Economics may/june 2022 Paper 22 Section A: a) 2600m Put the Dollar Sign here, answer is correct b) Life expectancy, GDP per head c) Aggregate demand= C+I+G+(X-M), government spending increases (G) so aggregate demand also increases Incomplete point d) People may prefer working in the tertiary sector due to many reasons. To begin with, working conditions are much better than that of the primary sector, so it will be healthier for workers. Also, income is likely to be higher in the tertiary sector, so people will prefer working there Too short, for such questions which do not require detailed explanation, write at least 1 point for each mark e) Investing in education will allow more students to have a better degree, so they’ll be able to get a better job, and therefore increase productivity. Capital goods are basically machinery, so they will be able to work 24/7 without a break, so they may be able to produce more in a shorter period of time Investment in capital goods explanation is not properly written, it lacks proper chain of analysis and key words. Key words missing in the Investment in Education part as well. f) The expected relationship between GDP per head and net migration should be direct, meaning that as GDP per head is higher, net migration should also be higher. The countries following this expectation are: New Zealand, Slovenia, Cyprus and Bhutan, while the countries that are not within expectation are: Kenya and Mozambique, this is because Kenya has a higher GDP per head but less net migration. Use a little more data from the question to lengthen your answer. Points are correct but answer is too short for a 5 mark question. g) On one hand, if people’s living quality has improved, it likely how? not a developed point. means that enterprise has increased, so incomes increases, so living standards increase. Also, if firms’ profits have increased in the future, this means that enterprise has also increased. On points are answered directly without building cause and effect relationship the other hand, if the living quality of people did not improve, then enterprise has most likely not increased due to incomes not increasing. Also, if the firms’ profits did not increase, it is most likely that enterprise has not increased too. Vey basic points, it is also a repition. Try using different types of points. The points were not developed at all. Check Marking Scheme for ideas about how to develop the points. h) On one hand, a cut in income tax rates will increase disposable income, so spending increases, and the people may spend on luxury goods, so living standard increases. Also, when spending increases, people may be able to get out of poverty, so their living standards increase. On the other hand, if spending increases, aggregate demand increases, and if it keeps increasing, it may cause demand-pull infation, so costs may skyrocket, and many people wont be able to buy necessity goods, so living standards decrease. It is just the reverse of the merit point. Consider points such as not beneficial to all people, may increase pollution, decrease in government tax revenue and therefore less government spending, etc. Section B: Qs 2: a) Paper money, Cheques, Coins, Digital Money but how does it help the government? try completing your points by giving a logical chain of analysis b) A central bank issues money to the government in terms of notes and coins. It also controls the monetary policy, which it is not just setting interest rates means that it sets interest rates. Also, it is the lender of last resort to commerial banks as well as the government. focus only on the government c) Most governments have low unemployment as their main aim due to various reasons. To begin with, lower unemployment means that the labour force is stronger, so productivity increases. Additionally, when productivity increases, GDP per head increases, so living standards also increase. Lastly, if there isnt low unemployment, crime rates will increase due to people needing money, so living standards decrease. Also consider a few other points such as increase in aggregate demand, increase in government revenue. And complete the point with a cause and effect chain. d) On one hand, inflaton may be healthy to the market if it’s a small percentage, eg. 2% or 3%. This is because a small point percentage wont harm consumers, but will benefit producers assame repeated, there are so many 2% from many consumers will cause their profit margin to other important Please increase. Additionally, inflation means higher prices, so more points. check Markign Scheme profit for the producers. On the other hand, if there is superinflation, consumers will stop buying due to the high prices, so producers will suffer a huge loss and may have to shut down. Lastly, inflation will increase the prices of raw materials, so costs will increase, and profits decrease. Your answer lacks thought and depth. It only highlights the point of view of profit. Try thinking from international, government, environement as well as consumer perspective. Qs 3: a) A curve which represents the maximum output of a country, it also shows opportunity cost. mention possible combination of two goods, mention given resources and technology b) Price inelastic means that % change in qty demanded is less than that of price. Soap is a neccessity good, so no matter the price, people have to buy it, whereas perfume is a luxury good, so if its price increases, people may stop buying it. Another point needed, consider postponement of consumption, number of substitutes, proportion of income spent, etc c) of what ? An increase in incomes will allow people to spend more, so demand increases. When demand increases prices increase. This type of an explanation will not give you 2 marks. You have to give another reason, for example, demand increases as purchasing power increases, etc d) Qs 5: a) The willingness and ability to produce goods over a period of time and at a given price. b) Merit goods are goods that are more beneficial to us than we realize. Governments may increase the consumption of merit goods in many ways. Firstly, they could advertise these goods and talk about how beneficial they are for us. They could also decrease their prices which will encourage more people to try them out. how? Write that government can provide subsidies on production or government can introduce price ceiling c) As GDP decreases, GDP per head decreases, so instead of households spending a high proportion on luxury goods, most of the disposable income will be spent of neccessity goods and very less on luxury goods. Furthermore, a reduction in income will cause households to save less due to most of the money being spent already. Lastly, a reduction in income may cause a person to look for more jobs, so spending pattern may not change at all. You could also consider other points instead of the last point. d) On one hand, an increase in output means more revenue is being received, so profits increase. When profits increase, firms may spend the extra money on capital goods and R&D to increase their productivity. Also, an increase in profits will allow firms to increase workers’ incomes, so they will be motivated to produce even more. On the other hand, if output write diseconomies of scale increases, costs may also be increasing, and the firm may start suffering losses, and may start to release some workers, which will also decrease their productivity. Lastly, an increase in output may cause a firm to experience diseconomies of scale, eg. Poor communication due to the firm expanding.
