemployment
• Effects depend on to what extent private sector spending/employment
can replace public sector spending/employment
• Potential increase in hidden economy (e.g. rise in cash in hand work)
• Effects would depend on what areas of government spending and/or
taxation are changed

Level Mark Descriptor


0 No rewardable material.
Level 1 1–3 Identification of generic evaluative comments.
No supporting evidence/reference to context.
No evidence of a logical chain of reasoning.
Level 2 4–6 Evidence of evaluation of alternative approaches.
Some supporting evidence/reference to context.
Evaluation is supported by a partially-developed chain of reasoning.
Level 3 7–8 Evaluation recognises different viewpoints and/or is critical of the
evidence, leading to an informed judgement.
Appropriate reference to evidence/context.
Evaluation is supported by a logical chain of reasoning.

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