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UNIVERSITY OF CAMBRIDGE INTERNATIONAL EXAMINA
International General Certificate of Secondary Education
ECONOMICS
Paper 2 Structured Questions
October/November 2012
2 hours
Additional Materials:
Answer Booklet/Paper
* 3 9 7 1 2 9 2 5 6 5 *
READ THESE INSTRUCTIONS FIRST
If you have been given an Answer Booklet, follow the instructions on the front cover of the Booklet.
Write your Centre number, candidate number and name on all the work you hand in.
Write in dark blue or black pen.
You may use a soft pencil for any diagrams, graphs or rough working.
Do not use staples, paper clips, highlighters, glue or correction fluid.
Section A
Answer Question 1.
Section B
Answer any three questions.
At the end of the examination, fasten all your work securely together.
The number of marks is given in brackets [ ] at the end of each question or part question.
This document consists of 4 printed pages.
DC (SM) 46685/2
© UCLES 2012
[Turn over
2
Section A
Answer this question.
1
The United States Postal Service is in trouble
Since 2006, the volume of mail carried by the United States Postal Service (USPS) has fallen
considerably and as a result it has reduced the number of its employees.
Table 1: USPS Volume of mail and number of employees in 2006 and 2010
2006
2010
Volume of mail
(in billions of items)
220
176
Number of employees
(in thousands)
720
612
One reason for the problems of the USPS has been the recession. This has prompted businesses
and advertisers, which account for most of the USPS’s income, to reduce the number of letters
and parcels they send. A long-term problem is that the volume of mail is not likely to go back to
pre-2006 figures as the economy improves because of the strong challenge from the internet.
Email is fast and cheap, businesses are advertising online more and they are increasingly asking
customers to pay their bills online.
All of these issues are making it very difficult for the USPS, which does not receive any government
subsidies. It estimated that it would lose US$8 billion in 2010.
The USPS plans to increase revenue by charging more for its services and to cut its costs by
stopping Saturday deliveries and collections. Many USPS customers, including firms that use
this service, are opposed to the plan. Some firms, however, stand to gain from this plan. One
firm, Pitney Bowes, for example, makes products used by the USPS, such as automated sorting
machines and automated franking machines. It expects demand for these products to rise if the
USPS seeks to replace some of its employees with capital equipment.
(a) Did the number of employees of the USPS fall by a smaller or greater percentage than the
volume of mail between 2006 and 2010? Show your workings.
[2]
(b) (i)
(ii)
Explain what is meant by a substitute and give two examples from the extract.
[3]
Explain two reasons why a firm may seek to replace some of its employees with capital
equipment.
[4]
(c) It is stated that the USPS plans to charge more for its services. Explain why such a decision
might not necessarily lead to an increase in revenue.
[4]
(d) Discuss whether it would be a good idea for a business, such as the USPS, to be supported
by a government subsidy.
[7]
© UCLES 2012
0455/21/O/N/12
3
Section B
Answer any three questions from this section.
2
Labour is one of the four factors of production.
(a) Explain three causes of an increase in the supply of labour in a particular industry.
[6]
(b) Explain, using a demand and supply diagram, how an increase in the supply of labour in a
particular industry would affect the wages of people working in that industry.
[6]
(c) Discuss what affects the ability of a trade union to achieve a wage increase for its
members.
[8]
3
(a) Explain what is meant by a central bank.
[2]
(b) Describe the role that a central bank plays in a country’s economy.
[4]
(c) Explain why different income groups have different spending patterns.
[6]
(d) Discuss to what extent non-wage factors are likely to be more important than wage factors in
influencing a woman’s choice of occupation.
[8]
4
(a) Explain why multi-nationals are unlikely to be private limited companies.
[4]
(b) Analyse the different ways in which firms can grow in size.
[6]
(c) Discuss whether consumers would always want to be supplied by firms in perfect competition
rather than by a monopoly.
[10]
5
(a) Explain what is meant by economic growth.
[4]
(b) Explain what actions a government could take to increase the rate of economic growth in a
country.
[6]
(c) Discuss the extent to which a high rate of economic growth always benefits a developing
economy.
[10]
6
(a) Distinguish between Gross Domestic Product (GDP) per head and the Human Development
Index.
[4]
(b) Explain how changes in a country’s birth rate can influence its GDP per head.
[6]
(c) Many countries have high levels of poverty. Discuss which policies would be most useful in
reducing poverty in a country.
[10]
© UCLES 2012
0455/21/O/N/12
[Turn over
4
7
(a) Explain why countries often specialise.
[5]
(b) Despite the potential advantages of specialisation, explain why a country may choose not
to specialise.
[5]
(c) Discuss why some countries have fixed exchange rates while others have floating
exchange rates.
[10]
Permission to reproduce items where third-party owned material protected by copyright is included has been sought and cleared where possible. Every
reasonable effort has been made by the publisher (UCLES) to trace copyright holders, but if any items requiring clearance have unwittingly been included, the
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publisher will be pleased to make amends at the earliest possible opportunity.
co
© UCLES 2012
0455/21/O/N/12
UNIVERSITY OF CAMBRIDGE INTERNATIONAL EXAMINA
International General Certificate of Secondary Education
* 0 4 1 3 9 3 8 9 0 3 *
ECONOMICS
Paper 2 Structured Questions
October/November 2011
2 hours
Additional Materials:
.
rs
pe
University of Cambridge International Examinations is part of the Cambridge Assessment Group. Cambridge Assessment is the brand name of University
of Cambridge Local Examinations Syndicate (UCLES), which is itself a department of the University of Cambridge.
Answer Booklet/Paper
READ THESE INSTRUCTIONS FIRST
If you have been given an Answer Booklet, follow the instructions on the front cover of the Booklet.
Write your Centre number, candidate number and name on all the work you hand in.
Write in dark blue or black pen.
You may use a soft pencil for any diagrams, graphs or rough working.
Do not use staples, paper clips, highlighters, glue or correction fluid.
Section A
Answer Question 1.
Section B
Answer any three questions.
At the end of the examination, fasten all your work securely together.
The number of marks is given in brackets [ ] at the end of each question or part question.
This document consists of 4 printed pages.
DC (SJF) 35341/3
© UCLES 2011
[Turn over
2
Section A
Answer this question.
1
The Chinese economy is growing
In 2009, the Chinese economy, as measured by the increase in real Gross Domestic Product
(GDP), grew by 9%. This was a much higher rate of economic growth than most other economies.
Indeed, in some countries the real GDP actually fell.
The role of the private sector is increasing in China, with more firms having profit maximisation
as an important aim. The future of many firms in China looks encouraging, with profits up by an
average of 7% in 2009.
One of the reasons for the impressive rate of economic growth in China has been the willingness
of the commercial banks to lend. This has set China apart from many other countries, where it has
often been difficult to obtain the required finance. Bank lending in China increased by 34% during
2009.
Another reason for the high rate of economic growth has been the willingness of the Chinese
Government to increase public spending, especially to improve the country’s infrastructure. This
has been most noticeable in relation to the expenditure on the country’s railways and roads, many
of which were in great need of improvement.
(a) What is meant by economic growth?
[2]
(b) Explain why firms aim to maximise profits.
[4]
(c) Describe how lending by commercial banks can have a significant impact on an economy. [6]
(d) Discuss whether economic growth is always beneficial for an economy.
© UCLES 2011
0455/21/O/N/11
[8]
3
Section B
Answer any three questions from this section.
2
Car production in the United States has changed dramatically during the last forty years. The
managers of the firms have decided to use more advanced machinery and fewer employees to
produce the cars.
(a) Identify and explain the factors of production in the information above.
[4]
(b) Most car producing firms are now very large. Explain how they may have benefited from:
(i)
horizontal integration
[4]
(ii)
vertical integration.
[4]
(c) The wages paid to employees in the car industry vary widely. Discuss the possible reasons
why these earnings vary so much.
[8]
3
Many governments intervene in their economies by imposing an indirect tax on a product.
Sometimes, this is to try to overcome a market failure.
(a) Using an example, describe what is meant by an indirect tax.
[3]
(b) Explain, using a demand and supply diagram, how the introduction of an indirect tax can
affect the equilibrium price and equilibrium quantity in a market.
[6]
(c) Explain why markets often fail.
[5]
(d) Discuss the extent to which the introduction of an indirect tax could correct market failure. [6]
4
It was reported in the Netherlands in 2010 that the proportion of income that was saved, rather
than spent, had actually increased for the first time in many years. At the same time, borrowing fell.
(a) Explain what could influence people to save more.
[6]
(b) Explain the disadvantages to an economy of people saving a high proportion of their income.
[6]
(c) Discuss how a government could encourage people to spend a higher proportion of their
income.
[8]
© UCLES 2011
0455/21/O/N/11
[Turn over
4
5
One of the important aims of governments is full employment. The unemployment rate in
some countries, however, has increased over the last few years.
(a) Define:
6
(i)
full employment
[2]
(ii)
the unemployment rate.
[2]
(b) Describe the different types of unemployment which could exist in an economy.
[6]
(c) Discuss whether a rise in employment always benefits an economy.
[10]
The population of the world continues to rise, despite the efforts of some countries to
control population growth.
(a) Explain why the rate of population growth in some countries might be higher than in
other countries.
[6]
(b) As a country becomes more developed, describe what is likely to happen to:
(i)
the geographical distribution of its population
[2]
(ii)
the occupational distribution of its workforce.
[4]
(c) Discuss whether an increase in the population of a country should always be regarded
as undesirable.
[8]
7
In recent years there have been attempts to increase free trade so that countries are able to
benefit from specialisation. Trade protection, however, still survives as a strong force in many parts
of the world.
(a) Explain what is meant by trade protection.
[4]
(b) Explain two reasons why a government might introduce trade protection.
[6]
(c) Discuss the extent to which free trade can be seen as a benefit to (i) all consumers
and (ii) all producers.
[10]
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Permission to reproduce items where third-party owned material protected by copyright is included has been sought and cleared where possible. Every
reasonable effort has been made by the publisher (UCLES) to trace copyright holders, but if any items requiring clearance have unwittingly been included, the
publisher will be pleased to make amends at the earliest possible opportunity.
0455/21/O/N/11
UNIVERSITY OF CAMBRIDGE INTERNATIONAL EXAMINA
International General Certificate of Secondary Education
* 4 7 3 1 2 5 4 0 3 0 *
ECONOMICS
Paper 2 Structured Questions
October/November 2010
2 hours
Additional Materials:
Answer Booklet/Paper
READ THESE INSTRUCTIONS FIRST
If you have been given an Answer Booklet, follow the instructions on the front cover of the Booklet.
Write your Centre number, candidate number and name on all the work you hand in.
Write in dark blue or black pen.
You may use a soft pencil for any diagrams, graphs or rough working.
Do not use staples, paper clips, highlighters, glue or correction fluid.
Section A
Answer Question 1.
Section B
Answer any three questions.
At the end of the examination, fasten all your work securely together.
The number of marks is given in brackets [ ] at the end of each question or part question.
co
© UCLES 2011
.
rs
pe
University of Cambridge International Examinations is part of the Cambridge Assessment Group. Cambridge Assessment is the brand name of University
of Cambridge Local Examinations Syndicate (UCLES), which is itself a department of the University of Cambridge.
This document consists of 4 printed pages.
DC (LEO/SLM) 19737/2
© UCLES 2010
[Turn over
2
Section A
Answer this question.
1
Tourism in Kenya
On average, over one million holiday makers travel to Kenya each year. Many holiday makers like
to get away from the colder climates in Europe and North America, and they enjoy visiting the
safari parks and beaches.
Tourism is Kenya’s largest foreign exchange earner. It brings in between US$1000 million and
US$1500 million a year, more than the combined earnings from the next two largest earners,
horticulture (flowers and vegetables) and tea. The tourist industry directly employs 500 000 people.
It employs another 500 000 people indirectly. For example, the farmers in areas without a tourist
industry sell products to restaurants and hotels in the tourist areas.
Economic growth was a success story for the Kenyan Government, and between 2002 and 2007,
economic growth increased from 0.5% to 7%. However, in 2008, the demand for holidays in
Kenya fell as holiday makers chose to visit other destinations. This had a huge impact on Kenya’s
economy, and analysts feared a recession was likely. For the Kenyan economy to continue with a
7% growth rate after 2008, tourism would have to increase again.
(a) Identify two reasons why people choose to holiday in Kenya.
[2]
(b) Explain how tourism affected Kenya’s balance of payments before and after 2008.
[5]
(c) What is meant by economic growth?
[4]
(d) Discuss why the article calls Kenya’s economic growth a ‘success story’ and consider how a
fall in the number of holiday makers might affect the incomes and employment of people in
Kenya.
[9]
© UCLES 2010
0455/21/O/N/10
3
Section B
Answer any three questions from this section.
2
In recent years there has been publicity that eating fish is often healthier than eating meat. At the
same time, environmentalists in one country complained that the local supply of some fish had
declined and they persuaded their government to limit the amount of fish that could be caught.
(a) Describe, with the aid of a demand and supply diagram, what might have happened in the
market for fish.
[5]
(b) Explain how the changes mentioned might affect
(i)
the incomes of fishermen
[4]
(ii)
the profits of food retailers.
[4]
(c) Sometimes the government influences private industry. What measures might it use to
influence private industry?
[7]
3
Sometimes there is not enough skilled labour for a particular occupation.
(a) Why might companies spend money on training to increase the skills of their workforce?
[4]
(b) Apart from lack of skills, explain three other reasons that might prevent a person moving from
one job to another.
[6]
4
(c) Why might a worker join a trade union?
[4]
(d) Discuss how a government might influence the demand for and the supply of labour.
[6]
(a) Identify two types of business organisation that are likely to be found in a mixed economy and
describe their characteristics.
[6]
(b) Explain why most countries have mixed economies.
[6]
(c) Sometimes firms and business organisations grow in size. Discuss how this might occur. [8]
© UCLES 2010
0455/21/O/N/10
[Turn over
4
5
Lack of rain in some developing countries can be a problem. The developed countries often
send food and other essential items to help.
(a) Why might low rainfall have such a disastrous effect in many developing countries?
[5]
(b) What economic policies might the government of a developing country use to reduce
the problem of food shortages?
[7]
(c) Discuss which indicators economists might find most useful to determine whether a
country is developed or developing.
[8]
6
As scientists discover more about the spread of disease, governments introduce health education
programmes and increase spending on health care. These programmes are particularly significant
in developing countries and can change the age structure of the population.
(a) Identify and explain two concerns that a health education programme might cover.
[4]
(b) How may the age structure of the population in a developing country change as a result
of increased spending on health care?
[6]
(c) Explain what is meant by
(i)
opportunity cost
[2]
(ii)
social benefit.
[2]
(d) Discuss whether it is possible to apply the concepts of opportunity cost and social benefit
to health care programmes.
[6]
7
Some governments impose tariffs and quotas on imports.
(a) Explain the difference between a tariff and a quota.
[3]
(b) What effect might a tariff on imports have in the country that imposed the tariff?
[8]
(c) Discuss what might happen if free trade between countries was established.
[9]
Permission to reproduce items where third-party owned material protected by copyright is included has been sought and cleared where possible. Every
reasonable effort has been made by the publisher (UCLES) to trace copyright holders, but if any items requiring clearance have unwittingly been included, the
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publisher will be pleased to make amends at the earliest possible opportunity.
0455/21/O/N/10
UNIVERSITY OF CAMBRIDGE INTERNATIONAL EXAMIN
International General Certificate of Secondary Education
ECONOMICS
*7483897647*
Paper 2 Structured Questions
October/November 2009
2 hours
Additional Materials:
Answer Booklet/Paper
READ THESE INSTRUCTIONS FIRST
If you have been given an Answer Booklet, follow the instructions on the front cover of the Booklet.
Write your Centre number, candidate number and name on all the work you hand in.
Write in dark blue or black pen.
You may use a soft pencil for any diagrams, graphs or rough working.
Do not use staples, paper clips, highlighters, glue or correction fluid.
Section A
Answer Question 1.
Section B
Answer any three questions.
At the end of the examination, fasten all your work securely together.
The number of marks is given in brackets [ ] at the end of each question or part question.
co
s.
© UCLES 2010
r
pe
University of Cambridge International Examinations is part of the Cambridge Assessment Group. Cambridge Assessment is the brand name of University
of Cambridge Local Examinations Syndicate (UCLES), which is itself a department of the University of Cambridge.
This document consists of 4 printed pages.
IB09 11_0455_02/3RP
© UCLES 2009
[Turn over
2
Section A
Answer this question.
1
A developed country had a fall in its birth rate. From 1997, numbers in government junior
(primary) schools fell by 300 000 over ten years. In time, this decline in numbers reached
government senior (secondary) schools.
It was predicted in 2007 that, in the next ten years, the population of all children under 19 would
further decrease by 4.5 %, with the numbers at senior school age (11 to 18 years) falling by 11 %.
(a) Explain whether a decline in the birth rate would mean that the population of a country is
declining.
[4]
(b) Analyse the possible effect in the employment market of a fall in the number of school
leavers for a ten year period.
[6]
(c) Explain why governments are involved in spending on education.
[5]
(d) Discuss whether the concept of opportunity cost could be applied to the changes in
government spending that might be required in senior schools.
[5]
© UCLES 2009
0455/02/O/N/09
3
Section B
Answer any three questions from this section.
2
In 2007, there was an increase in demand for holidays using cruise ships as people wished to
avoid long delays at airports caused by increased security controls.
(a) Explain, using a demand and supply diagram, what is likely to happen in the market for air
travel as a result of increased delays at airports.
[4]
(b) Identify a complementary (jointly demanded) good or service industry connected with cruise
ships and discuss the possible employment prospects in that industry as a result of the
increase in airport delays.
[6]
(c) Some countries rely very heavily on the tourist industry. Discuss the possible consequences
of the delays at airports for the economy of such a country.
[10]
3
4
After studying for your Economics qualification you have to decide whether to leave school and
find a job or enrol at a college for more specialised training.
(a) What factors might you consider when making your decision?
[5]
(b) Is it always an advantage for an individual to have a specialised job?
[5]
(c) Explain how an individual’s earnings might change over time.
[4]
(d) Analyse why different income groups have different spending patterns.
[6]
Cadbury, the chocolate manufacturer, declared to its shareholders profits of £69 million in the first
six months of 2007. However, in July 2007, floods in the UK severely damaged farms. As a
result, Cadbury had to pay £20 million extra for milk to make the chocolate in addition to its
annual milk cost of £150 million.
(a) Explain whether milk is a fixed or variable cost for Cadbury.
[3]
(b) Discuss whether the demand for chocolate is likely to be price elastic or price inelastic.
[7]
(c) Suggest, from the information given, what type of business organisation Cadbury is likely to
be.
[4]
(d) Discuss whether the rise in milk costs is likely to have a significant effect on Cadbury’s
profits.
[6]
© UCLES 2009
0455/02/O/N/09
[Turn over
4
5
6
(a) Describe what is meant by a mixed economy.
[4]
(b) Explain three macro-economic aims a government might have.
[6]
(c) What is meant by a government’s budget?
[4]
(d) Discuss how a government might finance its expenditure.
[6]
(a) What is meant by the balance of payments?
[4]
(b) Why do countries trade with each other?
[6]
(c) Discuss whether it is likely to be better or worse for a country’s inhabitants if a
country increases the tariffs and quotas it puts on international trade.
[10]
7
(a) What is meant by a developing country?
[5]
(b) Discuss whether a country should conserve or use its resources.
[5]
(c) How may living standards between countries be compared?
[10]
Permission to reproduce items where third-party owned material protected by copyright is included has been sought and cleared where possible. Every
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reasonable effort has been made by the publisher (UCLES) to trace copyright holders, but if any items requiring clearance have unwittingly been included, the
publisher will be pleased to make amends at the earliest possible opportunity.
0455/02/O/N/09
UNIVERSITY OF CAMBRIDGE INTERNATIONAL EXAMIN
International General Certificate of Secondary Education
*9034784228*
ECONOMICS
Paper 2 Structured Questions
October/November 2008
1 hour 30 minutes
Additional Materials:
Answer Booklet/Paper
READ THESE INSTRUCTIONS FIRST
If you have been given an Answer Booklet, follow the instructions on the front cover of the Booklet.
Write your Centre number, candidate number and name on all the work you hand in.
Write in dark blue or black pen.
You may use a soft pencil for any diagrams, graphs or rough working.
Do not use staples, paper clips, highlighters, glue or correction fluid.
Answer all questions.
At the end of the examination, fasten all your work securely together.
The number of marks is given in brackets [ ] at the end of each question or part question.
co
s.
© UCLES 2009
r
pe
University of Cambridge International Examinations is part of the Cambridge Assessment Group. Cambridge Assessment is the brand name of University
of Cambridge Local Examinations Syndicate (UCLES), which is itself a department of the University of Cambridge.
This document consists of 3 printed pages and 1 blank page.
IB08 11_0455_02/RP
© UCLES 2008
[Turn over
2
Answer all questions.
1
Population in Botswana
The charts show the population pyramid for Botswana in 2000 and that predicted for 2050.
Botswana: 2000
age
80+
75-79
70-74
65-69
60-64
55-59
50-54
45-49
40-44
35-39
30-34
25-29
20-24
15-19
10-14
5-9
0-4
male
120 100
80
60
40
20
0
0
female
20
40
60
80
100 120
population (in thousands)
Botswana: 2050
age
80+
75-79
70-74
65-69
60-64
55-59
50-54
45-49
40-44
35-39
30-34
25-29
20-24
15-19
10-14
5-9
0-4
male
120 100
80
60
40
20
0
0
female
20
population (in thousands)
© UCLES 2008
0455/02/O/N/08
40
60
80
100 120
3
(a) What is shown in a population pyramid?
[3]
(b) Describe what the prediction suggests will happen in Botswana by 2050.
[3]
(c) (i)
Draw an outline shape of a population pyramid for a typical developed country to show
how it might differ from those given for Botswana.
[3]
(ii) Explain what causes the difference in the shape of the population pyramid of a
developed and a developing country.
[4]
(d) Discuss how an improvement in education in a developing country such as Botswana might
have an effect on its population.
[7]
2
(a) Explain why different income groups might have a different pattern of spending and saving.
[5]
(b) Discuss what might influence government spending.
3
[5]
In February 2005 Kuwait opened a new port extension, said to be the largest and most advanced
in the Middle East, near the country’s main oil refinery. It took 3 years to build, can accommodate
four supertankers at the same time, cost £187 million and is hoped to last at least 30 years.
Kuwait is actively seeking new markets for its planned increase in oil production.
(a) Explain, using demand and supply analysis, why Kuwait might want to seek new markets
when it increases its oil production.
[4]
(b) Distinguish between fixed and variable costs and consider which is likely to have the highest
proportion in the production and distribution of oil.
[6]
4
5
A newspaper advertisement states that there is a job vacancy for a laboratory technician in a
large international chemical company. The person will need to be able to travel a lot and will need
to have an advanced qualification in chemistry. Another advertisement is for a
secretary/receptionist in a local doctor’s surgery on four afternoons a week.
(a) Explain in what type of business organisation the two occupations might be found.
[4]
(b) Explain the factors that might affect an individual’s choice of occupation.
[6]
Investment spending is undertaken by both the private sector and the public sector.
(a) Use examples to distinguish between private sector and public sector investment spending.
[4]
(b) Explain why investment spending is important for an economy.
[6]
© UCLES 2008
0455/02/O/N/08
4
BLANK PAGE
Copyright Acknowledgements:
Question 1
© U.S. Census Bureau.
Permission to reproduce items where third-party owned material protected by copyright is included has been sought and cleared where possible. Every
reasonable effort has been made by the publisher (UCLES) to trace copyright holders, but if any items requiring clearance have unwittingly been included, the
publisher will be pleased to make amends at the earliest possible opportunity.
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co
s.
0455/02/O/N/08
UNIVERSITY OF CAMBRIDGE INTERNATIONAL EXAMIN
International General Certificate of Secondary Education
ECONOMICS
*5673546849*
Paper 2 Structured Questions
October/November 2007
1 hour 30 minutes
Additional Materials:
r
pe
University of Cambridge International Examinations is part of the Cambridge Assessment Group. Cambridge Assessment is the brand name of University
of Cambridge Local Examinations Syndicate (UCLES), which is itself a department of the University of Cambridge.
Answer Booklet/Paper
READ THESE INSTRUCTIONS FIRST
If you have been given an Answer Booklet, follow the instructions on the front cover of the Booklet.
Write your Centre number, candidate number and name on all the work you hand in.
Write in dark blue or black pen.
You may use a soft pencil for any diagrams, graphs or rough working.
Do not use staples, paper clips, highlighters, glue or correction fluid.
Answer all questions.
At the end of the examination, fasten all your work securely together.
The number of marks is given in brackets [ ] at the end of each question or part question.
This document consists of 3 printed pages and 1 blank page.
IB07 11_0455_02/RP
© UCLES 2007
[Turn over
2
Answer all questions.
1
The Royal Mail
The following is adapted from a leaflet the UK Royal Mail sent to its customers in 2005.
We are investing in the postal service so that it is consistent and reliable and remains one of the
best in Europe. You can trust the Royal Mail with your post. 99.9 % of all mail gets delivered
safely and quickly to the right address. Sometimes letters have the incorrect address or no
address at all. At least 92.5 % of the First Class letters arrive by lunchtime the next working day.
(In France barely 80 % of the First Class mail is delivered on time.) We are determined to manage
this better and are investing in technology and training.
Our prices are rising by less than inflation and are amongst the lowest in Europe. In April the
price of First Class post will go up from £0.28 to £0.30 which compares well with a price of £0.26
ten years ago. In Italy First Class could cost you £1.12, in Germany up to £1.
There will now be only one delivery a day. Previously, when mail was sorted by hand, it was
impossible to sort and deliver it all at once. Now, more mail is sorted automatically and overnight.
A single delivery helps us to keep our costs down. We need to make profits so that we can invest
in better equipment, better technology and better offices, and also pay our staff more for doing a
responsible job.
(a) Explain what is meant by factors of production.
[4]
(b) How has the Royal Mail’s use of these factors of production changed?
[2]
(c) Explain how the proposed new investment will change the Royal Mail’s fixed cost and
variable cost.
[4]
(d) Discuss how the rise in price from £0.28 to £0.30 might affect demand for substitute methods
of communication.
[4]
(e) Is there enough evidence in the article to support the Royal Mail’s statement that it is one of
the best in Europe?
[6]
2
A multi-national was described as a large company that employs people from different countries
and is controlled by a government.
(a) Explain whether this is a correct description.
[4]
(b) If a company is large and employs many people it often has to deal with trade unions. What
is a trade union and what is its role in an economy?
[6]
© UCLES 2007
0455/02/O/N/07
3
3
(a) Explain how the principle of opportunity cost might be relevant when a person chooses a new
job.
[3]
(b) Some service sector occupations pay very well, others have low rates of pay. Discuss why
this might be so.
[7]
4
1 in 5 adults have not been educated to read or write; 98 % of them live in developing countries
and 66 % of them are women.
(a) Explain three other differences that you might find between the population of a developed
country and a developing country.
[3]
(b) Another indicator of living standards, apart from education, is GDP. Discuss how useful this
is in comparing the living standards between two countries.
[7]
5
It was reported that farmers in Malawi were being discouraged from specialising in growing the
staple crop of maize. Instead they were encouraged to diversify into other crops.
(a) Explain what is meant by specialisation.
[4]
(b) Discuss whether there are any benefits from specialisation rather than diversification.
[6]
© UCLES 2007
0455/02/O/N/07
4
BLANK PAGE
Copyright Acknowledgements:
Question 1
© Royal Mail, March 2005.
Permission to reproduce items where third-party owned material protected by copyright is included has been sought and cleared where possible. Every
reasonable effort has been made by the publisher (UCLES) to trace copyright holders, but if any items requiring clearance have unwittingly been included, the
publisher will be pleased to make amends at the earliest possible opportunity.
University of Cambridge International Examinations is part of the Cambridge Assessment Group. Cambridge Assessment is the brand name of University
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UNIVERSITY OF CAMBRIDGE INTERNATIONAL EXAM
International General Certificate of Secondary Educ
ECONOMICS
Paper 2 Structured Questions
October/N
Additional Materials:
Answer Booklet/Paper
1 hour 30 minutes
READ THESE INSTRUCTIONS FIRST
If you have been given an Answer Booklet, follow the instructions on the front cover of the Booklet.
Write your Centre number, candidate number and name on all the work you hand in.
Write in dark blue or black pen.
You may use a soft pencil for any diagrams, graphs or rough working.
Do not use staples, paper clips, highlighters, glue or correction fluid.
Answer all questions.
At the end of the examination, fasten all your work securely together.
The number of marks is given in brackets [ ] at the end of each question or part question.
This document consists of 3 printed pages and 1 blank page.
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© UCLES 2007
m
of Cambridge Local Examinations Syndicate (UCLES), which is itself a department of the University of Cambridge.
SP (SLM) T10566
© UCLES 2006
[Turn over
2
Answer all questions.
1
Trade and production in Bangladesh
At one time, international trade agreements ensured an export market for clothes made in
Bangladesh, but these were due to end in 2005. It was feared that many workers in Bangladesh
would lose their jobs as a result. The Foreign Minister hoped that the trade in medicines would
grow sufficiently to reduce that unemployment. The Foreign Minister said that in 2004 Bangladesh
was exporting medicines to 60 countries and could produce them up to 70% cheaper than the
Developed World. He said that if Bangladesh, a developing country, could get 2% of the global
trade in medicines it could be worth many times the clothing exports that Bangladesh had lost.
In 2004, 150 local firms and 6 multi-national companies manufactured medicines in Bangladesh.
However, the production of medicines employed just 50 000 workers and most future jobs would
require highly trained technicians. The clothing trade employed 1.8 million unskilled workers and
accounted for more than 75% of Bangladesh’s exports.
(a) State four ways in which multi-national companies can help developing countries such as
Bangladesh.
[4]
(b) International trade agreements can protect jobs. Despite this, some economists prefer free
trade to trade agreements. Explain why.
[6]
(c) Summarise the main argument of the Foreign Minister of Bangladesh.
[4]
(d) Why might it be difficult for employment in the clothing industry to be replaced by employment
in the manufacture of medicines?
[6]
2
(a) Explain the difference between an equilibrium price and a disequilibrium price.
[4]
(b) Many more people travel by aeroplane today than ten years ago. With the help of a demand
and supply diagram, explain what might have happened in the market for air travel to cause
this increase.
[6]
3
(a) State four non-wage influences on an individual’s choice of occupation.
[4]
(b) Explain what is meant by the primary, secondary and tertiary sectors of production and
describe how the importance of each sector changes as a country develops.
[6]
4
In 2004, economists were concerned about the inflationary impact of unusually high oil prices,
which were caused by political uncertainty in the Middle East.
(a) Explain how inflation is measured.
[6]
(b) Low inflation is one of the aims of government policy. Choose two other macro-economic
aims of the government and explain what they mean.
[4]
© UCLES 2006
0455/02/O/N/06
3
5
In China, the State Council has ordered a reduction in urban development projects in Beijing.
This is because, as developers clear land, people’s homes are destroyed. It will also support the
government’s aim of reducing total demand in the economy.
(a) Explain what is meant by the conservation of resources.
[4]
(b) Urban development is often thought to be beneficial. Consider who might benefit from an
urban development project.
[6]
© UCLES 2006
0455/02/O/N/06
4
BLANK PAGE
Copyright Acknowledgements:
Question 1
© Reprinted with permission of Far Eastern Economic Review, Copyright © (2004) Dow Jones & Company, Inc. All Rights Reserved Worldwide.
Permission to reproduce items where third-party owned material protected by copyright is included has been sought and cleared where possible. Every
reasonable effort has been made by the publisher (UCLES) to trace copyright holders, but if any items requiring clearance have unwittingly been included, the
publisher will be pleased to make amends at the earliest possible opportunity.
University of Cambridge International Examinations is part of the University of Cambridge Local Examinations Syndicate (UCLES), which is itself a department
of the University of Cambridge.
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ECONOMICS
Paper 2 Structured Questions
October/N
Answer Booklet/Paper
1 hour 30 minutes
READ THESE INSTRUCTIONS FIRST
If you have been given an Answer Booklet, follow the instructions on the front cover of the Booklet.
Write your Centre number, candidate number and name on all the work you hand in.
Write in dark blue or black pen on both sides of the paper.
You may use a soft pencil for any diagrams, graphs or rough working.
Do not use staples, paper clips, highlighters, glue or correction fluid.
Answer all questions.
At the end of the examination, fasten all your work securely together.
The number of marks is given in brackets [ ] at the end of each question or part question.
This document consists of 2 printed pages.
co
UNIVERSITY OF CAMBRIDGE INTERNATIONAL EXAM
International General Certificate of Secondary Educ
Additional Materials:
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SP (NF) S94484
© UCLES 2005
[Turn over
2
Answer all questions.
1
Lesotho National Development Corporation
Since its establishment the Lesotho National Development Corporation (LNDC) has been the
Lesotho Government’s main means of promoting industrial development. The LNDC is now
expanding its job creation programme by promoting exports and encouraging firms to grow in size.
It also encourages and supports local entrepreneurs. Two of the projects it has supported are local
chicken farms and the building of a private hospital. The slogan of the LNDC is ‘We build industry’.
(a) Describe the main role of an entrepreneur.
[2]
(b) Identify from the passage one project in the primary sector and one project in the secondary
sector.
[2]
2
(c) Explain what is meant by industrial development.
[4]
(d) Explain the policies that a government might use to encourage private businesses.
[6]
(e) Why might a government wish to create jobs?
[6]
In the UK four large supermarket companies dominate the sale of food but there are also many
small food shops.
(a) Define a fixed cost and a variable cost, and identify one fixed cost and one variable cost that
the supermarket might have.
[4]
3
4
5
(b) Discuss why a small food shop might survive when there are very large supermarkets.
[6]
(a) Using examples, contrast a direct tax with an indirect tax.
[4]
(b) Discuss how a government might use taxation to affect the distribution of income.
[6]
The rate of inflation in some developed countries has remained low for several years.
(a) What is meant by inflation?
[3]
(b) Explain how a retail price index (index of consumer prices) is calculated.
[7]
(a) Explain why specialisation in international trade might benefit a country.
[6]
(b) Some countries use protective measures in international trade. Describe two types of
protection a government can use in international trade.
[4]
Permission to reproduce items where third-party owned material protected by copyright is included has been sought and cleared where possible. Every
reasonable effort has been made by the publisher (UCLES) to trace copyright holders, but if any items requiring clearance have unwittingly been included, the
publisher will be pleased to make amends at the earliest possible opportunity.
University of Cambridge International Examinations is part of the University of Cambridge Local Examinations Syndicate (UCLES), which is itself a department
of the University of Cambridge.
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0455/02/O/N/05
ECONOMICS
Paper 2 Structured Questions
October/N
Answer Booklet/Paper
1 hour 30 minutes
READ THESE INSTRUCTIONS FIRST
If you have been given an Answer Booklet, follow the instructions on the front cover of the Booklet.
Write your Centre number, candidate number and name on all the work you hand in.
Write in dark blue or black pen on both sides of the paper.
You may use a soft pencil for any diagrams, graphs or rough working.
Do not use staples, paper clips, highlighters, glue or correction fluid.
Answer all questions.
At the end of the examination, fasten all your work securely together.
The number of marks is given in brackets [ ] at the end of each question or part question.
This document consists of 3 printed pages and 1 blank page.
co
UNIVERSITY OF CAMBRIDGE INTERNATIONAL EXAM
International General Certificate of Secondary Educ
Additional Materials:
a
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© UCLES 2005
SP (NF) S70221
© UCLES 2004
[Turn over
2
Answer all questions.
1
Decline in world supply of cotton
The largest producers of cotton are China, the US, India and Pakistan. By 2001 there had been
five years of declining international cotton prices, so in that year it was expected that cotton
production would fall as farmers were discouraged from growing the crop by the low prices. This
reduction in supply was then expected to cause prices to rise in the following year, 2002, when the
cotton was put onto the market.
The fall in production was expected to occur in countries that were the most efficient, but there
would be a fall in production in other countries also. Although India produces cotton, its average
yield per hectare is half of the world average. This is because of low seed quality, insufficient pest
control and poor irrigation due to irregular rainfall.
(a) Explain why low prices might discourage farmers from growing cotton.
[3]
(b) Using a demand and supply diagram, explain the changes in price that were expected to
occur between 2001 and 2002.
[5]
(c) (i)
(ii)
Identify what measures India might take to increase its production of cotton.
[3]
Explain how two of the measures chosen in c(i) might have effects on
– the fixed costs,
– the variable costs and
– the revenue of the producers.
[6]
(d) How would the earnings from cotton be shown in India’s balance of payments?
2
[3]
In 2002 in the UK and in Germany trade unions supported strikes in some public sector
occupations.
(a) Explain what is meant by the public sector and give one example of a public sector
occupation.
[3]
(b) Describe the functions of trade unions and explain which function you consider to be the most
important.
[7]
3
It was reported in 2002 that people in Germany were expecting tax rises and an increase in
unemployment.
(a) Distinguish between a direct tax and an indirect tax. Give an example of each.
[4]
(b) Identify three types of unemployment and explain how they are caused.
[6]
© UCLES 2004
0455/02/O/N/04
3
4
Changes in the population structure of many countries have led governments to introduce a health
education programme.
(a) Identify and explain two of the issues that a health education programme might cover in
developing countries.
[4]
(b) How may the age structure of the population in a developing country differ from that in a
developed country?
[6]
5
As Eastern European economies continue to grow, companies are recording an increase in
profits. Public and private sector investment are expected to rise as trade barriers are reduced.
(a) What is meant by economic growth?
[3]
(b) Discuss whether economic growth is always advantageous.
[7]
© UCLES 2004
0455/02/O/N/04
4
BLANK PAGE
Copyright Acknowledgements:
Question 1.
The Cape Times
Every reasonable effort has been made to trace all copyright holders where the publishers (i.e. UCLES) are aware that third-party material has been reproduced.
The publishers would be pleased to hear from anyone whose rights they have unwittingly infringed.
University of Cambridge International Examinations is part of the University of Cambridge Local Examinations Syndicate (UCLES), which is itself a department of
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CAMBRIDGE INTERNATIONAL EXAMINATION
International General Certificate of Secondary Educ
ECONOMICS
Paper 2 Structured Questions
October/N
Additional Materials:
Answer Booklet/Paper
1 hour 30 minutes
READ THESE INSTRUCTIONS FIRST
If you have been given an Answer Booklet, follow the instructions on the front cover of the Booklet.
Write your Centre number, candidate number and name on all the work you hand in.
Write in dark blue or black pen on both sides of the paper.
You may use a soft pencil for any diagrams, graphs or rough working.
Do not use staples, paper clips, highlighters, glue or correction fluid.
Answer all questions.
At the end of the examination, fasten all your work securely together.
The number of marks is given in brackets [ ] at the end of each question or part question.
This document consists of 4 printed pages.
BR S52465
© CIE 2003
[Turn over
2
Answer all questions.
1
Investment in Namibia increased from N$4445 million in 1998 to N$4909 million in 1999 at current
market prices. In the same period, according to a government report, overall economic growth in
Namibia was 3.8 %.
The report examined the main factors for this and stated that the primary sector registered a
positive growth. Agriculture showed an increase of 11.7 % in 1999 compared with 1.8 % in 1998,
fishing grew by 1.3 % in 1999 and diamonds showed an increase of 9.4 % in 1999, compared with
1.3 % in 1998.
The secondary sector recorded a decline of 1.7 % in 1999, with manufacturing decreasing by
0.6 %, fish processing decreasing by 9.6 % and construction declining by 18.3%.
(a) What is meant by investment?
[2]
(b) In the first sentence of the article you will find the phrase ‘current market prices’. What does
this phrase tell you?
[2]
(c) The article says economic growth rose by 3.8 %.
(i)
Define what is meant by economic growth.
[2]
(ii)
Explain the link between a rise in investment and a rise in economic growth.
[4]
(d) An aim of government policy is to achieve economic growth. Explain what benefits economic
growth can bring to a country.
[6]
(e) Discuss whether the information allows you to determine which is the most significant sector
in the Namibian economy.
[4]
2
In 2001 there was a crisis in the farming industry in the UK. The spread of a disease meant many
animals had to be killed. The government decided to compensate the farmers with a subsidy.
(a) Explain what is meant by a subsidy and illustrate the effect of a subsidy in a market by using
a demand and supply diagram.
[4]
(b) Discuss how UK farmers’ costs, revenues and profits might have changed in 2001.
3
[6]
In the UK the Royal Society for the Protection of Birds (RSPB) has recently bought land around
the coast to prevent building on the area where rare birds breed. It has received donations from
the public towards the cost. The RSPB plans to set up special visitor centres in the area.
(a) Explain which factors of production are involved in the above action by the RSPB.
[4]
(b) Discuss whether the local area might be more likely to gain or lose from the action of the
RSPB.
[6]
0455/02/O/N/03
3
4
Countries are categorised as less developed because of their poverty and low average incomes,
their lack of good human resources and their low level of economic diversification.
(a) Explain what is meant by
(i)
‘their lack of good human resources’,
[3]
(ii)
‘their low level of economic diversification’.
[3]
(b) Explain whether it can be concluded from the above statement that all people in less
developed countries are poor.
[4]
5
‘The most effective support the industrialised countries could provide for the poorer nations would
be to open their markets to the products of developing countries by having fewer trade
restrictions.' (Trade and Industry Minister for Ghana, 2001)
(a) What forms do trade restrictions often take?
[3]
(b) Discuss the immediate and the long-term changes that might occur in developing countries if
trading restrictions were reduced.
[7]
0455/02/O/N/03
4
Copyright Acknowledgements:
Question 1
© The Namibian Economist
Cambridge International Examinations has made every effort to trace copyright holders, but if we have inadvertently overlooked any we will
be pleased to make the necessary arrangements at the first opportunity.
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International General Certificate of Secondary Education
CAMBRIDGE INTERNATIONAL EXAMINATIONS
ECONOMICS
PAPER 2 Structured Questions
OCTOBER/NOVEMBER SESSION 2002
1 hour 30 minutes
Additional materials:
Answer paper
TIME
1 hour 30 minutes
INSTRUCTIONS TO CANDIDATES
Write your name, Centre number and candidate number in the spaces provided on the answer booklet/
answer paper.
Answer all questions.
Write your answers on the separate answer paper provided.
If you use more than one sheet of paper, fasten the sheets together.
INFORMATION FOR CANDIDATES
The number of marks is given in brackets [ ] at the end of each question or part question.
This question paper consists of 4 printed pages.
SP (SM) S34745
© CIE 2002
[Turn over
2
Answer all questions.
1
In August 2000 Navistar, a truck manufacturer in North America, announced plans to reduce the
number of workers by 1100, as increased fuel prices and higher interest rates had caused a
reduction in sales. It said it would also reduce its $600 m annual capital spending.
Navistar reported a net profit for the third quarter of 2000 of $96 m. This was a reduction from
$255m for the same quarter a year earlier. Revenue for the year 2000 was $1.92 billion; in the
previous year revenue was $1.87 billion.
(a) (i)
Calculate the reduction in profit between the third quarter of 1999 and the third quarter of
2000.
[1]
(ii)
Calculate the change in the company’s revenue between 1999 and 2000.
[1]
(iii)
Why might a company have an increase in revenue and a fall in profits at the same time?
[2]
(b) What evidence is there in the extract that Navistar is likely to be a public limited company? [4]
(c) Explain how higher interest rates might have affected the company.
[5]
(d) The article says that the net profit of the company was reduced. What might be the likely
effects of this?
[7]
2
(a) Identify three causes of a change in the demand for a good.
[3]
A combination of excess supply, weak consumer demand and competition from new channels
such as the internet has pushed prices down in shops for goods from clothing to electrical
products.
(b) Using demand and supply analysis, explain whether the reasons given in the above extract
would lead to the stated effect on prices.
[7]
3
A US trade agency ruled that US imports of steel bars from China and South Korea might be
unfair to US companies because they were sold at below market price. The agency wanted a tariff
to be imposed on the imports.
(a) How would the trade in steel bars be classified in the Chinese balance of payments?
[2]
(b) What is the difference between a tariff and a quota?
[4]
(c) Consider how cheap imports might affect US companies.
[4]
0455/2/O/N/02
3
4
In 2000 the Singapore government revenue from income tax, motor vehicle tax, betting tax and
the tax on goods and services all increased. However, the revenue from the tax on goods and
services doubled while that from income tax rose 7%. Singapore depends on its tourist trade for
part of its wealth.
(a) Explain the difference between direct and indirect tax and identify one direct and one indirect
tax in the above statement.
[4]
(b) Discuss why governments impose taxes.
5
[6]
60% of the workforce in Java, which contains a large proportion of Indonesia’s population, are rice
farmers.
(a) Given this information, explain why Indonesia is likely to be a developing rather than a
developed economy.
[3]
(b) Describe the difference in living standards that might be found in a developing economy
compared with a developed economy.
[7]
0455/2/O/N/02
4
Copyright Acknowledgements:
Question 1. © International Herald Tribune, 16 August
2000. Question 4. © The Straits Times, 24 May 2000.
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0455/2/O/N/02
UNIVERSITY OF CAMBRIDGE INTERNATIONAL EXAMINA
International General Certificate of Secondary Education
ECONOMICS
* 0 0 7 6 7 6 2 8 3 4 *
Paper 2 Structured Questions
May/June 2012
2 hours
Additional Materials:
Answer Booklet/Paper
READ THESE INSTRUCTIONS FIRST
If you have been given an Answer Booklet, follow the instructions on the front cover of the Booklet.
Write your Centre number, candidate number and name on all the work you hand in.
Write in dark blue or black pen.
You may use a soft pencil for any diagrams, graphs or rough working.
Do not use staples, paper clips, highlighters, glue or correction fluid.
Section A
Answer Question 1.
Section B
Answer any three questions.
At the end of the examination, fasten all your work securely together.
The number of marks is given in brackets [ ] at the end of each question or part question.
.
rs
pe
Cambridge International Examinations has made every effort to trace copyright holders, but if we have inadvertently overlooked any we will be pleased to
make the necessary arrangements at the first opportunity.
This document consists of 3 printed pages and 1 blank page.
DC (NH) 46666/2
© UCLES 2012
[Turn over
2
Section A
Answer this question.
1
A major change in the Indian economy
A major change in India has been the decrease in the primary sector and an increase in the
manufacturing sector. Agriculture’s share of India’s national output has dropped from 40% in
1980 to 17% in 2010. For the first time, the primary sector is smaller than the secondary sector
(manufacturing and construction). As a result, even more workers are leaving the land to work in
the secondary sector.
There has been a large increase in investment in new plant and machinery in the manufacturing
sector and much of this has been due to multi-national firms deciding to locate in India.
In April 2008, the Indian Government passed the National Rural Employment Guarantee Act. This
promised those living in the rural areas at least 100 days’ work each year at a minimum wage. A
local trade union leader stated that “people here are feeling a sense of security for the first time.”
A major problem for India, however, is inflation. The prices of many items have been rising
significantly. The price of sugar, for example, rose by 35% in 2010. The Reserve Bank of India, the
country’s central bank, has announced that it will need to change the rate of interest.
(a) Explain why workers might decide to move from the primary sector to the secondary sector of
an economy.
[4]
(b) What are the advantages of the Indian Government promising employment in rural areas? [4]
(c) Analyse how a change in India’s interest rate might influence its inflation rate.
[4]
(d) Discuss whether it is always a benefit to a developing economy when a multi-national firm
decides to locate there.
[8]
© UCLES 2012
0455/21/M/J/12
3
Section B
Answer any three questions from this section.
2
3
(a) Explain the economic problem of scarcity.
[3]
(b) Define the concept of opportunity cost.
[3]
(c) Distinguish, using examples, between the different factors of production.
[6]
(d) Discuss whether a country should conserve or use its natural resources.
[8]
(a) Explain the functions that money performs in an economy.
[6]
(b) The demand for workers with a particular skill has increased significantly in the last few years.
Explain, using a demand and supply diagram, how this is likely to affect the equilibrium wage
and the equilibrium quantity of such workers.
[6]
(c) Discuss whether skilled workers always earn more than unskilled workers.
4
5
[8]
(a) Explain why a firm might wish to change from a private limited company to a public limited
company.
[4]
(b) Analyse why most firms want to maximise profits.
[6]
(c) Discuss whether a firm will always benefit from an increase in its size.
[10]
(a) Explain why a government may sometimes decide to produce certain goods and services
itself rather than leave the production of such goods and services to the private sector.
[6]
(b) Define the term full employment.
[4]
(c) Discuss the extent to which frictional unemployment and structural unemployment are serious
problems for (i) an individual and (ii) the economy.
[10]
6
(a) Explain why the rate of population growth varies so much between some countries.
[6]
(b) Explain the main features of a country classified as being developed.
[6]
(c) Discuss whether an ageing population should always be regarded as an economic problem.
[8]
7
(a) Describe the structure of the current account of a country’s balance of payments.
[4]
(b) Explain the main causes of a current account deficit.
[6]
(c) Discuss what would be the most effective policies to increase a country’s exports.
[10]
© UCLES 2012
0455/21/M/J/12
4
BLANK PAGE
Permission to reproduce items where third-party owned material protected by copyright is included has been sought and cleared where possible. Every
reasonable effort has been made by the publisher (UCLES) to trace copyright holders, but if any items requiring clearance have unwittingly been included, the
publisher will be pleased to make amends at the earliest possible opportunity.
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© UCLES 2012
UNIVERSITY OF CAMBRIDGE INTERNATIONAL EXAMINA
International General Certificate of Secondary Education
ECONOMICS
* 1 9 7 1 7 1 2 2 9 3 *
Paper 2 Structured Questions
May/June 2011
2 hours
Additional Materials:
Answer Booklet/Paper
READ THESE INSTRUCTIONS FIRST
If you have been given an Answer Booklet, follow the instructions on the front cover of the Booklet.
Write your Centre number, candidate number and name on all the work you hand in.
Write in dark blue or black pen.
You may use a soft pencil for any diagrams, graphs or rough working.
Do not use staples, paper clips, highlighters, glue or correction fluid.
Section A
Answer Question 1.
Section B
Answer any three questions.
At the end of the examination, fasten all your work securely together.
The number of marks is given in brackets [ ] at the end of each question or part question.
.
rs
pe
University of Cambridge International Examinations is part of the Cambridge Assessment Group. Cambridge Assessment is the brand name of University
of Cambridge Local Examinations Syndicate (UCLES), which is itself a department of the University of Cambridge.
This document consists of 4 printed pages.
DC (SJF) 35254/3
© UCLES 2011
[Turn over
2
Section A
Answer this question.
1
Rio de Janeiro wins the vote to host the 2016 Olympic Games
The Brazilian city of Rio de Janeiro has been chosen to host the Olympic Games in 2016.
Winning the vote would seem to have been the easy bit. Holding the games will require effort and
expense on a massive scale. Apart from new stadiums and other sports facilities, the city will need
infrastructure such as new bridges and roads, and also double the number of hotel rooms. The
metro railway line will need to be extended by almost 10 miles (approximately 16 kilometres).
The city government has allocated US$14.4 billion to pay for the improvements in the infrastructure,
although it is widely thought that the actual figure will be much higher than this.
The decaying port area will be redeveloped and the nearby bay will be cleaned as this is currently
affected by sewage and industrial pollution.
It is hoped that the construction and redevelopment work will lead to an increase in the demand
for labour, thereby reducing the city’s high unemployment rate.
There are some people, however, who think that government revenue should be used for other
purposes. A spokesperson from the Institute for Studies on Labour and Society suggested that the
money should be spent on getting rid of the city’s worst slum areas, reducing the high crime rate
and doing something about the poverty in a city where one in six residents is poor.
(a) Name two sources of government revenue.
[2]
(b) Explain why government spending on getting the city ready for the Olympic Games is an
example of opportunity cost.
[4]
(c) Explain, using a demand and supply diagram, how the change in the demand for labour is
likely to affect the wages paid to construction workers.
[6]
(d) Discuss the economic advantages and economic disadvantages to Rio de Janeiro of hosting
the Olympic Games in 2016.
[8]
© UCLES 2011
0455/21/M/J/11
3
Section B
Answer any three questions from this section.
2
A market system, such as in Spain, has a number of advantages but, despite these benefits, it can
also be said to fail in certain circumstances. This is why governments are sometimes required to
intervene.
(a) Describe the advantages of a market system.
[6]
(b) Explain what causes market failure.
[6]
(c) Discuss whether government intervention is always successful in correcting market failure.
[8]
3
Commercial banks perform an important role in most economies. Money helps in the exchange
of goods and services and, in the form of wages, is an influence on the choice of occupation for
many individuals.
(a) Explain the role of commercial banks.
[4]
(b) Describe the various functions that money performs in an economy.
[4]
(c) Describe the likely changes in income for individuals over their lifetime.
[4]
(d) Discuss whether wages are the most important factor influencing the choice of occupation for
many individuals.
[8]
4
Sole proprietors and partnerships play an important role in Pakistan. They can often be regarded
as a feature of perfect competition, especially sole proprietors.
(a) Describe the key features of a sole proprietor.
[4]
(b) Explain why a lawyer, working as a sole proprietor, might wish to change the business to a
partnership.
[4]
(c) Describe the characteristics of perfect competition.
[4]
(d) Discuss whether perfect competition is always to be preferred to monopoly.
[8]
© UCLES 2011
0455/21/M/J/11
[Turn over
4
5
Inflation and unemployment continue to be major problems in many countries.
(a) What is meant by inflation?
[3]
(b) Explain the possible causes of inflation.
[5]
(c) Identify and describe two different types of unemployment that can exist in an
economy. [4]
(d) Discuss whether unemployment or inflation is the greater problem.
6
[8]
When an economy develops, the occupational, age and geographical structure of the population
is likely to change. Standards of living usually increase, but there are still likely to be regional
differences in living standards.
(a) Describe how the (i) occupational, (ii) age and (iii) geographical structure of a population
is likely to change as a country becomes more developed.
[6]
(b) Explain why there may be differences in living standards in various regions within a
country. [6]
(c) Discuss which policies are likely to be most effective in reducing the differences in
living standards in various regions within a country.
[8]
7
Changes in a country’s exchange rate can sometimes have significant effects on its economy
and on its balance of payments.
(a) Identify two causes of a change in a country’s exchange rate.
[2]
(b) Explain the effects of a fall in a country’s exchange rate on its production.
[6]
(c) Explain any two of the four sections of the current account.
[4]
(d) Discuss whether an improvement in a country’s current account position will result in
an increase in its employment.
[8]
Permission to reproduce items where third-party owned material protected by copyright is included has been sought and cleared where possible. Every
reasonable effort has been made by the publisher (UCLES) to trace copyright holders, but if any items requiring clearance have unwittingly been included, the
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publisher will be pleased to make amends at the earliest possible opportunity.
co
© UCLES 2011
0455/21/M/J/11
UNIVERSITY OF CAMBRIDGE INTERNATIONAL EXAMINA
International General Certificate of Secondary Education
* 2 9 0 8 5 9 7 9 3 0 *
ECONOMICS
Paper 2 Structured Questions
May/June 2010
2 hours
Additional Materials:
Answer Booklet/Paper
READ THESE INSTRUCTIONS FIRST
If you have been given an Answer Booklet, follow the instructions on the front cover of the Booklet.
Write your Centre number, candidate number and name on all the work you hand in.
Write in dark blue or black pen.
You may use a soft pencil for any diagrams, graphs or rough working.
Do not use staples, paper clips, highlighters, glue or correction fluid.
Section A
Answer Question 1.
Section B
Answer any three questions.
At the end of the examination, fasten all your work securely together.
The number of marks is given in brackets [ ] at the end of each question or part question.
.
rs
pe
University of Cambridge International Examinations is part of the Cambridge Assessment Group. Cambridge Assessment is the brand name of University
of Cambridge Local Examinations Syndicate (UCLES), which is itself a department of the University of Cambridge.
This document consists of 4 printed pages.
DC (LEO/SLM) 19735/1
© UCLES 2010
[Turn over
2
Section A
Answer this question.
1
South Africa imposes a quota on Chinese imports
In 2007, the South African Government imposed a quota on the imports of clothing and textiles
from China. The aim was to try and reduce these imports and increase home production instead.
In the first quarter of 2007, imports from China fell by 35% but some were replaced by imports
from other countries, including unlikely sources such as Malawi and Zimbabwe which doubled
their exports to South Africa. It was thought that China was exporting to South Africa via these
countries. Overall, imports fell by only 13%.
The hope of increased home production was not achieved as some South African companies could
not obtain the imports of the necessary fabrics used as raw materials. Lack of raw materials forced
one company to reduce its workforce by 8% despite previously investing heavily for a planned
expansion.
Other South African manufacturers did not have the capacity to meet demand so the quotas did
not help create employment. The employers said that union power had also not helped. Unions
wanted guaranteed employment but employers said, ‘we run a business where fashion dictates
what we buy and make. We do not know what our fabric requirements are years into the future and
cannot promise future employment.’
South Africa imports of clothing
and textiles from China
(Rand million)
1600
1400
1200
1000
800
600
400
200
0
2003
2004
2005
2006
2007
(Year)
(a) Where are clothing and textile imports recorded in the balance of payments?
[2]
(b) Explain what effect the imposition of a quota by a government might have on an economy. [4]
(c) The graph shows imports of clothing and textiles from China. Suggest why imports took the
path shown between 2006-2007.
[2]
(d) Explain whether the existence of a union in an industry such as clothing manufacturing is
always a benefit to the textile workers.
[4]
(e) Consider whether there is evidence in the article to suggest that the quota system was a
success.
[8]
3
Section B
Answer any three questions from this section.
2
A government decided to stop subsidising students when they went to university. This meant a
university course cost the students more but the government had extra funds.
(a) Define opportunity cost and explain how the above decision might be used to illustrate an
opportunity cost.
[4]
(b) With the aid of a demand and supply diagram discuss how the effect of a subsidy might vary
in different markets.
[6]
3
(c) Apart from a subsidy, how might a government change the market price of a good?
[4]
(d) Analyse the differences between a market economy and a mixed economy.
[6]
(a) Sometimes it is said that a person chooses a job because of non-wage factors. Explain, using
three examples, the meaning of non-wage factors.
[4]
(b) What might determine why one person saves a higher proportion of income and spends a
lower proportion than another person?
[6]
(c) Some occupations pay much more than other occupations. Why might this happen?
4
[10]
A large, capital-intensive German company producing electrical goods decided to establish a
factory in India.
(a) From the information given above, describe the type of business organisation that the German
company is likely to be.
[4]
(b) Discuss what might be the advantages for a company of establishing a factory in another
country.
[6]
(c) How might the establishment of the factory affect existing Indian companies and the Indian
economy?
[10]
© UCLES 2010
0455/21/M/J/10
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4
5
(a) Describe what is meant by economic growth and explain how it might be measured.
[5]
(b) If there is economic growth, unemployment often declines. Identify three
unemployment and explain their causes.
types of
[6]
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Firms employ factors of production to produce goods and services in order to make profits.
*2969522440*
(a) What is meant by the term factors of production?
[4]
(b) How do the characteristics of a monopoly differ from those of perfect competition?
[6]
(c) Discuss how firms might become large and evaluate whether monopolies are
necessarily advantageous.
[10]
7
People often have an account with a commercial bank in which they deposit some of their
money and from which they can pay their bills.
(a) Describe the functions of money.
[6]
(b) Identify and explain three functions of a central bank which differ from the functions of
a commercial bank.
[6]
(c) Sometimes the value of money is decreased because of inflation. Discuss the main causes
of inflation.
[8]
Permission to reproduce items where third-party owned material protected by copyright is included has been sought and cleared where possible. Every
reasonable effort has been made by the publisher (UCLES) to trace copyright holders, but if any items requiring clearance have unwittingly been included, the
publisher will be pleased to make amends at the earliest possible opportunity.
University of Cambridge International Examinations is part of the Cambridge Assessment Group. Cambridge Assessment is the brand name of University
of Cambridge Local Examinations Syndicate (UCLES), which is itself a department of the University of Cambridge.
© UCLES 2010
0455/21/M/J/10
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(c) Discuss how (i) consumers (ii) firms and (iii) the government might benefit if there is
economic growth.
[9]
UNIVERSITY OF CAMBRIDGE INTERNATIONAL EXAMIN
International General Certificate of Secondary Education
ECONOMICS
Paper 2 Structured Questions
May/June 2009
2 hours
Additional Materials:
Answer Booklet/Paper
READ THESE INSTRUCTIONS FIRST
If you have been given an Answer Booklet, follow the instructions on the front cover of the Booklet.
Write your Centre number, candidate number and name on all the work you hand in.
Write in dark blue or black pen.
You may use a soft pencil for any diagrams, graphs or rough working.
Do not use staples, paper clips, highlighters, glue or correction fluid.
Section A
Answer Question 1.
Section B
Answer any three questions.
At the end of the examination, fasten all your work securely together.
The number of marks is given in brackets [ ] at the end of each question or part question.
This document consists of 4 printed pages.
IB09 06_0455_02/3RP
© UCLES 2009
[Turn over
2
Section A
Answer this question.
1
Economic Growth in Uganda
In 2007 there were 27.7 million people in Uganda. It was reported that by 2025 the population
was expected to almost double, making Uganda the country with the fastest increase in
population in the world. There was concern that with limited employment, health care and
education in Uganda, such an increase in population would result in increased poverty. However,
the President of Uganda said that the country was under-populated and that the population
increase would result in a bigger internal market and a larger workforce which would improve
economic prospects and economic growth.
(a) Explain what is meant by economic growth.
[4]
(b) Discuss why many countries aim to increase economic growth.
[4]
(c) Identify two macro-economic aims, apart from economic growth, that a government may
have, and explain why a government might think these aims are important.
[6]
(d) Discuss whether you agree with the President of Uganda that an increase in population
causes an increase in the workforce which would improve economic growth.
[6]
© UCLES 2009
0455/02/M/J/09
3
Section B
Answer any three questions from this section.
2
A company produces cigarettes which it believes have a low price elasticity of demand.
(a) Explain what is meant by price elasticity of demand.
[4]
(b) How might knowledge of price elasticity be of use to a producer?
[6]
(c) Some countries have now prohibited smoking in public areas in buildings. Use the concepts
of private and social costs and benefits to explain this policy.
[6]
(d) Discuss what effect the policy of prohibiting smoking in public areas might have on the
manufacturers of cigarettes.
[4]
3
In 2007, it was reported that a trade union of post office workers feared that increased capital
investment would mean more automation and job losses. The union demanded that managers
allow higher wages and shorter working hours for its members.
(a) Explain what is meant by the factors of production and identify which factors are involved in
the above statement.
[4]
(b) Describe the functions of a trade union.
[6]
(c) What is meant when an industry is said to become more capital-intensive rather than labourintensive?
[3]
(d) Discuss whether increased automation is likely to make it easy for the union to achieve both
of its demands in the statement above.
[7]
4
In the same industry there are often firms of different sizes. Sometimes a firm integrates with
another firm.
(a) What is the difference between horizontal and vertical integration?
[4]
(b) Contrast the characteristics of two types of business organisation.
[6]
(c) Discuss whether the growth of a firm is advantageous for both the firm and consumers.
[10]
© UCLES 2009
0455/02/M/J/09
[Turn over
4
5
Many governments have increased their spending on police and armed forces but there is
an opportunity cost of this policy.
(a) Explain the term opportunity cost and discuss why an increase in spending on police
and armed forces may result in an opportunity cost.
[4]
(b) Discuss whether such government spending could be a result of market failure.
[6]
(c) Sometimes governments do not provide goods and services but they still influence
the activities of private firms. Analyse how they might do this.
[10]
6
7
(a) What is meant by inflation?
[4]
(b) Explain how a government might calculate the rate of inflation in its economy.
[6]
(c) How might inflation affect a person’s spending, saving and borrowing?
[10]
Countries sometimes establish agreements with each other to encourage free trade by
abolishing tariffs or quotas on trade between them.
(a) Distinguish between a tariff and a quota.
[4]
(b) Analyse the possible link between the level of tariffs and international specialisation.
[4]
(c) Analyse the advantages of trading without tariffs and quotas.
[6]
(d) There is sometimes opposition to the removal of a tariff. Analyse how this might be justified.
[
6
]
Copyright Acknowledgements:
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© Xan Rice; The Guardian, 01 September 2006.
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Question 1
© UCLES 2009
0455/02/M/J/09
UNIVERSITY OF CAMBRIDGE INTERNATIONAL EXAMIN
International General Certificate of Secondary Education
*9633334721*
ECONOMICS
Paper 2 Structured Questions
May/June 2008
1 hour 30 minutes
Additional Materials:
Answer Booklet/Paper
READ THESE INSTRUCTIONS FIRST
If you have been given an Answer Booklet, follow the instructions on the front cover of the Booklet.
Write your Centre number, candidate number and name on all the work you hand in.
Write in dark blue or black pen.
You may use a soft pencil for any diagrams, graphs or rough working.
Do not use staples, paper clips, highlighters, glue or correction fluid.
Answer all questions.
At the end of the examination, fasten all your work securely together.
The number of marks is given in brackets [ ] at the end of each question or part question.
co
s.
University of Cambridge International Examinations is part of the Cambridge Assessment Group. Cambridge Assessment is the brand name of University
of Cambridge Local Examinations Syndicate (UCLES), which is itself a department of the University of Cambridge.
r
pe
Permission to reproduce items where third-party owned material protected by copyright is included has been sought and cleared where possible. Every
reasonable effort has been made by the publisher (UCLES) to trace copyright holders, but if any items requiring clearance have unwittingly been included, the
publisher will be pleased to make amends at the earliest possible opportunity.
This document consists of 3 printed pages and 1 blank page.
IB08 06_0455_02/RP
© UCLES 2008
[Turn over
2
Answer all questions.
1
UK railway operation
GNER is one of a number of companies that operate trains in the UK. GNER was formed in 1996
when the national rail company was privatised. GNER states that:
-
it carried 40 % more passengers in 2005 than in 1996;
in 2005, 10 % of the passengers bought tickets that were cheaper in real terms than the
cheapest available in 1996;
from each £1 of revenue, 50 % goes towards track costs and government charges, 46 %
goes on operating costs and less than 4 % is profit;
it subsidises the less profitable parts of some of the other UK railway companies by the
money it pays to the government;
since 1996 the company has faced increasingly fierce competition from domestic airlines, car
and coach travel.
(a) Explain what is meant by a substitute good and identify an example from the information. [2]
(b) From the information given, was it cheaper to travel by train in 2005 than in 1996?
[4]
(c) Explain what is meant by a fixed cost and analyse whether in 2005 the fixed cost of every
journey on GNER was higher than the variable cost.
[4]
(d) Explain what GNER means when it says it ‘subsidises the less profitable parts of some of the
other UK railway companies’.
[2]
(e) Discuss whether it can be concluded from the information that GNER’s profits are likely to
have risen by 40 % between 1996 and 2005.
[8]
2
(a) Explain what is meant by a trade union and describe its functions.
[5]
(b) Trade unions are not often found in small enterprises. How significant might this be as a
factor which influences someone in choosing to work for a small enterprise?
[5]
3
In Ghana local farmers manage small plots of land for subsistence farming. However, some have
benefited by selling pineapples at an agreed, fixed price to an exporter. The exporter provides
finance, training, fertilizers and machinery and even building materials for the farmers’ homes.
(a) Identify and explain which factors of production are mentioned above.
[4]
(b) In 2005, European supermarkets changed their demand to a new, sweeter pineapple not
grown in Ghana. Use demand and supply diagrams to explain what happened in the market
for both types of pineapple.
[6]
© UCLES 2008
0455/02/M/J/08
3
4
It is stated that the richest households in a country spend under 15 % of their income on food
while the poorest households spend over 30 %.
(a) Do these figures mean that the actual amount spent on food by the richest households is
lower than that spent by the poorest households? Explain your answer.
[4]
(b) Daniel recently finished training to be a dentist and started his first job. Samira works in a
bank and is now in a senior position. Describe how the expenditure pattern of these two
people might be different.
[6]
5
(a) Using examples, describe the difference between direct and indirect taxes.
[4]
(b) How might a reduction in taxation help any two macro-economic aims of a government?
[6]
© UCLES 2008
0455/02/M/J/08
4
BLANK PAGE
Copyright Acknowledgements:
Question 1
© GNER.
Permission to reproduce items where third-party owned material protected by copyright is included has been sought and cleared where possible. Every
reasonable effort has been made by the publisher (UCLES) to trace copyright holders, but if any items requiring clearance have unwittingly been included, the
publisher will be pleased to make amends at the earliest possible opportunity.
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0455/02/M/J/08
UNIVERSITY OF CAMBRIDGE INTERNATIONAL EXAMIN
International General Certificate of Secondary Education
ECONOMICS
*7126181206*
Paper 2 Structured Questions
May/June 2007
1 hour 30 minutes
Additional Materials:
Answer Booklet/Paper
READ THESE INSTRUCTIONS FIRST
If you have been given an Answer Booklet, follow the instructions on the front cover of the Booklet.
Write your Centre number, candidate number and name on all the work you hand in.
Write in dark blue or black pen.
You may use a soft pencil for any diagrams, graphs or rough working.
Do not use staples, paper clips, highlighters, glue or correction fluid.
Answer all questions.
At the end of the examination, fasten all your work securely together.
The number of marks is given in brackets [ ] at the end of each question or part question.
r
pe
University of Cambridge International Examinations is part of the Cambridge Assessment Group. Cambridge Assessment is the brand name of University
of Cambridge Local Examinations Syndicate (UCLES), which is itself a department of the University of Cambridge.
This document consists of 3 printed pages and 1 blank page.
IB07 06_0455_02/RP
© UCLES 2007
[Turn over
2
Answer all questions.
1
Airline Industry Losses
At an international conference, at which 95 % of the world’s airlines were represented, it was said
that the global airline industry would have a $6 billion loss for the year 2005. Only parts of the
industry were said to be profitable. Although there had been a growth in travel and revenue in
Asia and Europe, increased costs in North America and high fuel prices were estimated to
outweigh that. It was stated that losses from 2001 to 2004 had already exceeded $36 billion.
Globally, non-fuel costs were forecast to fall by 4.5 % in 2005. This was particularly the case in
Asia where labour costs were low. European airlines were recording profits due to increased
traffic and some industry mergers. However, the biggest obstacle to growth in the industry was
North America, where airlines recorded large losses. In North America labour costs and airport
taxes were high. In addition, competition from the smaller low-cost airlines charging cheap fares
was causing a fall in the profits of the larger companies. The airline industry also criticised the
high taxes, averaging 26%, which are imposed on ticket sales in North America. To try to improve
profits the industry launched some major projects to cut costs, which included the complete
replacement of paper tickets with electronic tickets by 2007.
(a) Calculate the estimated average yearly loss between 2001 and 2005. Show your working. [2]
(b) Identify four causes of the airline industry’s losses in North America.
[2]
(c) Discuss whether (i) fuel and (ii) labour would be classified as a fixed or a variable cost for the
airline industry.
[4]
(d) How might the replacement of paper tickets affect the demand for each of the factors of
production by the airlines?
[4]
(e) A company is making losses. Discuss what policies it might adopt.
2
[8]
Partnerships are owned by only two people while public companies are owned by the
government.
(a) Explain whether the above definitions are correct.
[4]
(b) Why do some firms remain small in size?
[6]
© UCLES 2007
0455/02/M/J/07
3
3
4
(a) Explain what is meant by specialisation and the division of labour.
[4]
(b) Discuss why some people are prepared to work in low-paid occupations.
[6]
World population has more than doubled since 1950. People in many countries face poverty and
malnutrition.
(a) What differences might you expect to find in the factors that affect population growth in
developed and developing countries?
[4]
(b) Analyse what might happen to the occupational distribution of the population as a country
becomes more developed.
[6]
5
In 2005 Namibia entered into trade agreements with France, Italy and Austria. These countries
would provide capital and technology in order to broaden the manufacturing industry in Namibia
and to increase its trade and investment in industries which are labour-intensive.
(a) Explain the meaning of the terms ‘investment’ and ‘labour-intensive’.
[4]
(b) Discuss the difference between free trade and a trade agreement.
[6]
© UCLES 2007
0455/02/M/J/07
4
BLANK PAGE
Copyright Acknowledgements:
Question 1
© http://www.republikein.com.na/content/die_mark/DieMark_2005/Mei/31_airline.php
Permission to reproduce items where third-party owned material protected by copyright is included has been sought and cleared where possible. Every
reasonable effort has been made by the publisher (UCLES) to trace copyright holders, but if any items requiring clearance have unwittingly been included, the
publisher will be pleased to make amends at the earliest possible opportunity.
.X
w
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t re
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a
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University of Cambridge International Examinations is part of the Cambridge Assessment Group. Cambridge Assessment is the brand name of University
of Cambridge Local Examinations Syndicate (UCLES), which is itself a department of the University of Cambridge.
r
pe
co
s.
0455/02/M/J/07
UNIVERSITY OF CAMBRIDGE INTERNATIONAL EXAM
International General Certificate of Secondary Educ
ECONOMICS
Paper 2 Structured Questions
M
Additional Materials:
Answer Booklet/Paper
1 hour 30 minutes
READ THESE INSTRUCTIONS FIRST
If you have been given an Answer Booklet, follow the instructions on the front cover of the Booklet.
Write your Centre number, candidate number and name on all the work you hand in.
Write in dark blue or black pen.
You may use a soft pencil for any diagrams, graphs or rough working.
Do not use staples, paper clips, highlighters, glue or correction fluid.
Answer all questions.
At the end of the examination, fasten all your work securely together.
The number of marks is given in brackets [ ] at the end of each question or part question.
This document consists of 4 printed pages.
SP (SC) T09737
© UCLES 2006
[Turn over
2
Section A
Answer this question.
1
Demand for oil in India
India is the world’s seventh-largest consumer of oil. Demand for oil could more than double in the
next 15 years because of strong industrial growth and increasing numbers of Indians who will be
able to afford to buy cars and motorcycles. As demand grows, so will India’s dependence on
imports. India imports around 70% of its oil.
(a) Explain using a demand and supply diagram what the article says will be the likely change in
the market for oil in India in the next 15 years.
[5]
(b) (i)
Where would the purchase of foreign oil be recorded in India’s balance of payments? [3]
(ii)
Explain two possible disadvantages to the Indian economy of its dependence on
imported oil.
[4]
(c) The article says there will be ‘strong industrial growth’.
(i)
Explain what is meant by strong industrial growth.
[2]
(ii)
Discuss the possible effects of strong industrial growth.
[6]
© UCLES 2006
0455/02/M/J/06
3
Section B
Answer three questions.
2
3
Sometimes in an industry a firm buys a smaller competitor which uses similar factors of
production. At other times a firm buys another firm which supplies it with the raw materials and
other inputs for its production.
(a) Explain what is meant by the factors of production.
[4]
(b) Discuss the reasons why some firms remain small.
[6]
(a) Explain the terms scarcity and opportunity cost.
[4]
(b) Describe the factors that affect an individual’s choice of occupation and show how the idea of
opportunity cost might be relevant to that choice.
[6]
4
5
Australia’s unemployment rate fell to 5.5% in May 2004, the lowest for 23 years. At the same time
total employment decreased to 9.6 million. Full-time jobs decreased by 42 600 but part-time
employment rose by 1500. The shift from employment in agriculture and manufacturing to
services has continued.
(a) Calculate the change in total employment. (Show your working).
[2]
(b) Explain why the pattern of employment might change.
[8]
(a) Distinguish between the private sector and the public sector of an economy.
[3]
(b) Discuss the disadvantages of allocating resources through the public sector.
[7]
© UCLES 2006
0455/02/M/J/06
4
Copyright Acknowledgements:
Question 1
Question 4
Reprinted with permission of Far Eastern Economic Review, Copyright © (2004) Dow Jones & Company, Inc. All rights Reserved Worldwide.
Reprinted with permission of Far Eastern Economic Review, Copyright © (2004) Dow Jones & Company, Inc. All rights Reserved Worldwide.
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© UCLES 2006
0455/02/M/J/06
UNIVERSITY OF CAMBRIDGE INTERNATIONAL EXAM
International General Certificate of Secondary Educ
ECONOMICS
Paper 2 Structured Questions
M
Additional Materials:
Answer Booklet/Paper
1 hour 30 minutes
READ THESE INSTRUCTIONS FIRST
If you have been given an Answer Booklet, follow the instructions on the front cover of the Booklet.
Write your Centre number, candidate number and name on all the work you hand in.
Write in dark blue or black pen on both sides of the paper.
You may use a soft pencil for any diagrams, graphs or rough working.
Do not use staples, paper clips, highlighters, glue or correction fluid.
Answer all questions.
At the end of the examination, fasten all your work securely together.
The number of marks is given in brackets [ ] at the end of each question or part question.
co
University of Cambridge International Examinations is part of the University of Cambridge Local Examinations Syndicate (UCLES), which is itself a department of
the University of Cambridge.
.
rs
pe
Permission to reproduce items where third-party owned material protected by copyright is included has been sought and cleared where possible. Every
reasonable effort has been made by the publisher (UCLES) to trace copyright holders, but if any items requiring clearance have unwittingly been included, the
publisher will be pleased to make amends at the earliest possible opportunity.
This document consists of 2 printed pages.
SP (NF) S90132
© UCLES 2005
[Turn over
2
Answer all questions.
1
European recession
In 2003 Germany, Italy and the Netherlands were in a period of recession. GDP in Germany
fell by 0.2% between January and April, and by 0.1% between April and June. The
recession spread to Italy, which is dependent on Germany as a market for its exports. The
weakest of the three was the Netherlands, where output fell by 0.5% between April and
June following a fall for the previous eight months. The German government planned to
encourage consumer spending by introducing cuts in both indirect and direct taxation. It
also approved measures to increase employment opportunities.
(a) Why does the article refer to the Netherlands as the weakest economy?
[2]
(b) Explain what is meant by GDP.
[3]
(c) Using examples, describe the difference between direct and indirect taxes.
[4]
(d) How might a reduction in taxation help any two macro-economic aims of a
government? [6]
(e) Why might a government wish to increase employment opportunities?
[5]
2
(a) Distinguish between a quota and a subsidy.
[5]
(b) Explain, using a demand and supply diagram, what effect would be likely to occur in a
market if the government introduced a subsidy on the production of a good.
[5]
3
A major computer company announced in 2003 that its profits had fallen.
(a) Explain what might cause profits to fall.
[5]
(b) There are some very large computer companies. How might a firm become large?
[5]
4
Some workers work long hours but earn little because the rate they receive for each hour
worked is very low.
(a) Why do you think a worker would be prepared to work for very low wages?
[5]
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Changes in the rate of exchange meant that exports of goods from Egypt decreased
as they became more expensive in other countries.
(a) Explain what is meant by a rate of exchange.
[3]
(b) If exports from Egypt became more expensive, how might that affect
production and employment both in Egypt and in countries importing Egyptian goods?
[7]
Copyright Acknowledgements:
Question 1.
© Eric Pfanner, International Herald Tribune, August 15, 2003.
Permission to reproduce items where third-party owned material protected by copyright is included has been sought and cleared where possible.
Every reasonable effort has been made by the publisher (UCLES) to trace copyright holders, but if any items requiring clearance have unwittingly
been included, the publisher will be pleased to make amends at the earliest possible opportunity.
University of Cambridge International Examinations is part of the University of Cambridge Local Examinations Syndicate (UCLES), which is itself a
department of the University of Cambridge.
© UCLES 2005
0455/02/M/J/05
UNIVERSITY OF CAMBRIDGE INTERNATIONAL EXAMINA
International General Certificate of Secondary Education
MARK SCHEME for the June 2005 question papers
0455 ECONOMICS
0455/02
Paper 2 (Structured Questions), maximum mark 60
These mark schemes are published as an aid to teachers and students, to indicate the
requirements of the examination. They show the basis on which Examiners were initially
instructed to award marks. They do not indicate the details of the discussions that took place
at an Examiners’ meeting before marking began. Any substantial changes to the mark
scheme that arose from these discussions will be recorded in the published Report on the
Examination.
All Examiners are instructed that alternative correct answers and unexpected approaches in
candidates’ scripts must be given marks that fairly reflect the relevant knowledge and skills
demonstrated.
Mark schemes must be read in conjunction with the question papers and the Report on the
Examination.
co
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(b) What reasons might make a worker decide to move to another job at the same rate
of pay? [5]
•
CIE will not enter into discussion or correspondence in connection with these mark
schemes.
CIE is publishing the mark schemes for the June 2005 question papers for most IGCSE and
GCE Advanced Level and Advanced Subsidiary Level syllabuses and some Ordinary Level
syllabuses.
Grade thresholds for Syllabus 0455 (Economics) in the June 2005 examination.
maximum
mark
available
Component 4
60
minimum mark required for grade:
A
C
E
F
n/a
30
17
13
The threshold (minimum mark) for B is set halfway between those for Grades A and C.
The threshold (minimum mark) for D is set halfway between those for Grades C and E.
The threshold (minimum mark) for G is set as many marks below the F threshold as the
E threshold is above it.
Grade A* does not exist at the level of an individual component.
June 2005
IGCSE
MARK SCHEME
MAXIMUM MARK: 60
SYLLABUS/COMPONENT: 0455/02
ECONOMICS
(Structured Questions)
Page 1
1 (a)
Mark Scheme
IGCSE – JUNE 2005
Syllabus
0455
Paper
2
The Netherlands has 0.5% fall in output between April and June, other
countries have 0.1% and 0.2%. The Netherlands has also been contracting
for the previous 8 months. (1)
[2]
(b)
Identification of the letters and brief explanation of the term.
[3]
(c)
Expect one example of each type of tax (2) and a comment on whether the tax
is levied on a person at source or on earning or on subsequent
expenditure. (2)
[4]
(d)
Identification of two aims.
Falling taxes might help change income
distribution, might help income and spending and thus growth, might help
production and thus move towards full employment.
[6]
(e)
To make better use of human resources; it will reduce government
expenditure on benefit payments; it might result in less crime; it might
encourage economic growth; it will increase national income; it may result in
political votes.
[5]
2 (a)
A quota is a fixed amount of production which may keep the price on the
market high if the quota is below the equilibrium quantity. A subsidy affects
production through a reduction in costs which might result in lower prices or
higher profits. Diagram not expected, but could be used.
[5]
(b)
1 for DS curves, 1 for shift of the supply curve downwards, 1 for labels, 2 for
explanation which need only clearly explain the change in equilibrium
position if any discussion on profits has been given in (a). If there is no
discussion in (a) that discussion could occur here.
[5]
3 (a)
Comment on changes in either revenue or costs or both. Could give an
example of why revenue or costs might change.
[5]
(b)
Comment on the possibility of mergers; of general growth through increased
sales caused by increased demand/advertising; of increased profits caused
by either increased demand or different pricing policies; of growth caused by
a change in type of stock or image; of expansion into other areas/products;
and a comment on the methods used to obtain finance – profits, borrowing,
shares.
[5]
© University of Cambridge International Examinations 2005
Page 2
Mark Scheme
IGCSE – JUNE 2005
Syllabus
0455
Paper
2
4 (a)
Might not be able to get another job, many low paid jobs are unskilled – worker
might not be trained to do skilled job: might choose to work part-time and do not
mind low pay; might view the job as a supplement to another wage/salary and be
prepared to accept low pay; might view the job as a temporary measure until a
better job is available; might not know of alternative jobs due to lack of
information; might be limited by location of work; might be limited in other jobs by
age; might work in the informal economy and does not declare earnings for tax.
[5]
(b)
Occupational and geographical factors include better conditions, better prospects,
location/shorter journey to work, can live in preferred area, shorter hours, size of
company, fringe benefits – subsidised meals, health scheme, leisure activities.
[5]
5 (a)
Explanation in terms of the rate at which one currency is exchanged for
another currency and the effect on relative prices of imports and exports or
in terms of amount of goods that can be purchased from another country.
[3]
(b)
In Egypt, production and employment likely to fall as not so many goods sold,
resulting in reduced income and further effects on employment. In importing
country production might switch to home produced goods resulting in an increase
in production and employment and income.
If demand
switches to imports from another country the effect in the importing country will
be reduced (if the other country’s goods are cheaper leaving more
disposable income) or result in no change.
[7]
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© University of Cambridge International Examinations 2005
UNIVERSITY OF CAMBRIDGE INTERNATIONAL EXAM
International General Certificate of Secondary Educ
ECONOMICS
Paper 2 Structured Questions
M
Additional Materials:
Answer Booklet/Paper
1 hour 30 minutes
READ THESE INSTRUCTIONS FIRST
If you have been given an Answer Booklet, follow the instructions on the front cover of the Booklet.
Write your Centre number, candidate number and name on all the work you hand in.
Write in dark blue or black pen on both sides of the paper.
You may use a soft pencil for any diagrams, graphs, music or rough working.
Do not use staples, paper clips, highlighters, glue or correction fluid.
Answer all questions.
At the end of the examination, fasten all your work securely together.
The number of marks is given in brackets [ ] at the end of each question or part question.
This document consists of 3 pages and 1 blank page.
SP (CW) S61181
© UCLES 2004
[Turn over
2
Answer all questions.
1
In Bangladesh there used to be a complete lack of access to health services in areas of poor
housing, and residents did not have the time or money to seek out health care. In these areas one
third of the population was affected by disease, and the child mortality rates were over ten times
the national average. Now small health centres, staffed by volunteers, are being set up in these
areas by a charity. The organisers say that these small centres have been a great success and
have proved that it is possible to provide good services in poor areas.
Other health provision is being made for one million women working in the labour-intensive
garment factories. Many workers have poor health because of long working hours and the
physically demanding nature of the work. They cannot take time off to get treatment and they
cannot afford private health care. The charity that set up the health centres went into partnership
with the factory owners by convincing them that a healthy workforce was a productive one.
(a) According to the article how do the working conditions of some workers affect their health? [2]
(b) What is meant by ‘labour-intensive’ production?
[2]
(c) How far can it be concluded from the article that people living in the areas of poor housing
have worse health than the rest of the country?
[4]
(d) Sometimes the government provides services in an economy, sometimes the private sector
provides services. Explain why it is that the government provides some services.
[6]
(e) The article says ‘a healthy workforce is a productive one.’
2
(i)
Explain what this means.
[3]
(ii)
Should it usually be the responsibility of the employers rather than the government to
provide health care?
[3]
In Zimbabwe a local community markets a tea which grows wild in their area. ‘Communities should
be able to manage their natural resources if they are to benefit, especially if they are to gain an
economic benefit,’ the leader of the project said.
(a) Identify the factors of production.
[4]
(b) Explain what benefits might be gained by the local community in Zimbabwe from the project.
[6]
3
The UK/Dutch consumer goods company Unilever had a 35% rise in profits in the first part of
2002. The group, whose brands include tea, soap and washing powder, benefited from a rise in
profit margins, but the growth in sales was slow.
(a) Explain who might benefit from the rise in profits.
[4]
(b) Discuss how firms might achieve a rise in profits.
[6]
© UCLES 2004
0455/02/M/J/04
3
4
5
(a) What is meant by a retail price index?
[3]
(b) Explain how a retail price index is calculated.
[7]
Demand for UK exports dropped considerably in November 2002, which pushed the UK further
into a visible trade deficit – the largest since records began.
(a) Explain what is meant by a visible trade deficit and identify in which part of the balance of
payments the deficit would be recorded.
[3]
(b) Discuss whether it matters if a country has a visible trade deficit.
© UCLES 2004
0455/02/M/J/04
[7]
4
BLANK PAGE
Copyright Acknowledgements:
Question 1
© Department for International Development
Every reasonable effort has been made to trace all copyright holders. The publishers will be pleased to hear from anyone whose rights we have unwittingly
infringed.
University of Cambridge International Examinations is part of the University of Cambridge Local Examinations Syndicate (UCLES), which is itself a department
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of the University of Cambridge.
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© UCLES 2004
0455/02/M/J/04
co
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CAMBRIDGE INTERNATIONAL EXAMINATION
International General Certificate of Secondary Educ
ECONOMICS
Paper 2 Structured Questions
M
Additional Materials:
Answer Booklet/Paper
1 hour 30 minutes
READ THESE INSTRUCTIONS FIRST
If you have been given an Answer Booklet, follow the instructions on the front cover of the Booklet.
Write your Centre number, candidate number and name on all the work you hand in.
Write in dark blue or black pen on both sides of the paper.
You may use a soft pencil for any diagrams, graphs or rough working.
Do not use staples, paper clips, highlighters, glue or correction fluid.
Answer all questions.
At the end of the examination, fasten all your work securely together.
The number of marks is given in brackets [ ] at the end of each question or part question.
This document consists of 3 printed pages and 1 blank page.
BR S48682/1
© CIE 2003
[Turn over
2
Answer all questions.
1
Private home ownership is increasing in China. For years the urban Chinese relied on
overcrowded housing rented from the state and often waited a long time to have their own
apartment. Now, with the increase in the market economy, the government is encouraging citydwellers to buy their own homes by giving cheap loans and tax-relief. Home buying will help
China’s economy. New home-owners need to spend money on furniture, appliances and
decorating. GDP grew by 8% in 1999, of which the housing industry contributed about a fifth.
The housing changes will affect social and political issues as well as the economy. In the old
system people had to live close to their work, and it was difficult to change jobs because no other
housing was available. Single people had no hope of being allocated an apartment. Now anyone
with money can buy a home and choose where they wish to live.
(a) Explain what is meant by the market economy.
[4]
(b) Explain the meaning of complements and substitutes, giving an example of each from the
passage.
[4]
(c) Identify four factors that might influence a worker’s choice of occupation.
[4]
(d) How far do you think the change in the provision of housing is likely to affect a worker’s choice
of occupation?
[3]
(e) Discuss whether the change in the provision of housing is likely to benefit everybody.
2
3
4
[5]
The most important status symbols for the emerging black middle class in South Africa are
clothing and footwear, together with certain perfumes, hair-styles, cell-phones and household
appliances. Some of these are expensive products that can be linked to a luxurious life style.
(a) According to economic theory, what determines the demand for a product?
[5]
(b) Discuss why different income groups have different spending patterns.
[5]
Some car manufacturers are multi-national companies with plants in several countries. These
plants produce thousands of cars a year and are capital-intensive.
(a) Define the term ‘capital-intensive’.
[3]
(b) Why are some organisations capital-intensive and others labour-intensive?
[7]
In 2001 it was announced that two German organisations responsible for training personnel were
to merge to form a new organisation with a staff of 900. It was said that this would make the
organisation more efficient.
(a) Why might companies spend money on training to increase the skills of their workforce?
[4]
(b) Discuss whether the provision of education and training should be the responsibility of the
government.
[6]
0455/02/M/J/03
3
5
The mining and export of minerals and precious stones is a very important part of the Namibian
economy. It was reported that despite a sharp decrease in the quantity of these exports between
1995 and 1999 the export value of the items rose in that period.
(a) Where would the minerals and precious stones be recorded in the Namibian balance of
payments?
[2]
(b) Discuss whether it is beneficial for a country to specialise in the production and export of a
limited range of products.
[8]
0455/02/M/J/03
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* 4 1 3 2 8 8 8 9 3 4 *
General Certificate of Secondary Education
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0455/22
ECONOMICS
i
Paper 2 dStructured Questions
October/November 2018
2 hours 15 minutes
g
e
No Additional Materials are required.
I
n
READ THESE
INSTRUCTIONS FIRST
t
An Answer
e Booklet is provided inside this Question Paper. You should follow the instructions on the front cover of
r Booklet. If you need additional answer paper ask the invigilator for a Continuation Booklet.
the Answer
n
Section A
a
Answer Question 1.
t
SectioniB
Answer o
any three questions.
n
The number
a of marks is given in brackets [ ] at the end of each question or part question.
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This document consists of 5 printed pages, 3 blank pages and 1 Insert.
t
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DC (CE) 148227/3
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[Turn over
© UCLES 2018
n
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2
Section A
Answer this question.
1
Rubber production in Liberia
Liberia is a west African country that has faced a number of serious problems in recent years.
These have included a civil war and in 2014 the outbreak of the Ebola epidemic. There have also
been improvements. The unemployment rate was 85% in 2004 but had fallen to 4% in 2016. This
reduction has influenced both emigration and wages. Workers have received higher wages
although some economists think that the higher which in 2016 was 8%.
The country has a good supply of drinking water and a climate favourable to agriculture. More than 70% of
the country’s labour force is curre exports are rubber, iron ore, timber and gold.
A US multinational company (MNC) runs the wor operation in Liberia. The price of rubber fell by 75%
between 2011 and 2016. The global supply of
rubber had exceeded demand as a number of countries imposed import restrictions on rubber. In
response to the lower price the US MNC cut its production, but still made a loss. The MNC does
not want to go out of business and is trying to survive by cutting its costs. In the long run it hopes
to maximise profits. When some of its 7000 workers retire, they will not be replaced. The MNC has
introduced new production techniques and diversified into growing cocoa and coffee.
The Liberian government is providing subsidies to local rubber farmers to help them buy new
equipment and introduce new farming methods. Despite the challenging situation, a number of
local Liberian rubber farmers are increasing the size of their operations by buying up more land.
Some others are diversifying by using wood from the rubber trees to make furniture.
While helping its rubber farmers, the Liberian government is also encouraging the expansion of the
secondary and tertiary sectors. Between 2014 and 2016 it increased its expenditure on healthcare but
this was at the expense of a number of public sector investment projects. Table 1 compares the infant
mortality rate and healthcare expenditure per head in selected countries in 2015.
Table 1 Infant mortality rate and healthcare expenditure per
head in selected countries in 2015
Infant mortality rate
(deaths per 1000
Healthcare expenditure
per head
live births)
(US$)
Cuba
4.5
459
Hungary
5.0
2 096
India
41.5
248
Liberia
67.5
90
Turkey
18.8
1 148
UK
4.4
3 749
Country
© UCLES 2018
0455/22/O/N/18
3
(a) Identify, from the extract, two goals of business organisations.
[2]
(b) Explain, using information from the extract, two reasons why the price of rubber fell between
2011 and 2016.
[4]
(c) Analyse how an increase in wages could cause inflation.
[5]
(d) Analyse to what extent the information in Table 1 suggests that healthcare expenditure per
head is an important influence on the infant mortality rate.
[4]
(e) Discuss whether or not having more of its workers employed in the tertiary sector would
benefit the Liberian economy.
(f)
[5]
Explain, using information from the extract, how the concept of opportunity cost affects all
rubber farmers in Liberia.
[4]
(g) Discuss whether or not a high rate of unemployment would always cause emigration.
© UCLES 2018
0455/22/O/N/18
[6]
[Turn over
4
Section B
Answer any three questions.
2
3
Mexico has recently experienced relatively low inflation and the Mexican government wants to
maintain this price stability. Despite this its currency has fallen in value with each Mexican peso
exchanging for less foreign currency. The government is also trying to reduce pollution in the
country. One key cause of pollution in Mexico is car travel. Driving has both private and external
costs.
(a) Define private cost.
[2]
(b) Explain two ways a government could reduce external costs.
[4]
(c) Analyse how a high rate of inflation affects the functions of money.
[6]
(d) Discuss whether or not a fall in its foreign exchange rate will benefit an economy.
[8]
In 2016, the Indonesian government increased its spending on healthcare and education and
considered raising the school leaving age. The government also planned to increase taxation. Such
a move might conflict with its aim of reducing unemployment at a time when a number of countries
were at risk of entering a recession.
(a) Identify two types of tax.
[2]
(b) Explain two benefits to a government from a fall in unemployment.
[4]
(c) Analyse, using a production possibility curve (PPC) diagram, the effects of high unemployment
in a country.
[6]
(d) Discuss whether or not a government should raise the school leaving age.
4
[8]
UK students often take jobs during their holidays and some save part of their income to pay their
tuition fees. UK graduates earn, on average, £8500 a year more than non-graduates. Economics
graduates had the second highest average earnings of all UK graduates in 2016. The top 10% of
economics graduates earned £115 000 a year.
(a) Define earnings.
[2]
(b) Explain two non-wage factors that influence an[4]indi
(c) Analyse why economics graduates are well-paid.
[6]
(d) Discuss whether or not people in developed countries are likely to save more than people in
developing countries.
© UCLES 2018
[8]
0455/22/O/N/18
5
5
Productivity has fallen recently in Finland particularly in the public sector. The country has a
relatively high number of small firms. In recent years the price elasticity of demand and the price
elasticity of supply of the products made by Finnish firms have changed.
(a) What is the difference between the private sector and the public sector?
[2]
(b) Explain two reasons why productivity may fall.
[4]
(c)
Analyse how an increase in the price elasticity of demand (PED) and the price elasticity of
supply (PES) of its products could benefit a firm.
(d) Discuss whether or not small firms are likely to survive in the long run.
6
7
[6]
[8]
A relatively high proportion of people from the Philippines either work in call centres or abroad.
Call centres employ 1.2 million people in the
Gross Domestic Product. Due to the time difference with the US, the main market for call centre
services, many Filipinos have to work at night. The call centres are introducing new technology
including robots.
(a) Define Gross Domestic Product (GDP).
[2]
(b) Explain two reasons why a person may be willing to work at night.
[4]
(c) Analyse how having some of its population working abroad may benefit an economy.
[6]
(d) Discuss whether or not advances in technology benefit an economy.
[8]
The price of gold rose in 2016. This encouraged owners of gold mines to employ more resources
to increase the supply of gold. The level of competition in gold production varies in the different
gold producing countries. A number of countries, including India, impose a tariff on imported gold.
(a) Identify two factors of production involved in mining gold.
[2]
(b) Explain two reasons why a government may impose a tariff on imported gold.
[4]
(c) Analyse how perfect competition differs from monopoly.
[6]
(d) Discuss whether or not an economy should mine and sell all of its gold now.
[8]
© UCLES 2018
0455/22/O/N/18
6
BLANK PAGE
© UCLES 2018
0455/22/O/N/18
7
BLANK PAGE
© UCLES 2018
0455/22/O/N/18
8
BLANK PAGE
Permission to reproduce items where third-party owned material protected by copyright is included has been sought and cleared where possible. Every reasonable
effort has been made by the publisher (UCLES) to trace copyright holders, but if any items requiring clearance have unwittingly been included, the publisher will
be pleased to make amends at the earliest possible opportunity.
To avoid the issue of disclosure of answer-related information to candidates, all copyright acknowledgements are reproduced online in the Cambridge International
Examinations Copyright Acknowledgements Booklet. This is produced for each series of examinations and is freely available to download at www.cie.org.uk after
the live examination series.
Cambridge International Examinations is part of the Cambridge Assessment Group. Cambridge Assessment is the brand name of University of Cambridge Local
Examinations Syndicate (UCLES), which is itself a department of the University of Cambridge.
©
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04
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2/
O/
N/
18
Cambridge International Examinations
Cambridge International General Certificate of Secondary Education
0455/22
ECONOMICS
Paper 2 Structured Questions
October/November 2017
2 hours 15 minutes
No Additional Materials are required.
READ THESE INSTRUCTIONS FIRST
An Answer Booklet is provided inside this Question Paper. You should follow the instructions on the front cover of
the Answer Booklet. If you need additional answer paper ask the invigilator for a Continuation Booklet.
Section A
Answer Question 1.
Section B
Answer any three questions.
The number of marks is given in brackets [ ] at the end of each question or part question.
* 3 1 5 9 4 1 2 0 0 2 *
This document consists of 5 printed pages, 3 blank pages and 1 Insert.
DC (KN/FD) 128047/4
© UCLES 2017
[Turn over
2
Section A
Answer this question.
2
From inflation to deflation
For some time, many central banks have tried to achieve a target inflation rate of about 2%. A small
and steady rise in the price level can bring a number of benefits to an economy. For central banks
and governments, the problem used to be stopping the inflation rate from going above the target
rate while keeping the unemployment rate low. Now the problem has changed, and the risk is that
inflation will fall below this target rate. At the end of 2014 the consumer prices index in China stood
at 100.5. The inflation rate in the country in 2015 was 2%. Meanwhile, a number of countries in
Europe experienced deflation. This had several consequences, including increasing the gap
between the wages of skilled and unskilled workers.
One major reason for the downward pressure on inflation was a fall in the global price of oil from
US$120 to US$66 a barrel in 2015. This reduced the price of energy and transport. Lower transport
costs had a noticeable impact on the price of food. Fig. 1 shows how the market for food was
affected in 2015.
S1
price
S2
of food
P1
P2
D
O
Q1 Q2
quantity of food
Fig. 1 The market for food in 2015
At the same time as falling inflation, some countries experienced falling unemployment. Other
countries, however, experienced both falling inflation and rising unemployment. For example,
France saw unemployment rising between 2014 and 2015. This put upward pressure on French
Government spending.
© UCLES 2017
0455/22/O/N/17
3
(a) Identify, from the extract, two aims of government policies.
[2]
(b) Explain two problems caused by inflation.
[4]
(c) Calculate, using information from the extract:
(i) the percentage fall in the global price of a barrel of oil in 2015
[2]
(ii) the consumer prices index in China at the end of 2015.
[2]
(d) Analyse why an increase in unemployment might cause an increase in government spending.
[5]
(e) Discuss whether the supply of workers for unskilled jobs will be high in a country.
[5]
(g) Explain, using information from the extract and Fig. 1, what happened to the market for food
in 2015.
[4]
(g) Discuss whether a decrease in income tax would reduce deflation.
© UCLES 2017
0455/22/O/N/17
[6]
[Turn over
4
Section B
Answer any three questions from this section.
3
Singapore is usually ranked as one of the best countries in which to do business. It is an open
economy engaging in free trade. It has a history of strong entrepreneurship, low unemployment,
low average costs and relatively low tax rates. Its example may encourage other countries to
remove trade restrictions.
(a) Define ‘average costs’.
[2]
(b) Explain two factors that would increase the supply of entrepreneurs in an economy.
[4]
(c) Analyse how the market for a product would be affected by a reduction of the tax on the
product combined with a fall in the price of a complement.
[6]
(d) Discuss whether low unemployment in a country will encourage multinational companies
(MNCs) to set up there.
4
[8]
Rich people in some countries are now working for more hours on average than poor people. One
reason for this is thought to be that well-paid jobs provide more job satisfaction. Gaining enjoyment
from work can lead to high labour productivity.
(a) What is a possible opportunity cost of working?
[2]
(b) Explain two reasons why older workers tend to earn more than younger workers.
[4]
(c) Analyse, using a production possibility curve diagram, how an increase in labour productivity
will affect an economy.
[6]
(d) Discuss whether the rich in one country will save more than the rich in another country.
5
[8]
In Pakistan there is a limited choice of cars to buy. The country has a population of approximately
190 million but only about 120 000 cars a year are produced there. The firms producing cars in
Pakistan are protected from foreign competition by a range of methods of trade protection.
(a) Name two factors of production used in making cars.
[2]
(b) Explain how two methods of trade protection may reduce imports.
[4]
(c) Analyse the social costs created by car production and car use.
[6]
(d) Discuss whether demand for cars is likely to increase in the future.
[8]
© UCLES 2017
0455/22/O/N/17
5
5
Nauru is one of the smallest countries in the world with a population of only 10 000. Fifty years ago
the population was one of the richest per head in the world, largely the result of exporting the
phosphate created over many centuries by sea-bird droppings. This labour-intensive industry has
declined significantly. Now incomes are much lower and one third of workers are jobless.
(a) What is meant by a ‘labour-intensive industry[2]
(b) Explain two reasons why a country may stop exporting a product.
[4]
(c) Analyse the effects of an increase in unemployment on inflation.
[6]
(d) Discuss whether having a relatively small population is an advantage or a disadvantage for
an economy.
6
[8]
Moldova has a population of 3.5 million. It is one of the poorest countries in Europe, with relatively low
living standards. In 2015, the country experienced a recession and a doubling of its inflation
rate. Moldova’s central bank increased its inter
(a) Identify two influences on the size of a country’s[2] p
7
(b) Explain two causes of an increase in living standards.
[4]
(c) Analyse how an increase in the rate of interest could increase unemployment.
[6]
(d) Discuss whether a government should increase tax rates during a recession.
[8]
The Gulf countries, some of which are quite specialised, import a high proportion of the food their
inhabitants eat. For example, the United Arab Emirates imports 83% of all the food that it
consumes. The Gulf countries are trying to reduce their reliance on imports of food.
(a) Define ‘specialisation’.
[2]
(b) Explain two disadvantages that workers may experience from specialising.
[4]
(c) Analyse how a country could reduce its reliance on imports.
[6]
(d) Discuss whether producing more food will increase living standards.
[8]
© UCLES 2017
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© UCLES 2017
0455/22/O/N/17
7
BLANK PAGE
© UCLES 2017
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Permission to reproduce items where third-party owned material protected by copyright is included has been sought and cleared where possible. Every reasonable
effort has been made by the publisher (UCLES) to trace copyright holders, but if any items requiring clearance have unwittingly been included, the publisher will
be pleased to make amends at the earliest possible opportunity.
To avoid the issue of disclosure of answer-related information to candidates, all copyright acknowledgements are reproduced online in the Cambridge International
Examinations Copyright Acknowledgements Booklet. This is produced for each series of examinations and is freely available to download at www.cie.org.uk after
the live examination series.
Cambridge International Examinations is part of the Cambridge Assessment Group. Cambridge Assessment is the brand name of University of Cambridge Local
Examinations Syndicate (UCLES), which is itself a department of the University of Cambridge.
©
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C
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E
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55
/2
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N/
17
Cambridge International Examinations
Cambridge International General Certificate of Secondary Education
0455/21
ECONOMICS
Paper 2 Structured Questions
October/November 2016
2 hours 15 minutes
No Additional Materials are required.
READ THESE INSTRUCTIONS FIRST
An answer booklet is provided inside this question paper. You should follow the instructions on the front cover of the
answer booklet. If you need additional answer paper ask the invigilator for a continuation booklet.
Section A
Answer Question 1.
Section B
Answer any three questions.
The number of marks is given in brackets [ ] at the end of each question or part question.
* 2 1 6 6 6 2 0 0 1 4 *
This document consists of 5 printed pages, 3 blank pages and 1 insert.
DC (KN) 112827/2
© UCLES 2016
[Turn over
2
Section A
Answer this question.
3
The changing oil market
In 2013 China overtook the United States of America (US) as the largest importer of oil. The rise
in Chinese demand has driven up the price of oil. The higher price of oil has made production
techniques used in the US, such as hydraulic fracking, possible and has provided more oil for US
domestic consumption. US oil companies have purchased larger, more expensive capital
equipment and are employing more specialist engineers. The expansion in the US oil industry
contributed to the fall in the country’s unemployment rate to 6.1% in 2014.
Despite being the largest importer of oil, China is not yet the world’s largest consumer. In 2013 the
US oil industry supplied 10.5 million barrels a day, exported 3.4 million barrels a day and imported
10.9 million barrels a day. These figures are likely to change in the future. For example, in 2013
the US had 250 million vehicles and China had only 100 million. It is forecast that by 2030 China
will have 350 million vehicles. If this change does occur, China will become more vulnerable to oil
price changes and disruptions in the supply of oil.
While US oil production is increasing, its consumption is falling. More oil is being discovered in the
country and more sophisticated techniques are being used to extract it. At the same time, fewer
young people in the country are learning to drive, vehicle ownership per household is falling and
average mileage is declining. In addition, US cars are becoming more fuel efficient as a result of
tighter fuel economy standards and consumers switching to more economical vehicles.
US consumers are becoming more sensitive to changes in the price of oil but a rise in price still
leads to a rise in oil producers’ revenue. Changes in the price of oil, oil production and oil
consumption also still have a significant effect on the US economy. For example, the discovery of
more oil in the country usually affects the value of the US dollar.
Changes in the consumption and production affect China’s and the US’s current account positions on
their balance of payments. Currently China has the world’s largest current account surplus whilst the
US has the world’s largest current account deficit. It is interesting to note that both countries have been
trying to increase their economic growth rate. The US central bank, the Federal Reserve, has tried to
raise the growth of the country’s output by cutting the rate of interest.
© UCLES 2016
0455/21/O/N/16
3
(a) Using information from the extract, explain whether the US was operating on or inside its
production possibility curve in 2014.
[2]
(b) Explain whether the extract suggests the demand for oil in the US is price-elastic or priceinelastic.
[2]
(c) Using information from the extract, explain two economies of scale that US oil companies are
experiencing.
[4]
(d) Calculate the US’s demand for oil per day in 2013.
[3]
(e) Analyse how the discovery of more oil in the US would be likely to affect the value of the
US dollar.
[4]
(h) Discuss whether a cut in the rate of interest will increase a country’s economic growth rate.
[5]
(g) Using information from the extract, explain why the price of oil may rise more in China than in
the US in the future.
[4]
(h)
Discuss whether a government should try to reduce a surplus on the current account of its
country’s balance of payments.
[6]
© UCLES 2016
0455/21/O/N/16
[Turn over
4
Section B
Answer any three questions from this section.
4
In 2014 the value of Ghana’s currency, the cedi, changed in value by 40% against the US dollar.
Inflation rose as the cedi experienced a depreciation. Demand in the economy was changing, with
government spending rising by more than taxation. Some economists warned that increasing taxes
might cause deflation.
(a) What is meant by a ‘depreciation’ of a currency?
[2]
(b) Explain how a depreciation of a currency can cause a rise in the inflation rate of a country. [4]
5
(c) Analyse why it may be difficult for an economy to have both low unemployment and low
inflation at the same time.
[6]
(d) Discuss whether an increase in taxes will cause deflation.
[8]
A 2014 United Nations report recommended that governments should seek to halve meat
consumption. A reduction in meat consumption, it was argued, would reduce the market failure
caused by the pollution coming from chemical fertilisers and manure. Reducing meat consumption
would free large areas of land that could be used to grow vegetables, cereals and fruit to feed a
growing population. The supply of a number of agricultural products is inelastic.
(a) Define ‘inelastic supply’.
[2]
(b) Explain why market failure occurs.
[4]
(c) Analyse how a government could reduce meat consumption.
[6]
(d) Discuss whether population growth is likely to exceed the growth of food production in the
future.
[8]
6
In Egypt in both 2011 and 2012, Gross Domestic Product (GDP) per head and investment fell. One
reason for the fall in investment was that firms found it difficult to obtain loans from the country’s
commercial banks. Another reason was the removal of some government subsidies, including the
subsidy given to the producers of petrol.
(a) Define ‘GDP per head’.
[2]
7
Explain two reasons why firms may find it difficult to obtain loans from commercial banks. [4]
8
Using a demand and supply diagram, analyse the effect on the market for petrol if a subsidy
on petrol is removed.
[6]
(d) Discuss whether a fall in a country’s GDP will result in net emigration.
© UCLES 2016
0455/21/O/N/16
[8]
5
8
In 2014 global steel demand slowed because of a halving of the growth in consumption by China,
the world’s biggest market for steel. The world’s biggest steel producing firm forecast higher profits
for 2014 although it thought that it might have to cut production. The firm was increasing its
specialisation within the steel market. Employment in the industry has declined as firms have
sought to reduce their capacity.
(a) Define ‘specialisation’.
[2]
(b) Explain how a fall in output will affect average fixed cost and average total cost.
[4]
(c) Analyse how a firm could reduce its output and increase its total profit.
[6]
(d) Discuss whether workers who lose their jobs are likely to still be unemployed a year later. [8]
8
The population of most countries includes more women than men. Iran, however, is an exception. In
the 1990s the Iranian Government sought to reduce the country’s birth rate. The measures it introduced
were very successful and the birth rate fell. In 2012, however, the government changed its objective
and is now trying to persuade people to have more children. This change in policy is because of
concerns about the effects of an ageing population caused by a falling death rate.
(a) Identify two reasons why a country may have more women than men.
[2]
(b) Explain two causes of a fall in the death rate.
[4]
(c) Analyse three policy measures a government could introduce to increase the birth rate. [6]
(d) Discuss whether the government of a country with an ageing population should raise the
retirement age.
[8]
7
The development of laser eye surgery is reducing the demand for spectacles in a number of
countries. The treatment of sight problems is using more capital equipment and less labour. Some
economists are predicting that the wages of opticians may decrease in the future. A fall in wages
may encourage some opticians to retrain for other jobs.
(a) Giving an example, define ‘labour’.
[2]
(b) Explain two reasons why a firm may change from labour-intensive
production.
to capital-intensive
[4]
(c) Analyse why the wages of workers in a particular occupation may fall.
[6]
(d) Discuss whether a government should subsidise the provision of training.
[8]
© UCLES 2016
0455/21/O/N/16
6
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© UCLES 2016
0455/21/O/N/16
7
BLANK PAGE
© UCLES 2016
0455/21/O/N/16
8
BLANK PAGE
Permission to reproduce items where third-party owned material protected by copyright is included has been sought and cleared where possible. Every reasonable
effort has been made by the publisher (UCLES) to trace copyright holders, but if any items requiring clearance have unwittingly been included, the publisher will
be pleased to make amends at the earliest possible opportunity.
To avoid the issue of disclosure of answer-related information to candidates, all copyright acknowledgements are reproduced online in the Cambridge International
Examinations Copyright Acknowledgements Booklet. This is produced for each series of examinations and is freely available to download at www.cie.org.uk after
the live examination series.
Cambridge International Examinations is part of the Cambridge Assessment Group. Cambridge Assessment is the brand name of University of Cambridge Local
Examinations Syndicate (UCLES), which is itself a department of the University of Cambridge.
©
U
C
L
E
S
20
16
04
55
/2
1/
O/
N/
16
Cambridge International Examinations
Cambridge International General Certificate of Secondary Education
0455/21
ECONOMICS
Paper 2 Structured Questions
October/November 2017
2 hours 15 minutes
No Additional Materials are required.
READ THESE INSTRUCTIONS FIRST
An Answer Booklet is provided inside this Question Paper. You should follow the instructions on the front cover of
the Answer Booklet. If you need additional answer paper ask the invigilator for a Continuation Booklet.
Section A
Answer Question 1.
Section B
Answer any three questions.
The number of marks is given in brackets [ ] at the end of each question or part question.
* 9 0 3 3 7 8 6 5 4 0 *
This document consists of 5 printed pages, 3 blank pages and 1 Insert.
DC (KN/CGW) 128051/4
© UCLES 2017
[Turn over
2
Section A
Answer this question.
4
Cigarette smoking in China
China has recently experienced rapid economic growth and an improving Human Development
Index (HDI) ranking. It is, however, facing a nu largest cigarette market, with more than 350 million smokers.
A higher proportion of men smoke
in China than in most other countries, including Russia and the USA. While 50% of Chinese men
smoke, only 2% of Chinese women smoke. It has been estimated that nearly 2 million Chinese
citizens a year die from smoking-related illnesses. These include smokers and those who have
suffered from passive smoking.
As well as being the largest consumer of cigare of cigarettes. Tobacco is grown in a number of the
provinces of China, including the province of
Yunnan. Over 3 million workers are employed in the industry, which is increasingly using advanced
technological capital equipment. However, between 2009 and 2014 the number of cigaretteproducing firms declined from 200 to 40 as firms merged and grew in size.
Although revenue from taxes on cigarettes earned the Chinese Government 800 billion yuan in
2014 (5% of the government’s total tax revenue) discourage smoking. It has imposed a ban on smoking in
public places, hospitals, schools and
public transport. Health campaigns are also being used. Such campaigns are used throughout the
world both to discourage the consumption of some products that are thought to be harmful to health
and to encourage the consumption of products that are considered to be beneficial to health. For
example, an information campaign on the benefits of consuming fruit has met with some success
in the UK. Fig. 1 shows the impact it had on the market for fruit in the UK in 2015.
price
of
S
fruit
P2
P1
D
2
D
1
O
Q 1 Q2
quantity of fruit
Fig. 1 The market for fruit in the UK in 2015
© UCLES 2017
0455/21/O/N/17
3
(a) Identify, from the extract, two factors of production used in producing cigarettes.
[2]
(b) Explain two reasons why firms merge.
[4]
(c) Calculate, using information from the extract:
the percentage decrease in the number of cigarette firms in China from 2009 to 2014
[2]
(ii) the total tax revenue that the Chinese Government received in 2014.
[2]
(d) Analyse, using a production possibility curve diagram, the effect of moving
factors of
production from producing cigarettes to producing other products.
[5]
(e) Discuss whether people in countries with a high HDI always enjoy a high standard of living. [5]
(f)
Explain, using information from the extract and Fig. 1, what happened to the market for fruit in
the UK in 2015.
[4]
(g) Discuss the arguments for and against the Chinese Government increasing the tax on
cigarettes. [6]
© UCLES 2017
0455/21/O/N/17
[Turn over
4
Section B
Answer any three questions from this section.
2
In 2015, the global equilibrium price of milk fell. As a result, the number of farms producing milk
declined. Farms tried to cut costs by becoming larger and employing fewer but more specialised
workers. The reduction in the number of farms has led to less competition because some large
farms have gained monopoly powers in local areas. A number of farm workers switched to other
jobs, but some who remained accepted a cut in pay.
(a) Define ‘equilibrium price’.
[2]
(b) Explain two reasons why a worker may continue in a job despite a cut in pay.
[4]
(c) Analyse how employing specialised workers may
[6]
(d) Discuss whether consumers would benefit if a firm became a monopoly.
3
[8]
Qatar is a growing economy and has benefited from the expansion of the insurance industry. This
industry is currently dominated by one firm and is a long way from perfect competition. The
economy has also experienced a general increase in labour productivity. However, the nature of
the relationship between free trade and economic growth is debated among economists.
(a) Define ‘perfect competition’.
[2]
(b) Explain two influences on the size of firms.
[4]
(c) Analyse the causes of an increase in labour productivity.
[6]
(d) Discuss whether a country that engages in free trade is likely to have a higher economic
growth rate than one that uses trade protection.
4
[8]
Indonesia is rich in resources including such raw materials as copper, gold and coal. Indonesia is
the second-largest exporter of coal. In 2015, the Indonesian Government was considering
increasing subsidies to producers, including farmers. Subsidies can be used to reduce inflation.
Recent years have seen lower direct taxes in Indonesia, but higher direct taxes in some other
countries.
(a) What is used to measure a country’s inflation[2]
(b) Explain two reasons for conserving resources.
[4]
(c) Analyse how subsidies given to farmers could raise living standards.
[6]
(d) Discuss whether a rise in direct taxes will reduce economic growth.
[8]
© UCLES 2017
0455/21/O/N/17
5
5
In 2015, Venezuela was facing a number of challenges. Despite government subsidies, increases
in demand meant there were shortages of food. The fall in the global price of oil increased the
deficit on the current account of the country’s of the country’s export earnings. In Venezuela, but the country
also has many sole traders involved in other industries.
(a) Define a ‘subsidy’.
[2]
(b) Explain two causes of a decrease in demand for oil.
[4]
(c) Analyse the advantages of being a sole trader.
[6]
(d) Discuss whether a government should be concerned about a growing deficit on the current
account of its balance of payments. [8]
6
In 2008, Zimbabwe reached a record high rate of inflation of 500 trillion per cent. By 2015, it had
fallen so much that there was even talk of deflation. Such deflation could be very serious given
the country’s high rate of unemployment. Increas policy measures that can be used to reduce both
unemployment and inflation.
(a) Identify two ways in which a high rate of unemployment may affect firms.
[2]
(b) Explain two causes of deflation.
[4]
(c) Analyse the disadvantages of a very high rate of inflation.
[6]
(d) Discuss whether increased government spending on training will always reduce inflation. [8]
7
Despite encouragement from central banks, in 2015 some commercial banks were still reluctant to
lend, especially to the poor. Attracting more lenders and borrowers would have allowed commercial
banks to expand and employ more workers. A rise in employment would make more
use of a country’s labour force. Over time, the
(a) Identify two ways in which the expenditure patterns of the poor and the rich are different. [2]
(b) Explain two reasons why a commercial bank may prefer to lend to the rich rather than to the
poor.
[4]
(c) Analyse the effects that an increase in the labour force will have on an economy.
[6]
(d) Discuss whether providing loans to the poor will reduce poverty.
[8]
© UCLES 2017
0455/21/O/N/17
6
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© UCLES 2017
0455/21/O/N/17
7
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© UCLES 2017
0455/21/O/N/17
8
BLANK PAGE
Permission to reproduce items where third-party owned material protected by copyright is included has been sought and cleared where possible. Every reasonable
effort has been made by the publisher (UCLES) to trace copyright holders, but if any items requiring clearance have unwittingly been included, the publisher will
be pleased to make amends at the earliest possible opportunity.
To avoid the issue of disclosure of answer-related information to candidates, all copyright acknowledgements are reproduced online in the Cambridge International
Examinations Copyright Acknowledgements Booklet. This is produced for each series of examinations and is freely available to download at www.cie.org.uk after
the live examination series.
Cambridge International Examinations is part of the Cambridge Assessment Group. Cambridge Assessment is the brand name of University of Cambridge Local
Examinations Syndicate (UCLES), which is itself a department of the University of Cambridge.
©
U
C
L
E
S
20
17
04
55
/2
1/
O/
N/
17
UNIVERSITY OF CAMBRIDGE INTERNATIONAL EXAMINATIONS
International General Certificate of Secondary Education
0455/22
ECONOMICS
Paper 2 Structured Questions
October/November 2012
2 hours
Additional Materials:
Answer Booklet/Paper
READ THESE INSTRUCTIONS FIRST
If you have been given an Answer Booklet, follow the instructions on the front cover of the
Booklet. Write your Centre number, candidate number and name on all the work you hand in.
Write in dark blue or black pen.
You may use a soft pencil for any diagrams, graphs or rough working.
Do not use staples, paper clips, highlighters, glue or correction fluid.
Section A
* 0 2 5 8 2 3 1 2 9 3 *
Answer Question 1.
Section B
Answer any three questions.
At the end of the examination, fasten all your work securely together.
The number of marks is given in brackets [ ] at the end of each question or part question.
This document consists of 4 printed pages.
DC (NH) 46673/1
© UCLES 2012
[Turn over
2
Section A
Answer this question.
5
A new city is to be built in Ghana
Ghana is a mainly agricultural country where nearly a third of the population lives in poverty. The
infrastructure is poor. Millions of people are moving into the cities, especially Ghana’s capital,
Accra. These areas are unable to cope with this geographical movement of people, resulting in an
increasing number of shanty towns.
A businessman in Ghana is planning to build an eco-city, called Sikafutu, on land 30 miles
(approximately 48 kilometres) outside Accra. It is called an eco-city because the building materials,
such as wood and sand, would be obtained locally. Methane from food waste could be used to
produce gas for cooking. Solar panels, and hydro power from a nearby river, would reduce
pollution.
The eco-city will eventually cost US$1.7 billion to build. It could one day be home to 60 000 people.
At the moment it is open land, used mainly for farming, with just a few people living there. The local
tribespeople own this land and they have been promised a significant payment if they agree to sell
the land, so that the project can go ahead.
The government would like property prices in the eco-city to be as low as possible, so that people
are able to move from the shanty towns but, without government intervention, prices will be
determined by market forces. Population and income are expected to rise in the area and these
changes will have an impact on the future price of housing.
(a) What evidence is there in the extract to suggest that Ghana is a developing country?
[4]
(b) Explain the economic reasons why some people might decide to move from rural parts of
Ghana to the cities. [4]
(c) Explain, using a demand and supply diagram, how the expected changes in population and
income are likely to affect the future price of property in the eco-city. [4]
(d) Discuss the advantages and disadvantages of building the new city to (i) the local tribespeople
who are already living on the land and (ii) the economy of Ghana as a whole. [8]
© UCLES 2012
0455/22/O/N/12
3
Section B
Answer any three questions from this section.
2
(a) Describe, with the use of examples, two factors of production.
[4]
(b) Explain what is meant by the economic problem and why opportunity cost is relevant to the
allocation of resources.
[6]
[10]
(c) Discuss whether every economy should have some government intervention.
(d) A government is planning to build a high speed railway through a large area of fertile land and
scenic beauty. A decision to construct the railway will depend upon how the project is financed and
the social costs and social benefits arising from its construction.
(a) Describe, with the aid of examples from the construction of a railway, the meaning of social
costs.
[4]
(b) Explain why a government might consider using private funding rather than public funding to
finance the project.
[6]
(c) Discuss the advantages and disadvantages of such a high speed railway to a country’s
economy, both locally and nationally.
[10]
4
Money is said to be of vital importance in all economies.
(a) Describe the four functions of money.
[4]
(b) Explain how commercial banks may encourage saving.
[6]
(c) Analyse why there are often differences in the earnings of workers in the public sector and
workers in the private sector.
[10]
5(a)
Describe the main features of (i) a co-operative and (ii) a public corporation.
[4]
(b) Explain to what extent (i) a co-operative and (ii) a public corporation have profit maximisation
as an objective.
[4]
(c) Firms can grow large through integration. Explain, with the aid of examples, the difference
between horizontal and vertical integration.
[4]
(d) Discuss whether the disadvantages of a monopoly always outweigh the advantages.
5
[8]
Governments usually aim to have a low rate of inflation and a high rate of employment, but these
two aims can sometimes conflict.
(a) Explain why inflation can be harmful to an economy.
[6]
(b) Explain why unemployment which lasts for more than a year has more harmful effects than
short-term unemployment for (i) the unemployed and (ii) the economy.
[6]
(c) Discuss to what extent the aims of a low rate of inflation and a high rate of employment are
likely to conflict.
[8]
© UCLES 2012
0455/22/O/N/12
[Turn over
4
7(a)
Explain the advantages of regional specialisation in an economy.
[4]
(b) Describe the structure of the current account of a country’s balance of payments.
[4]
(c) Explain why the value of a currency may fall in a floating exchange rate system.
[4]
(d) Discuss whether a floating exchange rate system is always to be preferred to a fixed one. [8]
Permission to reproduce items where third-party owned material protected by copyright is included has been sought and cleared where possible. Every reasonable
effort has been made by the publisher (UCLES) to trace copyright holders, but if any items requiring clearance have unwittingly been included, the publisher will
be pleased to make amends at the earliest possible opportunity.
University of Cambridge International Examinations is part of the Cambridge Assessment Group. Cambridge Assessment is the brand name of University of
Cambridge Local Examinations Syndicate (UCLES), which is itself a department of the University of Cambridge.
©
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12
Cambridge International Examinations
Cambridge International General Certificate of Secondary Education
0455/22
ECONOMICS
Paper 2 Structured Questions
October/November 2015
2 hours 15 minutes
No Additional Materials are required.
READ THESE INSTRUCTIONS FIRST
An answer booklet is provided inside this question paper. You should follow the instructions on the front cover of the
answer booklet. If you need additional answer paper ask the invigilator for a continuation booklet.
Section A
Answer Question 1.
Section B
Answer any three questions.
The number of marks is given in brackets [ ] at the end of each question or part question.
* 1 2 4 1 0 1 9 4 4 5 *
This document consists of 5 printed pages, 3 blank pages and 1 Insert.
DC (ST) 96751/6
© UCLES 2015
[Turn over
2
Section A
Answer this question.
6
Mexico: rising to the top?
It has been predicted that Mexico will be one of the world’s top ten economies by 2020. Changes
in the industrial structure of the country have been occurring for some time. In 2008, 12% of the
labour force were employed in the primary sector (mainly agriculture), 26% in the secondary sector
(mainly manufacturing) and 62% in the tertiary sector (services). By 2012, employment had fallen
by 1% in the primary sector and by 2% in the secondary sector.
In recent years, Mexico has been removing trade protection measures such as tariffs and quotas.
The country now has free trade with more than 40 other countries. International trade plays a key
role in the Mexican economy, with a third of its output being exported and imports accounting for
more than a third of the products bought in Mexico. Nearly 80% of Mexico’s exports go to the
United States of America (US). Mexican firms have a wide choice of sources for imported raw
materials and a large international market in which to sell their products. The main destination of
Mexico’s falling number of emigrants is the US.
After an economic downturn in 2009, the Mexican economy has been growing. Incomes have risen
and life expectancy has increased. Table 1 shows the income levels and life expectancy for a
number of countries.
Table 1: Gross Domestic Product (GDP) per head and life expectancy
in selected countries in 2012
Country
GDP per head (US$)
Life expectancy
(years)
Bangladesh
700
69
Canada
48 000
83
Mexico
9 200
77
Peru
5 400
72
Portugal
22 100
80
South Africa
7 500
55
Although the standard of Mexico’s education is not very high, poverty is declining in the country as
living standards are rising. More people now have access to better quality health care. In contrast
to its neighbour the US, unemployment has been declining in Mexico.
Costs of production in Mexico are rising more slowly than in China. Mexico imports products from
China and also competes with China in a number of export markets.
Some of Mexico’s top exporting firms are monopolies within the country. One is Pemex, the stateowned oil and gas monopoly. The firm sells oil throughout the world. Some economists claim that
Mexican consumers would benefit from Pemex being sold to the private sector.
© UCLES 2015
0455/22/O/N/15
3
(a)
Using information from the extract, calculate what percentage of Mexico’s labour force was
employed in the tertiary sector in 2012.
[2]
(b) Using information from the extract, explain two benefits of free trade for Mexican firms.
[4]
(c) (i) Explain why people in countries with a higher GDP per head have a longer life expectancy
than people in countries with a lower GDP per head.
[2]
(b)
Using Table 1, comment on whether the information supports the view that countries with a
higher GDP per head have a longer life expectancy than countries with a lower GDP
per head.
[3]
(d) Using information from the extract, explain two reasons why emigration from Mexico has
fallen.
[4]
(e) Discuss whether rises in costs of production in China will benefit the Mexican economy.
[5]
(f)
[4]
Explain two ways in which a monopoly differs from perfect competition.
(g) Discuss whether selling a state monopoly, such as Pemex, to the private sector would benefit
consumers in Mexico.
[6]
© UCLES 2015
0455/22/O/N/15
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4
Section B
Answer any three questions from this section.
6
6
The United Nations’ World Tourism Organisation has estimated that the proportion of the world’s
population who have visited another country will have reached only 7% by 2020. Increasing
international travel might create jobs and influence incomes. However, it would also put pressure
on finite resources and would create external costs.
(a) Define ‘resources’.
[2]
(b) Explain how international travel may create external costs.
[4]
(c) Analyse how an increase in international travel may influence incomes.
[6]
(d) Discuss whether demand for international travel is likely to continue to increase.
[8]
A heatwave in July 2013 in the United Kingdom resulted in sales of ice cream more than doubling.
Extra workers were taken on to meet the higher demand. In recent years, the demand and supply
conditions of ice cream have changed, leading to demand and supply becoming more elastic. The
market has also been influenced by government policies and by changes in the country’s economic
growth rate.
(a) Define ‘supply’.
[2]
(b) Explain two ways a government could influence the price of a product.
[4]
(c) Analyse why demand for a product may become more price elastic.
[6]
(d) Discuss whether the wages of all workers will increase during a period of economic growth. [8]
7
On average, Norwegians work only 27 hours a week. They also take more, and longer, holidays
than most other countries’ workers. In 2013, Norway had the second highest productivity in the
world. It was also ranked number one in the Human Development Index (HDI). Unlike many other
countries, Norway has had almost full employment in recent years.
(a) Define ‘productivity’.
[2]
(b) Explain two reasons why productivity may increase.
[4]
(c) Analyse why a country may have a high HDI value.
[6]
(d) Discuss whether a country would benefit from having full employment.
[8]
© UCLES 2015
0455/22/O/N/15
5
9
9
In 2009, a digital currency called Bitcoin was invented. Between 2009 and 2014 there was a growth
in the number of people and firms accepting it as a medium of exchange and store of value.
Financial experts have called for digital money to be regulated by central banks. One of their
concerns is that it could increase the money supply and cause inflation.
(a) Define ‘medium of exchange’.
[2]
(b) Explain two ways in which a central bank differs from a commercial bank.
[4]
(c) Analyse how an increase in the money supply may cause inflation and a fall in saving.
[6]
(d) Discuss whether price stability should be a government’s main economic aim.
[8]
Capital goods make up over half of Japanese exports. In 2013, although Japan’s imports rose more
rapidly than its exports, there was still a surplus on the current account of its balance of payments.
Across the world, increasing trade was leading to new airports being opened to meet the demand
for transporting goods.
(a) Define ‘capital good’.
[2]
(b) Explain two reasons why a country’s export revenue might increase when export prices rise.
[4]
(c) Analyse how a government could increase the surplus on the country’s current account of the
balance of payments.
[6]
(d) Discuss whether new airports should be built and operated by governments or the private
sector.
[8]
9
Myanmar (Burma) is seeking to move from being a developing to a developed country. It has a
lower savings ratio than most other Asian economies, with its people spending most of their
income. The country’s Government is encouraging investment from abroad to increase its
economic growth. The Government is using fiscal policy in an attempt to reduce poverty, which
affects a third of its population.
(a) Identify two characteristics of a developed country.
[2]
(b) Explain two reasons why people may spend most of their income.
[4]
(c) Analyse how an increase in investment may increase a country’s economic growth rate.
[6]
(d) Discuss whether fiscal policy measures will reduce poverty.
[8]
© UCLES 2015
0455/22/O/N/15
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BLANK PAGE
© UCLES 2015
0455/22/O/N/15
7
BLANK PAGE
© UCLES 2015
0455/22/O/N/15
8
BLANK PAGE
Permission to reproduce items where third-party owned material protected by copyright is included has been sought and cleared where possible. Every reasonable
effort has been made by the publisher (UCLES) to trace copyright holders, but if any items requiring clearance have unwittingly been included, the publisher will
be pleased to make amends at the earliest possible opportunity.
To avoid the issue of disclosure of answer-related information to candidates, all copyright acknowledgements are reproduced online in the Cambridge International
Examinations Copyright Acknowledgements Booklet. This is produced for each series of examinations and is freely available to download at www.cie.org.uk after
the live examination series.
Cambridge International Examinations is part of the Cambridge Assessment Group. Cambridge Assessment is the brand name of University of Cambridge Local
Examinations Syndicate (UCLES), which is itself a department of the University of Cambridge.
©
U
C
L
E
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04
55
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2/
O/
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15
UNIVERSITY OF CAMBRIDGE INTERNATIONAL EXAMINATIONS
International General Certificate of Secondary Education
0455/21
ECONOMICS
Paper 2 Structured Questions
October/November 2012
2 hours
Additional Materials:
Answer Booklet/Paper
READ THESE INSTRUCTIONS FIRST
If you have been given an Answer Booklet, follow the instructions on the front cover of the
Booklet. Write your Centre number, candidate number and name on all the work you hand in.
Write in dark blue or black pen.
You may use a soft pencil for any diagrams, graphs or rough working.
Do not use staples, paper clips, highlighters, glue or correction fluid.
Section A
Answer Question 1.
* 3 9 7 1 2 9 2 5 6 5 *
Section B
Answer any three questions.
At the end of the examination, fasten all your work securely together.
The number of marks is given in brackets [ ] at the end of each question or part question.
This document consists of 4 printed pages.
DC (SM) 46685/2
© UCLES 2012
[Turn over
2
Section A
Answer this question.
1
The United States Postal Service is in trouble
Since 2006, the volume of mail carried by the United States Postal Service (USPS) has fallen
considerably and as a result it has reduced the number of its employees.
Table 1: USPS Volume of mail and number of employees in 2006 and 2010
2006
2010
Volume of mail
(in billions of items)
220
176
Number of employees
(in thousands)
720
612
One reason for the problems of the USPS has been the recession. This has prompted businesses
and advertisers, which account for most of the USPS’s income, to reduce the number of letters and
parcels they send. A long-term problem is that the volume of mail is not likely to go back to pre2006 figures as the economy improves because of the strong challenge from the internet. Email is
fast and cheap, businesses are advertising online more and they are increasingly asking customers
to pay their bills online.
All of these issues are making it very difficult for the USPS, which does not receive any government
subsidies. It estimated that it would lose US$8 billion in 2010.
The USPS plans to increase revenue by charging more for its services and to cut its costs by
stopping Saturday deliveries and collections. Many USPS customers, including firms that use this
service, are opposed to the plan. Some firms, however, stand to gain from this plan. One firm,
Pitney Bowes, for example, makes products used by the USPS, such as automated sorting
machines and automated franking machines. It expects demand for these products to rise if the
USPS seeks to replace some of its employees with capital equipment.
(a) Did the number of employees of the USPS fall by a smaller or greater percentage than the
volume of mail between 2006 and 2010? Show your workings.
[2]
(b) (i) Explain what is meant by a substitute and give two examples from the extract.
1
Explain two reasons why a firm may seek to replace some of its employees with capital
equipment.
[3]
[4]
(c) It is stated that the USPS plans to charge more for its services. Explain why such a decision
might not necessarily lead to an increase in revenue. [4]
(d) Discuss whether it would be a good idea for a business, such as the USPS, to be supported
by a government subsidy. [7]
© UCLES 2012
0455/21/O/N/12
3
Section B
Answer any three questions from this section.
2Labour is one of the four factors of production.
(a) Explain three causes of an increase in the supply of labour in a particular industry.
[6]
(b) Explain, using a demand and supply diagram, how an increase in the supply of labour in a
particular industry would affect the wages of people working in that industry.
[6]
(c) Discuss what affects the ability of a trade union to achieve a wage increase
members.
3
for its
[8]
(a) Explain what is meant by a central bank.
[2]
(b) Describe the role that a central bank plays in a country’s economy.
[4]
(c) Explain why different income groups have different spending patterns.
[6]
(d) Discuss to what extent non-wage factors are likely to be more important than wage factors in
influencing a woman’s choice of occupation.
[8]
4
(a) Explain why multi-nationals are unlikely to be private limited companies.
[4]
(b) Analyse the different ways in which firms can grow in size.
[6]
(c) Discuss whether consumers would always want to be supplied by firms in perfect competition
rather than by a monopoly.
[10]
5
(a) Explain what is meant by economic growth.
[4]
(b) Explain what actions a government could take to increase the rate of economic growth in a
country.
[6]
(c) Discuss the extent to which a high rate of economic growth always benefits a developing
economy.
[10]
6
(a) Distinguish between Gross Domestic Product (GDP) per head and the Human Development
Index.
[4]
(b) Explain how changes in a country’s birth rate can influence its GDP per head.
[6]
(c) Many countries have high levels of poverty. Discuss which policies would be most useful in
reducing poverty in a country.
[10]
© UCLES 2012
0455/21/O/N/12
[Turn over
4
7(a) Explain why countries often specialise.
[5]
(b) Despite the potential advantages of specialisation, explain why a country may choose not to
specialise.
[5]
(c) Discuss why some countries have fixed exchange rates while others have floating exchange
rates.
[10]
Permission to reproduce items where third-party owned material protected by copyright is included has been sought and cleared where possible. Every reasonable
effort has been made by the publisher (UCLES) to trace copyright holders, but if any items requiring clearance have unwittingly been included, the publisher will
be pleased to make amends at the earliest possible opportunity.
University of Cambridge International Examinations is part of the Cambridge Assessment Group. Cambridge Assessment is the brand name of University of
Cambridge Local Examinations Syndicate (UCLES), which is itself a department of the University of Cambridge.
©
U
C
L
E
S
20
12
04
55
/2
1/
O/
N/
12
Cambridge International Examinations
Cambridge International General Certificate of Secondary Education
0455/22
ECONOMICS
Paper 2 Structured Questions
October/November 2016
2 hours 15 minutes
No Additional Materials are required.
READ THESE INSTRUCTIONS FIRST
An answer booklet is provided inside this question paper. You should follow the instructions on the front cover of the
answer booklet. If you need additional answer paper ask the invigilator for a continuation booklet.
Section A
Answer Question 1.
Section B
Answer any three questions.
The number of marks is given in brackets [ ] at the end of each question or part question.
* 3 3 7 9 4 2 2 0 9 9 *
This document consists of 4 printed pages and 1 Insert.
DC (LK) 112829/1
© UCLES 2016
[Turn over
2
Section A
Answer this question.
7
The Mints
Mexico, Indonesia, Nigeria and Turkey, known as the Mints, are four emerging economies that are
predicted to grow rapidly. The four countries have relatively large populations, from 75 million in
Turkey to 242 million in Indonesia in 2014. They also have high birth rates, from 17 in Turkey to
41.5 in Nigeria per 1000 people. Both income per head and the countries’ Human Development
Index ranking are improving. The changes, however, do not mean that everyone in the four
countries is satisfied. As incomes increase, so do people’s wants, and what people would like to
consume exceeds the maximum output that countries are capable of producing.
Output and consumption are increasing in each of the four countries. Nigeria, for example, is
predicted to be one of the world’s 20 largest economies by 2020. Productivity is rising in most
sectors of the Nigerian economy although it remains low in agriculture. Despite some security
concerns, more multinational companies are setting up in the country, attracted by its expanding
markets.
Nigeria and Turkey both had annual inflation rates above 8% in 2014. Indonesia’s was 5.7% and
Mexico’s 5.2%. The Mexican Government had used monetary policy measures in that year to keep
the inflation rate down. In August 2014 it opened up its energy market, allowing private sector firms
to compete against the country’s state-owned petroleum firm. It also increased spending on stateprovided health care, which operates alongside private medical care.
The four countries saw fluctuations in their exchange rates in 2014. Indonesia’s currency, the
rupiah, changed from 10 685 per US$ the year before to 11 450 per US$ in 2014. Turkey’s
currency, the Turkish Lira, followed a similar trend.
Changes in the exchange rate can affect firms’ costs of production, as can industrial action. In June
2014 Turkish trade unions organised a number of strikes seeking to gain better wages and working
conditions for their members. However, the power of Turkish trade unions is limited by restrictive
trade union legislation and a small membership, with only 9% of workers belonging to trade unions.
This means that collective bargaining is not a key feature of Turkish labour markets and Turkish
trade unions do not have much influence on economic policy.
(a) Using information from the extract, explain how the Mints illustrate the economic problem. [2]
(b) Calculate how many children were born in Turkey in 2014.
[2]
(c) Using information from the extract, explain two reasons why the earnings of workers in
Nigeria are likely to increase.
[4]
(d) Explain whether the extract suggests that Mexico operates a market economic system or a
mixed economic system.
[3]
(e) Analyse how the change in Indonesia’s exchange rate in 2014 is likely to have affected the
country’s import expenditure.
[4]
(c) Discuss whether the Human Development Index is a good measure of living standards. [5]
(g) Using information from the extract, explain two functions of a trade union.
[4]
(h) Discuss whether countries with high population growth have high economic growth.
[6]
© UCLES 2016
0455/22/O/N/16
3
Section B
Answer any three questions from this section.
7
There are a number of competing producers of jeans. These firms are now also facing competition
from new sportswear designed to also be worn as leisurewear. This increased competition has
made demand for jeans more price-elastic. For instance, a government report has estimated that
the price elasticity of demand for one of the oldest firm’s jeans in Asia is – 2.5.
(a) What is meant by a price elasticity of demand of – 2.5?
[2]
(b) Explain the importance of price elasticity of demand for a government.
[4]
(c) Using a demand and supply diagram, analyse the effect of a rise in the price of Firm X’s
jeans on the market for Firm Y’s jeans. [6]
(d) Discuss whether long-established and well-known firms are likely to be more successful than
firms that are new to an industry. [8]
7
8
In recent years productivity growth has been low in Brazil, which has kept average costs relatively
high. Some economists claim this low growth in productivity is due to protectionism. The Brazilian
Government imposes high tariffs on a range of imports, including smartphones; it argues that such
protectionism saves Brazilian jobs.
(a) Define ‘productivity’.
[2]
(b) Explain the difference between average fixed cost and average variable cost.
[4]
(c) Analyse the advantages that a country may gain from specialising in a product such as
smartphones.
[6]
(d) Discuss whether protectionism saves jobs.
[8]
Household debt in South Korea in 2014 was reaching record levels. People were borrowing more
and saving less: the savings ratio fell from 19% in 1985 to 4% in 2014. Despite the low rate of
saving, there was little demand-pull or cost-push inflation. Indeed, in 2014 the country came close
to experiencing deflation.
(a) Define ‘deflation’.
[2]
(b) Explain the difference between demand-pull inflation and cost-push inflation.
[4]
(c) Analyse how a central bank might reduce household borrowing.
[6]
(d) Discuss whether a government should encourage an increase in saving.
[8]
© UCLES 2016
0455/22/O/N/16
[Turn over
4
10
The unemployment rate in Wales fell from 8.2% in March 2013 to 6.8% in March 2014. One in four
workers in Wales is employed in the public sector. A high proportion of workers are employed in
multinational companies, including a Japanese car producer and a South Korean electronics firm.
(a) Define ‘unemployment’.
[2]
(b) Explain two benefits that a firm may gain from producing in another country.
[4]
(c) Using a production possibility curve diagram, analyse the effect of a decrease in unemployment
on an economy’s output.
[6]
(d) Discuss whether it is better to work in the public sector or the private sector.
[8]
10 The largest Indonesian aviation firm is a public corporation that started production in 1976. It
employs a relatively high value of capital goods and has a monopoly of aircraft construction in
Indonesia. It has been making parts for foreign firms for some time but is now trying to sell aircraft
to other countries. This involves it competing in a market where most of the firms are public limited
companies.
(a) Identify who owns a public corporation and who owns a public limited company.
[2]
(b) Explain why fixed costs are high in the aircraft-making industry.
[4]
(c) Analyse what determines a firm’s demand for capital goods.
[6]
(d) Discuss whether the quality of products is likely to be higher in a monopoly or in a perfectly
competitive market. [8]
10 Tax revenue from both direct and indirect taxes in Germany rose to US$860 billion in 2013. The
increase was largely due to a fall in unemployment. Germany has a progressive tax system. In
2014, German politicians discussed whether the tax rates should be increased. Changes in tax
rates influence the amount of tax revenue received and the nature of the tax system.
(a) Define ‘a progressive tax’.
[2]
(b) Explain the difference between direct and indirect taxes.
[4]
(c) Analyse how a fall in unemployment can increase tax revenue.
[6]
(d) Discuss whether a government should increase tax rates.
[8]
Permission to reproduce items where third-party owned material protected by copyright is included has been sought and cleared where possible. Every reasonable
effort has been made by the publisher (UCLES) to trace copyright holders, but if any items requiring clearance have unwittingly been included, the publisher will
be pleased to make amends at the earliest possible opportunity.
To avoid the issue of disclosure of answer-related information to candidates, all copyright acknowledgements are reproduced online in the Cambridge International
Examinations Copyright Acknowledgements Booklet. This is produced for each series of examinations and is freely available to download at www.cie.org.uk after
the live examination series.
Cambridge International Examinations is part of the Cambridge Assessment Group. Cambridge Assessment is the brand name of University of Cambridge Local
Examinations Syndicate (UCLES), which is itself a department of the University of Cambridge.
©
U
C
L
E
S
20
16
04
55
/2
2/
O/
N/
16
Cambridge International Examinations
Cambridge International General Certificate of Secondary Education
0455/21
ECONOMICS
Paper 2 Structured Questions
October/November 2015
2 hours 15 minutes
No Additional Materials are required.
READ THESE INSTRUCTIONS FIRST
An answer booklet is provided inside this question paper. You should follow the instructions on the front cover of the
answer booklet. If you need additional answer paper ask the invigilator for a continuation booklet.
Section A
Answer Question 1.
Section B
Answer any three questions.
At the end of the examination, fasten all your work securely together.
The number of marks is given in brackets [ ] at the end of each question or part question.
* 9 5 0 8 9 0 4 8 4 7 *
This document consists of 5 printed pages, 3 blank pages and 1 Insert.
DC (SJF) 96753/1
© UCLES 2015
[Turn over
2
Section A
Answer this question.
8
Cambodia aims to be a top rice exporter
Currently approximately 80% of Cambodia’s export revenue comes from the sale of clothing. The
Cambodian Government wants to encourage clothing producers to export more but its current
priority is to promote the export of rice. In 2012 Cambodia was the world’s seventh largest exporter
of rice. The government aim is for the country to be in the top five. Raising export revenue above
its 2012 level of US$6 billion would reduce the country’s deficit on the current account of its balance
of payments.
To achieve the government’s aim, there are a number of improvements that need to be made to
increase Cambodia’s Gross Domestic Product (GDP). One is to develop the country’s
infrastructure, including building more roads and ports. Better transport infrastructure needs to be
combined with increased investment in the agriculture industry. In addition, the skills of farm
workers need to be developed. Those farm workers already skilled need to be encouraged to stay
in the country rather than emigrate.
The Cambodian Government is also seeking to increase investment in the manufacturing and
service sectors. Investment is influenced by a range of factors. One of the most important of these
is the economic growth rate. Countries with a high economic growth rate tend to spend a high
proportion of their income on capital goods.
Table 1 Economic growth rates and investment in selected countries in 2012
Country
Economic growth rate
(% change in GDP)
Investment
(as % of GDP)
Cambodia
7.5
20
China
8.2
48
India
8.0
35
Indonesia
6.3
33
Malaysia
6.0
19
Pakistan
4.0
15
Cambodia is attracting investment from other countries, most significantly from China. Such
investment is the result of a number of factors including a young population and improvements in
the country’s financial sector. In 2012 the country’s population was 15 million with the birth rate
exceeding the death rate by 13 per thousand of the population. Emigration exceeded immigration
with a net migration rate of minus 0.3 per thousand of the population.
In 2012 Cambodia opened its first stock exchange which is called the Cambodian Securities
Exchange (CSX). The first company to trade on the CSX was the Phnom Penn Water Supply
Authority. The Cambodian company is recognised as one of the most efficient water companies in
Asia. It is a popular company to work for, partly because it pays relatively high wages.
© UCLES 2015
0455/21/O/N/15
3
(a) Using information from the extract, calculate the value of Cambodia’s clothing exports in 2012. [2]
(b) Explain two reasons why demand for Cambodia’s rice may increase in the future.
[4]
(c) (i) Explain why high economic growth can increase investment.
[4]
(d)
Using Table 1, comment on whether the information supports the view that high economic
growth leads to a high rate of investment.
[3]
(d) Using information from the extract, explain whether Cambodia experienced an increase or a
decrease in population in 2012.
[2]
(e) Discuss whether building more roads and ports would increase Cambodia’s exports of rice.
[5]
(f)
[4]
Explain two functions of a stock exchange.
(g) Discuss whether a company will have to raise wage rates to attract more workers.
© UCLES 2015
0455/21/O/N/15
[6]
[Turn over
4
Section B
Answer any three questions from this section.
8
A lack of electricity regularly results in power failure in the Lebanon. The daily gap between supply
and demand may increase if the Lebanese economy continues to grow. The Lebanese
Government is planning to build more power stations but there is a risk that the social costs of
operating power stations may be greater than the social benefits.
(a) Define ‘demand’.
[2]
(b) Explain what impact an imbalance between supply and demand is likely to have on price and
the quantity traded.
[4]
(c) Analyse why economic growth may increase demand for electricity.
[6]
(d) Discuss whether the social costs of operating power stations are likely to be greater than the
social benefits.
[8]
8
The average income in Mexico is rising but a number of people in the country are still poor. Carlos
Slim is a Mexican entrepreneur and one of the richest men in the world. His companies dominate
the mobile (cell) phone and landline phone markets in the country and employ a high number of
specialised workers. The Mexican Government, however, is seeking to increase competition in the
communications market.
(a) Identify two functions of an entrepreneur.
[2]
(b) Explain two ways a government could redistribute income from the rich to the poor.
[4]
(c)
Analyse why price may be higher and output lower in a monopoly than in a more competitive
market.
[6]
(d) Discuss whether workers benefit from specialising.
9
[8]
China’s solar power industry has the biggest solar panel firms in the world. Their growth has been
helped by low labour costs and government subsidies. Solar panel firms are smaller in Europe
where some are sole proprietors. In 2013 the European Union was considering imposing a tariff of
47% on Chinese solar panels.
(a) Identify two features of a sole proprietor.
[2]
(b) Explain how government subsidies can increase the size of firms.
[4]
(c) Analyse three advantages of small firms.
[6]
(d) Discuss whether imposing tariffs will benefit an economy.
[8]
© UCLES 2015
0455/21/O/N/15
5
11 The Brazilian economy ran into difficulties in 2013. Its inflation rate rose above its Central Bank’s
target. More than two-thirds of the items used to calculate the inflation rate rose in price. The
economic growth rate declined with fewer jobs being created. As the labour force grows in size,
more jobs have to be created to avoid unemployment increasing. Greater free trade might improve
Brazil’s economic performance.
(a) Identify two causes of an increase in the size of a country’s labour force.
[2]
(b) Explain how a country’s inflation rate is measured.
[4]
(c) Analyse how free trade can reduce firms’ costs of production.
[6]
(d) Discuss whether unemployment always harms an economy.
[8]
11 In 2013 the Japanese Government used a range of policies, including monetary policy, to increase
consumer expenditure and investment to avoid deflation. At the same time, some Japanese
politicians were arguing that the government should increase the rate of the country’s sales tax
from 5% to 10%. Sales tax is an indirect and regressive tax.
(a) Define ‘regressive tax’.
[2]
(b) Explain two influences on the amount firms spend on capital goods.
[4]
(c) Analyse how monetary policy could increase the price level.
[6]
(d) Discuss whether an increase in the rate of a sales tax would benefit an economy.
[8]
11 The world’s population is forecast to rise to 9 billion by 2050. It is predicted that Nigeria, a
developing country with a mixed economy, will move from having the seventh largest population at
158 million in 2013 to having the third largest at 400 million in 2050. Some governments try to
reduce the growth of their populations by using a range of government policy measures.
(a) Define ‘mixed economy’.
[2]
(b) Explain two reasons why the world population in 2050 may be more than forecast.
[4]
(c) Analyse how the population structure of a developing country is likely to differ from that of a
developed country.
[6]
(d) Discuss the effectiveness of possible government policy measures to reduce the growth of
population.
[8]
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0455/21/O/N/15
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© UCLES 2015
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Permission to reproduce items where third-party owned material protected by copyright is included has been sought and cleared where possible. Every reasonable
effort has been made by the publisher (UCLES) to trace copyright holders, but if any items requiring clearance have unwittingly been included, the publisher will
be pleased to make amends at the earliest possible opportunity.
To avoid the issue of disclosure of answer-related information to candidates, all copyright acknowledgements are reproduced online in the Cambridge International
Examinations Copyright Acknowledgements Booklet. This is produced for each series of examinations and is freely available to download at www.cie.org.uk after
the live examination series.
Cambridge International Examinations is part of the Cambridge Assessment Group. Cambridge Assessment is the brand name of University of Cambridge Local
Examinations Syndicate (UCLES), which is itself a department of the University of Cambridge.
©
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C
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04
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/2
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15
Cambridge International Examinations
Cambridge International General Certificate of Secondary Education
0455/21
ECONOMICS
Paper 2 Structured Questions
October/November 2018
2 hours 15 minutes
No Additional Materials are required.
READ THESE INSTRUCTIONS FIRST
An Answer Booklet is provided inside this Question Paper. You should follow the instructions on the front cover of
the Answer Booklet. If you need additional answer paper ask the invigilator for a Continuation Booklet.
Section A
Answer Question 1.
Section B
Answer any three questions.
The number of marks is given in brackets [ ] at the end of each question or part question.
* 7 0 1 9 4 6 5 5 9 2 *
This document consists of 5 printed pages, 3 blank pages and 1 Insert.
DC (CE) 148226/3
© UCLES 2018
[Turn over
2
Section A
Answer this question.
9
Russtruggleia’sforeconomicreovery
Shortly after the 2014 Winter Olympic Games in Sochi, Russia, the value of the Russian currency,
the rouble, depreciated significantly against the US$. Russian Gross Domestic Product (GDP)
growth rates also became negative. Political and economic instability in the region contributed to
these changes.
To avoid further outflows of financial capital from the Russian economy and further falls in the value
of the Russian rouble, the central bank of Russia increased the official interest rate to 17%. By
2016, the rouble fell even more and the central bank considered selling its foreign reserves to raise
the exchange rate against the US$.
Overall, things did not look good for the Russian economy in 2016. Export values fell and foreign investors
lacked confidence in the Russian economy. This not only had a negative impact on unemployment rates
and economic growth but also had an impact on poverty rates which were expected to return to pre-2007
levels. Demograp declined due to high death rate, low fertility rate, and a high level of emigration.
Domestic consumption and investment, however, showed some positive signs. Consumers bought
more domestic products and domestic investment increased. However, inflation rose and the
central bank introduced policy measures to avoid a rapid increase in prices.
As an oil producer, Russia’s economy was affecte the world’s second largest oil producer, contin other
producers to cut production. In addition, global demand for oil was weak. Table 1 shows the
price of oil between 2010 and 2016.
Table1PriceofOil2010–(US16$)
Year
PriceofOil
(USper$barrel)
2010
82
2011
92
2012
103
2013
93
2014
95
2015
53
2016
37
In 2016, domestic Russian oil producers struggled to make a profit due to economic uncertainty
and competition from renewable energy. They were also concerned that it may become even more
difficult for them to make a profit in the future. This was because the government wanted to increase
tax on oil producers to raise more revenue. The government believed that such an extra tax would
not actually hurt the large oil producers.
© UCLES 2018
0455/21/O/N/18
3
(a)Calculate, using the information in Table 1, the percentage change in the price of oil between
2010 and 2016.
[2]
(b)Explain, using information from the extract, two reasons for falling oil prices.
[4]
(c)Identify, using information from the extract, two ways a central bank could try to stop a fall in
the international value of its currency. [2]
(d)Explain, using information from the extract, two reasons for Russia’s[4] dec
(e)Analyse the extent to which a rise in oil prices will cause inflation.
[5]
(f)Discuss whether or not increasing taxes on Russian oil producers will be harmful to those
producers.
[5]
(g)Identify one way in which monetary policy differs from fiscal policy.
[2]
(h)Discuss whether or not the Russian government should have been concerned about the
state of the Russian economy in 2016. [6]
© UCLES 2018
0455/21/O/N/18
[Turn over
4
Section B
Answer any three questions.
(e) In 2016, there was a global surplus in the steel market pushing down steel prices. This situation
led to various calls for protectionist measures by other steel producers such as those in the EU
and the USA. However, such measures were not supported by car producers as approximately
22% of a car manufacturer’s costs depend on stee
(a)Define protectionism.
[2]
(b)Explain two methods of trade protection.
[4]
(c)Analyse, using a demand and supply diagram, the effect of falling steel prices on the market
for cars.
[6]
(d)Discuss whether or not protectionism is effective in raising living standards.
9
9
[8]
Droughts in the Pacific Coast region of the US and regulations, in the form of limits on the amount
of salmon that can be caught in the wild, have reduced the supply of wild salmon. These limits
were imposed to avoid market failure in the salmon market. However, the effect of this on the
revenue of salmon producers is uncertain. In addition, producers of farmed salmon in the US states
of Washington and Alaska have received subsidies from the US government.
(a)Define supply.
[2]
(b)Explain one market failure that may occur in the salmon market.
[4]
(c)Analyse how information on changes in a firm’s
of demand calculations.
[6]
(d)Discuss whether or not government subsidies are beneficial to producers.
[8]
The Malaysian government implemented the Vision 2020 policy which aims to make Malaysia a
developed country by the year 2020. Along with this vision, the National Privatisation Policy was
also implemented whereby various firms, such as those involved in telecommunications, were
privatised. Poverty has significantly reduced since the implementation of these policy measures.
(a)Identify the difference between absolute poverty and relative poverty.
[2]
(b)Explain two characteristics of a developed country.
[4]
(c)Analyse two policy measures to alleviate poverty.
[6]
(d)Discuss whether or not moving firms from the public sector to the private sector will benefit
an economy. [8]
© UCLES 2018
0455/21/O/N/18
5
10 The largest airline in Pakistan was originally formed as a result of a merger between a state-owned
airline and a private airline. In April 2016, the Pakistan government made this merged firm a public
limited company. This was hoped to improve the productivity of this loss-making airline and also
improve the overall economy of Pakistan.
(a)Define public limited company.
[2]
(b)Explain the difference between productivity and production.
[4]
(c)Analyse how increased productivity could reduce inflation.
[6]
(d)Discuss whether or not a merger might make it easier for a firm to achieve its goals.
6
[8]
Teachers in many countries oppose their governme that this could reduce the standard of education and
also the welfare of teachers employed in the
state sector. Some teachers specialise in teaching one subject while others teach a number of
subjects.
(a)Identify two reasons why a person may want to work in the state sector.
(b)Explain two reasons why a government may want to cut spending on education.
[2]
[4]
(c)Analyse the contribution that education can make in an economy.
[6]
(d)Discuss whether or not a worker would benefit by specialising.
[8]
12 During a recent recession in Europe, Spain had an unemployment rate of over 25%. This led to
high levels of emigration from Spain into higher-wage European economies such as Germany and
the UK. This has created both opportunities and problems in countries where immigration was
higher than emigration.
(a)Define unemployment.
[2]
(b)Explain two reasons for wage differentials between different economies.
[4]
(c)Analyse how a recession in one country could cause unemployment in another country. [6]
(d)Discuss whether the economic advantages of immigration into countries such as the UK and
Germany outweigh the economic disadvantages. [8]
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Permission to reproduce items where third-party owned material protected by copyright is included has been sought and cleared where possible. Every reasonable
effort has been made by the publisher (UCLES) to trace copyright holders, but if any items requiring clearance have unwittingly been included, the publisher will
be pleased to make amends at the earliest possible opportunity.
To avoid the issue of disclosure of answer-related information to candidates, all copyright acknowledgements are reproduced online in the Cambridge International
Examinations Copyright Acknowledgements Booklet. This is produced for each series of examinations and is freely available to download at www.cie.org.uk after
the live examination series.
Cambridge International Examinations is part of the Cambridge Assessment Group. Cambridge Assessment is the brand name of University of Cambridge Local
Examinations Syndicate (UCLES), which is itself a department of the University of Cambridge.
©
U
C
L
E
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20
18
04
55
/2
1/
O/
N/
18
Cambridge International Examinations
Cambridge International General Certificate of Secondary Education
0455/21
ECONOMICS
Paper 2 Structured Questions
October/November 2014
2 hours 15 minutes
No Additional Materials are required.
READ THESE INSTRUCTIONS FIRST
An answer booklet is provided inside this question paper. You should follow the instructions on the front cover of the
answer booklet. If you need additional answer paper ask the invigilator for a continuation booklet.
Section A
Answer Question 1.
Section B
Answer any three questions.
The number of marks is given in brackets [ ] at the end of each question or part question.
* 6 0 1 1 0 8 9 2 7 8 *
This document consists of 4 printed pages and 1 insert.
DC (SJF) 74030/4
© UCLES 2014
[Turn over
2
Section A
Answer this question.
10 Economic diversification in Mauritius
The economy of Mauritius has made good progress since the country achieved independence in
1968. The economy is becoming less specialised; there is now less of a reliance on sugar-cane,
and more importance has been attached to textiles, financial services, higher education and
tourism. For example, there is a target of 2 million visitors by 2015, up from 1 million in 2010. There
has also been rapid progress in technology services: information technology now employs some
15 000 people and contributes about 7% to Gross Domestic Product (GDP).
The country had an average economic growth rate of 4.6% per year from 2007–2010. In 2011 it
had an annual economic growth rate of 5%, a population of 1.3 million and a GDP of US$11.31
billion.
There has been substantial investment, encouraged by the presence of a well-educated, skilled
and multilingual labour force, new production techniques and political stability. Mauritius has also
benefited from membership of a common market of 19 countries in eastern and southern Africa
(COMESA), with a combined population of over 400 million. Taxation is relatively low with corporate
tax, value added (sales) tax and income tax all at 15%. India is the second largest investor in
Mauritius, after the United Kingdom. This investment has created a lot of jobs in Mauritius, reducing
the rate of unemployment to 7.8% in 2011.
The financial services sector has been liberalised, helped by the establishment of a stock exchange
in the country in 1989, which provides for the buying and selling of company stocks and shares
and government bonds. It is the only stock exchange in Africa that can list, trade and settle
transactions in several currencies. There are now over 130 companies listed on the Stock
Exchange of Mauritius.
Table 1: Labour force in Mauritius by occupation (2011)
Occupation
© UCLES 2014
% of Labour Force
Agriculture and fishing
9
Construction and industry
30
Transportation and communication
7
Restaurants and hotels
22
Finance
6
Other services
26
0455/21/O/N/14
3
(a) Define ‘Gross Domestic Product’.
[2]
(b) Using information from the extract, calculate the Gross Domestic Product per
Mauritius in 2011.
head in
[2]
(c) Discuss the extent to which economic growth is advantageous for a country.
[6]
(d) Using information from the extract, describe two functions that the stock exchange performs
in the Mauritian economy.
[4]
(e) Explain why governments impose taxes.
(f)
[4]
Using Table 1, calculate the percentage of the labour force in Mauritius employed in the
services (tertiary) sector.
[2]
(g) Using information from the extract, explain why there has been substantial investment by
foreign firms in Mauritius in recent years.
[4]
(h) Discuss whether an economy would benefit from becoming less specialised and having a
greater range of different industries.
[6]
Section B
Answer any three questions from this section.
2
All countries face the economic problem and so choices have to be made.
(a) Explain what is meant by the ‘economic problem’.
[2]
(b) Describe the two main features of the factor of production, ‘enterprise’.
[4]
3
Using a production possibility curve diagram, explain how the curve can be used to show the
consequences of a change in the allocation of resources between the production of two
goods.
[6]
(d) Discuss whether a decision by a government, with limited financial resources, to increase
expenditure on education by 25% over a three year period, is likely to be an appropriate
decision. [8]
3
A government decides to encourage the use of public transport by the provision of a subsidy.
(a) Using a demand and supply diagram, analyse the effect of a subsidy on the equilibrium price
and the equilibrium quantity in such a market.
[6]
(b) Explain what factors influence the price elasticity of demand for public transport.
[6]
(c) Discuss whether transport in a country should be provided by the public sector or by the
private sector.
[8]
© UCLES 2014
0455/21/O/N/14
[Turn over
4
4
5
Different workers can be paid vastly different amounts of money. Sometimes this can be due to the
level of skill that different workers have, and sometimes it can be influenced by whether a worker
is in a trade union or not.
(a) Describe three factors that can influence an individual’s choice of occupation.
[6]
(b) Explain two reasons why an unskilled worker is usually paid less than a skilled worker.
[4]
(c) Describe what is meant by a trade union.
[4]
(d) Discuss whether membership of a trade union will always be beneficial for a worker.
[6]
In Pakistan, some businesses, especially sole proprietorships and partnerships, are perfectly
competitive and other businesses are monopolies.
(a) Distinguish between a sole proprietor and a partnership.
6
[4]
(b) Explain how some large firms can experience economies of
diseconomies of scale.
scale, while others face
[6]
(c) Discuss whether a monopoly is always in the public interest.
[10]
Many countries experience different degrees of poverty and migration, but in all countries it can be
difficult to measure living standards.
(a) Distinguish between relative poverty and absolute poverty.
[2]
(b) Explain four reasons why some developing countries experience immigration.
[8]
(c) Discuss whether GDP per head is the best way to compare living standards in different
countries.
[10]
7
Trade protection and changes in exchange rates are two ways a country can try to reduce a current
account deficit of the balance of payments.
(a) Explain what is meant by ‘a current account deficit of the balance of payments’.
[4]
(b) Analyse why the depreciation of its currency’s exchange rate may lead to a reduction in a
country’s current account deficit.
[6]
(c) Describe two methods of trade protection that a country could use.
[4]
(d) Discuss whether trade protection should always be preferred to free trade.
[6]
Permission to reproduce items where third-party owned material protected by copyright is included has been sought and cleared where possible. Every reasonable
effort has been made by the publisher (UCLES) to trace copyright holders, but if any items requiring clearance have unwittingly been included, the publisher will
be pleased to make amends at the earliest possible opportunity.
Cambridge International Examinations is part of the Cambridge Assessment Group. Cambridge Assessment is the brand name of University of Cambridge Local
Examinations Syndicate (UCLES), which is itself a department of the University of Cambridge.
©
U
C
L
E
S
20
14
04
55
/2
1/
O/
N/
14
Cambridge International Examinations
Cambridge International General Certificate of Secondary Education
0455/22
ECONOMICS
Paper 2 Structured Questions
October/November 2014
2 hours 15 minutes
No Additional Materials are required.
READ THESE INSTRUCTIONS FIRST
An answer booklet is provided inside this question paper. You should follow the instructions on the front cover of the
answer booklet. If you need additional answer paper ask the invigilator for a continuation booklet.
Section A
Answer Question 1.
Section B
Answer any three questions.
The number of marks is given in brackets [ ] at the end of each question or part question.
* 4 3 3 6 9 0 5 0 3 8 *
This document consists of 5 printed pages, 3 blank pages and 1 insert.
DC (SJF) 74031/4
© UCLES 2014
[Turn over
2
Section A
Answer this question.
11 Fiscal policy and an ageing population in Japan
A sales tax was introduced in Japan in 1989, initially at a rate of 3%, and this was later increased
to 5% in 1997. The intention is to increase the rate to 8% in 2014 and to 10% in 2015. This will still
leave the tax rate below other countries. The tax increase in 1997 was not opposed by many of the
Japanese people, but since then Japan’s Gross Domestic Product (GDP) has fallen by 10%. It was
US$5069 billion in 2011. There has been deflation and this has badly affected tax revenue, which
has fallen 22% since 1997, leading to a doubling of the Japanese Government’s debt. The
Japanese Government was required to spend a great deal of money in March 2011 when a
devastating earthquake and tsunami (coastal flooding) struck the country’s north-eastern coast,
leaving 20 000 people dead or missing; it has been estimated that the rebuilding work will cost
US$260 billion. The Japanese Government’s debt is now at a very high level, as can be seen in
Table 1.
Table 1: Government debt as a percentage of GDP in 2011
Country
Government debt as a % of GDP
Japan
200
Greece
147
Italy
127
Iceland
120
Portugal
103
The Japanese Government has decided to increase sales tax to help pay for the pensions and
health care of the ageing population. The problem is that the higher tax rate might lead to a fall in
consumption, leading to an increase in unemployment. It may not help the country to get out of
recession. The average annual growth in Gross Domestic Product over the last five years has been
–0.3%.
Many Japanese people are anxious and worried about the future, especially fearing that the government
might try to reduce its public sector debt, leading to further increases in unemployment. The rate of
unemployment in Japan is currently above its average rate over the last ten years. Economists in Japan
are thinking of ways to promote economic growth to get the country out of recession, such as through
encouraging increased productivity and greater entrepreneurship.
It is certainly the case that there is a high savings ratio in Japan. This is despite the fact that interest
rates are at their lowest ever level. There is a strong tradition of saving in Japanese culture and
the level of interest rates is clearly only one influence on the decision of how much people save.
The ageing population is a particular problem in Japan. The percentage of the Japanese population
that is over the age of 60 is 30.5%. The life expectancy of Japanese men is now 80.1 years and
Japanese women 87.2 years, giving an average of 83.7 years. Table 2 shows how this compares
with a number of other countries.
© UCLES 2014
0455/22/O/N/14
3
Table 2: Average life expectancy in selected countries in 2011
Country
Average life expectancy
Japan
83.7
Singapore
81.0
United Arab Emirates
78.1
Kenya
56.9
Afghanistan
45.5
(a) Explain what is meant by ‘deflation’.
[2]
(b) Using information from the extract, calculate the level of government debt in US$ in Japan in
2011.
[1]
(c) Using information from the extract, explain two reasons why Japan’s government debt, as a
percentage of Gross Domestic Product, is so high.
[4]
(d) Discuss whether an increase in the rate of a sales tax will cause unemployment.
[6]
(e) Analyse how increased productivity and greater entrepreneurship could help an economy to
get out of recession.
[6]
(g) Using information from the extract, explain two influences, other than interest rates, on how
much people save.
[4]
(g) Using Table 2, calculate the difference between average life expectancy in Japan and Kenya.
[1]
(h) Discuss whether an ageing population is always a problem for an economy.
© UCLES 2014
0455/22/O/N/14
[6]
[Turn over
4
Section B
Answer any three questions from this section.
4
Factors of production, private and external costs and opportunity costs are all important concepts
in Economics.
(a) Using examples, define the factor of production, ‘capital’.
[4]
(b) Using examples, distinguish between a private cost and an external cost.
[4]
(c) Explain why scarcity gives rise to an ‘opportunity cost’.
[4]
(d) Discuss whether a decision to cut down trees for wood is an appropriate use of a scarce
resource.
[8]
5
Governments can influence economic behaviour in different ways, such as through taxes and
regulations.
(a) Explain why, in a market economy, some goods and services are over-consumed and some
under-consumed.
[6]
(b) Using a demand and supply diagram, analyse the effect of the imposition of an indirect tax on
the equilibrium price and equilibrium quantity of tobacco.
[6]
(c) Discuss whether government regulations on private producers always achieve their intended
aims.
[8]
4
Money, central banks and commercial banks all play a key role in economies.
(a) Explain how well money performs its function as a medium of exchange.
[5]
(b) Analyse the importance of a central bank in an economy.
[7]
(c) Discuss whether a country’s largest commercial banks should be nationalised and so become
public corporations, and taken under government control.
[8]
6
There are many large firms in most economies, but this does not mean that all small firms will
become large.
(a) Explain two reasons why a decision might be taken to change a private limited company into
a public limited company. [4]
(b) Explain two reasons why production by a firm might be changed from capital-intensive to
labour-intensive.
[5]
(c) Using examples, distinguish between vertical, horizontal and conglomerate integration.
[5]
(d) Discuss whether it is likely that the majority of small firms in an economy will remain small. [6]
© UCLES 2014
0455/22/O/N/14
5
7
Inflation and unemployment are two economic problems that governments usually have to deal
with.
(a) Distinguish between demand-pull and cost-push inflation.
[4]
(b) Explain three reasons why inflation is regarded as a serious economic problem.
[6]
(c) Distinguish between frictional and cyclical unemployment.
[4]
(d) Discuss whether there is likely to be a conflict between the government aims of low inflation
and low unemployment.
[6]
7 Specialisation can lead to a significant increase in output and international trade.
(a) Explain what is meant by ‘specialisation’.
[4]
(b) Describe the benefits and disadvantages of specialisation at a regional level.
[6]
(c) Discuss whether an economy will always benefit from an increase in international trade. [10]
© UCLES 2014
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© UCLES 2014
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Permission to reproduce items where third-party owned material protected by copyright is included has been sought and cleared where possible. Every reasonable
effort has been made by the publisher (UCLES) to trace copyright holders, but if any items requiring clearance have unwittingly been included, the publisher will
be pleased to make amends at the earliest possible opportunity.
Cambridge International Examinations is part of the Cambridge Assessment Group. Cambridge Assessment is the brand name of University of Cambridge Local
Examinations Syndicate (UCLES), which is itself a department of the University of Cambridge.
©
U
C
L
E
S
20
14
04
55
/2
2/
O/
N/
14
UNIVERSITY OF CAMBRIDGE INTERNATIONAL EXAMINATIONS
International General Certificate of Secondary Education
0455/21
ECONOMICS
Paper 2 Structured Questions
October/November 2013
2 hours
Additional Materials:
Answer Booklet/Paper
READ THESE INSTRUCTIONS FIRST
If you have been given an Answer Booklet, follow the instructions on the front cover of the
Booklet. Write your Centre number, candidate number and name on all the work you hand in.
Write in dark blue or black pen.
You may use a soft pencil for any diagrams, graphs or rough working.
Do not use staples, paper clips, highlighters, glue or correction fluid.
Section A
Answer Question 1.
* 9 9 6 3 8 4 3 7 5 8 *
Section B
Answer any three questions.
At the end of the examination, fasten all your work securely together.
The number of marks is given in brackets [ ] at the end of each question or part question.
This document consists of 4 printed pages.
DC (SJF) 59990
© UCLES 2013
[Turn over
2
Section A
Answer this question.
12 Oman is confident about the future
Oman has been experiencing relatively high rates of unemployment in recent years. ‘Throughout
the whole of the Middle East region, unemployment is a crucial issue and one we take very
seriously,’ one government minister stated.
The government is committed to creating as many new job opportunities as possible. It plans to
improve the educational level of its workforce through a number of education and training schemes.
Secondary and university education are encouraged and there are also vocational training
schemes. Attractive financial incentives, including generous grants and loans, are also available
for those who want to start up their own business.
In 2011, oil revenues made up 76% of Oman’s Gross Domestic Product and its government
recognised the need to diversify so that its economy was less dependent on oil. For example, it
has been developing its financial and tourism industries.
The most recent government budget showed a significant increase in government spending. It was
clear that the government’s fiscal policy was to continue spending on infrastructure development
in order to meet the needs of a nation developing rapidly.
(a) State two industries that have been growing in Oman.
[2]
(b) Describe two types of unemployment.
[4]
(c) Explain how fiscal policy can be used to support the development of a country such as Oman.
[6]
(d) Discuss the extent to which spending on education and training will reduce the rate of
unemployment in a country. [8]
© UCLES 2013
0455/21/O/N/13
3
Section B
Answer any three questions from this section.
(h) Economic decisions involve an opportunity cost. This can clearly be seen in a production possibility
curve.
(a) Describe why economic decisions involve an opportunity cost.
[4]
(b) Using a production possibility curve diagram, explain how it can show the concept of
opportunity cost.
[6]
(c) Discuss the extent to which the concept of opportunity cost is only of use to governments.
[10]
5
Prices in a market are determined by the conditions of demand and supply and these conditions
can change for a number of different reasons at any time.
(a) Describe what is meant by demand.
[2]
(b) Using a demand and supply diagram, analyse the likely effect of an increase in advertising on
the equilibrium price and equilibrium quantity of a product in a market.
[6]
(c) Describe the concept of price elasticity of demand.
[4]
(d) Discuss the extent to which knowledge of price elasticity of demand is of use to a business.
[8]
4
Money performs an important role in an economy.
Explain how money functions as (i) a unit of account and (ii) a standard for deferred payments.
[4]
(b) Analyse the role that commercial banks can perform in an economy.
[6]
(c) Discuss whether the rate of interest is the only influence on a person’s decision to borrow
money from a bank.
[10]
5The types of business organisation in India vary a great deal.
(a) Describe two features of a partnership.
[4]
(b) Explain why a partnership might become a private limited company.
[5]
(c) Distinguish between internal and external economies of scale.
[4]
(d) Discuss whether all small firms will eventually become large firms.
[7]
© UCLES 2013
0455/21/O/N/13
[Turn over
4
6
The extent of poverty, both absolute and relative, is a major problem in many countries.
(a) Describe what is meant by relative poverty.
[4]
(b) Explain why a government may not always have accurate knowledge of the level of poverty in
its country.
[6]
(c) Discuss whether encouraging multinational companies to locate in a country is likely to reduce
significantly the extent of poverty there.
[10]
7
Free trade is generally supported by economists, but certain industries may still be protected for
various reasons.
(a) Explain what is meant by free trade.
[4]
(b) Analyse how a tariff can be used as a method of trade protection.
[4]
(c) Explain why a government might decide to protect a strategic industry in its economy.
[4]
(d) Discuss whether the protection of an infant industry in an economy can ever be justified.
[8]
Permission to reproduce items where third-party owned material protected by copyright is included has been sought and cleared where possible. Every reasonable
effort has been made by the publisher (UCLES) to trace copyright holders, but if any items requiring clearance have unwittingly been included, the publisher will
be pleased to make amends at the earliest possible opportunity.
University of Cambridge International Examinations is part of the Cambridge Assessment Group. Cambridge Assessment is the brand name of University of
Cambridge Local Examinations Syndicate (UCLES), which is itself a department of the University of Cambridge.
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UNIVERSITY OF CAMBRIDGE INTERNATIONAL EXAMINATIONS
International General Certificate of Secondary Education
0455/22
ECONOMICS
Paper 2 Structured Questions
October/November 2013
2 hours
Additional Materials:
Answer Booklet/Paper
READ THESE INSTRUCTIONS FIRST
If you have been given an Answer Booklet, follow the instructions on the front cover of the
Booklet. Write your Centre number, candidate number and name on all the work you hand in.
Write in dark blue or black pen.
You may use a soft pencil for any diagrams, graphs or rough working.
Do not use staples, paper clips, highlighters, glue or correction fluid.
Section A
* 2 9 6 6 9 1 4 6 0 4 *
Answer Question 1.
Section B
Answer any three questions.
At the end of the examination, fasten all your work securely together.
The number of marks is given in brackets [ ] at the end of each question or part question.
This document consists of 4 printed pages.
DC (SJF) 59989/1
© UCLES 2013
[Turn over
2
Section A
Answer this question.
13 Prices rise faster than wages in the United Kingdom (UK)
Household incomes in the UK have suffered their largest fall in three decades. Real disposable
incomes fell by 0.8% in 2010.
Wages often rise faster than prices, but the problem in 2010 was that wage increases failed to
keep up with price increases. This meant that many people suffered effective pay cuts in real terms.
The rate of inflation, as measured by the UK Consumer Prices Index, was 4.0% in 2010.
The Bank of England, the UK’s central bank, stated that the rate of inflation would eventually start
to fall but that, in the meantime, people could expect to continue to suffer from a fall in real incomes
for the next few years.
It was thought that the Bank of England might raise interest rates to control inflation. However,
such a measure might badly affect many people who would have to pay more for their borrowing.
(a) Define the term ‘disposable incomes’.
[2]
(b) Explain how a consumer prices index is constructed.
[5]
(c) Explain how individual workers can try to increase their wages above the rate of inflation. [5]
(d) Discuss to what extent a rise in interest rates would be to the advantage of UK workers. [8]
© UCLES 2013
0455/22/O/N/13
3
Section B
Answer any three questions from this section.
6
An entrepreneur plans to cut down timber in a rainforest. The local community, however, are
concerned that the social costs will be greater than the social benefits.
(a) Define the factor of production, enterprise.
[4]
(b) Distinguish between the social benefits and the social costs involved in this example.
[6]
(c) Discuss whether a resource, such as a rainforest, should be conserved rather than used.
[10]
5
A person is choosing between different occupations and realises that there are both wage and nonwage factors that need to be taken into account.
(a) Describe the non-wage factors that can influence a person’s choice of occupation.
[4]
(b) Explain the different forms of payment that a worker can receive.
[4]
(c) Consider the likely changes in earnings over an individual’s lifetime.
[3]
(d) Discuss whether a worker in the services sector is always likely to receive a higher wage than
one in the manufacturing sector.
[9]
7
Perfect competition is one type of market structure with a number of distinctive characteristics. It is
often compared favourably with monopoly.
(a) Analyse three characteristics of perfect competition.
[6]
(b) Distinguish between a firm that is a price taker and one that is a price maker.
[4]
(c) Discuss whether pricing and output policies in perfect competition are more favourable to the
consumer than those in monopoly.
[10]
8
There are usually many different taxes in an economy and they can be divided into direct and
indirect taxes.
(a) Explain what is meant by a regressive indirect tax.
[4]
(b) Using a demand and supply diagram, analyse how an increase in tax on fuel can affect the
equilibrium price and equilibrium quantity of fuel. [6]
(c) Discuss the extent to which a direct tax, such as income tax, can affect the distribution of
income in an economy.
[10]
© UCLES 2013
0455/22/O/N/13
[Turn over
4
8
It is not only the size of a country’s population that concerns economists, but also its age
distribution.
(a) Describe three possible causes of the growth of a country’s population.
[6]
(b) Explain how the rate of population growth may differ between a developed country and a
developing country.
[4]
(c) Explain what is meant by an ageing population.
[2]
(d) Discuss to what extent an ageing population is a serious economic problem.
[8]
12 There are strong arguments in favour of free trade and yet many countries still use various forms
of trade protection.
(a) Explain three potential benefits of free trade.
[6]
(b) Distinguish between quotas and exchange controls as methods of trade protection.
[4]
(c) Explain how a subsidy could be used to protect an industry from foreign competition.
[4]
(d) Discuss whether the protection of a declining and inefficient industry in a country can ever be
justified.
[6]
Permission to reproduce items where third-party owned material protected by copyright is included has been sought and cleared where possible. Every reasonable
effort has been made by the publisher (UCLES) to trace copyright holders, but if any items requiring clearance have unwittingly been included, the publisher will
be pleased to make amends at the earliest possible opportunity.
University of Cambridge International Examinations is part of the Cambridge Assessment Group. Cambridge Assessment is the brand name of University of
Cambridge Local Examinations Syndicate (UCLES), which is itself a department of the University of Cambridge.
©
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2/
O/
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13
Cambridge International Examinations
Cambridge International General Certificate of Secondary Education
0455/22
ECONOMICS
Paper 2 Structured Questions
May/June 2018
2 hours 15 minutes
No Additional Materials are required.
READ THESE INSTRUCTIONS FIRST
An Answer Booklet is provided inside this Question Paper. You should follow the instructions on the front cover of
the Answer Booklet. If you need additional answer paper ask the invigilator for a Continuation Booklet.
Section A
Answer Question 1.
Section B
Answer any three questions.
The number of marks is given in brackets [ ] at the end of each question or part question.
* 9 5 9 7 4 0 0 1 2 7 *
This document consists of 5 printed pages, 3 blank pages and 1 Insert.
DC (SC/FC) 148196/2
© UCLES 2018
[Turn over
2
Section A
Answer this question.
1
Crisis in the ice cream market
Vanilla is used in the production of soft drinks, cakes and perfumes. Its main use, however, is in
the production of ice cream. Fig. 1 shows the different costs of making ice cream for one firm.
Fig. 1 The costs of producing ice cream for one firm
raw materials
including vanilla
other
wages
insurance
lighting rent
security
Madagascar is the world’s largest supplier of v 2016, economists expected the price of ice crea
130% in 2015. This was largely because of the poor harvests in Madagascar which reduced the
output of vanilla in 2015.
Ice cream is seen as a luxury product in most c one reason why producers do not always pass on higher
costs to consumers. In 2015, there were
a number of other changes in the production of ice cream including a rise in the productivity of
the workers.
As well as vanilla, Madagascar produces a number of other primary products including coffee and sugar.
Nearly 80% of the country’s labour force a relatively low Gross Domestic Product (GDP) per head and a
relatively low Human Development
Index (HDI) value as shown in Table 1. This limi
© UCLES 2018
0455/22/M/J/18
3
Table 1 GDP per head and HDI in selected countries in 2015
Country
GDP per head (US$)
HDI
Argentina
22 400
0.836
Bangladesh
3 600
0.570
Cuba
10 200
0.769
Egypt
11 500
0.690
Ghana
4 300
0.579
Madagascar
1 500
0.510
Half of Madagascar’s population live in poverty introducing a programme of cash benefits. It is hoped that
one effect of this will be to increase
school enrolment and attendance of the children of poor families. To increase economic growth,
the government has sold off a number of state-owned enterprises and is moving the economy
towards a market system.
(a) Identify two fixed costs of production in Fig. [2]1.
(b) Explain, using informationtworeasonswhyfromarisein theprice extract,ofvanilla
might not cause an increase in the price of ice cream.
[4]
(c) Analyse, using a demand and supply diagram, the effect of an increase in income on the
market for ice cream.
[5]
14 Analyse the extent to which the relationship head and their HDI value is the expected[4]one.
(e) Discuss whether or not a government should encourage people to save more.
[5]
(e) Explain, using information from the extract,
poverty.
[4]
(g) Discuss whether or not a market system benefits consumers.
[6]
© UCLES 2018
0455/22/M/J/18
[Turn over
4
Section B
Answer any three questions in this section.
7
Swaziland is a small African country where six small and use little capital equipment. In October 2015 it
opened a new airport. Some economists suggest that the building of the airport involved a high
opportunity cost and caused a range of external costs. The building of the airport is a developing into a
developed country.
(a) What may be the opportunity cost of building an airport?
[2]
(b) Explaintworeasons why a government would want to turn its country from a developing into
a developed country.
[4]
(c) Analyse the external costs that can be caused[6]
(d) Discuss whether people would prefer to buy a product from a small firm or a large firm.
6
[8]
Farms in the USA are getting larger. One dairy farm in the state of Indiana has over 38 000 cows.
Farms in the USA compete with farms in both developed and developing countries. The value of
the farms’ exports of milk appears in the trade balance of payments.
(a) Identify two examples of capital goods that may[2]be u
(b) Explain how a country could have a trade in go
on the balance of payments.
[4]
(c) Analyse the economies of scale from which a farm may benefit.
[6]
(d) Discuss whether or not developing countries benefit from producing mainly primary products.
[8]
8
In the UK, bus journeys outside London have fallen by nearly 40% since 1980. This fall in demand
has been largely due to a rise in bus fares, a rise in income and changes in the price and quality
of substitutes. On some routes there are monopolies operating and this lack of competition can
push up the price.
(a) Define a substitute and give an example.
[2]
(b) Explaintwoadvantages a firm may gain from being a monopoly.
[4]
(c) Analyse how price elasticity of demand for a product influences the revenue a firm receives.
[6]
(d) Discuss whether or not a government should subsidise bus transport.
© UCLES 2018
0455/22/M/J/18
[8]
5
9
In October 2015, the Chinese government switched from its one child policy to a two child policy
partly because of the challenges caused by an ageing population. The birth rate was falling anyway
due to rising female participation in the labour force, improvements in education, later marriages
and the rapidly rising price of housing.
(a) Identify two causes of an ageing population.
(b) Explain why the price of housing
6
[2]
may increase[4]
(c) Analyse why more women may enter the labour force.
[6]
(d) Discuss whether or not a rise in the birth rate will benefit an economy.
[8]
In February 2016, share prices on stock exchan number of reasons for this; including concerns about the
slowdown in world growth, the possibility
of deflation and unemployment, and fears that some commercial banks could go out of business.
(a) Define commercial bank.
[2]
(b) Explain how a stock exchange could encourage[4]
(c) Analyse what can cause deflation.
(d)
[6]
Discuss whether or not government policy measures to reduce unemployment will cause
inflation.
9
[8]
World output has grown in recent years, but a nu
The removal of trade restrictions such as import tariffs has slowed down, reducing the growth of
world trade.
(a) Define import tariff.
[2]
(b) Explaintwobenefits of an increase in world output.
[4]
13 Analyse how a recession may reduce a country’[6]
14 Discuss whether or not a developing country will benefit from the removal of trade restrictions.
[8]
© UCLES 2018
0455/22/M/J/18
6
BLANK PAGE
© UCLES 2018
0455/22/M/J/18
7
BLANK PAGE
© UCLES 2018
0455/22/M/J/18
8
BLANK PAGE
Permission to reproduce items where third-party owned material protected by copyright is included has been sought and cleared where possible. Every reasonable
effort has been made by the publisher (UCLES) to trace copyright holders, but if any items requiring clearance have unwittingly been included, the publisher will
be pleased to make amends at the earliest possible opportunity.
To avoid the issue of disclosure of answer-related information to candidates, all copyright acknowledgements are reproduced online in the Cambridge International
Examinations Copyright Acknowledgements Booklet. This is produced for each ser the live examination series.
Cambridge International Examinations is part of the Cambridge Assessment Group Examinations Syndicate (UCLES), which is itself a department of the University
Cambridge International Examinations
Cambridge International General Certificate of Secondary Education
©
U
C
L
E
S
20
18
0455/21
ECONOMICS
04
55
/2
2/
M/
J/
18
Paper 2 Structured Questions
May/June 2018
2 hours 15 minutes
No Additional Materials are required.
READ THESE INSTRUCTIONS FIRST
An Answer Booklet is provided inside this Question Paper. You should follow the instructions on the front cover of
the Answer Booklet. If you need additional answer paper ask the invigilator for a Continuation Booklet.
Section A
Answer Question 1.
Section B
Answer any three questions.
The number of marks is given in brackets [ ] at the end of each question or part question.
* 1 9 2 0 3 7 6 1 2 1 *
This document consists of 5 printed pages, 3 blank pages and 1 Insert.
DC (SC/FC) 148195/2
© UCLES 2018
[Turn over
2
Section A
Answer this question.
15 Banking and unemployment in Morocco
Morocco’s banking industry has been described as largest commercial banks, but three out of nineteen
control more than two-thirds of the market.
These three have grown mostly through mergers and it is expected more mergers will occur
between Moroccan banks in the future.
The banks make use of brand names, set their own interest rates on loans and provide some
different services. The larger banks tend to lend to large firms. Small and medium sized firms find
it more difficult to get loans.
More than 60% of the population now make use of the services of commercial banks. The
proportion of families opening savings accounts at commercial banks is increasing.
Moroccan banks now have branches in 22 African countries as well as a number of European
countries. They are also expanding in Morocco, creating more jobs. Morocco has a relatively high
unemployment rate. Fig. 1 shows the unemployment rate in 2015 in a range of African countries
including Benin, a relatively poor country. Benin has a large labour-intensive, subsistence farming
sector. Fig. 1 also shows youth unemployment and population growth. Unemployment rates vary
between different groups. Youth unemployment is often twice the rate of the overall unemployment
rate.
Fig. 1 The unemployment rate, youth unemployment rate and population growth rate
in selected African countries in 2015
45
40
rat
(%)
e
35
30
25
20
15
10
5
0
Benin
Egypt
Unemployment rate
Morocco
Nigeria
Youth unemployment rate
Uganda
Population growth rate
In Morocco, the population is increasing at a faster rate than new jobs are being created. The rising
unemployment rate is affecting wage rates in the country. As with unemployment, wage rates vary
between different groups. Older workers, for example, tend to be paid more than younger workers.
© UCLES 2018
0455/21/M/J/18
3
(a) Identify, using information from the extract, two functions of a commercial bank.
[2]
(b) Explain, using information from the extract, two reasons why the banking market in Morocco
is not an example of perfect competition.
[4]
(c) Analyse why a commercial bank may prefer to sell its services in foreign countries rather than
in its home country.
[5]
(d) Analyse whether the information in Fig. 1 supports the view that:
(i) countries with high population growth rates have a high unemployment rate
(f)
[2]
the youth unemployment rate is usually twice that of the overall unemployment rate. [2]
(e) Discuss whether or not older workers are always paid more than younger workers.
8
[5]
Explain, using information from the extract, one reason why a relatively poor country may
have a low unemployment rate.
[4]
(g) Discuss whether or not commercial banks in Morocco would benefit from further mergers. [6]
© UCLES 2018
0455/21/M/J/18
[Turn over
4
Section B
Answer any three questions in this section.
7
In England football stadiums are usually built and financed by the private sector, but in some
countries the stadiums are built and financed by the government. Many football stadiums in the
English Premier League are full on match days. In the short run the supply of seats is perfectly
inelastic. The football clubs could actually raise prices, still sell their tickets and so raise their profits.
Premier League footballers currently receive very high wages.
(a) Define perfectly inelastic supply.
[2]
(b) Explain two reasons why a firm may not aim to earn maximum profit.
[4]
(c) Analyse why Premier League footballers receive very high wages.
[6]
(d) Discuss whether or not a government should spend some of its tax revenue on building sports
stadiums. [8]
9
In 2014, the government of Kazakhstan devalued its currency, the tenge. A year later the country
still had a current account deficit. Therefore, in 2016 it considered adopting a floating exchange
rate which might help to remove the deficit. However, it had concerns that this might affect the
country’s inflation rate which was already high
(a) Define devaluation.
[2]
(b) Explain two advantages of a floating exchange rate.
[4]
(c) Analyse how fiscal policy measures could reduce inflation.
[6]
(d) Discuss whether or not a reduction in a current account deficit on the balance of payments
will benefit an economy.
[8]
10 In 2015, the Tripartite Free Trade Area (TFTA) was established. It covers 26 countries and is the
biggest free trade area in Africa. Removing trade restrictions can enable economies to take
greater advantage of economies of scale. Some e would be more beneficial and would do more to reduce
a current account deficit on the balance of payments and raise living standards.
(a) Define economies of scale.
[2]
(b) Explain two benefits consumers may gain from free trade.
[4]
10 Analyse how reducing transport costs could[6] in
11 Discuss whether or not raising living standards is the most important economic objective for
developing countries.
[8]
© UCLES 2018
0455/21/M/J/18
5
15 The government of Slovenia has introduced a range of supply-side policy measures to influence
the country’s inflation rate. Among other facto membership and strength.
(a) Identify two price indices.
[2]
(b) Explain two supply-side policy measures.
[4]
(c) Analyse why a government may want to reduce[6] i
(d) Discuss whether or not increasing the strength of trade unions will benefit an economy.
[8]
(e) More than 80% of Qatar’s population are immigra country’s demand for labour. As well as a short drinking
water. The government has run public campaigns to stop people using their free supply
of drinking water to fill their swimming pools and water their gardens. In 2016, the government increased its
spending to increase the country’s
8
(a) Define net immigration.
[2]
(b) Explain how market forces would respond to a shortage of drinking water.
[4]
(c) Analyse what determines the demand for labour.
[6]
(d) Discuss whether or not increased government spending will increase economic growth.
[8]
More governments are imposing taxes on unhealthy food and drinks. Such taxes are usually
regressive. Some of these governments are also increasing their spending on healthcare. In other
countries healthcare is provided by the private sector. The number of state-owned enterprises is
declining in a number of countries due to privatisation.
(a) Define regressive tax.
[2]
(b) Explain why the social benefit of healthcare is greater than the private benefit.
[4]
(c) Analyse why a government imposes taxes.
[6]
(d) Discuss whether or not consumers are likely to benefit from state-owned
becoming private sector firms.
© UCLES 2018
enterprises
[8]
0455/21/M/J/18
6
BLANK PAGE
© UCLES 2018
0455/21/M/J/18
7
BLANK PAGE
© UCLES 2018
0455/21/M/J/18
8
BLANK PAGE
Permission to reproduce items where third-party owned material protected by copyright is included has been sought and cleared where possible. Every reasonable
effort has been made by the publisher (UCLES) to trace copyright holders, but if any items requiring clearance have unwittingly been included, the publisher will
be pleased to make amends at the earliest possible opportunity.
To avoid the issue of disclosure of answer-related information to candidates, all copyright acknowledgements are reproduced online in the Cambridge International
Examinations Copyright Acknowledgements Booklet. This is produced for each series of examinations and is freely available to download at www.cie.org.uk after
the live examination series.
Cambridge International Examinations is part of the Cambridge Assessment Group. Cambridge Assessment is the brand name of University of Cambridge Local
Examinations Syndicate (UCLES), which is itself a department of the University of Cambridge.
©
U
C
L
E
S
20
18
04
55
/2
1/
M/
J/
18
Cambridge International Examinations
Cambridge International General Certificate of Secondary Education
0455/22
ECONOMICS
Paper 2 Structured Questions
May/June 2017
2 hours 15 minutes
No Additional Materials are required.
READ THESE INSTRUCTIONS FIRST
An Answer Booklet is provided inside this Question Paper. You should follow the instructions on the front cover of
the Answer Booklet. If you need additional answer paper ask the invigilator for a Continuation Booklet.
Section A
Answer Question 1.
Section B
Answer any three questions.
The number of marks is given in brackets [ ] at the end of each question or part question.
* 5 2 3 3 6 6 3 8 1 9 *
This document consists of 5 printed pages, 3 blank pages and 1 Insert.
DC (RW/SG) 127626/4
© UCLES 2017
[Turn over
2
Section A
Answer this question.
16 Mining diamonds in Botswana
Botswana
is
the
world’s
largest
producer
GrossbillionDomesticandProductfor80%(G exports.
of
dia
third
of
the
country’s
The country currently gets most of its income from mining and selling rough (uncut) diamonds.
It receives onlycaratUS$700roughfor diamond1.5. The diamond finished, usually in other countries. India is
the market leader in cutting and polishing diamonds.
The cost of cutting and polishing diamonds in India is only a quarter of the cost in Botswana.
The global average caratcost ofdiamondfinishingUSa$80001.5. The customer with a 25% profit margin.
Botswana is trying to develop industries connected with diamond mining, such as cutting, polishing
and jewellery making including diamond rings. Fig. 1 shows how the global market for diamond
rings changed in 2015.
price of
diamond
S
rings
P2
P1
D1
O
Q Q
1
2
D2
quantity of diamond rings
Fig. 1 The global market for diamond rings in 2015
The Botswanan Government has also encouraged the in Gaborone, the capital of Botswana. Some
government ministers, however, are concerned that Botswana is too dependent on diamonds. They warn
that there is a finite supply of diamonds and
urge the government to encourage diversification.
As well as diamonds, the country has a number of other strengths. It has good infrastructure, a
developed education system and free hospital treatment.
© UCLES 2017
0455/22/M/J/17
3
(a) Identify, using information from the extract, two reasons why a foreign diamond company
may set up in Botswana.
[2]
(b) Explain two benefits that a country may gain from the presence of a foreign multinational
company.
[4]
(c) Calculate, using information from the extract:
(g) the value of diamonds produced in Botswana[2]
(ii) the average caratprice diamondof1.5in 2015.
[2]
(d) Analyse why a country could have lower production costs for a particular good than another
country. [5]
(e) Discuss whether Botswana should mine all its diamonds and sell them as quickly as possible.
[5]
9
Explain, using information from the extract and Fig. 1, what happened to the market for
diamond rings in 2015.
[4]
(g) Discuss the economic arguments for and against providing free hospital treatment to patients.
[6]
© UCLES 2017
0455/22/M/J/17
[Turn over
4
Section B
Answer any three questions from this section.
2
Indonesia’s output is influenced by its factor diagram can be used to show this relationship between
resources and output. Indonesia does
have extensive fishing waters but does not actually catch many fish. Most of its fishing firms are
small and they compete against much larger foreign firms. These larger foreign firms have been
attracted into Indonesia’s waters because of in demand for different types of fish has changed in the last
few years.
8
(a) Identify the two human factors of production.
[2]
(b) Explain two economic concepts shown by a production possibility curve diagram.
[4]
(c) Analyse why demand for a product may become more elastic over time.
[6]
(d) Discuss whether small firms can compete
[8]succe
In 2015 some German commercial banks reduced th accounts. The German Government was hoping that
such a change would encourage more Germans to buy shares in German firms. The ability of German
firms to buy capital goods would
be increased if they could sell more shares or borrow more from commercial banks.
(a) Identify two ways a commercial bank differs from a central bank.
[2]
(b) Explain the connection between opportunity cost and the purchase of shares.
[4]
10 Analyse how a fall in the rate of interest[6] ma
11 Discuss whether an increase in spending on capital goods will help to achieve the aims of
government policies.
[8]
11 More people are becoming billionaires at the same time that other people are living in poverty.
While some people enjoy luxuries others lack even basic essentials. To enable more people to
achieve a minimum living standard some economists support the redistribution of income.
What is meant by ‘redistribution of income’?[2]
(b) Explain two reasons why the rich spend more in total than the poor.
[4]
(c) Analyse why the elimination of absolute poverty would not solve the economic problem. [6]
(d) Discuss whether Gross Domestic Product (GDP) per head is the best measure of comparative
living standards.
[8]
© UCLES 2017
0455/22/M/J/17
5
5
Between 2009 and 2014, Delaware was the only US state to experience a fall in earnings. In the
same period, however, it had an unemployment rate below the national average and a higher
proportion of workers belonging to a trade union. The state is forecast to have one of the fastest
ageing populations of any state in the USA in the next twenty years.
(a) Define a ‘trade union’.
[2]
(b) Explain two possible causes of
a fall in a worker’s[4]
(c) Analyse the causes of unemployment.
[6]
(d) Discuss whether an ageing population benefits[8]
6
In 2015 the world saw many changes in demand an new ways to transfer money and there was an
increase in the number of stock exchanges. Some governments also raised the school-leaving age, that is
the minimum age at which children are
legally allowed to leave school.
(a) What is sold on a stock exchange?
[2]
(b) Explain how money helps specialisation and trade to occur.
[4]
(c) Analyse how advances in technology can affect demand and supply.
[6]
(d) Discuss the economic arguments for and against a government raising the school-leaving
age.
7
[8]
Spain has had one of the highest unemployment r unemployed had been out of work for at least a
introduced a range of policy measures, including increased government spending, to reduce unemployment
and poverty. It has also tried to help firms make the supply of their products more
elastic.
(a) Identify two problems that prevent a worker finding employment.
[2]
(b) Explain two costs of long-term unemployment to those who are unemployed.
[4]
(c) Analyse why price elasticity of supply can differ between products.
[6]
(d) Discuss whether increasing government spendin[8]
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Permission to reproduce items where third-party owned material protected by copyright is included has been sought and cleared where possible. Every reasonable
effort has been made by the publisher (UCLES) to trace copyright holders, but if any items requiring clearance have unwittingly been included, the publisher will
be pleased to make amends at the earliest possible opportunity.
To avoid the issue of disclosure of answer-related information to candidates, all copyright acknowledgements are reproduced online in the Cambridge International
Examinations Copyright Acknowledgements Booklet. This is produced for each series of examinations and is freely available to download at www.cie.org.uk after
the live examination series.
Cambridge International Examinations is part of the Cambridge Assessment Group. Cambridge Assessment is the brand name of University of Cambridge Local
Examinations Syndicate (UCLES), which is itself a department of the University of Cambridge.
©
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17
Cambridge International Examinations
Cambridge International General Certificate of Secondary Education
0455/21
ECONOMICS
Paper 2 Structured Questions
May/June 2017
2 hours 15 minutes
No Additional Materials are required.
READ THESE INSTRUCTIONS FIRST
An Answer Booklet is provided inside this Question Paper. You should follow the instructions on the front cover of
the Answer Booklet. If you need additional answer paper ask the invigilator for a Continuation Booklet.
Section A
Answer Question 1.
Section B
Answer any three questions.
* 7 5 0 5 7 2 8 4 2 0 *
The number of marks is given in brackets [ ] at the end of each question or part question.
This document consists of 5 printed pages, 3 blank pages and 1 Insert.
DC (LK/FD) 127509/4
© UCLES 2017
[Turn over
2
Section A
Answer this question.
17 The New Suez Canal
In August 2015 the Egyptian Government opened a second Suez Canal, alongside the original
canal, to enable more and larger ships to sail from the Mediterranean Sea to the Gulf of Suez. It
cost more than US$8 billion to build, with land having to be purchased, capital equipment acquired
and wages paid to the workers building the canal. This was at a time when there were calls for
increased spending on healthcare, in particular improving the quality of public hospitals and
improving education, especially adult literacy.
The Egyptian Government believes that the canal will attract more ships, both those carrying goods
and those carrying people. The number of goods and people using sea transport is influenced by
a variety of factors. These include the speed of the transportation, the level of economic activity
and the price of other forms of transport. Some goods have to be transported quickly, and recent
years have shown how sensitive demand for sea transport is to recessions and economic booms.
Fig. 1 shows how the market for sea transport has recently been affected by the change in the
market for air transport.
S
price of sea
transport
P1
P
2
D2
O
QQ
2
1
D1
quantity of
sea transport
Fig. 1 The market for sea transport
The Egyptian Government is hoping that new industries connected to the shipping industry will be built
along the canal. Developing infant industr rate, which in 2015 was 12.5%.
In 2015, the country had a population of 90 million, a population growth rate of 1.5% and a labour force of
28 million. Its death rate was fallin equivalent to 4% of Gross Domestic Product (GDP). 2015 also saw GDP
at US$280 billion with
an economic growth rate of 5%.
© UCLES 2017
0455/21/M/J/17
3
(h) Define ‘private cost’ and give an example[2]from
(i)
Explain opportunity cost and give an example[4]
(j)
Calculate, using information from the extract
(i) the number of people unemployed in Egypt in 2015
[2]
(ii) the amount the Egyptian Government spent on healthcare in 2015.
[2]
(d) Analyse how a global recession could affect demand for sea transport.
[5]
(e) Discuss whether a fall in a country’s death population size. [5]
10 Explain, using information from the extract a
transport as a result of the fall in the price of air transport.
[4]
(g) Discuss whether a government should protect infant industries.
[6]
Section B
Answer any three questions from this section.
9
Sales of bottled water in China doubled between 2010 and 2015. In 2013 China overtook the USA
as the biggest market for water by volume, but not value as the price of a bottle was higher in the
USA. The increase in global consumption of bottled water has increased the size of firms producing
bottled water but has also increased pollution.
Why is pollution an example of market failure[2]
8
(b) Explaintwocauses of a shift of a supply curve to the right.
[4]
(c) Analyse why the price of a product may be higher in the USA than China.
[6]
(d) Discuss whether large firms or small firms benefit consumers more.
[8]
Money and banking are closely linked. Money performs a number of functions, including being a
standard for deferred payments, and it is used to pay workers, often directly into their bank
accounts. The amount workers earn differs depending on the industry in which they work. Bank
lending from both private sector and public sector (state-owned) banks has increased in some
countries in recent years.
Define ‘a standard for deferred payments’[2].
Explaintworeasons why agricultural workers may be paid less than manufacturing workers.
[4]
(c) Analyse why private sector banks may earn higher profits than public sector banks.
[6]
(d) Discuss whether an increase in bank lending will benefit an economy.
[8]
© UCLES 2017
0455/21/M/J/17
[Turn over
4
4
In 2012 oil was discovered in Kenya, but in 2014 oil in the Arabuko Sokoke forest in the country and tertiary
sectors are changing. The amount of capital goods in the country is also increasing.
(a) Define the ‘secondary sector’ and give an[2]exa
(b) Explaintwobenefits that an economy may gain as a result of the discovery of oil on its land.
[4]
16 Analyse why the social costs of oil extractio[6]
17 Discuss whether a country would benefit from devoting more resources to producing capital
goods.
[8]
(f)
In June 2015 the value of the Swiss franc rose by 30% against the euro. The countries that
Switzerland exports to are changing. Exports to in importance, while exports to Germany, Italy appreciation
of the exchange rate is a fall in t
(a) Define ‘inflation’.
[2]
(b) Explain why a country’s exports to one countr decrease. [4]
(c) Analyse how an appreciation of the exchange[6] r
(d) Discuss whether a low inflation rate always benefits an economy.
9
[8]
Japan’s birth rate is falling. Its population i country’s population. This has an impact on the on pensions. Its
government is considering meas encourage immigration.
(a) Identify two causes of a fall in a country’s birth[2] r
(b)
Explaintworeasons why more educated people tend to live longer than less educated
people.
[4]
(c) Analyse, using a production possibility curve diagram, what effect net immigration is likely to
have on an economy.
[6]
(d) Discuss whether the government of a country should reduce the pensions it pays to retired
people.
© UCLES 2017
[8]
0455/21/M/J/17
5
7
In recent years there has been an increase in increased. Bus fares and food have become more was
planning to cut its spending by US$8.3 billion.
(a) Define ‘indirect taxes’ and give an example[2].
(b) Explaintwocauses of an increase in demand for bus transport.
[4]
(c) Analyse how a reduction in government spending on education could cause unemployment.
[6]
(d) Discuss whether a government should increase[8]
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0455/21/M/J/17
7
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Permission to reproduce items where third-party owned material protected by copyright is included has been sought and cleared where possible. Every reasonable
effort has been made by the publisher (UCLES) to trace copyright holders, but if any items requiring clearance have unwittingly been included, the publisher will
be pleased to make amends at the earliest possible opportunity.
To avoid the issue of disclosure of answer-related information to candidates, all copyright acknowledgements are reproduced online in the Cambridge International
Examinations Copyright Acknowledgements Booklet. This is produced for each ser the live examination series.
Cambridge International Examinations is part of the Cambridge Assessment Group Examinations Syndicate (UCLES), which is itself a department of the University
Cambridge International Examinations
Cambridge International General Certificate of Secondary Education
©
U
C
L
E
S
20
17
0455/22
ECONOMICS
04
55
/2
1/
M/
J/
17
Paper 2 Structured Questions
May/June 2016
2 hours 15 minutes
No Additional Materials are required.
READ THESE INSTRUCTIONS FIRST
An answer booklet is provided inside this question paper. You should follow the instructions on the front cover of the
answer booklet. If you need additional answer paper ask the invigilator for a continuation booklet.
Section A
Answer Question 1.
Section B
Answer any three questions.
The number of marks is given in brackets [ ] at the end of each question or part question.
* 4 7 5 3 1 3 7 6 7 5 *
This document consists of 5 printed pages, 3 blank pages and 1 Insert.
DC (KN) 112824/3
© UCLES 2016
[Turn over
2
Section A
Answer this question.
1
Crisis in the chocolate market
There are concerns that the price of chocolate could rise significantly in the next few years. This is
because of increasing demand for chocolate, particularly in emerging countries, and supply
problems in the countries that produce cocoa beans.
Cocoa beans, the main ingredient in chocolate, are grown mainly in the west coast of Africa by
small farms using labour-intensive methods. In 2012 Côte d’Ivoire (Ivory Coast) produced 37% of
the world’s output of cocoa beans, followed by Indonesia which produced 13%.
Côte d’Ivoire is becoming well known for supplying good quality cocoa beans. Concentrating on
supplying the product its resources are most suited to has increased output in the country. Gross
Domestic Product per head rose to US$1240 in 2013. Some farmers and farm workers, however,
still live on less than US$2 a day.
In Indonesia, the income of most cocoa farmers and farm workers increased along with the rise in
the country’s average income between 2013 and 2014. Their purchasing power was, however,
affected by the consumer prices index rising from 108.0 in 2013 to 115.2 in 2014. While people’s
medical care in Indonesia is improving with more doctors per head, the government is seeking to
raise education standards.
Among the problems being experienced by cocoa bean producers are an ageing labour force, with
the industry experiencing difficulties attracting young farmers and farm workers. The industry also
regularly experiences problems caused by pests and diseases, including black pod disease. At the
same time people in Asia, particularly China, are eating more chocolate and drinking more
chocolate drinks. People in the United States of America and the European Union are also eating
more chocolate, although concerns about the health effects of eating large quantities of chocolate
are beginning to affect demand. For many people, however, chocolate is addictive. Chocolate
producers seek to take advantage of this by increasing the gap between revenue and costs. Most
chocolate producers come from developed countries and most are public limited companies trying
to keep their shareholders happy. These producers take advantage of their market power to keep
the price they pay for cocoa beans relatively low whilst the price they charge to consumers who
buy their chocolate is kept relatively high.
© UCLES 2016
0455/22/M/J/16
3
(a) Using information from the extract, identify two indicators of improved living standards in
Indonesia.
[2]
(b) Explain whether the extract suggests the demand for chocolate is price-elastic or priceinelastic in developed countries.
[2]
(c) Using information from the extract, explain two reasons why cocoa bean farmers do not use
much capital equipment.
[4]
(d) Calculate the rate of inflation in Indonesia in 2014.
[3]
(e) Analyse two benefits of specialisation referred to in the extract.
[4]
(f)
Discuss whether the price of chocolate is likely to increase in the future.
[5]
(g) Using information from the extract, explain what is likely to be the main goal of chocolate
producers.
[4]
(h) Discuss whether free trade always benefits producers.
© UCLES 2016
0455/22/M/J/16
[6]
[Turn over
4
Section B
Answer any three questions in this section.
18 In 2013 the Mexican Government was considering imposing a sales tax of one peso per litre on
the price of fizzy drinks. The Government wanted to discourage people from consuming too many
fizzy drinks – 40% more fizzy drinks per person are consumed than in the United States of America.
A number of multinational fizzy drinks companies have threatened to leave the country if taxes are
increased.
(a) Giving an example, define ‘a sales tax’.
[2]
(b) Explain the difference between private costs and social costs.
[4]
(k) Using a demand and supply diagram, analyse the effect of imposing a tax on fizzy drinks. [6]
(l)
Discuss whether a country’s economy would be harmed if multinational companies moved
out.
[8]
11 It is forecast that India’s working-age population aged between 15 and 64 will rise by 125 million
between 2015 and 2025 and by a further 103 million over the following decade. Of course, not
everyone of working age will be in work or will be seeking work. Changes in population and the
labour force affect a government’s ability to achieve its economic aims.
(a) Identify two government economic aims.
[2]
(b) Explain two reasons why someone may be of working age but not in the labour force.
[4]
(c) Analyse what may cause an increase in a country’s labour force.
[6]
(d) Discuss whether an economy will benefit from having a younger labour force.
[8]
10 Tuk-tuks, three-wheeled motorised rickshaws, are driven in a number of countries. India is the
largest producer of the vehicle. India’s largest tuk-tuk producing firm faces competition from firms
at home and from imported tuk-tuks. The industry is becoming more capital-intensive and
competitive but is still some way from perfect competition.
(a) Define ‘capital-intensive’.
[2]
(b) Explain two characteristics of perfect competition.
[4]
(c) Analyse two internal diseconomies of scale that a large firm may experience.
[6]
(d) Discuss whether consumers would benefit from an increase in imports.
[8]
© UCLES 2016
0455/22/M/J/16
5
12 In July 2016 the Sveriges Riksbank, Sweden’s central bank, cut the rate of interest to 0.25%. The
Swedish economy was experiencing deflation, with the weighted price index falling by 0.2% on the
previous year. The fall in the rate of interest reduced the value of the krona, Sweden’s currency,
and was expected to end deflation.
(a) Define a ‘weighted price index’.
[2]
(b) Explain two ways in which a central bank differs from a commercial bank.
[4]
(c) Analyse how a fall in the value of a currency may increase a current account surplus on the
balance of payments.
[6]
(d) Discuss whether a cut in the rate of interest would end deflation.
[8]
12 Deposits in banks in Dubai rose by 40% in 2013. More financial companies are locating in Dubai.
The growth in its financial sector is being accompanied by horizontal mergers between financial
companies and workers becoming more specialised. The economy is becoming richer but the
economic problem will never be solved here or elsewhere in the world.
(a) Why can the economic problem never be solved?
[2]
(b) Explain two reasons why workers specialising can reduce the average cost of production.
[4]
(c) Analyse how an increase in bank lending can increase economic growth.
[6]
(d) Discuss whether consumers benefit from horizontal mergers.
[8]
12 Countries have to decide how to use their scarce resources. A number of countries are devoting
more of their resources to tourism. Some of the jobs in the industry are, however, low-paid and
offer little job security. The average age of workers employed, for example, in hotels is relatively
young although some older workers have spent their working life in the hotel industry.
(a) What is meant by ‘scarce resources’?
[2]
(b) Explain two reasons why someone may be willing to do a low-paid job with little job security.
[4]
(c) Analyse how the spending, saving and borrowing patterns of young workers may differ from
older workers.
[6]
(d) Discuss whether developing countries should encourage foreign tourism.
© UCLES 2016
0455/22/M/J/16
[8]
6
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0455/22/M/J/16
7
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© UCLES 2016
0455/22/M/J/16
8
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Permission to reproduce items where third-party owned material protected by copyright is included has been sought and cleared where possible. Every reasonable
effort has been made by the publisher (UCLES) to trace copyright holders, but if any items requiring clearance have unwittingly been included, the publisher will
be pleased to make amends at the earliest possible opportunity.
To avoid the issue of disclosure of answer-related information to candidates, all copyright acknowledgements are reproduced online in the Cambridge International
Examinations Copyright Acknowledgements Booklet. This is produced for each series of examinations and is freely available to download at www.cie.org.uk after
the live examination series.
Cambridge International Examinations is part of the Cambridge Assessment Group. Cambridge Assessment is the brand name of University of Cambridge Local
Examinations Syndicate (UCLES), which is itself a department of the University of Cambridge.
©
U
C
L
E
S
20
16
04
55
/2
2/
M/
J/
16
Cambridge International Examinations
Cambridge International General Certificate of Secondary Education
0455/21
ECONOMICS
Paper 2 Structured Questions
May/June 2016
2 hours 15 minutes
No Additional Materials are required.
READ THESE INSTRUCTIONS FIRST
An answer booklet is provided inside this question paper. You should follow the instructions on the front cover of the
answer booklet. If you need additional answer paper ask the invigilator for a continuation booklet.
Section A
Answer Question 1.
Section B
Answer any three questions.
The number of marks is given in brackets [ ] at the end of each question or part question.
* 5 1 8 2 6 6 0 4 0 0 *
This document consists of 4 printed pages and 1 Insert.
DC (NH) 112823/1
© UCLES 2016
[Turn over
2
Section A
Answer this question.
19 Changes in car production
Car production is changing. Until recently car manufacturing firms had the most power in the
market. Now, however, firms producing car parts are gaining more power. The markets for both
cars and car parts consist of a relatively high number of firms that range from very large to small.
In 2014 the market was dominated by sixteen major car firms, each selling more than one million
cars a year. In that year there were ten major car part firms and these were gaining more power
over the car producers.
The world’s largest car part supplier by revenue claims to supply at least one of the parts in every
car sold throughout the world. The firm has grown as a result of mergers and is moving towards
total control of the market. It is seeking to build up high barriers to entry and to become the sole
producer. The ten largest car part firms accounted for 63% of the total output of car parts in 2013,
producing US$250 billion of car parts in that year. These ten firms now have the ability to build
85% of a car’s internal systems, leaving the car manufacturing firms to make little more than the
engine.
Car production is increasing in a number of developing countries but declining in some developed
countries. Car manufacturing increased in the UK between 2013 and 2014, but the industry had
been experiencing problems before 2013. In 2008 the average wage of car workers fell. In that
year the UK experienced a recession. Real wages in the UK car industry for the lowest paid workers
also declined after 2008 and the number of workers employed fell between 2008 and 2012. This
was despite output per worker increasing, partly because some less skilled workers lost their jobs
and the industry replaced some of these workers with capital equipment.
Buyers of cars often borrow money from commercial banks to make their purchases. In some cases
buyers use their savings, which may be withdrawn from commercial banks, to buy cars.
The behaviour and performance of car firms are influenced by the economic system of the country
they are producing in. In countries with a market system there is likely to be greater consumer
sovereignty. Car firms in such countries may be more likely to innovate, bringing in new methods
of production and developing higher-quality products.
(a) Using information from the extract, identify two characteristics of monopoly.
[2]
(b) Calculate the total output of car parts in US$ in 2013.
[3]
(c) Explain, using information from the extract, why wages in the UK car industry fell in 2008. [2]
(d) Using information from the extract, explain two merits of a market system.
[4]
(e) Analyse two reasons, referred to in the extract, why a decrease in employment may increase
labour productivity.
[4]
(f)
Discuss whether a declining car industry should be protected by the government.
(g) Using information from the extract, explain two functions of commercial banks.
[5]
[4]
(h) Discuss whether small car manufacturing firms can compete with large car manufacturing
firms.
[6]
© UCLES 2016
0455/21/M/J/16
3
Section B
Answer any three questions from this section.
(m) Burundi is a country in Sub-Saharan Africa. In 2013 the government of Burundi introduced VAT,
an indirect tax, while lowering corporation tax (the tax on firms’ profits), from 35% to 30%. The
United Nations has encouraged Sub-Saharan African countries to increase their tax revenue in
order to have more funds available to spend on reducing poverty. There is, however, a debate
about whether imposing more taxes or removing some taxes is more beneficial for an economy.
(a) Define ‘an indirect tax’.
[2]
12 Explain how a cut in the rate of corporation tax could result in an increase in tax revenue. [4]
13 Using a demand and supply diagram, analyse the effect of removing an indirect tax on the
market for the product.
[6]
(d) Discuss whether an increase in taxes will reduce inflation.
[8]
11 The Canadian economy in 2014 was generally doing well. Money was largely retaining its value
and unemployment was falling. The country did, however, have rising household debt and a deficit
on the current account of its balance of payments. The Canadian Government in 2014 was seeking
to increase exports whilst recognising that such an increase may have an impact on the exchange
rate.
4
(a) Identify two functions of money.
[2]
(b) Explain two reasons why household borrowing may increase.
[4]
(c) Analyse three ways in which international trade differs from internal trade.
[6]
(d) Discuss whether an increase in exports will increase the exchange rate.
[8]
Increasing demand from China has made New Zealand the world’s biggest exporter of dairy
products. Its exports of milk to China increased by 45% in 2013. More than 300 000 hectares of
land in New Zealand have been transferred to dairy use from other forms of farming and forestry
use since 2000. The increase in milk production has caused the average cost of its production to
fall and changes in production methods have affected the price elasticity of supply of milk.
(a) Why may less wheat be the opportunity cost of producing more milk?
[2]
(b) Explain two reasons why the supply of a product may be price-inelastic.
[4]
(c) Analyse how an increase in exports could increase a country’s employment rate and inflation
rate.
[6]
(d) Discuss whether the average cost of production always decreases when a firm increases the
total output that it produces.
[8]
© UCLES 2016
0455/21/M/J/16
[Turn over
4
13 In January and February 2014 there were calls for the UK Government to build more flood
defences. Homes, factories and other resources were damaged and some destroyed by floods. It
was argued that government intervention was needed in this case as there was evidence of market
failure.
(a) Define ‘market failure’.
[2]
(b) Explain how government regulation may reduce market failure.
[4]
(c) Analyse the effect of a decrease in resources on government economic aims.
[6]
(d) Discuss whether the social benefits of building flood defences will exceed the social costs
involved.
[8]
13 The year 2014 saw the longest-ever strike by platinum miners in South Africa. It involved 70 000
miners out of a total of 200 000 employed in the industry. These miners included migrant workers
from neighbouring countries who had increased the size of the country’s labour force. The strike
cost the world’s three largest platinum producing firms US$1.4 billion and reduced the country’s
exports of platinum.
(a) Identify two reasons why workers go on strike.
[2]
(b) Explain two disadvantages of a decrease in a country’s export revenue.
[4]
(c) Analyse how a fall in a firm’s revenue may influence its spending on capital goods.
[6]
(d) Discuss whether an increase in a country’s labour force will increase income per head.
[8]
13 In 2014 Cuban doctors were given pay rises that significantly increased their salaries. This made
doctors’ pay more than twice that received by nurses. Cuba is devoting more resources to both
medical care and tourism, altering the country’s production possibility curve. Living standards are
increasing in the country but at a slower rate than some other nearby countries.
(a) What is meant by a production possibility curve?
[2]
(b) Explain, giving examples, two factors of production used in the tourism industry.
[4]
(c) Analyse why doctors are paid more than nurses.
[6]
(d) Discuss whether living standards are always lower in developing countries than in developed
countries.
[8]
Permission to reproduce items where third-party owned material protected by copyright is included has been sought and cleared where possible. Every reasonable
effort has been made by the publisher (UCLES) to trace copyright holders, but if any items requiring clearance have unwittingly been included, the publisher will
be pleased to make amends at the earliest possible opportunity.
To avoid the issue of disclosure of answer-related information to candidates, all copyright acknowledgements are reproduced online in the Cambridge International
Examinations Copyright Acknowledgements Booklet. This is produced for each series of examinations and is freely available to download at www.cie.org.uk after
the live examination series.
Cambridge International Examinations is part of the Cambridge Assessment Group. Cambridge Assessment is the brand name of University of Cambridge Local
Examinations Syndicate (UCLES), which is itself a department of the University of Cambridge.
©
U
C
L
E
S
20
16
04
55
/2
1/
M/
J/
16
Cambridge International Examinations
Cambridge International General Certificate of Secondary Education
0455/22
ECONOMICS
Paper 2 Structured Questions
May/June 2015
2 hours 15 minutes
No Additional Materials are required.
READ THESE INSTRUCTIONS FIRST
An answer booklet is provided inside this question paper. You should follow the instructions on the front cover of the
answer booklet. If you need additional answer paper ask the invigilator for a continuation booklet.
Section A
Answer Question 1.
Section B
Answer any three questions.
The number of marks is given in brackets [ ] at the end of each question or part question.
* 5 1 0 0 3 3 6 7 9 7 *
This document consists of 5 printed pages, 3 blank pages and 1 Insert.
DC (KN/CGW) 96748/3
© UCLES 2015
[Turn over
2
Section A
Answer this question.
20 Peru and Panama
Between 2005 and 2012, Peru and Panama experienced the fastest economic growth rates in the
Americas. The two countries differ in the size of their populations and the size of their economies. In
2013, Peru had a population of 30 million and a Gross Domestic Product (GDP) of US$340 billion. In
contrast, Panama had a population of 3.6 million and a GDP of US$60 billion. Life expectancy was
higher in Panama with people, on average, living three years longer than in Peru.
Between 2008 and 2013, Peru had an average annual inflation rate of 2.7%. This was, in part
because of careful control of the country’s interest rate and exchange rate by Peru’s Central Bank.
Panama does not have a central bank and experienced a different average annual inflation rate
(see Fig. 1).
Fig. 1: The inflation rate in Panama, 2008–2013
10
8
inflation
rate (%)
6
4
2
0
2008 2009 2010 2011 2012 2013
years
Between 2008 and 2013, the unemployment rate fell more in Panama than in Peru. The decline in
Panama’s unemployment rate was largely due to the building work being undertaken on a sevenyear project to enlarge the Panama Canal. The lower unemployment rate enjoyed by Panama was
one of the reasons why the level of poverty was lower than in Peru in 2013.
Peru experienced a trade in goods surplus whilst Panama had a trade in goods deficit. Both
countries export gold and fish and import oil and cars. For both countries, the USA, China and
Japan are important trading partners.
About 75% of workers in Peru are employed in the service (tertiary) sector compared with 80% in
Panama. Among Panama’s key service industries are insurance and banking. Panama has the
largest insurance market in Central America. The number of companies in the market, including
multinational companies, is increasing. This is making the market more competitive. Multinational
companies also operate in the country’s banking sector. It has a number of private sector
commercial banks. It does not have a central bank and, therefore, does not have direct government
regulation of its banking sector. Recent years have seen an increase in the average size of the
commercial banks. There is some debate about whether larger banks benefit their customers.
© UCLES 2015
0455/22/M/J/15
3
(a) Using information from the extract, identify two reasons why Panama had a higher Human
Development Index (HDI) value than Peru in 2013.
[2]
(b) Using information in Fig. 1:
(i) describe what happened to the price level in Panama between 2008 and 2009
[2]
(ii) explain in which year the price level was highest in Panama.
[2]
(c) Using information from the extract and in Fig. 1, explain the likely effects of Peru and Panama
having different average annual inflation rates between 2008 and 2013.
[4]
(d) Discuss whether a fall in the unemployment rate will reduce poverty.
[5]
(e) Analyse why countries specialise and trade.
[5]
(f)
Using information from the extract, describe two functions of a central bank.
[4]
(g) Discuss whether the growth of a commercial bank will benefit its customers.
[6]
© UCLES 2015
0455/22/M/J/15
[Turn over
4
Section B
Answer any three questions from this section.
(n) Students have to consider the opportunity cost of going to university. University graduates usually
earn more than people who have not gone to university. Having more graduates influences a
country’s production possibility curve. Some economists suggest that students should pay the full
cost of their university courses and accommodation. Others say that the government should pay
some or all of the cost.
(a) Describe a possible opportunity cost of a student going to university.
[2]
(b) Explain why university graduates usually earn more than people who have not gone to
university.
[4]
(c) Using a production possibility curve diagram, analyse what effect an increase in the number
of graduates will have on an economy.
[6]
(d) Discuss whether graduates should pay the full cost of their university education.
[8]
14 China is the world’s largest producer of gold and India is the world’s largest buyer of gold. Gold
mining in China is becoming more capital-intensive which is making the supply of gold less price
inelastic. The wages of workers employed in the industry are rising but other costs of production
are falling.
(a) What is meant by an industry being ‘capital-intensive’?
[2]
(b) Explain two reasons why the supply of a product may be price inelastic.
[4]
12 Analyse what effect an increase in output will have on fixed, variable and average costs. [6]
13 Discuss whether a rise in the wages paid by an industry will encourage more people to work
in that industry.
[8]
14 Chile produces a third of the world’s supply of copper. A change in demand for, or supply of, copper
affects Chile’s Gross Domestic Product (GDP) and the current account position on its balance of
payments.
(a) Define ‘Gross Domestic Product’.
[2]
(b) Explain two benefits of an increase in Gross Domestic Product.
[4]
(c) Using a demand and supply diagram, analyse the effect of an increase in the costs of
producing copper on the market for copper.
[6]
(d) Discuss whether a rise in demand for copper would cause Chile to experience a current
account surplus.
[8]
© UCLES 2015
0455/22/M/J/15
5
14 Both the annual inflation rate and the economic growth rate fell in Pakistan between 2012 and
2013. Some economists suggested that the Government should try to lower inflation further by
reducing government spending. Lower inflation might increase economic activity and reduce
unemployment.
(a) Define ‘unemployment’.
[2]
(b) Explain two causes of economic growth.
[4]
(c) Analyse why a fall in the inflation rate may reduce a country’s unemployment rate.
[6]
(d) Discuss whether a decrease in government spending will reduce inflation.
[8]
14 Poland is experiencing changes to its population and economy. The country’s death rate is falling.
Despite Poland’s high unemployment rate, more people are migrating to the country, especially
from Spain and Italy. Poland is moving closer to a market economy with an increasing proportion
of its labour force employed in the private sector.
(a) Define ‘death rate’.
[2]
(b) Explain two causes of a fall in a country’s death rate.
[4]
(c) Analyse why people may migrate to a country with a high unemployment rate.
[6]
(d) Discuss whether the advantages of a market economy are greater than its disadvantages.
[8]
18 The Mexican economy has recently been performing well. Its monetary policy has lowered inflation
which has helped money in the country perform its functions more efficiently. The level of efficiency
of a country’s industries is influenced by a range of factors. These include the use of division of
labour and the level of the country’s trade protection.
(a) Define ‘monetary policy’.
[2]
(b) Explain two functions of money.
[4]
(c) Analyse why engaging in division of labour may increase a firm’s costs of production.
[6]
(d) Discuss whether a reduction in a country’s trade protection will improve its economic
performance.
[8]
© UCLES 2015
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6
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© UCLES 2015
0455/22/M/J/15
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BLANK PAGE
© UCLES 2015
0455/22/M/J/15
8
BLANK PAGE
Permission to reproduce items where third-party owned material protected by copyright is included has been sought and cleared where possible. Every reasonable
effort has been made by the publisher (UCLES) to trace copyright holders, but if any items requiring clearance have unwittingly been included, the publisher will
be pleased to make amends at the earliest possible opportunity.
To avoid the issue of disclosure of answer-related information to candidates, all copyright acknowledgements are reproduced online in the Cambridge International
Examinations Copyright Acknowledgements Booklet. This is produced for each series of examinations and is freely available to download at www.cie.org.uk after
the live examination series.
Cambridge International Examinations is part of the Cambridge Assessment Group. Cambridge Assessment is the brand name of University of Cambridge Local
Examinations Syndicate (UCLES), which is itself a department of the University of Cambridge.
©
U
C
L
E
S
20
15
04
55
/2
2/
M/
J/
15
Cambridge International Examinations
Cambridge International General Certificate of Secondary Education
0455/21
ECONOMICS
Paper 2 Structured Questions
May/June 2015
2 hours 15 minutes
No Additional Materials are required.
READ THESE INSTRUCTIONS FIRST
An answer booklet is provided inside this question paper. You should follow the instructions on the front cover of the
answer booklet. If you need additional answer paper ask the invigilator for a continuation booklet.
Section A
Answer Question 1.
Section B
Answer any three questions.
The number of marks is given in brackets [ ] at the end of each question or part question.
* 5 2 5 2 2 6 7 6 2 5 *
This document consists of 5 printed pages, 3 blank pages and 1 Insert.
DC (ST) 96742/5
© UCLES 2015
[Turn over
2
Section A
Answer this question.
21 What does the future hold for Sweden?
Sweden is a highly developed European country which enjoys one of the highest standards of living
in the world. In 2012, its citizens enjoyed an average income of US$49 000. The country’s labour
force of five million is highly skilled. About 70% of schoolchildren go on to university. Over the
years, investment has been high in Sweden and as a result there is a high value of capital goods
for each worker to use. In 2012, however, its economic growth rate slowed. The Swedish
Government was hoping that its decision to raise the retirement age to 67 would increase the
country’s economic growth rate.
Sweden exports half of its output. It exports a range of products including cars and capital goods.
Among the country’s imports are petrol, cars and iron. Table 1 shows the balance of the current
account of its balance of payments over the period 2008–2013.
Table 1: Sweden’s current account balance, 2008–2013
Year
Current account balance
US$ billion
as a % of Gross Domestic
Product (GDP)
2008
+38
6.9
2009
+31
7.0
2010
+31
6.8
2011
+32
6.4
2012
+39
7.1
2013
+40
7.2
A country’s trade position is influenced by its inflation rate. Indeed, a fall in a country’s inflation rate
can increase the international competitiveness of its products. The Swedish Government aims to
keep the annual inflation rate at 2% or below. If there is a risk that the inflation rate will exceed the
2% target, the Swedish Central Bank will raise the interest rate. Such a change will be likely to
influence consumer expenditure, investment and the exchange rate. In recent years, Sweden’s
inflation rate has remained low, averaging 1.9% between 2008 and 2013.
The low inflation rate provides certainty for Swedish firms. The best known Swedish firm is probably
IKEA, which produces furniture and household accessories. In 2012, it reduced its prices which,
as on previous occasions, resulted in a rise in its revenue. In 2013, its owners stated that their main
goal was to increase the size of the firm by opening new stores throughout the world, including in
its expanding markets in China and Russia.
© UCLES 2015
0455/21/M/J/15
3
(a) Using information from the extract, identify two reasons why Sweden is considered to be a
highly developed country. [2]
(o) Explain how a rise in the retirement age may increase a country’s economic growth rate. [4]
(p) Using information in Table 1, describe what happened to:
(i) Sweden’s current account position over the period shown
[2]
(ii) Sweden’s GDP between 2009 and 2010.
[2]
[2]
(d) Explain why a country may both export and import cars.
(e) Using information from the extract, analyse how a rise in the rate of interest can reduce
inflation. [5]
15
Discuss whether a fall in a country’s inflation rate will increase the international competitiveness
of its products.
[5]
(g) Using information from the extract, explain whether demand for IKEA’s products is price
elastic or price inelastic.
[2]
(h) Discuss whether growth is the main goal of most firms.
[6]
© UCLES 2015
0455/21/M/J/15
[Turn over
4
Section B
Answer any three questions from this section.
14 In 2013, an earthquake on the Iran/Pakistan border destroyed many factories and homes. Some
officials wanted the Governments to rebuild the factories and homes, even though there would be
an opportunity cost. Others suggested that some people should be encouraged to emigrate.
(a) Define ‘opportunity cost’.
[2]
(b) Explain why the economic problem can never be solved.
[4]
(c) Using a production possibility curve diagram, analyse the effect of the destruction of some of
its resources on an economy.
[6]
(d) Discuss whether a country will benefit from the emigration of some of its people.
[8]
15 In 2013, the market price of houses rose in China but fell in Greece. The Chinese Government
tried to reduce the rise in house prices by discouraging borrowing. In Greece, the equilibrium price
of houses fell, largely because of a decrease in income. In some countries, governments give
subsidies to housebuilders to influence the market for houses.
(a) Define ‘equilibrium price’.
[2]
(b) Explain two reasons why borrowing may decrease.
[4]
(c)
Using a demand and supply diagram, analyse why a fall in incomes may reduce the market
price of houses.
[6]
(d) Discuss whether the building of houses should be subsidised.
[8]
15 Trade union membership is decreasing in some countries, but it is increasing in China. Industrial
action by workers is becoming more common in China, with workers seeking higher wages.
Recently there was a strike at a car factory in South China, owned by a Japanese multinational
company.
(a) Define ‘multinational company’.
[2]
(b) Explain why governments may discourage strikes.
[4]
(c) Analyse three reasons why trade union membership may decrease in a country.
[6]
(d) Discuss whether a rise in the wages a firm pays would reduce its profits.
[8]
© UCLES 2015
0455/21/M/J/15
5
15 In January 2013, the Portuguese Government increased tax rates. Three months later it cut its
spending on health care and education. Between these two periods, unemployment in Portugal
rose.
(a) What is meant by ‘tax’?
[2]
(b) Explain two reasons why an increase in unemployment may reduce tax revenue.
[4]
(c) Analyse two reasons why unemployment may increase.
[6]
(d) Discuss whether a reduction in government spending on education will reduce
standards.
living
[8]
19 About 30% of Nigeria’s labour force is employed in agriculture but the country still spends more
than US$12 billion a year importing food. The Nigerian Government is seeking to reduce the
imports of food. With a high birth rate and many small farms, this may be difficult to achieve.
(a) Define ‘birth rate’.
[2]
(b) Explain two causes of a high birth rate.
[4]
(c) Analyse how an increase in the size of farms may affect the cost of producing food.
[6]
(d) Discuss whether a reduction in its imports will always benefit an economy.
[8]
(g) In 2013, the Singapore Government was concerned that its economy might experience a
recession. It was introducing a range of supply-side policy measures to increase productivity, avoid
a recession and achieve its other aims for the economy. It was also trying to reduce the
international value of the Singapore dollar.
(a) Define ‘recession’.
[2]
(b) Explain two reasons why an economy may have a high foreign exchange rate.
[4]
(c) Analyse how supply-side policy measures could increase productivity.
[6]
(d) Discuss whether a fall in the international value of its currency will always benefit an economy. [8]
© UCLES 2015
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© UCLES 2015
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7
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© UCLES 2015
0455/21/M/J/15
8
BLANK PAGE
Permission to reproduce items where third-party owned material protected by copyright is included has been sought and cleared where possible. Every reasonable
effort has been made by the publisher (UCLES) to trace copyright holders, but if any items requiring clearance have unwittingly been included, the publisher will
be pleased to make amends at the earliest possible opportunity.
To avoid the issue of disclosure of answer-related information to candidates, all copyright acknowledgements are reproduced online in the Cambridge International
Examinations Copyright Acknowledgements Booklet. This is produced for each series of examinations and is freely available to download at www.cie.org.uk after
the live examination series.
Cambridge International Examinations is part of the Cambridge Assessment Group. Cambridge Assessment is the brand name of University of Cambridge Local
Examinations Syndicate (UCLES), which is itself a department of the University of Cambridge.
©
U
C
L
E
S
20
15
04
55
/2
1/
M/
J/
15
Cambridge International Examinations
Cambridge International General Certificate of Secondary Education
0455/22
ECONOMICS
Paper 2 Structured Questions
May/June 2014
2 hours 15 minutes
No Additional Materials are required.
READ THESE INSTRUCTIONS FIRST
An answer booklet is provided inside this question paper. You should follow the instructions on the front cover of the
answer booklet. If you need additional answer paper ask the invigilator for a continuation booklet.
Section A
Answer Question 1.
Section B
Answer any three questions.
The number of marks is given in brackets [ ] at the end of each question or part question.
* 0 7 3 5 7 1 8 1 1 7 *
This document consists of 5 printed pages, 3 blank pages and 1 insert.
DC (LK) 73097/3
© UCLES 2014
[Turn over
2
Section A
Answer this question.
22 The challenges facing Angola
Angola is one of the fastest growing economies in the world and also one of the most specialised.
It had an average annual growth rate of 11% between 2002 and 2012. In 2010, the country’s capital
city, Luanda, was the most expensive capital city in the world. The average fare charged by the
only taxi (cab) firm in the city was high at US$50, and a standard house cost more than US$1m to
buy.
Oil production plays a key role in the economy. The country produces 1.9m barrels of oil a day and
this is expected to double by 2020. There is the possibility that Angola could overtake Nigeria to
become Africa’s largest oil producer. The oil industry accounts for most of the country’s output,
provides 97% of its export revenue and 75% of government tax revenue.
Economists have expressed concern that the country is too dependent on oil. Sonangol, the stateowned oil enterprise, is seeking to diversify. It is already involved in banking and it also owns an
airline and a football team. The government is trying to develop other industries. One of these is
the diamond industry. World demand for diamonds increased in 2012.
The Angolan Government faces a number of challenges in promoting other industries. One of
these is a lack of capital equipment in its manufacturing industries, and another is that much of its
agriculture is in the form of subsistence farming.
The economy faces other problems and three of these are connected. They are a widening gap
between the rich and the poor, a lack of education, and a rapidly growing population. Some people in
the country are very rich but 35% of the population live in poverty. Half of the population have no access
to health care, the infant mortality rate is one of the highest in the world, and life expectancy is one of
the lowest. Most of the population only experience five years of education and a third of adults are
illiterate. Between 2005 and 2010, the country had the eighteenth fastest growing population which
might have influenced its level of average income – see Table 1.
Table 1: Population growth, Gross Domestic Product (GDP) and GDP per head in selected
African countries in 2011
Country
Population growth
(annual % change)
GDP (US$bn)
GDP per head (US$)
Angola
2.92
120
6000
Kenya
2.58
72
1800
Nigeria
2.50
420
2600
South Africa
0.96
562
11 100
Uganda
3.24
47
1300
© UCLES 2014
0455/22/M/J/14
3
In 2012, Angola was experiencing an overall unemployment rate of 26% and an unemployment
rate of 50% among the young. The Angolan Government was considering cutting taxes to reduce
unemployment.
(a) Why is the Angolan economy considered to be ‘specialised’?
[2]
(b) Using information from the extract, explain why taxi (cab) fares were high in Luanda in 2010.
[2]
(c) Using information from the extract, draw a demand and supply diagram to show what is likely
to have happened to the price of diamonds in 2012. [4]
(d) Explain why countries with a high population growth rate may have a lower average income
than countries with a lower population growth rate. [3]
(q) Analyse whether the information in Table 1 supports the view that countries with a high
population growth rate have a lower average income than countries with a lower population
growth rate.
[4]
Discuss whether an increase in a country’s GDP will reduce poverty in that country.
[5]
(g) Using information from the extract, explain two reasons why labour productivity is low in
Angola.
[4]
(h) Discuss whether a cut in taxes will reduce unemployment.
[6]
(f)
© UCLES 2014
0455/22/M/J/14
[Turn over
4
Section B
Answer any three questions from this section.
16 A number of economies are devoting more of their resources to the provision of health care. Due
to the economic problem, this involves them having to make difficult choices.
(a) What is meant by the ‘economic problem’?
[2]
(b) Using a production possibility curve diagram, explain why choices have to be made as to
how to allocate resources. [6]
15 Explain how resources are allocated differently in market and mixed economic systems. [4]
16 Discuss whether an economy would benefit from an increase in the provision of health care.
[8]
16 Despite more cars being sold, world demand for bicycles is increasing. It has been estimated that
the world price elasticity of demand for bicycles is –0.18 but this does vary between countries. The
indirect taxes imposed on bicycles also differ between countries.
(a) Define ‘demand’.
[2]
(b) Explain three likely causes of an increase in demand for bicycles.
[6]
(c) Analyse why the demand for a product may be more price elastic in one country than in
another country.
[6]
(d) Discuss whether a government should impose indirect taxes only on products with inelastic
demand. [6]
16 The number of people employed in the banking sector in Turkey is increasing. The sector consists
of a number of commercial banks, some of which are growing in size, and the Central Bank of the
Republic of Turkey.
(a) Describe two functions of a central bank.
[4]
(b) Explain two types of internal economy of scale that a growing bank can enjoy.
[4]
(c) Analyse how the spending pattern of high paid workers is likely to differ from the spending
pattern of low paid workers.
[4]
(d) Discuss whether workers employed in banking are likely to earn more than workers employed
in agriculture.
[8]
© UCLES 2014
0455/22/M/J/14
5
16 A Zambian copper mine is operated by a foreign multinational company. The company’s main goal
is profit maximisation. Its mine creates pollution in the area, which causes diseases and damages
crops. Some economists have suggested that the economy would benefit from the mine being
operated by the Zambian Government.
(a) Define a ‘multinational company’.
[2]
(b) Explain one goal a multinational company may have other than profit maximisation.
[3]
(c) Explain why pollution is an example of market failure.
[5]
(d) Discuss whether a mine operated by the government would be more likely to benefit an
economy than one operated by a foreign multinational company.
[10]
20 In 2012, Mexico’s monetary policy was successful in keeping the country’s inflation rate low and
stable. Fiscal policy measures, including a rise in government spending, contributed to a relatively
high economic growth rate of 3.5% and a reduction in the country’s unemployment rate.
(a) What is meant by ‘monetary policy’?
[2]
(b) Explain two reasons why governments aim for low and stable inflation.
[4]
(c) Analyse how an increase in government spending may cause economic growth.
[6]
(d) Discuss whether a reduction in a country’s unemployment rate will always benefit an economy. [8]
(h) In March 2012, the Indian Government increased the tariff on imports of gold. It did this to reduce
the country’s growing deficit on the current account of its balance of payments.
(a) Describe how a tariff could reduce imports.
[4]
(b) Analyse three causes of a current account deficit.
[6]
(c) Discuss whether a government should always be concerned about a growing current account
deficit.
[10]
© UCLES 2014
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0455/22/M/J/14
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© UCLES 2014
0455/22/M/J/14
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Permission to reproduce items where third-party owned material protected by copyright is included has been sought and cleared where possible. Every reasonable
effort has been made by the publisher (UCLES) to trace copyright holders, but if any items requiring clearance have unwittingly been included, the publisher will
be pleased to make amends at the earliest possible opportunity.
Cambridge International Examinations is part of the Cambridge Assessment Group. Cambridge Assessment is the brand name of University of Cambridge Local
Examinations Syndicate (UCLES), which is itself a department of the University of Cambridge.
©
U
C
L
E
S
20
14
04
55
/2
2/
M/
J/
14
Cambridge International Examinations
Cambridge International General Certificate of Secondary Education
0455/21
ECONOMICS
Paper 2 Structured Questions
May/June 2014
2 hours 15 minutes
No Additional Materials are required.
READ THESE INSTRUCTIONS FIRST
An answer booklet is provided inside this question paper. You should follow the instructions on the front cover of the
answer booklet. If you need additional answer paper ask the invigilator for a continuation booklet.
Section A
Answer Question 1.
Section B
Answer any three questions.
The number of marks is given in brackets [ ] at the end of each question or part question.
* 8 5 8 2 3 4 0 9 4 0 *
This document consists of 5 printed pages, 3 blank pages and 1 insert.
DC (LK) 73094/3
© UCLES 2014
[Turn over
2
Section A
Answer this question.
23 A bright future for Mongolia?
Economists predict that the Asian economy of Mongolia will be the fastest growing economy
between 2015 and 2020. In 2011, the country’s economic growth rate was 21%. The forecast
annual growth rate for 2015 to 2020 is 24%.
The country is rich in a range of minerals including coal, copper, gold, silver and uranium. China
purchases large quantities of these minerals. In 2011, there was a significant rise in the world
demand for a range of minerals including copper. Some economists have pointed out that there
are a number of risks attached to an economic boom caused by a rise in demand for minerals. One
is the so-called ‘resources curse’. This refers to the disadvantage that can arise as natural
resources are used. High international demand for minerals can push up the exchange rate and
reduce the competitiveness of other industries. The extraction of minerals can also cause pollution.
This is certainly the case in Mongolia. The capital city, Ulaanbaatar, is one of the most polluted
cities in the world.
The Mongolian economy faces a number of other problems. Its inflation rate is relatively high,
reaching 10.6% in 2011, driven up by increases in food prices and rises in government spending.
Its unemployment rate, at 10% in the same year, was above that of some of its Asian neighbours.
This led it to being placed relatively high in the region’s ‘misery index’. This index, developed by
the American economist Arthur Okun, adds together the unemployment rate and the inflation rate.
Table 1 shows the unemployment rate, misery index and the interest rate for a number of Asian
economies.
Table 1: The unemployment rate, misery index and interest rate for selected Asian
economies in 2011
Country
Unemployment rate
(%)
Misery index (%)
(unemployment rate
+ inflation rate)
China
6.1
11.7
3.4
India
10.8
19.8
8.4
Japan
4.5
4.2
1.0
Malaysia
3.1
6.4
3.0
Mongolia
10.0
20.6
12.3
Interest rate (%)
Nearly 40% of Mongolia’s population lives below the poverty line. However, with rising economic
growth, income levels are increasing. Indeed, some economists are predicting that Mongolians will
become very rich. Tax revenue will also rise, which will enable the government to increase its
spending on, for instance, education. Higher spending on education will make it possible for
children to spend more years in school.
© UCLES 2014
0455/21/M/J/14
3
(a) Define ‘economic growth’.
[3]
(b) Using information from the extract, explain why Mongolia’s Human Development Index value
is likely to increase in the future.
[2]
(c) Using information from the extract, draw a demand and supply diagram to show what is likely
to have happened to the price of copper in 2011.
[4]
(d) Explain why countries with high inflation rates tend to have higher interest rates than those
with lower inflation rates.
[3]
(e) Analyse whether the information in Table 1 supports the view that countries with high inflation
rates have higher interest rates than those with lower inflation rates.
[5]
(r)
Discuss whether a rise in a country’s exchange rate will reduce its international
competitiveness.
[6]
(g) Using information from the extract, explain why the social costs of mining are higher than the
private costs of mining in Mongolia.
[2]
(h) Discuss whether a rise in incomes in a country will always increase tax revenue.
© UCLES 2014
0455/21/M/J/14
[5]
[Turn over
4
Section B
Answer any three questions from this section.
17 In 2012, the Indian Prime Minister announced that the Government was going to spend US$90
million on sending a spaceship to the planet Mars. Some economists argued that it would be better
to use the factors of production, such as land and labour, to improve education or to build more
roads.
(a) Describe two ways in which land is different from labour.
[4]
(b) Explain the significance of opportunity cost for a government when making its spending
decisions.
[4]
(c) Using a production possibility curve diagram, analyse the impact of an increase in resources
on an economy.
[5]
(d) Discuss whether the building of more roads will benefit an economy.
[7]
17 Many governments seek to discourage people from smoking cigarettes, whilst encouraging them
to eat more fruit, including bananas and apples. The government’s ability to influence people’s
consumption is determined, in part, by the price elasticity of supply and the price elasticity of
demand of the products, and by changes in market conditions.
(a) Define ‘price elasticity of supply’.
[2]
(b) Explain three reasons why the supply of bananas may decrease.
[6]
(c) Analyse what effect a rise in the price of apples, which are a substitute for bananas, will have
on the market for bananas.
[4]
(d) Discuss whether a government should increase the tax on cigarettes.
[8]
17 Co-operatives play a key role in the Kenyan economy, accounting for 43% of the country’s output.
They operate in a number of industries, some of which come close to a monopoly and some of
which are more competitive. There are many co-operative farms growing cotton. The Kenyan
Government is seeking to develop a vertically integrated textile industry.
(a) Describe two characteristics of a co-operative.
[4]
(b) Explain three ways in which monopoly differs from perfect competition.
[6]
(c) Analyse the advantages of vertical integration.
[4]
(d) Discuss what impact a rise in output is likely to have on a farmer’s profit.
[6]
© UCLES 2014
0455/21/M/J/14
5
17 Walmart, the US multinational retailer, is the world’s largest company. It allows its customers to
pay for their purchases by cash and by using a variety of other forms of money. The company is
the third largest employer in the world. Most of its workers do not belong to a trade union.
(a) Describe two influences on the amount people spend.
[4]
(b) Explain why an item has to be generally acceptable and divisible for it to carry out the functions
of money.
[4]
(c) Explain two advantages of working for a large company.
[4]
(d) Discuss whether a firm will benefit from encouraging its workers to join a trade union.
[8]
17 Over time the determinants of population size, including the birth rate and the fertility rate, change.
It is predicted that the world population will rise to 9 billion by 2050. Some countries, including Italy
and Japan, however, are expected to experience a fall in population size. It is also predicted that
average incomes will rise in most countries.
(a) Describe how the birth rate differs from the fertility rate.
[4]
21 Analyse how an increase in average incomes may influence a country’s population size. [6]
22 Discuss whether a government should be concerned about a fall in the country’s population
size.
[10]
(i)
Algeria’s exports have been increasing in recent years. The country has experienced low inflation, in
part, because of the fiscal and supply-side policy measures the government has introduced. In 2012,
the Algerian Government stated its main objective was to reduce unemployment.
(a) Describe two reasons why a country’s exports may increase.
[4]
(b) Explain why governments aim for low unemployment.
[6]
(c) Discuss whether a government should increase or decrease taxes to reduce inflation.
[10]
© UCLES 2014
0455/21/M/J/14
6
BLANK PAGE
© UCLES 2014
0455/21/M/J/14
7
BLANK PAGE
© UCLES 2014
0455/21/M/J/14
8
BLANK PAGE
Permission to reproduce items where third-party owned material protected by copyright is included has been sought and cleared where possible. Every reasonable
effort has been made by the publisher (UCLES) to trace copyright holders, but if any items requiring clearance have unwittingly been included, the publisher will
be pleased to make amends at the earliest possible opportunity.
Cambridge International Examinations is part of the Cambridge Assessment Group. Cambridge Assessment is the brand name of University of Cambridge Local
Examinations Syndicate (UCLES), which is itself a department of the University of Cambridge.
©
U
C
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E
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14
04
55
/2
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M/
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14
UNIVERSITY OF CAMBRIDGE INTERNATIONAL EXAMINATIONS
International General Certificate of Secondary Education
0455/22
ECONOMICS
Paper 2 Structured Questions
May/June 2013
2 hours
Additional Materials:
Answer Booklet/Paper
READ THESE INSTRUCTIONS FIRST
If you have been given an Answer Booklet, follow the instructions on the front cover of the
Booklet. Write your Centre number, candidate number and name on all the work you hand in.
Write in dark blue or black pen.
You may use a soft pencil for any diagrams, graphs or rough working.
Do not use staples, paper clips, highlighters, glue or correction fluid.
Section A
* 5 5 1 4 1 8 9 3 8 2 *
Answer Question 1.
Section B
Answer any three questions.
At the end of the examination, fasten all your work securely together.
The number of marks is given in brackets [ ] at the end of each question or part question.
This document consists of 4 printed pages.
DC (KN) 59988/2
© UCLES 2013
[Turn over
2
Section A
Answer this question.
24 The communications monopoly in Mexico
Mexico’s telephone and television industries are near-monopolies. Over 80% of telephone landlines are
connected to Telmex, and over 70% of the mobile (cell) phone market is controlled by one firm, Telcel.
It is a similar situation in the television industry where one firm, Televisa, controls over 70% of the
country’s free-to-air television market. All three firms are public limited companies.
Although this situation has existed for some time, a number of smaller companies have been
campaigning for more competition to benefit consumers.
Mexico’s Federal Competition Commission, an organisation which monitors competition in different
industries in the country, has agreed that consumers would benefit from greater competition. It has
stated that monopolies are against the public interest. For example, in 2011, mobile phone charges in
Mexico were 43.5% higher than rates charged in North America and Europe.
The Mexican Government, however, has been reluctant to intervene. It believes that it would be
better to allow market forces to determine the number of firms in a market and the prices that they
charge.
(a) Describe two features of a public limited company.
[4]
(b) Explain two reasons why firms differ in size in an economy, such as Mexico.
[4]
(c) Explain how a government might intervene to reduce mobile phone charges.
[4]
(d) Discuss whether monopolies are always against the public interest.
[8]
© UCLES 2013
0455/22/M/J/13
3
Section B
Answer any three questions from this section.
(s) Production involves the use of the four factors of production. The use of these resources involves
an opportunity cost.
(a) Using appropriate examples, describe the four factors of production.
[6]
(b) Using a production possibility curve, explain what is meant by opportunity cost.
[6]
(c) Discuss whether more factors of production should be used to build houses.
[8]
18 The demand for flat screen televisions has increased enormously in many countries and this has
had an effect on the market.
(a) Describe what can influence the demand for flat screen televisions.
(b)
[4]
Using a demand and supply diagram, analyse how an increase in income can affect the
equilibrium price and equilibrium quantity of flat screen televisions.
[6]
(c) Explain what is meant by price elasticity of demand.
[4]
(d) Discuss the potential usefulness of price elasticity of demand to a manufacturer of flat screen
televisions.
[6]
4
The central bank and stock exchanges can perform important roles in economies.
(a) What is meant when it is stated that money performs the functions of (i) a medium of exchange
and (ii) a store of value?
[4]
5
(b) Explain the role a central bank can play in an economy.
[6]
(c) Discuss how important a stock exchange can be in encouraging firms to expand.
[10]
Governments can use a range of different policies to encourage economic growth.
(a) Describe how economic growth is measured.
[4]
(b) Explain how fiscal policy can be used to encourage economic growth.
[6]
(c) Discuss to what extent supply-side policies are likely to be more effective than monetary
policies in stimulating economic growth.
[10]
© UCLES 2013
0455/22/M/J/13
[Turn over
4
18 Some countries have a fixed exchange rate system, but others allow the external value of their
currency (foreign exchange rate) to float.
(a) Explain how the external value of a currency is determined in a floating or flexible exchange
rate system.
[4]
(b) Describe how a government maintains the external value of its currency in a fixed exchange
rate system.
[4]
(c) Explain why a government might want the external value of its currency to fall.
[4]
(d) Discuss to what extent a floating exchange rate is preferable to a fixed exchange rate system.
[8]
18 A number of countries have high levels of poverty, but there is no agreement as to which is the
best way to try to improve standards of living in a country.
(a) Distinguish between absolute and relative poverty.
[4]
(b) Explain how the Human Development Index is measured.
[6]
(c) Discuss which policies are likely to be most successful in reducing the extent of poverty in a
country.
[10]
Permission to reproduce items where third-party owned material protected by copyright is included has been sought and cleared where possible. Every reasonable
effort has been made by the publisher (UCLES) to trace copyright holders, but if any items requiring clearance have unwittingly been included, the publisher will
be pleased to make amends at the earliest possible opportunity.
University of Cambridge International Examinations is part of the Cambridge Assessment Group. Cambridge Assessment is the brand name of University of
Cambridge Local Examinations Syndicate (UCLES), which is itself a department of the University of Cambridge.
©
U
C
L
E
S
20
13
04
55
/2
2/
M/
J/
13
UNIVERSITY OF CAMBRIDGE INTERNATIONAL EXAMINATIONS
International General Certificate of Secondary Education
0455/22
ECONOMICS
Paper 2 Structured Questions
May/June 2013
2 hours
Additional Materials:
Answer Booklet/Paper
READ THESE INSTRUCTIONS FIRST
If you have been given an Answer Booklet, follow the instructions on the front cover of the
Booklet. Write your Centre number, candidate number and name on all the work you hand in.
Write in dark blue or black pen.
You may use a soft pencil for any diagrams, graphs or rough working.
Do not use staples, paper clips, highlighters, glue or correction fluid.
Section A
* 5 5 1 4 1 8 9 3 8 2 *
Answer Question 1.
Section B
Answer any three questions.
At the end of the examination, fasten all your work securely together.
The number of marks is given in brackets [ ] at the end of each question or part question.
This document consists of 4 printed pages.
DC (KN) 59988/2
© UCLES 2013
[Turn over
2
Section A
Answer this question.
25 The communications monopoly in Mexico
Mexico’s telephone and television industries are near-monopolies. Over 80% of telephone landlines are
connected to Telmex, and over 70% of the mobile (cell) phone market is controlled by one firm, Telcel.
It is a similar situation in the television industry where one firm, Televisa, controls over 70% of the
country’s free-to-air television market. All three firms are public limited companies.
Although this situation has existed for some time, a number of smaller companies have been
campaigning for more competition to benefit consumers.
Mexico’s Federal Competition Commission, an organisation which monitors competition in different
industries in the country, has agreed that consumers would benefit from greater competition. It has
stated that monopolies are against the public interest. For example, in 2011, mobile phone charges in
Mexico were 43.5% higher than rates charged in North America and Europe.
The Mexican Government, however, has been reluctant to intervene. It believes that it would be
better to allow market forces to determine the number of firms in a market and the prices that they
charge.
(a) Describe two features of a public limited company.
[4]
(b) Explain two reasons why firms differ in size in an economy, such as Mexico.
[4]
(c) Explain how a government might intervene to reduce mobile phone charges.
[4]
(d) Discuss whether monopolies are always against the public interest.
[8]
© UCLES 2013
0455/22/M/J/13
3
Section B
Answer any three questions from this section.
(t)
Production involves the use of the four factors of production. The use of these resources involves
an opportunity cost.
(a) Using appropriate examples, describe the four factors of production.
[6]
(b) Using a production possibility curve, explain what is meant by opportunity cost.
[6]
(c) Discuss whether more factors of production should be used to build houses.
[8]
19 The demand for flat screen televisions has increased enormously in many countries and this has
had an effect on the market.
(a) Describe what can influence the demand for flat screen televisions.
(b)
[4]
Using a demand and supply diagram, analyse how an increase in income can affect the
equilibrium price and equilibrium quantity of flat screen televisions.
[6]
(c) Explain what is meant by price elasticity of demand.
[4]
(d) Discuss the potential usefulness of price elasticity of demand to a manufacturer of flat screen
televisions.
[6]
4
The central bank and stock exchanges can perform important roles in economies.
(a) What is meant when it is stated that money performs the functions of (i) a medium of exchange
and (ii) a store of value?
[4]
5
(b) Explain the role a central bank can play in an economy.
[6]
(c) Discuss how important a stock exchange can be in encouraging firms to expand.
[10]
Governments can use a range of different policies to encourage economic growth.
(a) Describe how economic growth is measured.
[4]
(b) Explain how fiscal policy can be used to encourage economic growth.
[6]
(c) Discuss to what extent supply-side policies are likely to be more effective than monetary
policies in stimulating economic growth.
[10]
© UCLES 2013
0455/22/M/J/13
[Turn over
4
19 Some countries have a fixed exchange rate system, but others allow the external value of their
currency (foreign exchange rate) to float.
(a) Explain how the external value of a currency is determined in a floating or flexible exchange
rate system.
[4]
(b) Describe how a government maintains the external value of its currency in a fixed exchange
rate system.
[4]
(c) Explain why a government might want the external value of its currency to fall.
[4]
(d) Discuss to what extent a floating exchange rate is preferable to a fixed exchange rate system.
[8]
19 A number of countries have high levels of poverty, but there is no agreement as to which is the
best way to try to improve standards of living in a country.
(a) Distinguish between absolute and relative poverty.
[4]
(b) Explain how the Human Development Index is measured.
[6]
(c) Discuss which policies are likely to be most successful in reducing the extent of poverty in a
country.
[10]
Permission to reproduce items where third-party owned material protected by copyright is included has been sought and cleared where possible. Every reasonable
effort has been made by the publisher (UCLES) to trace copyright holders, but if any items requiring clearance have unwittingly been included, the publisher will
be pleased to make amends at the earliest possible opportunity.
University of Cambridge International Examinations is part of the Cambridge Assessment Group. Cambridge Assessment is the brand name of University of
Cambridge Local Examinations Syndicate (UCLES), which is itself a department of the University of Cambridge.
©
U
C
L
E
S
20
13
04
55
/2
2/
M/
J/
13
Cambridge International Examinations
Cambridge International General Certificate of Secondary Education
0455/22
ECONOMICS
Paper 2 Structured Questions
February/March 2017
2 hours 15 minutes
No Additional Materials are required.
READ THESE INSTRUCTIONS FIRST
An Answer Booklet is provided inside this Question Paper. You should follow the instructions on the front cover of
the Answer Booklet. If you need additional answer paper ask the invigilator for a Continuation Booklet.
Section A
Answer Question 1.
Section B
Answer any three questions.
The number of marks is given in brackets [ ] at the end of each question or part question.
* 2 0 8 6 8 5 4 8 4 6 *
This document consists of 4 printed pages and 1 Insert.
DC (NF/SW) 127286/4
© UCLES 2017
[Turn over
2
Section A
Answer this question.
26 Low-cost airlines
For several decades, low-cost airlines have been competing on short-distance flights not just with
established airlines, but also with train travel and car travel. Now they are starting to compete with
established airlines on long-distance flights. In response to this increased competition there have
been some horizontal mergers occurring between the established airlines.
It is predicted that by 2030 China will become
20% of all global air travel. The USA is currently the dominant market and it is predicted that
between 2015 and 2030 the country will order 6160 of the 28 000 passenger aircraft that will be
produced.
India, which has both state-owned and private-sector airlines, is experiencing a great increase in
both internal flights and flights to other countries. More airports are being built in India, with more
facilities being provided inside and around the airports. For example, more taxi firms are being set
up to take passengers to and from the airports. The rapid expansion of air travel in India and other
countries is having an impact on the market for pilots, as shown in Fig. 1.
S
price of
pilots
P2
P
1
D1
O
Q1 Q2
D2
quantity / number of pilots
Fig. 1 The market for pilots
How rapidly the Indian air travel market will grow will be influenced by a number of factors. These
include the extent to which business travel will grow and how rapidly demand for foreign holidays
will increase. Demand for these forms of air travel is, in turn, influenced by changes in price. The
price elasticity of demand for air travel has b prices, and so the inflation rate, is changes in taxation.
© UCLES 2017
0455/22/F/M/17
3
(a) Identify, using information from the extract:
(i) a substitute for air travel
[1]
(ii) a complement to air travel.
[1]
(b) Explain two advantages that firms may gain from a horizontal merger.
[4]
(c) Calculate, using information from the extract:
(u) the percentage of the new passenger aircraft that the USA is predicted to purchase
between 2015 and 2030
[2]
20
the percentage change in demand for air travel if the price of air travel falls by 15%. [2]
(d) Analyse why demand for a luxury holiday may be price elastic.
[5]
(e) Discuss whether airlines should be state-owned or operated by the private sector.
[5]
20 Explain, using information from the extract and Fig. 1, what happened to the market for pilots
in India in 2015.
[4]
(g) Discuss whether a cut in taxation will reduce inflation.
[6]
Section B
Answer any three questions from this section.
20
The actions of the Government of Georgia to reduce inflation and unemployment had an impact on the
business organisations operating in the country in 2015. The country has an expanding tertiary sector
including its banking sector. The country now has some features of a market economy.
(a) Identify two goals that business organisations may have.
[2]
(b) Explain two functions of a commercial bank.
[4]
(c) Analyse how the price mechanism influences the allocation of resources in a market economy.
[6]
(d) Discuss whether an increase in output will increase the profits that firms receive.
[8]
18 Firms use different quantities of land, labour, capital and enterprise in producing their products.
The ways in which a country’s resources can be u can be shown on a production possibility diagram.
(a) What is the difference between capital and land?
[2]
(b) Explain two reasons why a firm may decide to use more labour and less capital in producing
its products.
[4]
(c) Analyse, using a production possibility diagr
there is a change from full employment to unemployment.
[6]
(d) Discuss whether it is always possible for a country to have low unemployment and low
inflation at the same time.
© UCLES 2017
0455/22/F/M/17
[8]
[Turn over
4
4
The amount that workers earn influences their living standards. Some workers receive relatively
low pay. There are a number of ways a government can help the low-paid.
(a) Identify two wage factors that workers take into account when deciding on their occupation.
[2]
(b) Explain two indicators of living standards.
[4]
(c) Analyse how fiscal policy can produce a more even distribution of income.
[6]
(d) Discuss whether a rise in the wages paid to low-paid workers would benefit an economy. [8]
18 Abu Dhabi is a rapidly developing economy. It is building three new museums in its new cultural
district, which may attract more tourists and help its balance of payments. The museums will
include some very highly priced works of art.
(a) Define ‘balance of payments’.
[2]
(b) Explain two characteristics of a rapidly developing economy.
[4]
(c) Analyse how an increase in tourism can increa[6]
(d) Discuss whether the rich always save more than the poor.
[8]
23 At the start of 2015, dockworkers on the west coast of the USA took industrial action in the form of
a go-slow, disrupting exports and imports. This was coordinated by their trade union. Unions in the
USA are declining in strength, particularly in the private sector. Most workers in the USA work in
the private sector.
(a) Identify two aims of a trade union.
[2]
(b) Explain two reasons for a decline in trade union membership.
[4]
(c) Analyse why someone may switch from working in the public sector to working in the private
sector.
[6]
(d) Discuss whether a decrease in imports would[8] i
7 One way in which governments seek to reduce m
Governments also produce some goods and services by employing workers in the public sector.
(a) Define ‘regulation’.
[2]
(b) Explain two causes of market failure.
[4]
(c) Analyse the possible opportunity costs of an increase in government spending on higher
education services.
(d) Discuss whether government policy measures can reduce unemployment.
[6]
[8]
Permission to reproduce items where third-party owned material protected by copyright is included has been sought and cleared where possible. Every reasonable
effort has been made by the publisher (UCLES) to trace copyright holders, but if any items requiring clearance have unwittingly been included, the publisher will
be pleased to make amends at the earliest possible opportunity.
To avoid the issue of disclosure of answer-related information to candidates, all copyright acknowledgements are reproduced online in the Cambridge International
Examinations Copyright Acknowledgements Booklet. This is produced for each series of examinations and is freely available to download at www.cie.org.uk after
the live examination series.
Cambridge International Examinations is part of the Cambridge Assessment Group. Cambridge Assessment is the brand name of University of Cambridge Local
Examinations Syndicate (UCLES), which is itself a department of the University of Cambridge.
©
U
C
L
E
S
20
17
04
55
/2
2/
F/
M/
17
Cambridge International Examinations
Cambridge International General Certificate of Secondary Education
0455/22
ECONOMICS
Paper 2 Structured Questions
February/March 2016
2 hours 15 minutes
No Additional Materials are required.
READ THESE INSTRUCTIONS FIRST
An answer booklet is provided inside this question paper. You should follow the instructions on the front cover of the
answer booklet. If you need additional answer paper ask the invigilator for a continuation booklet.
Section A
Answer Question 1.
Section B
Answer any three questions.
* 3 3 5 1 0 7 7 4 0 5 *
The number of marks is given in brackets [ ] at the end of each question or part question.
This document consists of 4 printed pages and 1 Insert.
DC (NH) 113859/3
© UCLES 2016
[Turn over
2
Section A
Answer this question.
1
India, the United States of America (US) and wheat production
Agriculture accounted for 17% of India’s Gross Domestic Product (GDP) of US$1 890 billion in
2013. GDP had increased from US$1 769 billion the year before. The country’s population
increased from 1.22 billion in 2012 to 1.26 billion in 2013.
In 2013, both India and the US were in the top ten producers of wheat. India achieved third place
with an output of 95 million tonnes while the US was placed fourth with an output of 62 million
tonnes.
Only 1.6% of the US labour force was employed in agriculture, in contrast to India’s 45% in 2013.
While agricultural subsidies have decreased in the US, they remain high in India. The Indian
Government considers that help for its farmers is important for its national security and that food
subsidies help reduce poverty. Between 2010 and 2013, the Indian Government had spent US$15
billion on subsidising fertilisers to raise the fertility of the soil. Subsidising fertilisers has increased
the output of wheat but has also resulted in polluted rivers.
The Indian Government thinks that in the long run its agricultural sector will become more efficient
and the need for subsidies will be reduced. It expects that its workers will become more educated
and that the amount of capital equipment that will be used in agriculture will increase. Some US
economists have questioned this optimism. They point out that the state-owned Food Corporation
of India had to buy 30% of the country’s annual wheat harvest and that the country had a large
stockpile of unsold wheat in 2014.
Trade between India and the US is increasing. US citizens are buying a greater quantity of goods
and services from India. For example, with rising life expectancy in the US, which had already
reached 79 years in 2014, there is an increase in the imports of Indian medicines into the US.
The trend in trade between the two countries will be influenced by a number of factors. These
include the exchange rate between the US dollar and the Indian rupee. The price of the US dollar
is determined by market forces, so there may be fluctuations in the long-term trend.
(a) Using information from the extract, identify two examples of the factor of production ‘land’. [2]
(b) Explain the type of exchange rate system referred to in the extract.
[2]
(c) Using information from the extract, calculate the rise in GDP per head in India from 2012 to
2013.
[3]
(d) Explain two characteristics of the US mentioned in the extract that suggest that
developed country.
it is a
[4]
(e) Using information from the extract, analyse two reasons why the productivity of
agricultural workers is likely to increase in the future.
Indian
[4]
(f)
Discuss whether an increase in output always reduces average cost.
[5]
(g) Explain the cause of the example of market failure referred to in the extract.
[4]
(h) Discuss whether food subsidies reduce poverty.
[6]
© UCLES 2016
0455/22/F/M/16
3
Section B
Answer any three questions from this section.
27 The price of shares in a large UK supermarket firm fell on the London Stock Exchange in 2014
when it was announced that it was expecting a reduction in its profits. The increased competition
from German supermarket firms had forced the UK supermarket to consider a number of ways of
cutting its costs by, for example, reducing some of its workers’ wage rates and increasing some
workers’ working hours.
(a) Define a ‘stock exchange’.
[2]
(b) Explain why some firms may have survival as a short-term goal.
[4]
(c) Analyse how consumers may suffer as a result of a fall in the profits firms earn.
[6]
(d) Discuss whether a decrease in wage rates and an increase in working hours will always
reduce the supply of workers to a firm.
[8]
(v) A falling death rate is affecting the size of China’s population, which in turn is influencing demand
for a range of products including table salt. The Chinese Government has recently considered
ending the state salt monopoly. An online survey, however, revealed that most Chinese people
oppose introducing more competition into the market, thinking it will cause the price of salt to rise.
(a) Define a ‘monopoly’.
[2]
(b) Explain how a falling death rate may affect demand in a country.
[4]
(c) Analyse why price can be lower in a monopoly market than in perfect competition.
[6]
(d) Discuss whether an increase in a country’s population size will cause an increase in living
standards.
[8]
21
Between 2008 and 2014, Greece’s Gross Domestic Product fell by 25%. Thousands of sole proprietors
and other business organisations went out of business. As a result, the unemployment rate increased
to 28%. The Government reduced its spending and was being encouraged by the International
Monetary Fund to cut its corporation tax (the tax on firms’ profits).
(a) Identify two costs of unemployment.
[2]
(b) Explain two advantages of a sole proprietor.
[4]
(c) Analyse how a reduction in government spending may affect unemployment.
[6]
(d) Discuss whether a cut in corporation tax will increase economic growth.
[8]
© UCLES 2016
0455/22/F/M/16
[Turn over
4
21 In 2014 the inflation rate in the United States of America (US) was 2.0%. The unemployment rate
in the US was 6.1%, the lowest rate in six years. The economy was not yet at full employment but
not all job vacancies were filled. A higher proportion of US students were going to university.
Investment, which is spending on capital goods, was increasing.
(a) What is the opportunity cost to a person of going to university?
[2]
(b) Explain why there may be some people unemployed whilst there are job vacancies.
[4]
(c) Analyse how an increase in investment may affect unemployment.
[6]
(d) Discuss whether supply-side policy measures will reduce inflation.
[8]
21 In 2014 the World Trade Organisation ordered China to end its export quotas on its rare earth
metals, which are used in smartphones, laptops, tablets and other electronic equipment. China
supplies 90% of the world’s rare earth metals and is also the world’s largest consumer. The supply
of these metals is inelastic, and changes in their price affect the costs of producing a range of
products.
(a) Define an ‘export quota’.
[2]
(b) Explain the difference between inelastic supply and perfectly inelastic supply.
[4]
(c) Using a demand and supply diagram, analyse how an increase in the cost of producing
smartphones will affect the market for smartphones.
[6]
(d) Discuss whether a country exporting its raw materials always benefits its economy.
[8]
19 There has been a growth in foreign tourism. More people from both developed and developing
countries are taking holidays abroad. Foreign tourism brings both advantages and disadvantages.
Employment is created but some of the jobs are low-paid and low-skilled. The quality of
employment can vary between developed and developing countries, as can the problems they
face, including population problems.
(a) How are earnings received by a country from foreign tourism recorded in the current account
of its balance of payments?
[2]
(b) Explain two factors that could cause an increase in foreign tourists to a country.
[4]
(c) Analyse why workers with the same skills may be paid different wage rates.
[6]
(d) Discuss how population problems in developing countries may differ from those in developed
countries.
[8]
Permission to reproduce items where third-party owned material protected by copyright is included has been sought and cleared where possible. Every reasonable
effort has been made by the publisher (UCLES) to trace copyright holders, but if any items requiring clearance have unwittingly been included, the publisher will
be pleased to make amends at the earliest possible opportunity.
To avoid the issue of disclosure of answer-related information to candidates, all copyright acknowledgements are reproduced online in the Cambridge International
Examinations Copyright Acknowledgements Booklet. This is produced for each series of examinations and is freely available to download at www.cie.org.uk after
the live examination series.
Cambridge International Examinations is part of the Cambridge Assessment Group. Cambridge Assessment is the brand name of University of Cambridge Local
Examinations Syndicate (UCLES), which is itself a department of the University of Cambridge.
©
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* 6 9 5 8 0 4 9 6 6 5 *
ur questions in total: Section A:
answer Question 1.
C
a
m
b
r
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d
g
e
I
G
C
S
E
™
29
30
Section B: answer three questions.
Follow the instructions on the front cover of the answer booklet. If you need additional answer paper,
ask the invigilator for a continuation booklet.
You may use a calculator.
INFORMATION
(w) The total mark for this paper is 90.
(x) The number of marks for each question or part question is shown in brackets [ ].
ECONOMICS
Paper 2 Structured Questions
0455/21
October/November 2021
2 hours 15 minutes
You must answer on the enclosed
answer
booklet.
This
document
has 8 pages. Any blank pages are indicated.
You will need: Answer booklet (enclosed)
I
N
S
T
R
U
C
T
I
O
N
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28
DC (KN) 203612/2
© UCLES 2021
A
n
s
w
e
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f
o
[Turn over
2
Section A
Read the source material carefully before answering Question 1.
Source Material: Laos, a land-locked country
Laos fact file
2017
GDP
$16.85 billion
total exports
$2.04 billion
percentage of Laos’ exports sold to China
58%
GDP growth rate
6.9%
adult literacy rate
85%
Laos is a land-locked country, surrounded by Vietnam, Cambodia, Thailand, Myanmar and China.
Access to seaports helps an economy take full advantage of international trade. The economy of Laos
has grown rapidly since the government initiated free market reforms, with an average growth rate of
approximately 7% annually in the last 10 years.
The free market reforms have encouraged Laos to sell their abundant raw materials internationally and
also attracted foreign investment. Laos has large deposits of copper which are in high demand by global
manufacturing industries. A new rail link connecting China and Laos is expected to make such
transactions easier.
The government of Laos has also put a lot of emphasis on education. The adult literacy rate of both
males and females has increased from 60% to 85% over the last 20 years.
The financial sector, including commercial banks, is growing. This has enabled local entrepreneurs to
borrow money and encouraged more households to save.
However, investors are still uncertain about investing in Laos. There are strict rules and regulations for
foreign investors, especially in industries such as mining. The government says the regulations are
needed to avoid market failures, such as external costs, and abuse of monopoly power. However, these
rules and regulations are sometimes unclear. Laos is one of the lowest in the World Bank’s Ease of
Doing Business index, which measures how easy it is to start up and run a business in a country. Fig.
1.1 shows the Ease of Doing Business ranking (1 = easy) and GDP per head of selected countries in
2018.
Country
Ease of Doing Business
ranking
GDP per head ($)
Singapore
2
64 581
South Korea
5
31 362
Malaysia
15
11 239
Brunei
55
31 627
Laos
154
2567
Timor-Leste
178
2035
Fig. 1.1 The Ease of Doing Business ranking and GDP per head ($) of
selected countries in 2018
The recent economic slowdown of China may have harmful effects on Laos. China is Laos’s largest
trading partner and also the largest source of foreign investment into Laos.
© UCLES 2021
0455/21/O/N/21
3
Answer all parts of Question 1. Refer to the source material in your answers.
1 (a)
Calculate, in $, the total exports of Laos to China in 2017.
[1]
(b) Identify two roles of commercial banks.
[2]
(c) Explain how access to seaports may benefit an economy.
[2]
(d) Explain two benefits of the free market reforms introduced by the government of Laos.
[4]
(e) Analyse the impact of improved education on the economy of Laos.
[4]
22 Analyse the relationship between a country’s Ease of Doing Business ranking and its GDP
per head.
[5]
(g) Discuss whether or not strict rules and regulations benefit an economy.
[6]
(h) Discuss whether or not a slowdown of China’s economy will be harmful to the economy of
Laos.
[6]
© UCLES 2021
0455/21/O/N/21
[Turn over
4
Section B
Answer any three questions.
Each question is introduced by stimulus material. In your answer you may refer to this material and/or
to other examples that you have studied.
22 In 2019, the government of France proposed a 3% tax on the revenue of large firms that advertise
and sell products online. This tax may lead to a redistribution of income. There are concerns that
this tax may also lead to a reduction in France’s export of services as firms affected may leave
France. However, the government hopes that supply-side policy measures will encourage such
firms to stay in France.
(a) Define redistribution of income.
[2]
(b) Explain two reasons why governments redistribute income.
[4]
(c) Analyse the economic effects of a reduction in a country’s export of services.
[6]
(d) Discuss whether or not supply-side policy measures will encourage firms to operate in an
economy.
[8]
22 The island of Borneo is famous internationally for its rainforests which can bring many benefits,
both private and external. However, the economy is heavily dependent on a finite resource, oil.
The discovery of oil reserves in other parts of the world led to a significant fall in the world price of
oil. This affected producers of oil in Borneo.
(a) Define finite resource.
[2]
(b) Explain the difference between private and external benefits.
[4]
(c) Analyse, using a demand and supply diagram, the effects on the world price of oil of the
discovery of new reserves of oil.
[6]
(d) Discuss whether or not the fall in the price of a product is a disadvantage to an economy. [8]
20 Uruguay’s inflation rate reached 8.4% in July 2018. The central bank considered increasing the
interest rate to reduce the inflation rate. An increase in interest rates might influence total demand
in an economy and lead to an appreciation of its currency. This might influence Uruguay’s exports,
especially soybean exports. The total revenue of Uruguay’s soybean firms might change if there is
an appreciation of the Uruguayan peso.
(a) Define total revenue.
[2]
(b) Explain two causes of inflation.
[4]
19 Analyse how an increase in the interest rate could reduce total demand in an economy. [6]
20 Discuss whether or not an appreciation of a country’s domestic currency will have negative
effects on its economy.
[8]
© UCLES 2021
0455/21/O/N/21
5
24 Some economists criticise high government spending and trade unions for creating market
disequilibrium. However, trade unions may also play a key role in economic development. There
are over 60 trade unions in Singapore, in both labour-intensive and capital-intensive industries.
(a) Define market disequilibrium.
[2]
(b) Explain the difference between labour-intensive and capital-intensive industries.
[4]
(c) Analyse how trade unions could increase economic development.
[6]
(d) Discuss whether or not high government spending can help a government
macroeconomic aims.
© UCLES 2021
0455/21/O/N/21
achieve its
[8]
6
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0455/21/O/N/21
7
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© UCLES 2021
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8
BLANK PAGE
Permission to reproduce items where third-party owned material protected by copyright is included has been sought and cleared where possible. Every reasonable
effort has been made by the publisher (UCLES) to trace copyright holders, but if any items requiring clearance have unwittingly been included, the publisher will
be pleased to make amends at the earliest possible opportunity.
To avoid the issue of disclosure of answer- related information to candidates, all copyright acknowledgements are reproduced online in the Cambridge Assessment
International Education Copyright Acknowledgements Booklet. This is produced for each series of examinations and is freely available to download at
www.cambridgeinternational.org after the live examination series.
Cambridge Assessment International Education is part of the Cambridge Assessment Group. Cambridge Assessment is the brand name of the University of
Cambridge Local Examinations Syndicate (UCLES), which itself is a department of the University of Cambridge.
©
U
C
L
E
S
20
21
04
55
/2
1/
O/
N/
21
Cambridge IGCSE
™
ECONOMICS
0455/22
Paper 2 Structured Questions
February/March 2022
2 hours 15 minutes
You must answer on the enclosed answer booklet.
You will need: Answer booklet (enclosed)
INSTRUCTIONS
Answer four questions in total:
Section A: answer Question 1.
Section B: answer three questions.
32 Follow the instructions on the front cover of the answer booklet. If you need additional answer paper,
ask the invigilator for a continuation booklet.
33 You may use a calculator.
31
* 9 3 0 7 2 5 9 7 3 1 *
INFORMATION
(y) The total mark for this paper is 90.
(z) The number of marks for each question or part question is shown in brackets [ ].
This document has 8 pages. Any blank pages are indicated.
DC (PQ/FC) 303889/2
© UCLES 2022
[Turn over
2
Section A
Read the source material carefully before answering Question 1.
Source material: The advantages of visiting, producing and living in Bermuda
Bermuda fact file
2018
Population
72 000
Labour force
33 500
Unemployment rate
7%
Inflation rate
2%
Bermuda is a well-known holiday destination. It offers luxury holidays which are expensive.
Bermuda bans foreign fast-food outlets. It does have one foreign outlet selling fried chicken in the
island’s capital, Hamilton. This was opened before the ban was introduced in 1997. Some foreign
multinational companies (MNCs), which produce other goods and services, operate in Bermuda.
Bermuda is considered a tax haven. It does not have any corporation tax, but it does charge high import
tariffs particularly on demerit goods which are harmful to health.
Bermuda has a higher literacy rate and a lower population growth rate than most other countries. Its
GDP per head is high. Fig. 1.1 shows the relationship between GDP per head ($) and life expectancy
(years) in selected countries in 2018.
200 000
Monaco
180 000
160 000
GDP 140 000
per 120 000
head 100 000
($)
80 000
Bermuda
USA
60 000
Bahamas
40 000
20 000
00
Eswatini
10
20
30
40
50
60
70
Argentina
80
Life expectancy (years)
Fig. 1.1 The relationship between GDP per head ($) and life expectancy
(years) in selected countries 2018
© UCLES 2022
0455/22/F/M/22
90
100
3
Bermuda also has a relatively larger tertiary sector than most other countries. Insurance and other
financial services contributed 85% of its GDP in 2018. The Bermudian Monetary Authority (BMA) carries
out most of the functions of a central bank. For example, it acts as banker to the government, holds the
country’s reserves of foreign currency and implements the government’s monetary policy. The BMA
has been relatively successful in keeping inflation low. However, government policy measures designed
to reduce unemployment may affect the inflation rate. This is because policy measures can influence
total demand, productivity and firms’ costs of production.
Bermudian government policy may change, not only to cut unemployment, but also to reduce market
failure. For example, higher indirect taxes on demerit goods may be used but it can be difficult to change
people’s spending patterns.
Answer all parts of Question 1. Refer to the source material in your answers.
1 (a)
Calculate the number of Bermudian workers who were unemployed in 2018.
[1]
(b) Identify two reasons why demand for holidays in Bermuda may be price-elastic.
[2]
(c) State two reasons why a foreign MNC may want to operate in Bermuda.
[2]
(d) Explain two reasons why Bermuda has a higher level of economic development than many
other countries.
[4]
(e) Analyse the role of the Bermudian Monetary Authority (BMA).
[4]
(f)
[5]
Analyse the relationship between GDP per head and life expectancy.
(g) Discuss whether or not Bermudian government policy measures designed to reduce
unemployment would increase the inflation rate.
[6]
(h) Discuss whether or not higher indirect taxes can reduce the market failure caused by demerit
goods.
[6]
© UCLES 2022
0455/22/F/M/22
[Turn over
4
Section B
Answer any three questions.
Each question is introduced by stimulus material. In your answer you may refer to this material and/or
to other examples that you have studied.
23 South Africa (SA) experienced a recession in the second half of 2019 and an unemployment rate
of 29%. Only a small proportion of this unemployment was frictional. South Africa’s foreign
exchange rate fell from 1 SA rand = US$0.08 in 2018 to 1 SA rand = US$0.06 in 2019. South Africa
had reduced import tariffs, but in 2019 some South African economists suggested tariffs should be
used to protect its infant industries.
(a) Define frictional unemployment.
[2]
(b) Explain why an infant industry may need protection.
[4]
(c) Analyse how a fall in a country’s foreign exchange rate could reduce a deficit on the current
account of its balance of payments.
[6]
(d) Discuss whether or not a reduction in income tax will end a recession.
[8]
23 New Zealand is a small country with a population of 5 million. Most New Zealand firms are relatively
small and most do not experience diseconomies of scale. In 1894, New Zealand was the first
country to introduce a national minimum wage. New Zealand experienced a rise in income per
head every year between 2010 and 2019. During this period, 6% of New Zealand’s households
experienced absolute poverty.
(a) Define diseconomies of scale.
(b)
[2]
Explain two reasons why a high-income household may borrow more than a low-income
household.
[4]
(c) Analyse, using a diagram, the effect of an increase in output on average fixed cost (AFC) and
total fixed cost (TFC).
[6]
(d) Discuss whether or not the introduction of a national minimum wage will reduce poverty. [8]
23 Botswana’s net migration varies. In 2019, Botswana had net immigration. Since 2010, its
unemployment rate has averaged 18%. Between 2010 and 2019, the number of women in the
labour force increased from 380 000 to 490 000. Although Botswana is one of Africa’s richer
countries, its households do not save much of their income.
(a) Identify two reasons why immigration may increase.
[2]
(b) Explain two consequences of unemployment.
[4]
(c) Analyse why more women may join a country’s labour force.
[6]
(d) Discuss whether or not a government should encourage an increase in saving.
[8]
© UCLES 2022
0455/22/F/M/22
5
21 The economic problem means that countries have to decide what to produce. Ghana uses much
of its agricultural land to grow cocoa. Cocoa is sold to chocolate producers. The world’s main
chocolate producer in 2019 was a US firm with a 14% share of the global market. That firm was
the largest seller of chocolate in the US and, if it merges, may become a monopoly.
(a) Define the economic problem.
[2]
(b) Explain whether land is mobile.
[4]
(c) Analyse the causes of a shift to the right in the supply curve of chocolate.
[6]
(d) Discuss whether or not consumers would benefit from a firm becoming a monopoly.
[8]
© UCLES 2022
0455/22/F/M/22
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© UCLES 2022
0455/22/F/M/22
7
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© UCLES 2022
0455/22/F/M/22
8
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Permission to reproduce items where third-party owned material protected by copyright is included has been sought and cleared where possible. Every reasonable
effort has been made by the publisher (UCLES) to trace copyright holders, but if any items requiring clearance have unwittingly been included, the publisher will
be pleased to make amends at the earliest possible opportunity.
To avoid the issue of disclosure of answer-related information to candidates, all copyright acknowledgements are reproduced online in the Cambridge Assessment
International Education Copyright Acknowledgements Booklet. This is produced for each series of examinations and is freely available to download at
www.cambridgeinternational.org after the live examination series.
Cambridge Assessment International Education is part of Cambridge Assessment. Cambridge Assessment is the brand name of the University of Cambridge
Local Examinations Syndicate (UCLES), which is a department of the University of Cambridge.
©
U
C
L
E
S
20
22
04
55
/2
2/
F/
M/
22
Cambridge IGCSE
™
ECONOMICS
0455/22
Paper 2 Structured Questions
May/June 2021
2 hours 15 minutes
You must answer on the enclosed answer booklet.
You will need: Answer booklet (enclosed)
INSTRUCTIONS
Answer four questions in total:
Section A: answer Question 1.
Section B: answer three questions.
35 Follow the instructions on the front cover of the answer booklet. If you need additional answer paper,
ask the invigilator for a continuation booklet.
36 You may use a calculator.
34
* 6 1 8 0 4 7 2 8 0 7 *
INFORMATION
(aa) The total mark for this paper is 90.
(bb) The number of marks for each question or part question is shown in brackets [ ].
This document has 8 pages. Any blank pages are indicated.
DC (DH/CB) 201167/2
© UCLES 2021
[Turn over
2
Section A
Read the source material carefully before answering Question 1.
Source material: Chilean cherries
Content removed due to copyright restr
Producing just a few products can be risky for a country.
Content removed due to copyright restric
Fig. 1.1 Population pyramids of Chile and Haiti 2018
© UCLES 2021
0455/22/ M/J/21
3
Content removed due to copyright restrict
There is, however, evidence of market failure and inequality in
how resources are allocated.
Answer all parts of Question 1. Refer to the source material in your answers.
1 (a)
Calculate Chile’s agricultural output in 2017.
[1]
(b) Identify two disadvantages of a country specialising.
[2]
(c) Explain one reason why demand for cherries is price-elastic.
[2]
(d) Explain how Chile’s population structure differs from Haiti’s population structure.
[4]
(e) Analyse why China buys most of its cherries from Chile.
[4]
(f)
[5]
Analyse why Chilean astronomers are paid more than Chilean farm workers.
(g) Discuss whether or not Chilean consumers would benefit from more government intervention
in the economy.
[6]
(h) Discuss whether or not the Haitian economy would benefit from fewer of its people working in
Chile.
[6]
© UCLES 2021
0455/22/M/J/21
[Turn over
4
Section B
Answer any three questions.
Each question is introduced by stimulus material. In your answers you may refer to the material and /
or to other examples you have studied.
24 Nearly one million people in Cairo, the capital city of Egypt, live in crowded, unhealthy housing.
One reason why people lack basic necessities, including adequate housing, is unemployment. In
2019, nearly 10% of Cairo’s workers did not have a job. Other citizens of Cairo live in luxury, in
houses costing more than $1 million. Many of Cairo’s rich adults grew up in rich families.
(a) Identify two basic necessities, other than housing.
[2]
(b) Explain how frictional unemployment differs from cyclical unemployment.
[4]
(c) Analyse why the children of the rich tend to become rich adults.
[6]
(d) Discuss whether a government should provide subsidies to families to spend on housing. [8]
24 Consumers in Uruguay are eating more processed foods. Factors of production, including
enterprise, have responded to this change. Firms in the processed food industry have become
more capital-intensive. All of Uruguay’s industries were affected by the rise in its inflation rate, from
6.2% in 2017 to 7.7% in 2018.
(a) Define enterprise.
[2]
(b) Explain the influence of opportunity cost on consumers’ decisions.
[4]
(c) Analyse why a firm may become more capital-intensive.
[6]
(d) Discuss whether inflation harms a country’s industries.
[8]
24 Turkey’s birth rate is falling which is likely to reduce its supply of labour. However, improvements
in the quality of labour and the increase in foreign multinational companies (MNCs) operating in
Turkey (the host country to the MNCs) may help the economy avoid a recession. One reason why
economists are worried that a recession may occur is an expected rise in the interest rate.
(a) Define birth rate.
[2]
(b) Explain two causes of an increase in the quality of labour in a country.
[4]
(c) Analyse how a rise in the interest rate could cause a recession.
[6]
(d) Discuss whether or not MNCs improve the economic performance of the host countries in
which they operate.
[8]
© UCLES 2021
0455/22/M/J/21
5
22 The money supply in Bangladesh increased every year from 2010 to 2018. Changes in the money
supply and the foreign exchange rate can affect a government’s macroeconomic policy aims,
including full employment. There have been few mergers between commercial banks in
Bangladesh, although its banks are larger than many of its other firms.
(a) Identify two functions of money.
[2]
(b) Explain two reasons why commercial banks may want to merge.
[4]
(c) Analyse how a fall in a country’s foreign exchange rate could increase employment.
[6]
(d) Discuss whether or not it is an advantage to keep a firm small.
[8]
© UCLES 2021
0455/22/M/J/21
[Turn over
6
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© UCLES 2021
0455/22/M/J/21
7
BLANK PAGE
© UCLES 2021
0455/22/M/J/21
8
BLANK PAGE
Permission to reproduce items where third-party owned material protected by copyright is included has been sought and cleared where possible. Every reasonable
effort has been made by the publisher (UCLES) to trace copyright holders, but if any items requiring clearance have unwittingly been included, the publisher will
be pleased to make amends at the earliest possible opportunity.
To avoid the issue of disclosure of answer- related information to candidates, all copyright acknowledgements are reproduced online in the Cambridge Assessment
International Education Copyright Acknowledgements Booklet. This is produced for each series of examinations and is freely available to download at
www.cambridgeinternational.org after the live examination series.
Cambridge Assessment International Education is part of the Cambridge Assessment Group. Cambridge Assessment is the brand name of the University of
Cambridge Local Examinations Syndicate (UCLES), which itself is a department of the University of Cambridge.
©
U
C
L
E
S
20
21
04
55
/2
2/
M/
J/
21
Cambridge IGCSE
™
ECONOMICS
0455/22
Paper 2 Structured Questions
February/March 2021
2 hours 15 minutes
You must answer on the enclosed answer booklet.
You will need: Answer booklet (enclosed)
INSTRUCTIONS
● Answer four questions in total: Section
A: answer Question 1.
37
38
Section B: answer three questions.
Follow the instructions on the front cover of the answer booklet. If you need additional answer paper,
ask the invigilator for a continuation booklet.
You may use a calculator.
* 4 3 9 7 5 9 7 0 4 3 *
INFORMATION
(cc) The total mark for this paper is 90.
(dd) The number of marks for each question or part question is shown in brackets [ ].
This document has 8 pages. Any blank pages are indicated.
DC (MB) 199838/2
© UCLES 2021
[Turn over
2
Section A
Read the source material carefully before answering Question 1.
Source material: Will Germany continue to be a strong economy?
Population fact file 2017
Germany
world
population
81 million
7.5 billion
22.0%
8.5%
47.4 years
30.6 years
percentage of population aged over 65
average age
Germany is a country with a trade surplus and a high GDP per head. It also has a budget surplus
(government tax revenue greater than expenditure), a high HDI and a low inflation rate.
In recent years, German firms have exported a higher value of goods and services. This has contributed to
the growth of world trade, caused partly by a fall in transport costs. A relatively large number of German
firms produce both in Germany and in other countries, helped by better communications.
Germany is a major producer and exporter of luxury cars. Demand for luxury cars was influenced in
2018 by increases in incomes in Germany and abroad, a rise in the price of US luxury cars and, in some
countries, a fall in the price of petrol.
Improvements in the quality of education and information on job vacancies have made it easier for
workers to change jobs in Germany. This greater ability to change jobs has helped to reduce
unemployment and to increase the country’s output.
Fewer workers in the German car industry are now members of a trade union. As shown in Table 1.1,
trade union membership in Germany has declined in recent years.
Table 1.1 selected data on the German labour market 2013–2016
Year
Trade union
membership
(millions)
Size of labour force
(millions)
Unemployment
rate
(%)
Average annual
wage
($)
2013
18.0
42.2
5.4
40 567
2014
17.7
42.5
5.1
41 188
2015
17.6
42.8
4.8
42 084
2016
17.0
43.3
4.3
42 708
A challenge facing Germany is its ageing population. The effect of an older labour force is uncertain. It
may mean firms become reluctant to invest in new technology, but a shortage of young workers may
encourage firms to buy more capital goods.
Germany’s population may fall and there will soon be fewer Germans aged under 30 than over 60
unless immigration continues at a relatively high rate. Immigration might increase both the country’s
labour force and its government’s spending on education.
© UCLES 2021
0455/22/F/M/21
3
Answer all parts of Question 1. Refer to the source material in your answers.
1 (a)
Calculate the number of Germans aged over 65 in 2017.
[1]
(b) Identify two measures of living standards.
[2]
(c) Explain one cause of globalisation.
[2]
(d) Explain two advantages of an increase in the occupational mobility of labour.
[4]
(e) Analyse why the price of German luxury cars may have increased in 2018.
[4]
(f)
[5]
Analyse whether the strength of German trade unions increased from 2013–2016.
(g) Discuss whether or not an ageing labour force will reduce productivity.
[6]
(h) Discuss whether or not immigration will increase a country’s budget surplus.
[6]
© UCLES 2021
0455/22/F/M/21
[Turn over
4
Section B
Answer any three questions.
Each question is introduced by stimulus material. In your answer you may refer to this material and/or
to other examples that you have studied.
25 India has experienced a relatively high economic growth rate in recent years. This growth has been
driven by increases in government spending and exports, including exports of textiles. India’s
unemployment rate has, however, increased. The government is concerned that trying to reduce
unemployment may increase India’s inflation rate.
(a) Define economic growth.
[2]
(b) Explain the possible opportunity cost to India of exporting more textiles.
[4]
(c) Analyse how higher government spending could increase economic growth.
[6]
(d) Discuss whether or not a government can reduce unemployment without increasing inflation.
[8]
25 In the Netherlands in 2018, there were 1.3 bicycles per person and the world’s largest underground
bicycle parking area was built in the capital city. Land is scarce in city centres, where most cycling
takes place. Demand for bikes in the Netherlands is price-inelastic. Only a few people in the
Netherlands borrow money to buy bikes. The government encourages cycling by spending on both
bike parking areas and leisure cycle parks.
(a) Identify one difference between land and labour.
[2]
(b) Explain two reasons why demand for a product may be price-inelastic.
[4]
(c) Analyse why households in one country may borrow more than households in another
country.
[6]
(d) Discuss whether or not a government should encourage more people to cycle.
[8]
25 It is estimated that half of Egyptian men smoke. This is one of the highest rates in the world. In
recent years the Egyptian government has increased the tax on cigarettes. The government and
central bank have also tried to reduce inflation and improve Egypt’s international trade
performance. The Egyptian government could use subsidies to reduce its deficit on the current
account of its balance of payments.
(a) Identify two qualities of a good tax.
[2]
(b) Explain two reasons why governments tax cigarettes.
[4]
(c) Analyse how a central bank could reduce inflation.
[6]
(d) Discuss whether or not an increase in government subsidies will reduce a deficit on the
current account of the balance of payments.
[8]
© UCLES 2021
0455/22/F/M/21
5
23 Sweden has a mixed economic system. In 2018, it was operating at a point inside its production
possibility curve (PPC). In 2018, the country’s schools employed nearly 2500 extra teachers. A few
of these had previously been actors. A higher number had previously been government officials
involved with regulation of Swedish monopolies.
(a) Define a mixed economic system.
[2]
(b) Explain the difference between a point inside a PPC and a point outside a PPC.
[4]
(c) Analyse why an actor may decide to become a teacher.
[6]
(d) Discuss whether all monopolies have low costs of production.
[8]
© UCLES 2021
0455/22/F/M/21
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7
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© UCLES 2021
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8
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Permission to reproduce items where third-party owned material protected by copyright is included has been sought and cleared where possible. Every reasonable
effort has been made by the publisher (UCLES) to trace copyright holders, but if any items requiring clearance have unwittingly been included, the publisher will
be pleased to make amends at the earliest possible opportunity.
To avoid the issue of disclosure of answer- related information to candidates, all copyright acknowledgements are reproduced online in the Cambridge Assessment
International Education Copyright Acknowledgements Booklet. This is produced for each series of examinations and is freely available to download at
www.cambridgeinternational.org after the live examination series.
Cambridge Assessment International Education is part of the Cambridge Assessment Group. Cambridge Assessment is the brand name of the University of
Cambridge Local Examinations Syndicate (UCLES), which itself is a department of the University of Cambridge.
©
U
C
L
E
S
20
21
04
55
/2
2/
F/
M/
21
Cambridge IGCSE
™
ECONOMICS
0455/22
Paper 2 Structured Questions
October/November 2021
2 hours 15 minutes
You must answer on the enclosed answer booklet.
You will need: Answer booklet (enclosed)
INSTRUCTIONS
Answer four questions in total:
Section A: answer Question 1.
Section B: answer three questions.
40 Follow the instructions on the front cover of the answer booklet. If you need additional answer paper,
ask the invigilator for a continuation booklet.
41 You may use a calculator.
39
* 9 5 2 4 8 9 4 5 1 1 *
INFORMATION
(ee) The total mark for this paper is 90.
(ff) The number of marks for each question or part question is shown in brackets [ ].
This document has 8 pages. Any blank pages are indicated.
DC (DH) 314876/1
© UCLES 2021
[Turn over
2
Section A
Read the source material carefully before answering Question 1.
Source material: India’s airline industry
Air India fact file
total revenue 2018
$2.2 bn
total cost 2018
$2.9 bn
number of passengers carried in 2018
16.4 m
number of passengers carried in 2017
14.8 m
share of India’s international and national air travel market in 2018
13%
share of India’s international and national air travel market in 1994
100%
Air India is owned by the Indian government. The entry of new firms into India’s air travel market has
reduced Air India’s ability to set price. The state-owned firm faces competition not only from other
airlines but also from other forms of transport including trains and ships.
In 2017 the Indian government tried, unsuccessfully, to sell Air India to the private sector. A successful
sale would have raised money for the Indian government and might have increased the airline’s
efficiency.
It is predicted that India will have the third largest airline industry by 2025. The growth in the industry
may affect the current account position of India’s balance of payments. Table 1.1 shows the current
account position in India and four other countries.
Table 1.1 The current account position of the balance of payments of selected countries in 2017
Country
Current account
($ bn)
Current account
% of GDP
Brazil
–9.8
–0.5
China
164.9
1.4
India
–48.7
–1.9
Kenya
–5.4
–6.8
Russia
35.4
2.2
A rise in both the number of routes flown and the quality of the passenger experience may increase the
number of tourists visiting India. A larger Indian airline industry is likely to increase the ease of
movement of people and goods into and out of India. This might attract more multinational companies
(MNCs) and reduce firms’ costs of production.
India’s air travel market faces a number of challenges. India has Asia’s highest airline fuel tax. Some
economists suggest that this should be increased further to increase tax revenue and to reduce market
failure. The airlines’ other costs are rising but it is difficult for them to raise prices. This is because India’s
air passengers are among the most price-sensitive in the world. Some airlines stop their costs rising
any further by improving their staff training, introducing new technology and improving their pilots’
working conditions. The airlines’ ability to hire pilots is influenced by, among other factors, the quality
of education and other job opportunities.
© UCLES 2021
0455/22/O/N/21
3
Answer all parts of Question 1. Refer to the source material in your answers.
(a) Calculate, in $, Air India’s loss in 2018.
[1]
(b) Identify two substitutes for air travel.
[2]
(c) Explain one characteristic that suggests that Air India was a monopoly in 1994.
[2]
(d) Explain two reasons why a government may privatise an industry.
[4]
(e) Analyse how India’s position on the current account of its balance of payments in 2017
compares with the other four countries.
[4]
(f)
Analyse how a successful airline industry can promote economic growth.
[5]
(g) Discuss whether the Indian government should increase the tax on airline fuel.
[6]
(h) Discuss whether more people will apply to be pilots for Indian airlines in the future.
[6]
© UCLES 2021
0455/22/O/N/21
[Turn over
4
Section B
Answer any three questions.
Each question is introduced by stimulus material. In your answers you may refer to the material
and/or to other examples you have studied.
26 A number of countries, including Morocco, capture water from fog. Water is used in the primary,
secondary and tertiary sectors. In recent years, Morocco has increased the quantity and quality of
its resources and has moved more of them into the tertiary sector. The quantity, quality and
composition of a country’s resources are influenced by a number of factors, including its birth rate.
Morocco’s birth rate fell from 19.9 in 2016 to 18.7 in 2018.
(a) Define a free good.
[2]
(b) Explain, with examples, the difference between the secondary sector and the tertiary sector.
[4]
(c) Analyse, using a production possibility curve (PPC), the effect of an increase in the quality of
its resources on an economy.
[6]
(d) Discuss whether or not a fall in a country’s birth rate will benefit an economy.
[8]
26 Two of Uzbekistan’s main industries are cotton and gas. Uzbekistan is the world’s seventh largest
producer, and fifth largest exporter, of cotton. The Uzbek government has tried to influence the
cotton industry’s price elasticity of supply. It has also nearly ended the use of child labour in cotton
production. The country’s output of gas increased by 7% in 2018 and its average cost of gas
production fell.
(a) Identify two determinants of price elasticity of supply.
[2]
(b) Explain two advantages to an economy of ending child labour.
[4]
(c) Analyse how average cost can change as output increases.
[6]
(d) Discuss whether or not an economy would benefit from allocating more of its resources to
agriculture.
[8]
26 In Tunisia, resource allocation decisions are made by both the public sector and private sector.
Tunisia’s GDP increased from 2014 to 2018 but its households saved less. Income levels can be
affected by changes in trade union activity and the foreign exchange rate. From 2014 to 2018,
Tunisia experienced a number of strikes organised by its largest trade union, the Tunisian General
Labour Union. There was also a significant fall in its foreign exchange rate.
(a) Identify two of the three resource allocation decisions.
[2]
(b) Explain two reasons why households may save less even though their income has increased.
[4]
(c) Analyse how a trade union may benefit its members.
(d) Discuss whether or not a fall in its foreign exchange rate will improve a country’s
macroeconomic performance. [8]
© UCLES 2021
0455/22/O/N/21
[6]
5
24
The US operates a mainly market economic system. Life expectancy in the US fell in 2017, for the third
year in a row. Although the US has a high GDP per head, it also has a high level of income inequality.
The poor benefited from the US’s low and stable inflation rate. The government’s supply-side policy
measures were partly responsible for reducing inflationary pressure.
(a) Identify two ways a government could reduce income inequality.
[2]
(b) Explain two advantages of a market economic system.
[4]
(c) Analyse why life expectancy may decrease.
[6]
(d) Discuss whether or not supply-side policy measures can reduce inflation.
[8]
© UCLES 2021
0455/22/O/N/21
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Permission to reproduce items where third-party owned material protected by copyright is included has been sought and cleared where possible. Every reasonable
effort has been made by the publisher (UCLES) to trace copyright holders, but if any items requiring clearance have unwittingly been included, the publisher will
be pleased to make amends at the earliest possible opportunity.
To avoid the issue of disclosure of answer- related information to candidates, all copyright acknowledgements are reproduced online in the Cambridge Assessment
International Education Copyright Acknowledgements Booklet. This is produced for each series of examinations and is freely available to download at
www.cambridgeinternational.org after the live examination series.
Cambridge Assessment International Education is part of the Cambridge Assessment Group. Cambridge Assessment is the brand name of the University of
Cambridge Local Examinations Syndicate (UCLES), which itself is a department of the University of Cambridge.
©
U
C
L
E
S
20
21
04
55
/2
2/
O/
N/
21
Cambridge IGCSE
™
ECONOMICS
0455/21
Paper 2 Structured Questions
May/June 2021
2 hours 15 minutes
You must answer on the enclosed answer booklet.
You will need: Answer booklet (enclosed)
INSTRUCTIONS
Answer four questions in total:
Section A: answer Question 1.
Section B: answer three questions.
43 Follow the instructions on the front cover of the answer booklet. If you need additional answer paper,
ask the invigilator for a continuation booklet.
44 You may use a calculator.
42
* 5 1 0 5 4 1 9 0 9 8 *
INFORMATION
(gg) The total mark for this paper is 90.
(hh) The number of marks for each question or part question is shown in brackets [ ].
This document has 8 pages. Any blank pages are indicated.
DC (DH) 201166/1
© UCLES 2021
[Turn over
2
Section A
Read the source material carefully before answering Question 1.
Source material: changes in the Nigerian economy
Nigeria fact file
2017
Government spending
$19.5bn
Tax revenue
$12.9bn
Balance of trade in goods
$10.4bn
Imports of goods
$32.7bn
Nigeria produces a range of products including delivery vehicles, footwear, machines, maize and office
equipment. It does, however, depend heavily on oil for its exports. The government tries to encourage an
increase in the output and export of other products. To achieve this, it uses a range of policy measures
including changes in taxation and government spending e.g. subsidising the training of construction workers.
Successful training can increase job opportunities and wages. The government’s aims are to improve
Nigeria’s macroeconomic performance and to raise living standards.
Table 1.1 shows data on living standards in Nigeria and Ethiopia in 2017.
Table 1.1 Selected data on living standards in Nigeria and Ethiopia in 2017
Country
GDP per
head ($)
Life expectancy
at birth (years)
Average years
spent at school
% of children
aged under 5 who
are underweight
Nigeria
5,900
59
9
31.5
Ethiopia
2,200
63
8
23.6
Investment in Nigeria has been growing slowly. Some firms are discouraged from spending on capital
goods by the relatively high interest rate, high corporation tax rate and economic uncertainty.
Nigeria’s population is increasing rapidly. The birth rate is high and the death rate is falling but it has
net emigration. Nigeria’s population was 191 million in 2017 and is forecast to grow to 402 million by
2050. An increase in its population size will create both challenges and opportunities. It will affect the
level of demand in the economy, may harm the environment and more food will be needed.
The Nigerian government increased the tariff on imported rice in 2016, to encourage an increase in its
own rice production. Nigeria is Africa’s largest producer of rice but also its largest importer. In 2018,
Nigeria imported almost 50% of the rice it consumed. Nigerian farmers produce less rice for every unit
of land used than Asian farmers and Nigerian farmers have high costs of production.
© UCLES 2021
0455/21/M/J/21
3
Answer all parts to Question 1. Refer to the source material in your answers.
1 (a) Calculate the value of Nigeria’s exports of goods in 2017.
[1]
(b) Identify two examples of capital goods.
[2]
(c) Explain whether Nigeria had a budget deficit or a budget surplus in 2017.
[2]
4
Explain how government spending on training may increase tax revenue in the long run. [4]
5
Analyse how living standards in Nigeria compare with living standards in Ethiopia in 2017. [4]
(f)
Analyse how a government could encourage firms to increase their investment.
[5]
(g) Discuss whether or not an increase in Nigeria’s population will benefit its economy.
[6]
(h) Discuss whether or not an increase in Nigeria’s import tariff on rice would increase the output
of Nigerian rice.
[6]
© UCLES 2021
0455/21/M/J/21
[Turn over
4
Section B
Answer any three questions.
Each question is introduced by stimulus material. In your answers you may refer to the material and /
or to other examples you have studied.
2
3
There is an area of rubbish, three times the size of France, floating in the Pacific Ocean called the
Great Pacific Garbage Patch. It is made up of rubbish including old fishing nets but most is plastic
waste. It is forecast that, by 2050, there will be more plastic in the Pacific Ocean than fish. A number
of islands in the Pacific Ocean specialise in fishing. Greater pollution will increase the social cost
of the fishing industry.
(a) Identify the two types of costs that make up social cost.
[2]
(b) Explain two causes of a shift to the right in the demand curve for fish.
[4]
(c) Analyse how cleaning up pollution could benefit an economy.
[6]
(d) Discuss whether or not countries specialising benefits consumers.
[8]
In 2018, the US had its lowest unemployment rate for 18 years. Cyclical unemployment was very
low and so was the rate of inflation. The US also experienced a rise in labour productivity. However,
it did not do so well in reducing poverty. In 2018, approximately 12% of Americans were living in
poverty.
(a) Define cyclical unemployment.
[2]
(b) Explain two ways a firm could increase the productivity of its workers.
[4]
(c) Analyse the advantages of a low rate of inflation.
[6]
(d) Discuss whether or not a fall in a country’s unemployment rate will reduce poverty in that
country.
[8]
4
The Canadian government has introduced a number of policy measures designed to encourage
more women to enter the labour force. Canada’s labour force has reduced as its population has
aged. The number of workers and their output are influenced by changes in the country’s foreign
exchange rate and consumer expenditure. In 2018, the Canadian dollar fell in value while Canadian
consumer expenditure increased.
(a) Define the labour force.
[2]
(b) Explain two causes of an ageing population.
[4]
(c) Analyse how a fall in the value of a country’s foreign exchange rate could reduce a deficit on
the current account of its balance of payments. [6]
(d) Discuss whether or not an economy will benefit from an increase in consumer expenditure. [8]
© UCLES 2021
0455/21/M/J/21
5
5
Australia experienced a drought in 2018 which caused its agricultural output to fall. Australia’s
secondary and tertiary sectors performed better in 2018 than its primary sector. All three sectors
were affected by the measures taken by the central bank to avoid deflation. Some firms benefited
from these measures and increased their output.
(a) Identify two industries, other than agriculture, that operate in the primary sector.
[2]
(b) Explain two possible disadvantages to an economy of a fall in agricultural output.
[4]
(c) Analyse how a central bank could avoid deflation.
[6]
(d) Discuss whether or not a firm should have growth as its main objective.
[8]
© UCLES 2021
0455/21/M/J/21
6
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© UCLES 2021
0455/21/M/J/21
7
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© UCLES 2021
0455/21/M/J/21
8
BLANK PAGE
Permission to reproduce items where third-party owned material protected by copyright is included has been sought and cleared where possible. Every reasonable
effort has been made by the publisher (UCLES) to trace copyright holders, but if any items requiring clearance have unwittingly been included, the publisher will
be pleased to make amends at the earliest possible opportunity.
To avoid the issue of disclosure of answer- related information to candidates, all copyright acknowledgements are reproduced online in the Cambridge Assessment
International Education Copyright Acknowledgements Booklet. This is produced for each series of examinations and is freely available to download at
www.cambridgeinternational.org after the live examination series.
Cambridge Assessment International Education is part of the Cambridge Assessment Group. Cambridge Assessment is the brand name of the University of
Cambridge Local Examinations Syndicate (UCLES), which itself is a department of the University of Cambridge.
© UCLES 2021
0455/21/M/J/21
Cambridge IGCSE™
ECONOMICS
0455/22
Paper 2 Structured Questions
May/June 2020
2 hours 15 minutes
*7311585981*
You must answer on the enclosed answer booklet.
You will need: Answer booklet (enclosed)
INSTRUCTIONS
● Answer four questions in total:
Section A: answer Question 1.
Section B: answer three questions.
● Follow the instructions on the front cover of the answer booklet. If you need additional answer paper,
ask the invigilator for a continuation booklet.
● You may use a calculator.
INFORMATION
● The total mark for this paper is 90.
● The number of marks for each question or part question is shown in brackets [ ].
This document has 8 pages. Blank pages are indicated.
DC (JC) 184590/2
© UCLES 2020
[Turn over
2
Section A
Read the source material carefully before answering Question 1.
Source material: the challenges facing Pakistan
Pakistan fact file
2016
$ billion
2017
$ billion
Exports of goods
20.5
25.2
Imports of goods
47.0
61.7
Government spending
40.5
43.2
Consumer spending
259.3
294.8
Pakistan faces a number of economic challenges. These include responding to a rising population,
improving its trade in goods balance, controlling the country’s inflation rate and increasing the country’s
economic growth rate. To overcome these challenges, the Pakistani government is trying to increase
investment. Currently, a high proportion of the country’s resources are used to produce consumer
goods.
The government is subsidising entrepreneurs and charities to open low-cost schools. It wants to reduce
the dropout rate from schools and to raise educational standards. Some parents do not recognise the
advantages that a merit good such as education can give their children, for example better health and
better job opportunities. Some of the poor need their children to work from a young age to support the
family. Government reforms have not yet led to a significant rise in teachers’ wages but have improved
school buildings and the number of children attending. The qualifications required to teach may be
increased in the future.
Improved education may affect the number of skilled workers who emigrate and may raise the quantity
and quality of goods and services produced. Any resulting higher income may influence the value of
imports purchased, as shown in Table 1.
Table 1 GDP per head and imports per head in selected countries in 2017.
Country
GDP per head
($)
Imports per head
($)
Norway
70 600
14 472
UK
43 600
10 419
South Korea
39 400
11 602
Russia
27 900
4 002
Mexico
19 500
7 343
Pakistan
5 400
1 143
Haiti
1 800
853
Pakistan has relatively high import tariffs. Revenue from import tariffs is 45% of total tax revenue. The
tariffs on vehicles, some of which have inelastic demand, are particularly high. Future Pakistani tariffs
may be influenced by changes in other countries’ trade policies, as well as other factors.
© UCLES 2020
0455/22/M/J/20
3
Answer all parts to Question 1. Refer to the source material in your answers.
1
(a) Calculate Pakistan’s trade in goods balance in 2017.
[1]
(b) Identify two possible causes of demand-pull inflation in Pakistan in 2017.
[2]
(c) Explain the opportunity cost to Pakistan of producing consumer goods.
[2]
(d) Explain two reasons why education is a merit good.
[4]
(e) Analyse why the children of poor families tend to receive less education than the children of
rich families.
[4]
(f)
Analyse the relationship between GDP per head and imports per head.
[5]
(g) Discuss whether or not the supply of teachers in Pakistan is likely to increase in the future.
[6]
(h) Discuss whether or not an increase in its import tariffs would be likely to benefit the Pakistani
economy.
[6]
© UCLES 2020
0455/22/M/J/20
[Turn over
4
Section B
Answer any three questions.
Each question is introduced by stimulus material. In your answer you may refer to this material and / or
to other examples that you have studied.
2
The Indian government has declared that the country, now a major car producer, will sell only
electric cars by 2030. The government wants to reduce external costs, some of which are caused
by petrol and diesel cars. Demand for electric cars is currently relatively low and price-elastic. The
government, however, thinks that it will not need to subsidise the production of electric cars to
achieve its target.
(a) Define external costs.
[2]
(b) Explain two influences on whether demand for a product is price-elastic or price-inelastic. [4]
(c) Analyse, using a demand and supply diagram, how a subsidy given to producers could affect
the market for electric cars.
[6]
(d) Discuss whether cars should be produced by the private sector or the public sector.
3
4
[8]
A number of countries are withdrawing high value banknotes. For instance, Singapore plans to
stop issuing its $10 000 note. High value notes were originally intended to act as a convenient store
of value. Central banks are concerned some notes are now being used illegally. The Singapore
Police Force and the Monetary Authority of Singapore (its central bank) were trying to recruit more
workers in 2017. It was expected that the central bank would raise the rate of interest in 2018.
(a) State two functions of money, other than a store of value.
[2]
(b) Explain two advantages banknotes have as a form of money.
[4]
(c) Analyse the influences on the mobility of workers.
[6]
(d) Discuss whether or not a central bank should raise the rate of interest.
[8]
In 2017, the Japanese government announced improvements to its tax system. The amount of
tax raised is influenced by the size and age distribution of a country’s population. Japan’s birth
and death rates are falling, its population is ageing, and it has low immigration. Overall, Japan’s
population is decreasing.
(a) State two qualities of a good tax.
[2]
(b) Explain two causes of a decrease in the death rate.
[4]
(c) Analyse, using a production possibility curve (PPC) diagram, the effect of a decrease in
population size on an economy.
[6]
(d) Discuss whether or not an ageing population is a benefit to an economy.
© UCLES 2020
0455/22/M/J/20
[8]
5
5
Mali is a low income and low productivity country in Africa. Its government is using fiscal policy
to reduce poverty. The country’s main industries are agriculture and gold mining. In recent years,
however, there have been some changes in its resource allocation. The country is developing its
iron ore industry. Globally, the iron ore industry is one which has experienced a significant number of
mergers in recent years.
(a) State two key questions about how resources are allocated.
[2]
(b) Explain two fiscal policy measures that can be used to reduce poverty.
[4]
(c) Analyse why a country may have low productivity.
[6]
(d) Discuss whether or not mergers benefit an economy.
[8]
© UCLES 2020
0455/22/M/J/20
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© UCLES 2020
0455/22/M/J/20
7
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© UCLES 2020
0455/22/M/J/20
8
BLANK PAGE
Permission to reproduce items where third-party owned material protected by copyright is included has been sought and cleared where possible. Every
reasonable effort has been made by the publisher (UCLES) to trace copyright holders, but if any items requiring clearance hav e unwittingly been included,
the publisher will be pleased to make amends at the earliest possible opportunity.
To avoid the issue of disclosure of answer-related information to candidates, all copyright acknowledgements are reproduced online in the Cambridge
Assessment International Education Copyright Acknowledgements Booklet. This is produced for each series of examinations and is freely available to download
at www.cambridgeinternational.org after the live examination series.
Cambridge Assessment International Education is part of the Cambridge Assessment Group. Cambridge Assessment is the brand nam e of the University
of Cambridge Local Examinations Syndicate (UCLES), which itself is a department of the University of Cambridge.
© UCLES 2020
0455/22/M/J/20
Cambridge IGCSE™
ECONOMICS
0455/21
Paper 2 Structured Questions
May/June 2020
2 hours 15 minutes
*7722528678*
You must answer on the enclosed answer booklet.
You will need: Answer booklet (enclosed)
INSTRUCTIONS
● Answer four questions in total:
Section A: answer Question 1.
Section B: answer three questions.
● Follow the instructions on the front cover of the answer booklet. If you need additional answer paper,
ask the invigilator for a continuation booklet.
● You may use a calculator.
INFORMATION
● The total mark for this paper is 90.
● The number of marks for each question or part question is shown in brackets [ ].
This document has 8 pages. Blank pages are indicated.
DC (JC) 184589/2
© UCLES 2020
[Turn over
2
Section A
Read the source material carefully before answering Question 1.
Source material: Vietnam’s growing population and economy
Vietnam fact file
2010
2017
$272.8 billion
$662.4 billion
88 million
96 million
$1 = 19 500 dong
$1 = 22 780 dong
GDP
Population
Foreign exchange rate
Vietnam’s population and its output are increasing. Consumers, workers and firms are benefiting from
the higher output. Some Vietnamese people are receiving more generous pensions and higher wages
while some firms are earning higher profits.
Vietnam’s population is ageing but the country still has a relatively young labour force. Age can affect
workers’ flexibility, mobility, level of experience and their knowledge of the latest technology. The
Vietnamese government wants to raise the quality of its labour force by spending more on education.
Vietnamese children have recently performed better in international tests than children in richer
countries. Education spending can influence the percentage of the labour force working in the tertiary
sector as shown in Table 1.
Table 1 Education spending as a percentage of GDP and the percentage of the labour force
employed in the tertiary sector in selected countries in 2017.
Country
Education spending
% of GDP
Labour force employed in
the tertiary sector
(%)
Norway
7.4
78.0
Vietnam
6.3
32.3
France
5.5
75.9
Germany
4.9
71.2
Indonesia
3.6
45.2
Iran
3.1
49.1
Bangladesh
2.0
35.6
Vietnam has had a budget deficit since 2008. The country’s high economic growth rate and changes in
government policies will affect its budget balance in the future. The government is privatising a number
of public sector firms. It also plans to spend more on education and defence and is likely to raise some
tax rates.
Deregulation has increased the number of firms, both foreign and domestically owned, in a number of
markets. For instance, in 2007 there was only one Vietnamese airline. It operated only two routes and
the fares it charged were not affordable to most Vietnamese. Now the country has seven airlines offering
domestic and international flights.
Borrowing by both households and firms increased in Vietnam between 2010 and 2017. Households
borrowed mainly to purchase more consumer goods while firms borrowed mainly to invest.
© UCLES 2020
0455/21/M/J/20
3
Answer all parts to Question 1. Refer to the source material in your answers.
1
(a) Calculate Vietnam’s GDP per head in 2017.
[1]
(b) Identify two rewards to factors of production.
[2]
(c) Explain what happened to Vietnam’s foreign exchange rate between 2010 and 2017.
[2]
(d) Explain two benefits an economy may gain from having a young labour force.
[4]
(e) Analyse why Vietnam’s budget deficit may decline in the future.
[4]
(f)
Analyse the relationship between government spending on education and the percentage of
the labour force employed in the tertiary sector.
[5]
(g) Discuss whether or not an increase in competition is likely to benefit Vietnamese consumers.
[6]
(h) Discuss whether or not the increase in borrowing is likely to have caused inflation in Vietnam
in 2017.
[6]
© UCLES 2020
0455/21/M/J/20
[Turn over
4
Section B
Answer any three questions.
Each question is introduced by stimulus material. In your answer you may refer to this material and / or
to other examples that you have studied.
2
3
Japan has a low immigration rate and a declining population. In recent years, it has experienced
deflation and a rise in child poverty. By 2017, one in six Japanese children lived in a household
with less than half of the average household income. Japan operates a national minimum wage
which increased every year between 2010 and 2017. This may have affected the level of poverty
in the country.
(a) State two benefits a country may gain from immigration.
[2]
(b) Explain two consequences of deflation.
[4]
(c) Analyse why children from low-income families may have low incomes as adults.
[6]
(d) Discuss whether or not a national minimum wage will reduce poverty.
[8]
There is a smaller proportion of large firms in Africa than in Asia. The two African countries with
the largest firms are Nigeria and South Africa. These two countries’ firms have more capital
goods than most other African countries’ firms. Firms in South Africa produce a range of products
including gold and petrochemicals. In recent years, a number of African firms have developed into
multinational companies (MNCs), producing mainly in other African countries.
(a) Define a capital good.
[2]
(b) Explain two challenges facing small firms.
[4]
(c) Analyse, using a demand and supply diagram, how a rise in income may affect the market for
gold.
[6]
(d) Discuss whether or not MNCs increase production and productivity in their host countries. [8]
4
Economists are uncertain about the future United States (US) macroeconomic performance. For
instance, in recent years, US unemployment has fallen while the deficit on the current account of
the balance of payments has fluctuated. Whether its current account deficit will rise or fall in the
future may be affected by proposed tax cuts. Some economists suggest that the US government
should not be concerned about the country’s current account deficit.
(a) Define macroeconomics.
[2]
(b) Explain two consequences to firms of unemployment.
[4]
(c) Analyse how tax cuts could increase exports.
[6]
(d) Discuss whether or not a current account deficit on its balance of payments harms an
economy.
[8]
© UCLES 2020
0455/21/M/J/20
5
5
Australian firms have been praised for introducing new technology. The actions of some of these
firms, however, cause market failure. The Australian government uses subsidies, among other
policies, to reduce market failure. Government spending is used both to improve the performance of
individual markets and the macroeconomy. The Australian government increased its spending in
2017, in part to reduce unemployment.
(a) State two objectives of firms.
[2]
(b) Explain how a subsidy can correct market failure.
[4]
(c) Analyse, using a production possibility curve (PPC) diagram, the effect of advances in
technology on an economy.
[6]
(d) Discuss whether or not an increase in government spending will reduce unemployment.
© UCLES 2020
0455/21/M/J/20
[8]
6
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© UCLES 2020
0455/21/M/J/20
7
BLANK PAGE
© UCLES 2020
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8
BLANK PAGE
Permission to reproduce items where third-party owned material protected by copyright is included has been sought and cleared where possible. Every
reasonable effort has been made by the publisher (UCLES) to trace copyright holders, but if any items requiring clearance hav e unwittingly been included,
the publisher will be pleased to make amends at the earliest possible opportunity.
To avoid the issue of disclosure of answer-related information to candidates, all copyright acknowledgements are reproduced online in the Cambridge
Assessment International Education Copyright Acknowledgements Booklet. This is produced for each series of examinations and is freely available to download
at www.cambridgeinternational.org after the live examination series.
Cambridge Assessment International Education is part of the Cambridge Assessment Group. Cambridge Assessment is the brand nam e of the University
of Cambridge Local Examinations Syndicate (UCLES), which itself is a department of the University of Cambridge.
© UCLES 2020
0455/21/M/J/20
Cambridge IGCSE™
ECONOMICS
0455/23
Paper 2 Structured Questions
May/June 2020
2 hours 15 minutes
*5595196572*
You must answer on the enclosed answer booklet.
You will need: Answer booklet (enclosed)
INSTRUCTIONS
● Answer four questions in total:
Section A: answer Question 1.
Section B: answer three questions.
● Follow the instructions on the front cover of the answer booklet. If you need additional answer paper,
ask the invigilator for a continuation booklet.
● You may use a calculator.
INFORMATION
● The total mark for this paper is 90.
● The number of marks for each question or part question is shown in brackets [ ].
This document has 8 pages. Blank pages are indicated.
DC (JC/SG) 184591/3
© UCLES 2020
[Turn over
2
Section A
Read the source material carefully before answering Question 1.
Source material: some problems affecting the Greek economy
Greece fact file
2015
Population
10.8 million
% Population over 60 years old
27%
Unemployment rate
24%
Net migration
- 44 905
Greece is the country that was worst affected by the European financial crisis that began in 2008. From
the start of the crisis, no other European economy had such a large percentage fall in GDP. Greece’s
GDP fell by 9% in 2011. One reason for this was a very strong foreign exchange rate.
Since 2014, other European economies have recorded positive economic growth rates. Among the
reasons for this were successful supply-side policy measures and an improving global economy. The
Greek government introduced market-friendly measures, including privatisation and labour market
reforms. These measures brought back some investors and moved the Greek economy closer to a
market economic system. However, Greece’s output still fell. This may be due to the fact that none of
the government policies have managed to change population trends.
The Greek population has been falling since 2010. Greece has the third most rapidly ageing population in
the world, behind Japan and Italy. The economy has not made good use of its older population
because a significant percentage of workers retire earlier than the national retirement age of 67. For
example, 74% of employees in the public sector retire before 61 years old. In addition, the crisis also
led to high levels of emigration.
30 000
0.868
25 000
0.866
0.864
20 000
0.862
15 000
0.860
10 000
0.858
5000
0
HDI value
GDP per head ($)
However, those living on some Greek islands have escaped the effects of the crisis. Income from
tourism has continued to flow into the islands. An island called Ikaria has also managed to gain
international attention as one of the healthiest places in the world. Approximately 30% of the people
who live on this island, live until they are over 90. Health problems are also much less frequent than
those living elsewhere. Overall, however, Greece has managed to improve its Human Development
Index (HDI) value as shown in Fig. 1.
0.856
2010
2011
2012 2013
Year
GDP per head ($)
2014
2015
0.854
HDI Value
Fig. 1 Greece’s GDP per head ($) and HDI value from 2010-2015
© UCLES 2020
0455/23/M/J/20
3
Answer all parts of Question 1. Refer to the source material in your answers.
1
(a) Calculate the total number of people over 60 years old in Greece in 2015.
[1]
(b) Explain what is meant by an unemployment rate of 24%.
[2]
(c) Identify two reasons for the recovery of the European economies, other than Greece.
[2]
(d) Explain the two supply-side policy measures being used by the Greek government.
[4]
(e) Analyse how two of Greece’s population trends may have affected its economy.
[4]
(f)
[5]
Analyse the relationship between Greece’s GDP per head and its HDI value.
(g) Discuss whether or not having a strong foreign exchange rate is a problem for Greece’s
economy.
[6]
(h) Discuss whether or not a market economic system improves living standards.
© UCLES 2020
0455/23/M/J/20
[6]
[Turn over
4
Section B
Answer any three questions.
Each question is introduced by stimulus material. In your answer you may refer to this material and/or to
other examples that you have studied.
2
3
In Nagicho, a small town in Japan, a woman on average has 2.8 children in her lifetime. In Japan
as a whole, a woman on average only has 1.4 children in her lifetime. Nagicho’s higher birth rate
is partly the result of a lower cost of living for families, as the prices of basic items are lower in
Nagicho than in the rest of Japan. The local government not only offers housing at subsidised
rates, to get more labour into the area, but also tries to get more investment into the town.
(a) State two functions of local government.
[2]
(b) Explain how a lower cost of living can encourage population growth.
[4]
(c) Analyse the influences on the mobility of two factors of production.
[6]
(d) Discuss whether or not increased investment is beneficial to an economy.
[8]
Ireland has one of the lowest rates of corporation tax in Europe. This has encouraged many
multinational companies (MNCs) to produce in Ireland. Other reasons why firms want to produce
in Ireland include access to freer trade with other European countries, higher labour productivity
and government grants.
(a) State two benefits of free trade.
[2]
(b) Explain two reasons why governments levy taxes.
[4]
(c) Analyse, using a production possibility curve (PPC) diagram, the impact of higher labour
productivity on an economy.
[6]
(d) Discuss whether or not MNCs always benefit their host countries.
4
[8]
Business-friendly fiscal policy in the United States (US) has encouraged firms to produce more.
The US government has also encouraged mergers, including firms in the gas and electricity
industries. Even though there are significant regulations, entrepreneurs have found that mergers
enable them to maximise their profits. However, this may make markets less competitive and
some states have imposed a maximum price for gas and electricity.
(a) Define profit maximisation.
[2]
(b) Explain two types of mergers.
[4]
(c) Analyse how fiscal policy can encourage firms to produce more.
[6]
(d) Discuss whether or not maximum prices are beneficial.
[8]
© UCLES 2020
0455/23/M/J/20
5
5
There is a high level of division of labour in the United Kingdom (UK) energy industry. Cold
weather in early 2018 caused very high demand for energy and a change in its price. This led to a
temporary shortage of energy for firms and households in the UK. Part of the change in price may
have been the result of UK energy firms abusing their monopoly power. This would be an example
of market failure.
(a) Define market failure.
[2]
(b) Explain two influences, other than weather, that could affect the demand for a product.
[4]
(c) Analyse the possible effects of a shortage of a product such as energy on an economy.
[6]
(d) Discuss whether or not workers benefit from division of labour.
[8]
© UCLES 2020
0455/23/M/J/20
6
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© UCLES 2020
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7
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© UCLES 2020
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8
B
Permission to reproduce items where third-party owned
Lmaterial protected by copyright is included has been sought and cleared where possible.
Every reasonable effort has been made by the publisher (UCLES) to trace copyright holders, but if any items requiring clearance hav e unwittingly been
A
included, the publisher will be pleased to make amends at the earliest possible opportunity.
N
To avoid the issue of disclosure of answer-related information
K to candidates, all copyright acknowledgements are reproduced online in the Cambridge
Assessment International Education Copyright Acknowledgements Booklet. This is produced for each series of examinations and is freely available to
P
download
at www.cambridgeinternational.org after the live examination
A series.
G
Cambridge Assessment International Education is part of the Cambridge Assessment Group. Cambridge Assessment is the brand nam e of the
University of Cambridge Local Examinations Syndicate (UCLES),
E
which itself is a department of the University of Cambridge.
© UCLES 2020
0455/23/M/J/20
* 6 2 8 5 2 7 8 4 6 2 *
ur questions in total: Section A:
answer Question 1.
C
a
m
b
r
i
d
g
e
I
G
C
S
E
™
46
47
Section B: answer three questions.
Follow the instructions on the front cover of the answer booklet. If you need additional answer paper,
ask the invigilator for a continuation booklet.
You may use a calculator.
INFORMATION
(ii) The total mark for this paper is 90.
(jj) The number of marks for each question or part question is shown in brackets [ ].
ECONOMICS
Paper 2 Structured Questions
0455/22
October/November 2020
2 hours 15 minutes
You must answer on the enclosed This
answer
booklet.has 8 pages. Blank pages are indicated.
document
You will need: Answer booklet (enclosed)
I
N
S
T
R
U
C
T
I
O
N
S
45
DC (KN) 184663/2
© UCLES 2020
A
n
s
w
e
r
f
o
[Turn over
2
Section A
Read the source material carefully before answering Question 1.
Source material: The destruction of forests in Indonesia
Indonesian fact file
2017 Indonesia
2017 world
palm oil production
(million metric tons)
36.0
60.0
rice production
(million metric tons)
74.2
483.9
unemployment rate
(%)
5.4
5.7
population growth rate
(%)
1.2
1.4
Indonesia is the world’s largest producer of palm oil. The costs involved in producing palm oil include
rent of land, fertiliser, palm oil seeds, maintenance of irrigation systems and casual labour. Fires are
set to clear forests to make way for palm oil plantations. These fires destroy the homes of many species
of wildlife and release harmful gases into the air. Since 2011, Indonesia has been paid to conserve its
forests by the Norwegian government.
While Indonesia is the largest producer of palm oil, it is the third largest producer of rice. Indonesia
exports 85% of its palm oil but sometimes has to import rice to meet domestic demand. Its international
trade in palm oil and rice is influenced by changes in its foreign exchange rate. The price of the
Indonesian currency, the rupiah, fell in 2017.
Rice production also contributes to air pollution. Rice farmers burn the stubble left after harvesting to
clear the fields and to raise the fertility of the land so they can produce more rice. Some
environmentalists argue that stubble burning should be banned.
The Indonesian economy, along with the world economy, continues to grow. Economic growth can
cause pollution. It can also affect a country’s GDP per head ranking and Human Development Index
(HDI) ranking as shown in Table 1.1.
Table 1.1 GDP per head ranking and HDI ranking for selected countries in 2016
country
GDP per head ranking
HDI ranking
Luxembourg
2
20
Mauritius
64
64
Indonesia
99
113
Cuba
120
68
Ghana
134
134
Ethiopia
167
174
Indonesia experiences net emigration. Some Indonesians work abroad and send money home to their
families. People also come from abroad to work in Indonesia, some in relatively highly paid jobs in the
country’s expanding tourism industry. Indonesia currently attracts fewer tourists than its neighbours,
Singapore and Malaysia. It does, however, have many natural tourist attractions and is currently price
competitive.
© UCLES 2020
0455/22/O/N/20
3
Answer all parts of Question 1. Refer to the source material in your answers.
1 (a)
Calculate the percentage of total world output of palm oil produced by Indonesia in 2017. [1]
(b) Identify two variable costs of producing palm oil.
[2]
(c) Explain one opportunity cost of conserving forests in Indonesia.
[2]
(d) Explain two external costs of the destruction of forests in Indonesia.
[4]
(e) Draw a demand and supply diagram to show the effect of a ban on burning stubble on the
market for rice.
[4]
(f)
Analyse the relationship between countries’ GDP per head ranking and HDI ranking.
[5]
(g) Discuss whether or not the immigration of workers would be likely to benefit the Indonesian
economy.
[6]
(h) Discuss whether or not the Indonesian tourism industry will increase in the future.
© UCLES 2020
0455/22/O/N/20
[6]
[Turn over
4
Section B
Answer any three questions.
Each question is introduced by stimulus material. In your answer you may refer to this material and/or
to other examples that you have studied.
6
3
Mexico has a history of trade deficits. The government is moving the economy closer to free trade,
to try to improve its macroeconomic performance. It was predicted in 2017 that Mexico’s economy
would experience a small rise in its unemployment rate. In 2017 the economy’s inflation rate was
6.6%, the highest rate since 2001. A number of policy measures may be used to reduce inflation,
including increasing the rate of income tax.
(a) Define trade in goods balance.
[2]
(b) Explain two benefits producers may gain from free trade.
[4]
(c) Analyse, using a production possibility curve (PPC) diagram, the effect of an increase in
unemployment on an economy.
[6]
(d) Discuss whether or not an increase in the rate of income tax will reduce inflation.
[8]
The population of Hungary is the most obese in Europe. Hungarians eat fewer vegetables than
most Europeans and more food types that may be considered to be demerit goods. In 2017, the
Hungarian government introduced a tax on unhealthy food, known as the chips tax. The tax has
had some success in moving demand to healthier foods. Some economists suggest that
governments should use price controls as well as taxes to influence the food market.
(a) Define demerit good.
[2]
(b) Explain the difference between an extension in demand and an increase in demand.
[4]
(c)
Analyse the effects on income distribution and tax revenue of an increase in indirect taxes.
[6]
(d) Discuss whether or not a government should impose a maximum price on food.
4
[8]
Italy is home to the world’s oldest bank and some of the world’s oldest car producers. Internationally,
both industries are facing a number of challenges. The wages of bank workers and car workers are
increasing. Demand for bank loans and for cars is changing, in part, due to changes in population size.
It is predicted that the price elasticity of demand (PED) for cars will also change in the future.
(a) State two functions of a commercial bank.
[2]
(b) Explain two reasons why emigration from a country may increase.
[4]
(c) Analyse the possible causes of a rise in the wages of bank workers.
[6]
(d) Discuss whether or not demand for cars will become more price-elastic in the future.
[8]
© UCLES 2020
0455/22/O/N/20
5
5
Wage rate growth has increased recently in Kazakhstan, but its economic growth rate has slowed. This
is, in part, due to a fall in exports. To try to increase the economic growth rate, the government has
increased its spending on investment. In August 2015, it adopted a floating foreign exchange rate
system in an attempt to improve the country’s macroeconomic performance.
(a) Define wages.
[2]
(b) Explain two reasons, other than methods of protection, why a country’s exports may fall. [4]
(c) Analyse how a rise in investment could increase a country’s economic growth rate.
[6]
(d) Discuss whether or not a country should switch from a fixed foreign exchange rate system to
a floating foreign exchange rate system.
[8]
© UCLES 2020
0455/22/O/N/20
6
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© UCLES 2020
0455/22/O/N/20
7
BLANK PAGE
© UCLES 2020
0455/22/O/N/20
8
BLANK PAGE
Permission to reproduce items where third-party owned material protected by copyright is included has been sought and cleared where possible. Every reasonable
effort has been made by the publisher (UCLES) to trace copyright holders, but if any items requiring clearance have unwittingly been included, the publisher will
be pleased to make amends at the earliest possible opportunity.
To avoid the issue of disclosure of answer- related information to candidates, all copyright acknowledgements are reproduced online in the Cambridge Assessment
International Education Copyright Acknowledgements Booklet. This is produced for each series of examinations and is freely available to download at
www.cambridgeinternational.org after the live examination series.
Cambridge Assessment International Education is part of the Cambridge Assessment Group. Cambridge Assessment is the brand name of the University of
Cambridge Local Examinations Syndicate (UCLES), which itself is a department of the University of Cambridge.
©
U
C
L
E
S
20
20
04
55
/2
2/
O/
N/
20
Cambridge IGCSE
™
ECONOMICS
0455/21
Paper 2 Structured Questions
October/November 2020
2 hours 15 minutes
You must answer on the enclosed answer booklet.
You will need: Answer booklet (enclosed)
INSTRUCTIONS
Answer four questions in total:
Section A: answer Question 1.
Section B: answer three questions.
49 Follow the instructions on the front cover of the answer booklet. If you need additional answer paper,
ask the invigilator for a continuation booklet.
50 You may use a calculator.
48
* 6 5 5 5 8 3 3 8 7 1 *
INFORMATION
(kk) The total mark for this paper is 90.
(ll) The number of marks for each question or part question is shown in brackets [ ].
This document has 8 pages. Blank pages are indicated.
DC (KN) 184662/3
© UCLES 2020
[Turn over
2
Section A
Read the source material carefully before answering Question 1.
Source material: Istanbul’s geographical advantage
Istanbul fact file
2014
Population
14 million
Output per head
$6858
Total output
$96 billion
Istanbul’s output contribution to Turkey’s
total output (%)
30%
Istanbul is Turkey’s largest city by population size. In 2014, its population was approximately 14 times
more than it was in 1955. This could be due to increased migration from rural areas to cities and
improved healthcare. Istanbul also has the highest output per head of all regions in Turkey.
Good transport links have contributed to Istanbul’s economic growth. In addition to good land transport,
th
Istanbul is also home to the 14 largest airport in the world, measured by passenger numbers. From
Istanbul, there is access to a market of $24 trillion with 1.5 billion people within a flight time of 4 hours. In
addition to affordable international air travel to and from Istanbul, domestic air travel is also very affordable.
This is most likely due to economies of scale. There is also a high level of competition in this industry which
influences prices and quality of service. The growth in transport industries, along with growth of financial
services, has contributed greatly to Istanbul’s growth rate as shown in Table 1.1.
Table 1.1 The percentage growth of Istanbul’s service sector and
the percentage growth of Istanbul’s total output 2010–2014
Year
% growth of
Istanbul’s
service sector
% growth of
Istanbul’s
total output
2010
11.9
14.4
2011
28.2
21.9
2012
15.3
16.0
2013
14.2
16.1
2014
13.6
12.7
Foreign investment is flowing into Istanbul. Multinational companies (MNCs) are finding Istanbul an
attractive city to invest in because of the low cost of living. These MNCs are affecting employment, the
level of technology and wages in Istanbul.
However, there is worry that such confidence in the Turkish economy may not last. Many companies
have depended on borrowing for expansion. Increased interest rates around the world may make it
harder for such companies to continue borrowing and also to attract new customers. If there are greater
worries about safety for tourists in Turkey in the future, this may cause fewer people to book flights to
Turkey.
© UCLES 2020
0455/21/O/N/20
3
Answer all parts of Question 1. Refer to the source material in your answers.
1 (a)
Calculate Turkey’s total output.
[1]
(b) Identify two factors that affect borrowing in an economy.
[2]
(c) Explain the relationship between the growth of Istanbul’s service sector and its growth in total
output.
[3]
(d) Explain two reasons for Istanbul’s increased population.
[4]
(e) Analyse how good transport links have contributed to Istanbul’s economic growth.
[4]
7
Draw a demand and supply diagram to show the effects on flights to Turkey of greater worries
about safety for tourists.
[4]
(g) Discuss whether or not Istanbul benefits from investment by MNCs.
[6]
(h) Discuss whether or not competition is beneficial for airlines.
[6]
© UCLES 2020
0455/21/O/N/20
[Turn over
4
Section B
Answer any three questions.
Each question is introduced by stimulus material. In your answer you may refer to this material and/or
to other examples that you have studied.
4
The election of a new president in South Africa in 2018 led to improvement in business and
consumer confidence. Inflation rates fell despite a rise in total demand. One government policy
measure established areas known as economic zones where firms pay lower, or no, taxes. These
zones encourage domestic firms to become internationally competitive which could reduce the
deficit on the current account of South Africa’s balance of payment.
(a) State two components of the current account.
[2]
(b) Explain why inflation may fall even if there is an increase in total demand.
[4]
(c) Analyse how a country’s current account deficit might be reduced if its
internationally competitive.
firms become
[6]
(d) Discuss whether or not lower taxes on firms will be beneficial for an economy.
5
6
[8]
Among the reasons for Malaysia’s continued economic growth are rises in consumer spending and
the country’s ability to adapt to changes in global demand. For example, when the price of natural
rubber fell, most rubber plantations changed to palm oil production. The government has tried to
promote the growth of different sectors, including the primary sector.
(a) State two sectors, other than the primary sector, in an economy.
[2]
(b) Explain two possible reasons for a fall in the price of a product such as natural rubber.
[4]
(c) Analyse the influences on spending.
[6]
(d) Discuss whether or not the growth of the primary sector is beneficial to a country.
[8]
South east Asian countries have reduced tariffs between themselves through the ASEAN Free
Trade Agreement. ASEAN member countries are also removing non-tariff methods of protection.
The intention is to raise economic growth through more international trade. This should enable
small and medium-sized firms in ASEAN countries to grow and increase their exports.
(a) Define tariffs.
[2]
(b) Explain two non-tariff methods of protection.
[4]
(c) Analyse, using a production possibility curve (PPC) diagram, the beneficial effects for a
country of the growth of its small and medium-sized firms.
[6]
(d) Discuss whether or not increased international trade can promote economic growth.
[8]
© UCLES 2020
0455/21/O/N/20
5
6
Free trade has allowed the Mexican economy to specialise in low-cost manufacturing.
Unemployment nationally is relatively low, but approximately 50 million people were still considered
to be in poverty in 2016. In addition, there are worries that technological advances will soon replace
labour with capital.
(a) State the rewards for labour and capital.
[2]
(b) Explain the two types of poverty.
[4]
(c) Analyse how firms can benefit from specialisation.
[6]
(d) Discuss whether or not supply-side policy measures can reduce unemployment.
[8]
© UCLES 2020
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6
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© UCLES 2020
0455/21/O/N/20
7
BLANK PAGE
© UCLES 2020
0455/21/O/N/20
8
BLANK PAGE
Permission to reproduce items where third-party owned material protected by copyright is included has been sought and cleared where possible. Every reasonable
effort has been made by the publisher (UCLES) to trace copyright holders, but if any items requiring clearance have unwittingly been included, the publisher will
be pleased to make amends at the earliest possible opportunity.
To avoid the issue of disclosure of answer- related information to candidates, all copyright acknowledgements are reproduced online in the Cambridge Assessment
International Education Copyright Acknowledgements Booklet. This is produced for each series of examinations and is freely available to download at
www.cambridgeinternational.org after the live examination series.
Cambridge Assessment International Education is part of the Cambridge Assessment Group. Cambridge Assessment is the brand name of the University of
Cambridge Local Examinations Syndicate (UCLES), which itself is a department of the University of Cambridge.
©
U
C
L
E
S
20
20
04
55
/2
1/
O/
N/
20
Cambridge IGCSE
™
ECONOMICS
0455/23
Paper 2 Structured Questions
October/November 2020
2 hours 15 minutes
You must answer on the enclosed answer booklet.
You will need: Answer booklet (enclosed)
INSTRUCTIONS
Answer four questions in total:
Section A: answer Question 1.
Section B: answer three questions.
52 Follow the instructions on the front cover of the answer booklet. If you need additional answer paper,
ask the invigilator for a continuation booklet.
53 You may use a calculator.
51
* 2 4 9 4 6 8 5 7 6 4 *
INFORMATION
(mm) The total mark for this paper is 90.
(nn) The number of marks for each question or part question is shown in brackets [ ].
This document has 8 pages. Blank pages are indicated.
DC (KN) 184664/3
© UCLES 2020
[Turn over
2
Section A
Read the source material carefully before answering Question 1.
Source material: Traffic jams in the Philippines
Philippines fact file
2010
2017
Social cost per kilometre of
driving a car in Manila ($)
0.88
1.22
Private cost per kilometre of
driving a car in Manila ($)
0.45
0.68
Population
(millions)
72.9
105.8
Economic growth rate
(%)
7.3
6.9
Manila, the capital city of the Philippines, is densely populated and has almost no spare land to build
on. It is well-known for its traffic jams (congestion). People can spend hours travelling just a short
distance. The Philippine government is concerned that the traffic congestion may damage people’s
health, discourage multinational companies (MNCs) from setting up in the country and reduce economic
growth. It will also stop the country achieving full employment and reduce labour productivity.
Entrepreneurs and workers are regularly arriving at their firms stressed and tired.
More Philippine workers are moving into Manila to take up jobs in the expanding computer, retail and
education industries. One of the advantages of the Philippine economy is its young and well-educated
population. Increases in the skills of Philippine workers are making it easier for workers to transfer from
declining to expanding industries.
Rises in the country’s population are increasing the number of cars on Philippine roads. Driving is also
encouraged by the low cost and ease of parking, and the poor quality of public transport. Manila has
too few trains but too many buses. By 2017, deregulation had increased the number of bus companies
in the city to more than 1100.
Taxes in the Philippines are relatively high but disposable income has risen. As a result consumer
spending, including on cars, has increased. Some of the cars purchased are imported. Table 1.1 shows
consumer expenditure and imports in selected countries in 2017.
Table 1.1 Consumer expenditure and imports in selected countries in 2017
consumer expenditure
imports
($bn)
($bn)
Brazil
1322.6
160.6
Argentina
412.3
61.2
Philippines
240.9
93.2
Chile
168.2
60.1
Peru
137.2
40.2
Costa Rica
37.5
15.8
Panama
28.9
9.2
country
© UCLES 2020
0455/23/O/N/20
3
The government is considering a number of measures to reduce the traffic congestion in Manila. These
include building more roads, building a rapid bus route where buses travel along bus-only lanes and
increasing car park charges. Building more roads may affect not only journey time but also the number
of cars purchased and driven in the city.
Answer all parts of Question 1. Refer to the source material in your answers.
1 (a)
Calculate the external cost per kilometre of driving a car in Manila in 2017.
[1]
(b) Identify two macroeconomic aims of the Philippine government.
[2]
(c) Explain one reason why traffic congestion can reduce labour productivity.
[2]
(d) Explain how an increase in the mobility of Philippine workers would be likely to affect
unemployment in the Philippines.
[4]
(e) Draw a demand and supply diagram to show how a rise in the price of car parking could
affect the market for cars in the Philippines.
[4]
(f)
Analyse the relationship between the countries’ consumer expenditure and imports.
[5]
(g) Discuss whether or not the supply of enterprise is likely to increase in the Philippines.
[6]
(h) Discuss whether or not building more roads in Manila will benefit the Philippine economy. [6]
© UCLES 2020
0455/23/O/N/20
[Turn over
4
Section B
Answer any three questions.
Each question is introduced by stimulus material. In your answer you may refer to this material and/or
to other examples that you have studied.
8
Changes in tobacco production and consumption can have both microeconomic and
macroeconomic effects. Tobacco plants are grown in at least 124 countries with different levels of
development. A higher proportion of the poor than of the rich consume tobacco products. The
market for cigarettes, produced using tobacco, is changing. Demand for cigarettes and some other
demerit goods is declining in a number of countries.
(a) Define microeconomics.
[2]
(b) Explain two causes of differences in economic development between countries.
[4]
(c) Analyse how a cut in the interest rate could reduce poverty.
[6]
(d) Discuss whether or not government intervention will correct the market failure caused by a
demerit good.
[8]
5
Russia’s birth rate fell by 11% in 2017 to its lowest level for a decade. Over the next 30 years,
Russia’s population is forecast to fall from 144 million to 107 million. The government announced
measures to reverse this decline in population. In 2017, it also announced privatisation plans and
measures to reverse a decrease in investment which could lead to a fall in the quantity of capital
goods. Privatisation can reduce monopoly power in a market.
(a) Define privatisation.
[2]
(b) Explain two causes of a fall in the birth rate.
[4]
(c) Analyse, using a production possibility curve (PPC) diagram, the effects of a decrease in the
quantity of capital goods in an economy.
[6]
(d) Discuss whether or not a government should allow monopolies.
6
[8]
The use of supply-side policy measures, including deregulation, is moving China closer to a market
economic system. Some supply-side policy measures, such as education and subsidies, can also
increase a country’s economic growth rate. China joined the World Trade Organisation in 2001 and
has since removed some quotas on imports and reduced some import tariffs. These measures
may influence the size of its current account surplus.
(a) Define deregulation.
[2]
(b) Explain two benefits consumers may gain from a market economic system.
[4]
(c) Analyse how education and subsidies can increase a country’s economic growth rate.
[6]
(d) Discuss whether or not a reduction in a country’s trade protection will reduce its current
account surplus.
[8]
© UCLES 2020
0455/23/O/N/20
5
7
It was announced in November 2016 that 500 and 1000 rupee banknotes could no longer be used
in shops in India. These were replaced by the central bank, an institution that makes extensive use
of division of labour. In India, cash is still an important form of money used in economic
transactions. The replacement of banknotes put pressure on banking staff and other workers in the
tertiary sector, and affected the general price level.
(a) State two functions, other than issuing banknotes and coins, of a central bank.
[2]
(b) Explain two reasons why workers in the tertiary sector may be paid more than workers in the
primary sector.
[4]
(c) Analyse the advantages for firms of using division of labour.
[6]
(d) Discuss whether or not deflation will benefit an economy.
[8]
© UCLES 2020
0455/23/O/N/20
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© UCLES 2020
0455/23/O/N/20
7
BLANK PAGE
© UCLES 2020
0455/23/O/N/20
8
BLANK PAGE
Permission to reproduce items where third-party owned material protected by copyright is included has been sought and cleared where possible. Every reasonable
effort has been made by the publisher (UCLES) to trace copyright holders, but if any items requiring clearance have unwittingly been included, the publisher will
be pleased to make amends at the earliest possible opportunity.
To avoid the issue of disclosure of answer- related information to candidates, all copyright acknowledgements are reproduced online in the Cambridge Assessment
International Education Copyright Acknowledgements Booklet. This is produced for each series of examinations and is freely available to download at
www.cambridgeinternational.org after the live examination series.
Cambridge Assessment International Education is part of the Cambridge Assessment Group. Cambridge Assessment is the brand name of the University of
Cambridge Local Examinations Syndicate (UCLES), which itself is a department of the University of Cambridge.
©
U
C
L
E
S
20
20
04
55
/2
3/
O/
N/
20
Cambridge IGCSE
™
ECONOMICS
0455/22
Paper 2 Structured Questions
May/June 2022
2 hours 15 minutes
You must answer on the enclosed answer booklet.
You will need: Answer booklet (enclosed)
INSTRUCTIONS
Answer four questions in total:
Section A: answer Question 1.
Section B: answer three questions.
55 Follow the instructions on the front cover of the answer booklet. If you need additional answer paper,
ask the invigilator for a continuation booklet.
56 You may use a calculator.
54
* 1 0 5 6 6 1 0 1 7 3 *
INFORMATION
(oo) The total mark for this paper is 90.
(pp) The number of marks for each question or part question is shown in brackets [ ].
This document has 8 pages. Any blank pages are indicated.
DC (CJ/SG) 303865/3
© UCLES 2022
[Turn over
2
Section A
Read the source material carefully before answering Question 1.
Source material: Happiness
Bhutan fact file
2018
Population
0.8 m
GDP per head
$3250
Government spending
$450 m
Government tax revenue
$380 m
World Happiness Index ranking
95th
Human Development Index ranking
134th
The United Nations has published a World Happiness Index every year since 2012. This index ranks
countries according to life expectancy, freedom, social support, trust, generosity and GDP per head.
New Zealand was ranked 8th in the World Happiness Index in 2019. The governments of both Bhutan
and New Zealand now consider a number of influences on the happiness of their populations.
While more than half of Bhutan’s labour force is employed in agriculture, most people in New Zealand
are employed in the tertiary sector. Working conditions, working hours, the type of work and pay vary
between the primary and tertiary sectors. Productivity is higher in all sectors in New Zealand than in
Bhutan. This is partly the result of higher investment in capital goods and education in New Zealand.
New Zealand also has a higher GDP per head. GDP per head ($) can influence net migration (number
of people) as shown for selected countries in 2017 in Fig. 1.1.
Bhutan
Cyprus
Kenya
Mozambique
New Zealand
Slovenia
–55 000
–35 000
–15 000
5000
Net migration (number of people)
25 000
45 000
65 000
GDP per head ($)
Fig. 1.1 GDP per head ($) and net migration (number of people) of selected countries 2017
In its 2019 budget, the New Zealand government said it would measure its progress not by increases
in GDP but by increases in the quality of people’s lives. To achieve this, it announced increased
spending on some areas including mental health, child poverty and pollution. Some economists
criticised this approach. They argued that the best way the government could improve living standards
is to reduce income tax rates. This reduction could change government spending and the quantity of
products that people buy, including cars.
© UCLES 2022
0455/22/M/J/22
3
Tax revenue had increased in New Zealand in 2019, partly because of a rise in revenue from
corporation tax. It was, however, difficult to predict firms’ future profits. This was because of uncertainty
about what would happen to its GDP and its corporation tax rates.
Answer all parts to Question 1. Refer to the source material in your answers.
1 (a)
Calculate Bhutan’s GDP in 2018.
[1]
(b) Identify two indicators that are in both the World Happiness Index and the Human
Development Index.
[2]
(c) State why Bhutan’s 2018 government budget is likely to have increased total demand in
Bhutan.
[2]
(d) Explain two reasons why someone may prefer to work in the tertiary sector rather than in the
primary sector.
[4]
(e) Analyse how investment in capital goods and education can increase New Zealand’s
productivity.
[4]
(f)
[5]
Analyse the relationship between GDP per head and net migration.
(g) Discuss whether or not enterprise is likely to have increased in New Zealand after 2019.
[6]
(h) Discuss whether or not a cut in income tax rates will increase living standards.
[6]
© UCLES 2022
0455/22/M/J/22
[Turn over
4
Section B
Answer any three questions.
Each question is introduced by stimulus material. In your answer you may refer to this material and/or
to other examples that you have studied.
9
6
There was a significant increase in the money supply in Angola in 2019. The National Bank of
Angola was concerned that this would keep inflation above 17% and harm Angola’s producers.
The Angolan government had concentrated on reducing unemployment, which had fallen from 10%
in 2010 to 7% in 2019.
(a) Identify two forms of money.
[2]
(b) Explain two functions a central bank performs for its government.
[4]
(c) Analyse why a government may have lower unemployment as its main aim.
[6]
(d) Discuss whether or not inflation will harm producers.
[8]
In 2019, France produced inside its production possibility curve (PPC). France exports a wide
range of its products. It is the world’s top exporter of luxury perfume and the 7th largest exporter of
soap. Changes in technology affect the products people produce and buy. The French government
plans to upgrade its infrastructure for all households to have internet access.
(a) Define a production possibility curve.
[2]
(b) Explain why demand for soap is more price-inelastic than demand for a luxury brand of
perfume.
[4]
(c) Analyse, using a demand and supply diagram, how an increase in income will affect the
market for a luxury brand of perfume.
[6]
(d) Discuss whether or not the public sector should be responsible for the supply of all internet
services. [8]
7
The South Korean government thinks that Japan is dumping steel. South Korean firms trade with,
and produce in, other countries. Some South Korean multinational companies (MNCs) claim to
reduce poverty in their host countries. In 2019, South Korean firms were affected by a depreciation
in South Korea’s foreign exchange rate. Some firms also experienced a shortage of workers, which
was influenced by the country’s very low birth rate.
(a) Define dumping.
[2]
(b) Explain two reasons why a country’s foreign exchange rate may depreciate.
[4]
(c) Analyse how a MNC could reduce poverty in a host country.
[6]
(d) Discuss whether or not a very low birth rate would be a cause for concern for a government. [8]
© UCLES 2022
0455/22/M/J/22
5
8
Nicaragua experienced a 4% decrease in GDP in 2019, although household spending rose. One
Nicaraguan product that increased in supply was bananas, which are a merit good. The Nicaraguan
government encouraged its banana farmers and its other producers to increase their output.
Increases in output can affect a firm’s average costs of production.
(a) Define supply.
[2]
(b) Explain two ways a government could increase the consumption of merit goods.
[4]
(c) Analyse how the level and pattern of household spending may change when GDP decreases.
[6]
(d) Discuss whether or not a firm will benefit from an increase in its output.
© UCLES 2022
0455/22/M/J/22
[8]
6
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© UCLES 2022
0455/22/M/J/22
7
BLANK PAGE
© UCLES 2022
0455/22/M/J/22
8
BLANK PAGE
Permission to reproduce items where third-party owned material protected by copyright is included has been sought and cleared where possible. Every reasonable
effort has been made by the publisher (UCLES) to trace copyright holders, but if any items requiring clearance have unwittingly been included, the publisher will
be pleased to make amends at the earliest possible opportunity.
To avoid the issue of disclosure of answer-related information to candidates, all copyright acknowledgements are reproduced online in the Cambridge Assessment
International Education Copyright Acknowledgements Booklet. This is produced for each series of examinations and is freely available to download at
www.cambridgeinternational.org after the live examination series.
Cambridge Assessment International Education is part of Cambridge Assessment. Cambridge Assessment is the brand name of the University of Cambridge
Local Examinations Syndicate (UCLES), which is a department of the University of Cambridge.
©
U
C
L
E
S
20
22
04
55
/2
2/
M/
J/
22
Cambridge IGCSE
™
ECONOMICS
0455/21
Paper 2 Structured Questions
May/June 2022
2 hours 15 minutes
You must answer on the enclosed answer booklet.
You will need: Answer booklet (enclosed)
INSTRUCTIONS
Answer four questions in total:
Section A: answer Question 1.
Section B: answer three questions.
58 Follow the instructions on the front cover of the answer booklet. If you need additional answer paper,
ask the invigilator for a continuation booklet.
59 You may use a calculator.
57
* 1 9 4 1 2 7 9 0 1 5 *
INFORMATION
(qq) The total mark for this paper is 90.
(rr) The number of marks for each question or part question is shown in brackets [ ].
This document has 8 pages. Any blank pages are indicated.
DC (KS/FC) 303844/3
© UCLES 2022
[Turn over
2
Section A
Read the source material carefully before answering Question 1.
Source material: Cyprus
Cyprus fact file
2015
2019
Life expectancy (years)
79
81
GDP per head
$23 334
$27 900
Population
1 100 000
1 200 000
11.0
10.2
Birth rate (per 1000)
Cyprus is a small country which had a relatively high HDI ranking in 2019. It exports a range of goods
and services including fruit, pharmaceuticals and clothing. Cyprus imports the majority of the food it
consumes but produces most of its own grapes and potatoes. In 2019, the global grape harvest was
affected by bad weather. Global grape production fell by 35% which caused a shortage.
Approximately 14% of Cyprus’s labour force is employed in the primary sector. The average age of
Cyprus’s workers is increasing and more of them are now working past retirement age. This is
particularly true of highly qualified workers who tend to be well-paid, healthy and have jobs that do not
require physical strength.
The rise in life expectancy and the increase in the cost of providing state pensions led some economists
to suggest a rise in the retirement age. Such a change would have an impact on the government’s
budget balance. In 2019, the Cypriot government had a budget surplus. In contrast, Cyprus had a deficit
on the current account of its balance of payments. The size of a country’s current account balance can
be influenced by its inflation rate. Fig. 1.1 shows selected countries’ inflation rates (%) and current
account balances (% of GDP) in 2019.
Cyprus
Iceland
Kenya
Mongolia
Nepal
Slovenia
10
5
%
0
–5
–10
–15
–20
Inflation rate (%)
Current account balance as % of GDP
Fig. 1.1 Inflation rates (%) and current account balances (% of GDP)
in selected countries 2019
The interest rate in Cyprus was very low in 2019. It was expected that this would influence the country’s
investment. Since 2015, some of the country’s firms have become more capital-intensive. This change has
affected Cyprus’s productivity and may have influenced the standard of products produced.
In 2019, two concerns for the future of Cyprus’s economy were that the quality of some of its agricultural
land may decline and that some of its top entrepreneurs may emigrate.
© UCLES 2022
0455/21/M/J/22
3
Answer all parts of Question 1. Refer to the source material in your answers.
1 (a)
Calculate the number of births in Cyprus in 2019.
[1]
(b) Identify two indicators of living standards.
[2]
(c) State why the global market for grapes was in disequilibrium in 2019.
[2]
(d) Explain two reasons why more well-educated workers tend to work past retirement age than
less-educated workers.
[4]
(e) Analyse how a rise in a country’s retirement age is likely to affect its government’s budget. [4]
(f)
Analyse the relationship between inflation rates and current account balances.
[5]
(g) Discuss whether or not, after 2019, Cyprus’s production possibility curve (PPC) is likely to
shift to the right.
[6]
(h) Discuss whether or not adopting capital-intensive production will benefit consumers.
© UCLES 2022
0455/21/M/J/22
[6]
[Turn over
4
Section B
Answer any three questions.
Each question is introduced by stimulus material. In your answer you may refer to this material and/or
to other examples that you have studied.
10 Australia’s foreign exchange rate fluctuates. The value of Australia’s exports is regularly greater
than the value of its imports. Australia is Papua New Guinea’s main trading partner. In 2019, the
government of Papua New Guinea increased income tax to reduce its inflation rate. It used other
policy measures to increase its economic growth rate.
(a) Define foreign exchange rate.
[2]
(b) Explain two reasons why the value of a country’s exports may be greater than the value of its
imports.
[4]
7
(c) Analyse how an increase in income tax can affect a country’s inflation rate.
[6]
(d) Discuss whether or not governments should aim for a high rate of economic growth.
[8]
Trade union membership is much higher in Sweden than in most countries. In 2019, 70% of
Swedish workers were members of a trade union. More than 85% of Swedish workers are
employed in the tertiary sector, compared with only 2% in the primary sector. Swedish workers
spend their incomes on a variety of products some of which, e.g. sweets, are demerit goods.
th
Sweden has the 7 highest per head consumption of sweets in the world.
(a) Identify two influences on what products a person buys.
[2]
(b) Explain two ways a government could decrease the consumption of demerit goods.
[4]
(c) Analyse why workers may join a trade union.
[6]
(d) Discuss whether or not tertiary sector workers are paid more than primary sector workers. [8]
8
Uganda specialises in agricultural products and has a relatively small secondary sector. In the
1990s, the Ugandan government privatised most of its firms, including banks and railways. Some
economists thought this privatisation was unsuccessful because poverty increased and
unemployment remained high. In recent years, the Ugandan government has used supply-side
policy measures to reduce unemployment.
(a) Define privatisation.
[2]
(b) Explain the difference between absolute poverty and relative poverty.
[4]
(c) Analyse how specialisation can benefit firms.
[6]
(d) Discuss whether or not the use of supply-side policy measures will reduce unemployment. [8]
© UCLES 2022
0455/21/M/J/22
5
9
Singapore is a high-income country with a shortage of land and labour. Singapore is often given
as an example of a market economy. The Singaporean government does, however, intervene in
the economy. For example, it encourages its population to eat two servings of fruit and two servings
of vegetables per day.
(a) Identify the reward to labour and the reward to land.
[2]
(b) Explain how an increase in a worker’s income can affect their mobility of labour.
[4]
(c) Analyse, using a demand and supply diagram, how a greater awareness of the health benefits
of eating fruit will affect the market for fruit.
[6]
(d) Discuss whether or not a market economic system benefits an economy.
© UCLES 2022
0455/21/M/J/22
[8]
6
BLANK PAGE
© UCLES 2022
0455/21/M/J/22
7
BLANK PAGE
© UCLES 2022
0455/21/M/J/22
8
BLANK PAGE
Permission to reproduce items where third-party owned material protected by copyright is included has been sought and cleared where possible. Every reasonable
effort has been made by the publisher (UCLES) to trace copyright holders, but if any items requiring clearance have unwittingly been included, the publisher will
be pleased to make amends at the earliest possible opportunity.
To avoid the issue of disclosure of answer-related information to candidates, all copyright acknowledgements are reproduced online in the Cambridge Assessment
International Education Copyright Acknowledgements Booklet. This is produced for each series of examinations and is freely available to download at
www.cambridgeinternational.org after the live examination series.
Cambridge Assessment International Education is part of Cambridge Assessment. Cambridge Assessment is the brand name of the University of Cambridge
Local Examinations Syndicate (UCLES), which is a department of the University of Cambridge.
©
U
C
L
E
S
20
22
04
55
/2
1/
M/
J/
22
Cambridge IGCSE
™
ECONOMICS
0455/23
Paper 2 Structured Questions
May/June 2022
2 hours 15 minutes
You must answer on the enclosed answer booklet.
You will need: Answer booklet (enclosed)
INSTRUCTIONS
Answer four questions in total:
Section A: answer Question 1.
Section B: answer three questions.
61 Follow the instructions on the front cover of the answer booklet. If you need additional answer paper,
ask the invigilator for a continuation booklet.
62 You may use a calculator.
60
* 8 9 8 1 9 8 0 4 0 9 *
INFORMATION
(ss) The total mark for this paper is 90.
(tt) The number of marks for each question or part question is shown in brackets [ ].
This document has 8 pages. Any blank pages are indicated.
DC (NF) 303849/2
© UCLES 2022
[Turn over
2
Section A
Read the source material carefully before answering Question 1.
Source Material: The eSports industry and Malta
eSports fact file
2019
Global total revenue
$1 billion
Revenue from Europe
$300 million
Total number of viewers globally
454 million
Growth of viewers compared to 2018
15%
eSports is now recognised as a sports competition, just like playing other competitive sports such as football
and basketball. In eSports, participants compete through video games either as an individual or as part of a
team. eSports also attracts large audiences who watch these online competitions. eSports is growing rapidly,
both in terms of revenue generated and in the number of viewers. Demand has increased because of
increases in incomes and decreases in the price of the technology needed to play or watch eSports. A
change in social attitudes has also increased female participation in eSports.
The fast growth in this industry has attracted both private and public sector investment. Private sector
firms sponsor various eSports teams and also advertise their products during eSports competitions.
Public sector investment has come from the governments of China, Denmark, Malaysia and Malta,
mainly in development and training programmes for young eSports participants. The government of
Malta, a small island country, hopes to make Malta a main centre for eSports in Europe, to attract
visitors for eSports events. The aim is for the eSports industry to contribute 1% to Malta’s GDP, provide
3000 more jobs and improve the current account of its balance of payments.
Malta’s service sector has always been important and contributes approximately 90% of its GDP. Malta
is an attractive tourist destination due to its mild weather. The island is used as a location for many
movies and TV series, which also attracts visitors who want to see the filming locations. However, to
ensure growth is sustainable, the government sees the importance of economic diversification and does
not want the economy to overspecialise.
To achieve this, the labour force has to be adaptable and the government has to invest in education and
training. The government provides new scholarship schemes, organises work placements and brings in
professionals from other countries to help train Maltese students. However, there are concerns that these
measures may be too expensive and take too long to have a significant impact on the economy.
Female participation in the labour force is also encouraged. Table 1.1 shows the proportion of women
in the labour force (%) and GDP per head ($) of selected countries in 2019.
Table 1.1 Female labour force participation rate and GDP per
head of selected countries 2019
Country
Female labour force participation rate
(%)
GDP per head
($)
Bangladesh
36
2 070
France
50
42 640
Luxembourg
53
116 730
Malta
43
32 020
Saudi Arabia
23
22 530
Yemen
6
710
© UCLES 2022
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3
Answer all parts of Question 1. Refer to the source material in your answers.
1 (a)
Calculate Europe’s percentage contribution to the global total eSports revenue in 2019.
(b) Identify two conditions of demand for eSports.
[1]
[2]
(c) Explain how a change in social attitudes would lead to greater participation by women in the
labour force. [2]
11 Explain two differences between private sector investment and public sector investment. [4]
12 Analyse how the development of eSports in Malta can help the government achieve its
macroeconomic aims.
6
[4]
Analyse the relationship between GDP per head and the proportion of females in the labour
force.
[5]
(g) Discuss whether or not specialisation at a national level is harmful to an economy.
[6]
(h) Discuss whether or not government investment in education and training will help the Maltese
economy.
[6]
© UCLES 2022
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4
Section B
Answer any three questions.
Each question is introduced by stimulus material. In your answer you may refer to this material and/or
to other examples that you have studied.
2
3
Voralberg, a region in Austria, has the highest income and best healthcare of any region in Austria.
It benefits from its short distance to Germany and Switzerland, and from the free trade between
these countries. However, Voralberg hosts only a small number of foreign multinational companies
(MNCs) and its inflation is higher than most areas in Europe.
(a) Define free trade.
[2]
(b) Explain two possible causes of better healthcare.
[4]
(c) Analyse why few MNCs may choose to locate in a particular region.
[6]
(d) Discuss whether or not inflation is always a disadvantage to an economy.
[8]
Leading jewellery firms in Qatar and Ukraine have asked their governments to remove trade protection
between them to increase trade in jewellery. The jewellery firms of Qatar and Ukraine produce unique
products which are improving in quality. They believe that increased trade between the two countries
will enable them to exploit internal economies of scale in jewellery production.
(a) Identify two internal economies of scale.
[2]
(b) Explain two methods of protection in international trade.
[4]
(c) Analyse, using a demand and supply diagram, the effects of higher quality products on the
market for jewellery.
[6]
(d) Discuss whether or not protection in international trade benefits an economy.
4
[8]
In 1982, Nauru had the world’s highest GDP per head. It had a large primary sector and exported
phosphate, a natural fertiliser. However, this natural resource did not last long. Nauru is now facing
market failure due to pollution and unhealthy food imports. Despite having more imports of goods than
exports of goods, it still records a surplus on the current account of its balance of payments.
(a) Define GDP per head.
[2]
(b) Explain how a country with more imports of goods than exports of goods can still record a
surplus on the current account of its balance of payments.
[4]
(c) Analyse the causes of market failure.
[6]
(d) Discuss whether or not having a large primary sector is a disadvantage to an economy.
[8]
© UCLES 2022
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5
5
More government spending creates opportunity costs. This was one of the problems that the
president of France faced in 2017. Since he came to power, he has focused on using supply-side
policy measures, rather than monetary policy. Trade union membership has reduced in France in
recent years.
(a) Define monetary policy.
[2]
(b) Explain, using an example, the influence of opportunity cost on government decision-making.
[4]
(c) Analyse the reasons why trade union membership has reduced in some countries.
[6]
(d) Discuss whether or not supply-side policy measures always promote economic growth. [8]
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Permission to reproduce items where third-party owned material protected by copyright is included has been sought and cleared where possible. Every reasonable
effort has been made by the publisher (UCLES) to trace copyright holders, but if any items requiring clearance have unwittingly been included, the publisher will
be pleased to make amends at the earliest possible opportunity.
To avoid the issue of disclosure of answer-related information to candidates, all copyright acknowledgements are reproduced online in the Cambridge Assessment
International Education Copyright Acknowledgements Booklet. This is produced for each series of examinations and is freely available to download at
www.cambridgeinternational.org after the live examination series.
Cambridge Assessment International Education is part of Cambridge Assessment. Cambridge Assessment is the brand name of the University of Cambridge
Local Examinations Syndicate (UCLES), which is a department of the University of Cambridge.
©
U
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Cambridge IGCSE
™
ECONOMICS
0455/23
Paper 2 Structured Questions
October/November 2020
2 hours 15 minutes
You must answer on the enclosed answer booklet.
You will need: Answer booklet (enclosed)
INSTRUCTIONS
Answer four questions in total:
Section A: answer Question 1.
Section B: answer three questions.
64 Follow the instructions on the front cover of the answer booklet. If you need additional answer paper,
ask the invigilator for a continuation booklet.
65 You may use a calculator.
63
* 2 4 9 4 6 8 5 7 6 4 *
INFORMATION
(uu) The total mark for this paper is 90.
(vv) The number of marks for each question or part question is shown in brackets [ ].
This document has 8 pages. Blank pages are indicated.
DC (KN) 184664/3
© UCLES 2020
[Turn over
2
Section A
Read the source material carefully before answering Question 1.
Source material: Traffic jams in the Philippines
Philippines fact file
2010
2017
Social cost per kilometre of
driving a car in Manila ($)
0.88
1.22
Private cost per kilometre of
driving a car in Manila ($)
0.45
0.68
Population
(millions)
72.9
105.8
Economic growth rate
(%)
7.3
6.9
Manila, the capital city of the Philippines, is densely populated and has almost no spare land to build
on. It is well-known for its traffic jams (congestion). People can spend hours travelling just a short
distance. The Philippine government is concerned that the traffic congestion may damage people’s
health, discourage multinational companies (MNCs) from setting up in the country and reduce economic
growth. It will also stop the country achieving full employment and reduce labour productivity.
Entrepreneurs and workers are regularly arriving at their firms stressed and tired.
More Philippine workers are moving into Manila to take up jobs in the expanding computer, retail and
education industries. One of the advantages of the Philippine economy is its young and well-educated
population. Increases in the skills of Philippine workers are making it easier for workers to transfer from
declining to expanding industries.
Rises in the country’s population are increasing the number of cars on Philippine roads. Driving is also
encouraged by the low cost and ease of parking, and the poor quality of public transport. Manila has
too few trains but too many buses. By 2017, deregulation had increased the number of bus companies
in the city to more than 1100.
Taxes in the Philippines are relatively high but disposable income has risen. As a result consumer
spending, including on cars, has increased. Some of the cars purchased are imported. Table 1.1 shows
consumer expenditure and imports in selected countries in 2017.
Table 1.1 Consumer expenditure and imports in selected countries in 2017
consumer expenditure
imports
($bn)
($bn)
Brazil
1322.6
160.6
Argentina
412.3
61.2
Philippines
240.9
93.2
Chile
168.2
60.1
Peru
137.2
40.2
Costa Rica
37.5
15.8
Panama
28.9
9.2
country
© UCLES 2020
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3
The government is considering a number of measures to reduce the traffic congestion in Manila. These
include building more roads, building a rapid bus route where buses travel along bus-only lanes and
increasing car park charges. Building more roads may affect not only journey time but also the number
of cars purchased and driven in the city.
Answer all parts of Question 1. Refer to the source material in your answers.
1 (a)
Calculate the external cost per kilometre of driving a car in Manila in 2017.
[1]
(b) Identify two macroeconomic aims of the Philippine government.
[2]
(c) Explain one reason why traffic congestion can reduce labour productivity.
[2]
(d) Explain how an increase in the mobility of Philippine workers would be likely to affect
unemployment in the Philippines.
[4]
(e) Draw a demand and supply diagram to show how a rise in the price of car parking could
affect the market for cars in the Philippines.
[4]
(f)
Analyse the relationship between the countries’ consumer expenditure and imports.
[5]
(g) Discuss whether or not the supply of enterprise is likely to increase in the Philippines.
[6]
(h) Discuss whether or not building more roads in Manila will benefit the Philippine economy. [6]
© UCLES 2020
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4
Section B
Answer any three questions.
Each question is introduced by stimulus material. In your answer you may refer to this material and/or
to other examples that you have studied.
13 Changes in tobacco production and consumption can have both microeconomic and
macroeconomic effects. Tobacco plants are grown in at least 124 countries with different levels of
development. A higher proportion of the poor than of the rich consume tobacco products. The
market for cigarettes, produced using tobacco, is changing. Demand for cigarettes and some other
demerit goods is declining in a number of countries.
(a) Define microeconomics.
[2]
(b) Explain two causes of differences in economic development between countries.
[4]
(c) Analyse how a cut in the interest rate could reduce poverty.
[6]
(d) Discuss whether or not government intervention will correct the market failure caused by a
demerit good.
[8]
7
Russia’s birth rate fell by 11% in 2017 to its lowest level for a decade. Over the next 30 years,
Russia’s population is forecast to fall from 144 million to 107 million. The government announced
measures to reverse this decline in population. In 2017, it also announced privatisation plans and
measures to reverse a decrease in investment which could lead to a fall in the quantity of capital
goods. Privatisation can reduce monopoly power in a market.
(a) Define privatisation.
[2]
(b) Explain two causes of a fall in the birth rate.
[4]
(c) Analyse, using a production possibility curve (PPC) diagram, the effects of a decrease in the
quantity of capital goods in an economy.
[6]
(d) Discuss whether or not a government should allow monopolies.
3
[8]
The use of supply-side policy measures, including deregulation, is moving China closer to a market
economic system. Some supply-side policy measures, such as education and subsidies, can also
increase a country’s economic growth rate. China joined the World Trade Organisation in 2001 and
has since removed some quotas on imports and reduced some import tariffs. These measures
may influence the size of its current account surplus.
(a) Define deregulation.
[2]
(b) Explain two benefits consumers may gain from a market economic system.
[4]
(c) Analyse how education and subsidies can increase a country’s economic growth rate.
[6]
(d) Discuss whether or not a reduction in a country’s trade protection will reduce its current
account surplus.
[8]
© UCLES 2020
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4
It was announced in November 2016 that 500 and 1000 rupee banknotes could no longer be used
in shops in India. These were replaced by the central bank, an institution that makes extensive use
of division of labour. In India, cash is still an important form of money used in economic
transactions. The replacement of banknotes put pressure on banking staff and other workers in the
tertiary sector, and affected the general price level.
(a) State two functions, other than issuing banknotes and coins, of a central bank.
[2]
(b) Explain two reasons why workers in the tertiary sector may be paid more than workers in the
primary sector.
[4]
(c) Analyse the advantages for firms of using division of labour.
[6]
(d) Discuss whether or not deflation will benefit an economy.
[8]
© UCLES 2020
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© UCLES 2020
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8
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Permission to reproduce items where third-party owned material protected by copyright is included has been sought and cleared where possible. Every reasonable
effort has been made by the publisher (UCLES) to trace copyright holders, but if any items requiring clearance have unwittingly been included, the publisher will
be pleased to make amends at the earliest possible opportunity.
To avoid the issue of disclosure of answer- related information to candidates, all copyright acknowledgements are reproduced online in the Cambridge Assessment
International Education Copyright Acknowledgements Booklet. This is produced for each series of examinations and is freely available to download at
www.cambridgeinternational.org after the live examination series.
Cambridge Assessment International Education is part of the Cambridge Assessment Group. Cambridge Assessment is the brand name of the University of
Cambridge Local Examinations Syndicate (UCLES), which itself is a department of the University of Cambridge.
© UCLES 2020
0455/23/O/N/20