Mark Scheme (Results)

October 2022

Pearson Edexcel International Advanced Level

In Economics (WEC12) Paper 01
Unit 2: Macroeconomic performance and policy
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October 2022
Question Paper Log Number P72461A
Publications Code WEC12_01_2210_MS
All the material in this publication is copyright
© Pearson Education Ltd 2022
General Marking Guidance

• All candidates must receive the same treatment. Examiners must

mark the first candidate in exactly the same way as they mark the
last.
• Mark schemes should be applied positively. Candidates must be
rewarded for what they have shown they can do rather than
penalised for omissions.
• Examiners should mark according to the mark scheme not
according to their perception of where the grade boundaries may
lie.
• There is no ceiling on achievement. All marks on the mark scheme
should be used appropriately.
• All the marks on the mark scheme are designed to be awarded.
Examiners should always award full marks if deserved, i.e. if the
answer matches the mark scheme. Examiners should also be
prepared to award zero marks if the candidate’s response is not
worthy of credit according to the mark scheme.
• Where some judgment is required, mark schemes will provide the
principles by which marks will be awarded and exemplification
may be limited.
• When examiners are in doubt regarding the application of the
mark scheme to a candidate’s response, the team leader must be
consulted.
• Crossed out work should be marked UNLESS the candidate has
replaced it with an alternative response.
Section A
Question Quantitative skills Answer Mark
assessed
1 QS9: Interpret, apply and The only correct answer is C
analyse information in
A is not correct as this does not explain the
written, graphical, tabular
conflict; shows full employment
and numerical forms
B is not correct as it shows the relationship
between the price level and real output
D is not correct as it shows the relationship
between the price level and real output
(1)
2 QS9: Interpret, apply and The only correct answer is B
analyse information in
A is not correct as demand deficiency is
written, graphical, tabular
associated with a recession
and numerical forms
C is not correct as seasonal unemployment is
associated with jobs at different times of the
year
D is not correct as structural unemployment is
associated with a change in the sectoral
structure of the economy
(1)
3 QS9: Interpret, apply and The only correct answer is A
analyse information in
B is not correct because withdrawals will be
written, graphical, tabular
greater than injections
and numerical forms
C is not correct because the data relates to
the government’s budget
D is not correct because the data relates to
the government’s budget
(1)
4 QS9: Interpret, apply and The only correct answer is C
analyse information in
A is not correct because this will improve
written, graphical, tabular
France’s trade balance
and numerical forms
B is not correct because this will improve
France’s trade balance
D is not correct because this will improve
France’s trade balance
(1)
5 QS9: Interpret, apply and The only correct answer is D
analyse information in
A is not correct as QE will increase the
written, graphical, tabular
availability of credit
and numerical forms
B is not correct as QE will increase the rate of
inflation
C is not correct as QE will reduce the rate of
unemployment
(1)
6 QS5: Calculate and The only correct answer is D
interpret index numbers
A is not correct as this is the index number for
QS9: Interpret, apply and
2018 using 2020 as the base year
analyse information in
written, graphical, tabular B is not correct as this is the index number for
and numerical forms 2019 using 2020 as the base year
C is not correct as this is the index number for
2020 using 2019 as the base year
(1)
Section B
Question With reference to the chart, explain one likely effect of this trend in Mark
the rate of inflation.

Answer
7 Knowledge 1, Analysis 2, Application 1

Quantitative skills assessed:

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

Knowledge and Analysis

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

Application
1 mark for appropriate use of the chart, e.g.:
• For identifying an increase in the rate of inflation (1)
• Between Jan 2021 and Nov 2021, the rate of inflation increased
from approximately 0.6% to 3.4% / by 2.8 percentage points (1) (4)
Question In 2021 average house prices in the Philippines fell by over 10%. Mark
This had a significant impact on existing homeowners.

Based on this information, draw an AD and LRAS diagram to show

the likely impact of this fall in house prices on the price level and
real output in the Philippines.

Answer

8 Knowledge 1, Application 3

Quantitative skills assessed:

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

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

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

NB: Award a maximum of 2 marks if LRAS shifted along with AD (4)

Question Calculate the change in Canada’s balance of trade between 2019 and Mark
2020. Show your workings.

Answer

9 Knowledge 1, Application 3

Quantitative Skill assessed

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

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

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

• 2019  $555.8bn - $583.6bn = -$27.8bn (1)

• 2020  $477.1bn - $510.8bn = -$33.7bn (1)
• Change  -$33.7bn – -$27.8bn = -$5.9bn (1)

NB: if correct answer (-$5.9 billion/$5.9 billion/21.2%) is given,

award full marks regardless of working.

NB: award 3 marks if billion is not included in the final answer (4)
Question With reference to this information, explain one likely macroeconomic Mark
impact of an increase in the base interest rate.

Answer

10 Knowledge 1, Analysis 2, Application 1

Quantitative Skill assessed

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

Knowledge and Analysis

1 knowledge mark for identifying one impact and up to 2 marks for
linked explanation of the impact identified:
• Decrease in consumption (C) (1K) – disincentivises spending
on credit as the cost of borrowing has increased (1AN) thus
AD/consumer confidence/inflation is likely to decrease / and
incentivises savings as return on saving has risen (1AN)
• Increase in savings (1K) as the reward for saving has risen
(1AN) and therefore real output/AD is likely to decrease /
unemployment is likely to rise (1AN)
• Decrease in investment (I) (1K) as the cost of borrowing to
finance investment has risen (1AN) and therefore business
confidence/injections are likely to fall (1AN)
• Decrease in net trade (X-M) (1K) as a result of greater demand
for the currency/upward pressure on the exchange rate (1AN)
making exports relatively more expensive / making imports
relatively cheaper (1AN)

Application
1 mark for appropriate reference to context, e.g.:
• Between January 2021 and December 2021, base interest
rate increased from 2% to 9.75% / interest rate increased
by 7.75 percentage points (1)
• An accurately drawn and labelled AD/AS diagram showing an
inward/leftward shift of AD (1) (4)
 Question With reference to the table, explain what is meant by ‘gross Mark
investment’.

Answer

11 Knowledge 2, Application 2

Quantitative Skills Assessed

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

Knowledge
Up to 2 marks for defining gross investment, e.g.:
• Gross investment = net investment + depreciation (2)
• Gross investment includes replacement of worn-out capital
stock / Gross investment data includes an estimate for the
value of capital depreciation (1)
• Investment refers to the increase in the capital stock /
Investment is an injection into the CFI (1)

Application
Up to 2 marks for explicit reference to the data, e.g.:
• Gross investment in Tanzania increased (1) from $15.5bn
in 2015 to $25.6bn in 2020 (1)
• Gross investment in Tanzania increased (1) by 65.16% /
65.2% / $10.1 billion (1) (4)

Section C
Question Define the term ‘net migration’ (Extract A, line 13). Mark

Answer

12(a) Knowledge 2
• Immigration minus (1) emigration (1)
• Difference between number of people entering the country
and (1) the number of people leaving the country (1) (2)
Question With reference to Figure 2 and Extract A, analyse two possible impacts Mark
of net migration on the UK economy.

Answer

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

Quantitative Skill Assessed

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

Knowledge and analysis

Up to 2 knowledge marks for identifying two possible impacts of net
migration on the UK economy and 1 analysis mark for linked
development of each impact e.g.:
• Lower productivity (1K) if there are more low skilled workers
immigrating as they have low levels of human capital (1AN) /
Higher productivity (1K) if there are more high skilled workers
immigrating as they have high levels of human capital (1AN)
• Greater labour market flexibility/employment (1K) as workers
will take jobs where shortages/unfilled vacancies exist (1AN)
• Increase in frictional unemployment (1K) as net migration can
result in displacement of existing labour force: lead to workers
moving between jobs to search for new employment (1AN)
• Could increase the rate of economic growth (1K) if AD increases
due to higher consumer spending in the economy (1AN)
• Increase in government expenditure (1K) as demand for public
goods and services will increase, e.g. schools/hospitals (1AN)
• Increase in tax revenue (1K) as more people will be part of the
labour force/start businesses paying higher income tax, VAT and
corporation tax (1AN)

Application
Up to 2 marks for use of Figure 2, e.g.,
• Between 2010 and 2019 net migration increased by 5.9% (1+1)
• Net migration was 256 000 in 2010 (1) and 271 000 in 2019 (1)
• Highest net migration in 2015/Lowest net migration in 2012 (1)
• More people immigrated to UK than people who emigrated (1)
• Net migration was positive in each year from 2010 to 2019 (1) (6)
Question With reference to Figure 1, explain the term ‘productivity’. Mark

Answer

12(c) Knowledge 2, Application 2

Quantitative Skill Assessed

QS5: Calculate and interpret index numbers
QS9: Interpret, apply and analyse information in written, graphical,
tabular and numerical forms

Knowledge
Up to 2 marks for defining productivity, e.g.:
• Output per (1) unit of input/worker/hour worked (1)
• Amount of output produced (1) in a given period of time (1)
• Ratio of output volume (1) to input volume (1)
• How efficiently production inputs are being used (1) to
produce a given level of output (1)
• How much output can be produced (1) from a given set of
inputs/resources (1)

Application
Up to 2 marks for correctly identifying trends in productivity from
Figure 1, e.g.:
• Between 2010 and 2020 productivity in the USA increased by
around 10% (1+1)
• Between 2010 and 2020 productivity in the UK increased from
100 to 104.5 (1)
• In 2019/2020 the USA overtakes Germany as having the
highest productivity (1)
• Productivity improved in all the given countries (1)
• UK productivity was the lowest amongst all countries (1)
• Productivity rose at a faster rate in Germany than in the UK (1) (4)
Question Examine two likely macroeconomic effects of ‘significant wage Mark
increases’ (Extract A, line 21) on the UK economy.

Answer

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

Quantitative Skill Assessed

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

Knowledge and analysis

Up to 2 marks for identifying two likely effects of wage increases
and 1 analysis mark for each linked development e.g.:
• Decrease in real output (1K) as the SRAS is likely to shift to
the left/inwards due to rising costs (1AN)
• Increase in cost-push inflation (1K) as workers demand higher
wages because their real income eroded by inflation/firms can
pass higher costs to consumers in form of higher prices (1AN)
• Increase in unemployment (1K) as there will be lower demand
for labour/firms are likely to introduce more capital-intensive
methods of production in their operations (1AN)
• Deterioration in the balance of trade (1K) because the higher
wages can cause firms costs to rise resulting in higher export
prices/more imports due to greater marginal propensity to
import (1AN)
• Increase in living standards/national happiness (1K) as these
increases in real wages would enable people to access more
goods and services (1AN)
• Greater consumption (1K) as higher wages will increase the
workers affordability of goods and services/increase workers
demand for goods and services/AD increases (1AN)
• Higher productivity (1K) as workers become more motivated
to work harder/if firms replace workers with capital (1AN)
• Increased tax revenue for the government (1K) from greater
income tax/indirect taxes (1AN)

NB Accept negative effects as KAA and positive effects as

Evaluation (and vice versa)
Application
Up to 2 marks for use of the reference to context, e.g.,
• Have been experienced especially in the jobs where severe
shortages exist (1)
• Rising wages could incentivise businesses to invest in labour-
saving machinery and staff training (1)
• Concern that these wage increases will harm the UK economy
unless it is supported by higher productivity (1)
• An accurately drawn and labelled AD/SRAS diagram (1)

Evaluation
Up to 2 marks for evaluative comments (1+1 or 2+0), e.g.:
• The magnitude of the wage increase is relatively large (1) as
the wage increases have been ‘significant’, so impact is likely
to be considerable (1)
• In the short-run, wage increases will have a sizable impact on
inflation/real output (1) as any positive impact on productivity
will take time to come into effect (1)
• Impact on inflation depends on whether there has been an
increase in real wages or nominal wages (1) as an increase
in real wages is likely to raise living standards (1)
• The increase in living standards will only occur if the nominal
wages increase faster (1) than the rate of inflation (1) (8)
Question Discuss supply-side policies that the UK Government could use to increase
productivity.

Indicative content

12(e) Indicative content guidance

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

Quantitative Skill Assessed

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

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

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

incentives in an economy – it can be shown via a shift outward of the LRAS
creating both actual and potential growth
• Between 1997 and 2008, the average annual productivity growth was only
1.9%. Between 2009 and 2019 it fell to 0.7%. By 2021 productivity was nearly
20% below the level it would have reached if it had continued at 1.9%
• Increased government spending on skills through investment in education
and/or training – this would increase human capital and raise productivity
• Increased government spending on infrastructure investment (e.g., roads or
broadband) – this would reduce industry costs or improve access to market
• Reducing the level of welfare benefits – this would incentivise unemployed
to take jobs, work harder and increase output per worker of those in work
• Privatisation - this may lead to increased competition, greater innovation
due to higher R&D spending, and therefore higher productivity in the UK
• Cutting cost of bureaucracy and/or deregulation of firms – this would raise
efficiency and productivity by increasing competition between firms
• Reducing corporation tax/subsidies – this incentivises firms to innovate by
investing in technological advancements; hence increasing potential output
• Lowering regulation (deregulation of markets) and/or increasing competition
• Increasing the country’s national minimum wage
Level Mark Descriptor
0 No rewardable material.
Level 1 1–3 Displays isolated, superficial or imprecise knowledge and
understanding of economic terms, principles, concepts, theories and
models.
Use of generic material or irrelevant information or inappropriate
examples.
Descriptive approach which has no chains of reasoning.
Level 2 4–6 Displays elements of knowledge and understanding of economic terms,
principles, concepts, theories and models.
Ability to apply knowledge and understanding to some elements of the
question. Some evidence and contextual references are evident in the
answer.
Chains of reasoning in terms of cause and/or consequence are evident
but they may not be developed fully or some stages are omitted.
Level 3 7–8 Demonstrates accurate and precise knowledge and understanding of
economic terms, principles, concepts, theories and models.
Ability to link knowledge and understanding in context using relevant
examples which are fully integrated to address the broad elements of
the question.
Analysis is clear, coherent, relevant and focused. The answer
demonstrates logical and multi-stage chains of reasoning in terms of
cause and/or consequence.

Evaluation (6 marks) – indicative content

• Government will have to spend significant amount of money to increase

UK’s productivity – comparison drawn between countries using Figure 1
• It is difficult for the UK Government to accurately measure productivity
• Significant time lags and implementation lags for supply-side policies
• Creates an opportunity cost for the UK Government: it may lead to more
productivity if spent in another sector of the economy, e.g. healthcare
• Supply-side policies are less effective when there is large amounts of spare
capacity in an economy: they create potential growth but no actual growth
• Consideration of effectiveness of supply-side policies such as infrastructure
and education at delivering sustainable growth
• Depends on the quality of education, training and infrastructure projects
• Privatisation may lead to private monopolies, leading to less productivity
• Cut in welfare benefits designed as an incentive to work may be ineffective
if the unemployed are willing to receive less payments and do not work
• Reducing bureaucracy may create unemployment in the short-term
 • Cut in corporation tax would be ineffective if companies boost short-term
profits rather than investing in productivity-boosting technology
• Increasing national minimum wage may lead to unemployment if firms
decide to replace workers with capital

Level Mark Descriptor

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

Question Evaluate the limitations of using GDP data to compare living standards
between countries.

Indicative content

13 Indicative content guidance

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

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

• Understanding of the term real GDP/living standards

• Rate of economic growth is lower for developed countries than of the
developing countries
• Reference to differences in percentage change in real GDP from stem or
more widely

Limitations of comparison may include:

• Percentage changes are misleading without any reference to total GDP
• Presence of an informal and unpaid economy will imply that some
output is unrecorded as it is not bought or sold and there is no resulting
income – size of informal economy of developing countries is
significantly larger than that of developed countries
• Population growth in developing countries, such as Guyana, may
account for most growth in GDP; need to consider GDP per capita
• Differences in distribution of income as growth varies between countries
• Quality of life issues, such as spending on health and education – impact
is very difficult to measure, especially in developing countries
• Differences in quality of housing and environment between countries
• Subsistence, barter and the hidden economy will undervalue the real
output and national income will not reflect true living standards
• Currency values do not effectively calculate accurate purchasing power
parity/exchange rates might not accurately reflect these differences in
purchasing power of currencies
• Spending on investment goods may raise future living standards at the
expense of the current generation’s quality of life
• Methods of calculation and reliability of data may be questioned
• The size of the public sector spending, especially in developed countries
such as Norway/Finland, which may or may not improve living standards
 • Nominal GDP data ignores the impact of inflation which can significantly
reduce the real GDP figure impacting living standards
• Standard of living is subjective, and therefore it cannot be measured
effectively and accurately
• Differences in the composition of GDP

NB: Award a maximum of Level 3 for answers with no reference to

countries in their answer

Level Mark Descriptor

0 No rewardable material.
Level 1 1–3 Displays isolated, superficial or imprecise knowledge and
understanding of economic terms, principles, concepts, theories and
models.
Use of generic material or irrelevant information or inappropriate
examples.
Descriptive approach, which has no chains of reasoning.
Level 2 4–6 Displays elements of knowledge and understanding of economic
terms, principles, concepts, theories and models.
Limited application of knowledge and understanding to economic
problems in context. A narrow response or superficial, only two-stage
chains of reasoning in terms of cause and/or consequence.
Level 3 7–9 Demonstrates accurate knowledge and understanding of economic
terms, principles, concepts, theories and models.
Ability to apply knowledge and understanding to some elements of
the question. Some evidence and contextual references are evident in
the answer.
Analysis is clear and coherent. Chains of reasoning in terms of cause
and/or consequence are evident but they may not be developed fully
or some stages are omitted.
Level 4 10–12 Demonstrates accurate and precise knowledge and understanding of
economic terms, principles, concepts, theories and models.
Ability to link knowledge and understanding in context using
appropriate examples which are fully integrated to address the broad
elements of the question.
Analysis is clear, coherent, relevant and focused. The answer
demonstrates logical and multi-stage chains of reasoning in terms of
cause and/or consequence.
 Evaluation (8 marks) – indicative content

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

used by all countries and is well understood by policymakers
• GDP is an accurate indicator of the size of an economy and the GDP
growth rate is probably the best indicator of economic growth
• GDP is internationally recognised as it is the most reliable method of
comparing living standards between countries
• Simpler to measure GDP than any other composite indicators
• Ease of using GDP data for comparison over time between countries
• Other measures might be better, e.g., GDP per capita gives an indication
of average incomes, which is a key determinant of living standards
• GDP is dynamic and enables policymakers/central banks to determine
whether their economy is contracting or expanding and promptly take
necessary action to ensure living standards are maintained
• GDP allows policymakers, economists, and businesses to analyse the
impact of changes in monetary and fiscal policy, economic shocks, etc.
• SR v LR considerations: The global health crisis may have affected GDP
of countries in 2021

Level Mark Descriptor

0 No rewardable material.
Level 1 1–3 Identification of generic evaluative comments.
No supporting evidence/reference to context.
No evidence of a logical chain of reasoning.
Level 2 4–6 Evidence of evaluation of alternative approaches.
Some supporting evidence/reference to context.
Evaluation is supported by a partially-developed chain of reasoning.
Level 3 7–8 Evaluation recognises different viewpoints and/or is critical of the
evidence, leading to an informed judgement.
Appropriate reference to evidence/context.
Evaluation is supported by a logical chain of reasoning.
Question Evaluate the potential conflicts between the objective of economic growth and
two other macroeconomic objectives. Refer to a country of your choice in your
answer.

Indicative content

14 Indicative content guidance

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

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

• Understanding of economic growth/macroeconomic objectives

• Implicit or explicit identification of macroeconomic objectives
• Relevant diagram, e.g., AD/AS diagram showing rightward shift
in AD and/or AS curve

Potential conflicts include:

• Inflation rising as full capacity is approached – bottlenecks may
arise where some restrictions in the supply chain can cause cost
and wage pressures
• Balance of payments position may deteriorate as incomes rise and
more imports are demanded as a country might have a high
marginal propensity to import
• Growth should result in higher average living standards, but may
not deliver a more fair or equitable distribution of income and
wealth as rich tend to get rich faster than the poor do
• Increased growth tends to lead to high external costs/deterioration
of the environment from congestion and pollution

NB: Award a maximum of Level 3 for answers with no reference to an

economy
Level Mark Descriptor
0 No rewardable material.
Level 1 1–3 Displays isolated, superficial or imprecise knowledge and
understanding of economic terms, principles, concepts, theories and
models.
Use of generic material or irrelevant information or inappropriate
examples.
Descriptive approach which has no chains of reasoning.
Level 2 4–6 Displays elements of knowledge and understanding of economic
terms, principles, concepts, theories and models.
Limited application of knowledge and understanding to economic
problems in context.
A narrow response or superficial, only two-stage chains of reasoning in
terms of cause and/or consequence.
Level 3 7–9 Demonstrates accurate knowledge and understanding of economic
terms, principles, concepts, theories and models.
Ability to apply knowledge and understanding to some elements of the
question. Some evidence and contextual references are evident in the
answer.
Analysis is clear and coherent. Chains of reasoning in terms of cause
and/or consequence are evident, but they may not be developed fully
or some stages are omitted.
Level 4 10–12 Demonstrates accurate and precise knowledge and understanding of
economic terms, principles, concepts, theories and models.
Ability to link knowledge and understanding in context using
appropriate examples which are fully integrated to address the broad
elements of the question.
Analysis is clear, coherent, relevant and focused. The answer
demonstrates logical and multi-stage chains of reasoning in terms of
cause and/or consequence.
 Evaluation (8 marks) – indicative content

• Significance of the stage in trade cycle that the country is in, and the
implications for elasticity of the AS/proximity to the full employment
level of output
• If it is supply-side economic growth (rather than demand-side) then
there will be fewer conflicts with other objectives
• Objectives of low unemployment and/or balanced government budget
should not conflict with economic growth
• Depends on the initial state of inflation in the economy
• Extent of domestic economy’s capacity to meet rising demand (i.e., if
economy can supply wants)
• Extent of effectiveness of environmental policies, e.g., many developed
economies may have strict environmental laws/regulation encouraging
the use of clean and green technology
• Balance of payments position may improve if it is export-led growth/if
generated through increase in productivity (e.g., through investment)
• Economic growth may lead to higher government revenues and scope
to invest in green technology

Level Mark Descriptor

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