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This document outlines the examination details for the Pearson Edexcel International Advanced Level Economics Unit 2 paper, including instructions, total marks, and sections to be completed. It specifies the duration of the exam, materials required, and advises candidates on how to approach the questions. The document also includes sample questions from Sections A and B related to macroeconomic performance and policy.

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0% found this document useful (0 votes)

26 views32 pages

wec12/01 June 2021 (IAL) QP

Uploaded by

devagya

We take content rights seriously. If you suspect this is your content, claim it here.

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You are on page 1/ 32

PMT

Please check the examination details below before entering your candidate information
Candidate surname Other names

Pearson Edexcel Centre Number Candidate Number

International
Advanced Level

Time 1 hour 45 minutes

Paper
reference WEC12/01
Economics
International Advanced Subsidiary
UNIT 2: Macroeconomic performance and policy

You must have: Total Marks

Source Booklet (enclosed)

Instructions
• Use black ink or ball-point pen.
• Fill in the boxes at the top of this page with your name,
centre number and candidate number.
• Answer ALL questions in Sections A, B and C.
• Answer ONE question in Section D.
• Answer the questions in the spaces provided
– there may be more space than you need.

Information
• The total mark for this paper is 80.
• The marks for each question are shown in brackets
– use this as a guide as to how much time to spend on each question.
• Calculators may be used.
Advice
• Read each question carefully before you start to answer it.
• Check your answers if you have time at the end.
• Good luck with your examination.

Turn over

*P65833A0128*
P65833A
©2021 Pearson Education Ltd.

1/1/1/1/1/1
PMT

SECTION A
Answer ALL questions in this section.
Questions must be answered with a cross in a box . If you change your mind about an answer,
put a line through the box and then mark your new answer with a cross .
1 800 000 students graduated from universities in the UK in 2019. 380 000 of these
started work in jobs that did not require a degree.
Which one of the following describes this situation?

A Underemployment

B Unemployment

C Real wage inflexibility

D Economic inactivity

(Total for Question 1 = 1 mark)

2 Brazil’s annual rate of inflation between April 2019 and August 2019 is shown in
the table.

Month Rate of inflation

(%)

April 4.94

May 4.66

June 3.37

July 3.22

August 3.43

Which one of the following can be deduced from the table?

A There was deflation between April and July

B The average price level was highest in April

C There was disinflation between April and July

D The rate of inflation was lowest in August

(Total for Question 2 = 1 mark)

2
*P65833A0228*
PMT

3 South Africa’s annual government expenditure as a proportion of GDP increased from

31.4% to 34.6% between 2012 and 2019.
Which one of the following is most likely to have contributed to this increase in
government expenditure as a proportion of GDP?

A Lower welfare payments

B A lower exchange rate

C Less economic activity

D Increased business confidence

(Total for Question 3 = 1 mark)

4 The diagram shows an economy’s actual growth rate and trend growth rate.

Trend growth rate

Real
GDP X
Actual growth rate

U V

Time

Which one of the following can be deduced from the diagram?

A The economy is in recovery between points U and V

B A positive output gap exists at point V

C Unemployment is rising between points W and X

D A positive output gap exists at point X

(Total for Question 4 = 1 mark)

*P65833A0328*
3
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PMT

5 In Japan, private sector investment increased by 1.9% in the second quarter of 2019.
Which one of the following was the most likely cause of this increase in investment?

A A decrease in the rate of economic growth

B An increase in indirect taxation

C An increase in the tax on company profits

D A decrease in interest rates

(Total for Question 5 = 1 mark)

6 In Denmark the marginal propensity to consume is estimated to be 0.49.

Based on this estimate, which one of the following is the value of the multiplier
for Denmark?

A 0.51

B 1.96
C 2.04

D 4.90

(Total for Question 6 = 1 mark)

TOTAL FOR SECTION A = 6 MARKS

4
*P65833A0428*
PMT

SECTION B
Answer ALL questions in this section in the space provided.
7 The French Government is to offer €5 billion in tax relief for business investment.
Explain one likely economic effect of this investment tax relief.

................................ . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ............................................................................................................................................ . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

................................ . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ........................... ................................................................................................................. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ..

................................ . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ........................... ................................................................................................................. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(Total for Question 7 = 4 marks)

*P65833A0528*
5
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PMT

8 In the first quarter of 2019 average house prices decreased by 15% in real terms
in Sydney, Australia.
Explain one possible impact of this change in house prices on the level of
consumption.

(Total for Question 8 = 4 marks)

6
*P65833A0628*
PMT

9 In January 2016 the world price of oil was $29.78 per barrel. By May 2019 this had
increased to $66.83 per barrel. Saudi Arabia is a net exporter of oil.
Draw a diagram showing the change in AD for Saudi Arabia’s economy following the
increase in the price of oil. Show the effect on the price level and real output.

................................ . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ........................... ................................................................................................................. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ..

................................ . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ........................... ................................................................................................................. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(Total for Question 9 = 4 marks)

*P65833A0728*
7
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PMT

10 The data shows the quarterly percentage growth of real GDP for Belgium between
Q1 2019 and Q4 2019.

Quarter %

Q1 0.0

Q2 0.3

Q3 0.4

Q4 0.4

With reference to the overall trend of the data, explain what is meant by the term
‘growth of real GDP’.

................................ . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ........................... ................................................................................................................. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ..

................................ . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ........................... ................................................................................................................. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(Total for Question 10 = 4 marks)

8
*P65833A0828*
PMT

11 The table shows values for components of the US economy in 2018.

Component $ trillion

Consumption 13.95

Investment 3.65

Savings by households 1.25

Government expenditure 3.52

Tax revenue 3.64

Exports 2.50

Imports 3.10

Ceteris paribus, calculate the aggregate demand for the USA in 2018.

................................ . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ........................................................................................................................................... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

................................ . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ........................................................................................................................................... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

................................ . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ........................................................................................................................................... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

................................ . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .......................... ................................................................................................................. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ..

................................ . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ........................................................................................................................................... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

................................ . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .......................... ................................................................................................................. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ..

................................ . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ........................................................................................................................................... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

................................ . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .......................... ................................................................................................................. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(Total for Question 11 = 4 marks)

TOTAL FOR SECTION B = 20 MARKS

*P65833A0928*
9
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PMT

SECTION C
Study Figures 1 and 2 and Extracts A and B in the Source Booklet before answering Question 12.
Write your answers in the space provided on the following pages.
12 (a) Define the term ‘monetary policy’. (Extract A, line 8)
(2)
(b) With reference to Extract A, explain the term ‘foreign direct investment’.
(4)
(c) With reference to Figure 1 and Extract A, examine two likely impacts of the annual
GDP growth rates on the people living in East African countries.
(8)
(d) With reference to Figure 2, analyse one macroeconomic effect of the change in
the current account balance as a percentage of GDP on East African economies.
(6)
(e) With reference to Extract A and Extract B, discuss the likely effects of
interventionist supply-side policies on East African economies.
(14)

10
*P65833A01028*
PMT

12 (a) Define the term ‘monetary policy’. (Extract A, line 8)

(2)

................................ . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ........................... ................................................................................................................. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(b) With reference to Extract A, explain the term ‘foreign direct investment’.
(4)

*P65833A01128*
11
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PMT

(c) With reference to Figure 1 and Extract A, examine two likely impacts of the annual
GDP growth rates on the people living in East African countries.
(8)

12
*P65833A01228*
PMT

*P65833A01328*
13
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PMT

(d) With reference to Figure 2, analyse one macroeconomic effect of the change in
the current account balance as a percentage of GDP on East African economies.
(6)

14
*P65833A01428*
PMT

*P65833A01528*
15
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PMT

(e) With reference to Extract A and Extract B, discuss the likely effects of
interventionist supply-side policies on East African economies.
(14)

16
*P65833A01628*
PMT

*P65833A01728*
17
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PMT

(Total for Question 12 = 34 marks)

TOTAL FOR SECTION C = 34 MARKS

18
*P65833A01828*
PMT

BLANK PAGE

SECTION D BEGINS ON THE NEXT PAGE.

*P65833A01928*
19
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PMT

SECTION D
Answer ONE question from this section.
Write your answer in the space provided.
EITHER
13 In 2019 the new President of the European Central Bank asked governments
of eurozone countries to cut taxation and increase government expenditure to
stimulate the rate of economic growth.
Evaluate fiscal policy instruments as a means of increasing the rate of economic
growth.

(Total for Question 13 = 20 marks)

OR
14 In quarter 1 2019 the unemployment rate in South Africa was 27.6%. In quarter 2 it
increased to 29%. An additional 455 000 workers became unemployed.
Evaluate the likely impact of an increase in the unemployment rate on workers, public
finances and resource utilisation.

(Total for Question 14 = 20 marks)

20
*P65833A02028*
PMT

Indicate which question you are answering by marking a cross in the box . If you change your
mind, put a line through the box and then indicate your new question with a cross .

Chosen question number: Question 13 Question 14

Write your answer here:

*P65833A02128*
21
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PMT

22
*P65833A02228*
PMT

*P65833A02328*
23
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PMT

24
*P65833A02428*
PMT

TOTAL FOR SECTION D = 20 MARKS

TOTAL FOR PAPER = 80 MARKS

*P65833A02528*
25
PMT

BLANK PAGE

26
*P65833A02628*
PMT

BLANK PAGE

*P65833A02728*
27
PMT

BLANK PAGE

28
*P65833A02828*
PMT

Pearson Edexcel International Advanced Level

Time 1 hour 45 minutes

Paper
reference WEC12/01
Economics
International Advanced Subsidiary
UNIT 2: Macroeconomic performance and policy

Source Booklet
Do not return this Booklet with the question paper.

Turn over

1/1/1/1/1/1
PMT

Sources for use with Section C.

East African* economies
* Countries include Burundi, Comoros, Djibouti, Eritrea, Ethiopia, Kenya, Rwanda,
Seychelles, Somalia, South Sudan, Tanzania and Uganda.
Figure 1 Annual real GDP growth, 2014–2018
7
6.4 6.5
6 5.9
5.7
5.1
5

4
%
3

0
2014 2015 2016 2017 2018

Figure 2 Current account on the balance of payments as a percentage of GDP,

2016–2018

East African
economies

2016 -6.7

2017 -5.4

2018 -5.3

2
P65833A
PMT

Extract A Rapid growth in East Africa

East Africa was the fastest growing region of Africa in 2018. Increasing commodity prices
helped the agricultural and mining sectors contribute most to this growth. Higher foreign
direct investment (FDI) in the region also contributed to economic growth. Growth in
FDI in 2018 was 67% in Uganda, 27% in Kenya and 18% in Tanzania. Governments in 5
East Africa have been investing in infrastructure, such as roads, seaports and airports.
As a result of rapid economic growth, the rate of inflation increased to 13.1% in 2016 and
14.4% in 2017. Appropriate monetary policy in the region helped the rate of inflation to
fall to 8.9% in 2019.
Despite rapid economic growth rates, unemployment remains high. Many consumers 10
struggle to meet their basic needs. The governments of the region have been advised to
focus on interventionist supply-side policies. These should include continued investment
in infrastructure, improving the health and skills of the labour force and increasing the
supply of housing.
Extract B East African infrastructure investment needed
East African economies have under-invested in infrastructure. The roads in East Africa
are in a poor condition. The combination of low speeds and long distances causes high
transport costs. Rail transport is poor, which means most goods have to be transported
on a congested road system. Funds from China are being used to build two rail routes in 5
the region.
Inadequate energy supply is the biggest infrastructure problem. East Africa has the
lowest energy generating capacity per capita on the continent. Poor energy supply
causes blackouts. However, the region has the potential to develop hydro, wind and fossil
fuel resources that could increase energy supply. 10

The region has the smallest proportion of their population with telephone lines and
access to mobile phone networks in Africa. However, recently there has been a high
level of investment in telecommunications infrastructure. This will result in significant
improvements in communications.

3
P65833A
PMT

BLANK PAGE

Acknowledgements

Figure 1, Figure 2 and Extract A and Extract B adapted from ‘East Africa Economic Outlook’, African
Development Bank Group, 2018, https://www.afdb.org/fileadmin/uploads/afdb/Documents/
Publications/2018AEO/African-Economic-Outlook-2018-East-Africa.pdf

‘East Africa stays at the top, with foreign inflows at $4bn, report shows’, Njiraini Muchira, 19 June 2019,
https://www.theeastafrican.co.ke/business/East-Africa-foreign-inflows/2560-5163074-emgbyy/index.html

4
P65833A

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wec12/01 June 2021 (IAL) QP

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wec12/01 June 2021 (IAL) QP

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PMT

Pearson Edexcel Centre Number Candidate Number

Time 1 hour 45 minutes

You must have: Total Marks

C Real wage inflexibility

(Total for Question 1 = 1 mark)

Month Rate of inflation

Which one of the following can be deduced from the table?

A There was deflation between April and July

B The average price level was highest in April

C There was disinflation between April and July

D The rate of inflation was lowest in August

(Total for Question 2 = 1 mark)

3 South Africa’s annual government expenditure as a proportion of GDP increased from

A Lower welfare payments

B A lower exchange rate

C Less economic activity

D Increased business confidence

(Total for Question 3 = 1 mark)

Trend growth rate

Which one of the following can be deduced from the diagram?

A The economy is in recovery between points U and V

B A positive output gap exists at point V

C Unemployment is rising between points W and X

D A positive output gap exists at point X

(Total for Question 4 = 1 mark)

A A decrease in the rate of economic growth

B An increase in indirect taxation

C An increase in the tax on company profits

D A decrease in interest rates

(Total for Question 5 = 1 mark)

6 In Denmark the marginal propensity to consume is estimated to be 0.49.

(Total for Question 6 = 1 mark)

TOTAL FOR SECTION A = 6 MARKS

(Total for Question 7 = 4 marks)

(Total for Question 8 = 4 marks)

(Total for Question 9 = 4 marks)

(Total for Question 10 = 4 marks)

11 The table shows values for components of the US economy in 2018.

Savings by households 1.25

Government expenditure 3.52

Tax revenue 3.64

(Total for Question 11 = 4 marks)

TOTAL FOR SECTION B = 20 MARKS

12 (a) Define the term ‘monetary policy’. (Extract A, line 8)

(Total for Question 12 = 34 marks)

TOTAL FOR SECTION C = 34 MARKS

SECTION D BEGINS ON THE NEXT PAGE.

(Total for Question 13 = 20 marks)

(Total for Question 14 = 20 marks)

Chosen question number: Question 13 Question 14

TOTAL FOR SECTION D = 20 MARKS

Pearson Edexcel International Advanced Level

Time 1 hour 45 minutes

Sources for use with Section C.

Figure 2 Current account on the balance of payments as a percentage of GDP,

Extract A Rapid growth in East Africa

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