Mark Scheme

Extra assessment material

for first teaching
September 2017

International GCSE in Economics (4EC1)

Paper 2: Macroeconomics and the

Global Economy
Question Answer Mark
number
1(a) AO1 1 mark

A Income Tax (1)

Question Answer Mark

number
1(b) AO2 1 mark

C Savers (1)

Question Answer Mark

number
1(c) AO1 2 marks

Award 1 mark for reference to a rise in the output and 1 mark for
reference to time period.

• A rise in the total value of output/GDP (1) over a period of time (1). (2)

Question Answer Mark

number
1(d) AO1 2 marks

Award 1 mark for reference to a group of countries and 1 mark for

reference to trading between these members.

• A group of countries which join together (1) to increase trade

between members (1). (2)
Question Answer Mark
number
1(e) A02 2 marks

Award 1 mark for showing the calculation.

Award 1 mark for the correct answer.

($3 500 ÷ 100) × 4 (1) = $140 (1)

Award 2 marks if the correct answer is shown, with dollar symbol,

even if no calculations are shown.
Award 1 mark if correct answer is shown, but with no dollar
symbol, even if no calculations are shown. (2)

Question Answer Mark

number
1(f) AO2 3 marks

Award 1 mark for rightward shift of supply labelled.

Award 1 mark for lower equilibrium price labelled.
Award 1 mark for higher equilibrium quantity labelled.

(3)
Question Answer Mark
number
1(g) AO2 3 marks

Award 1 mark for identifying a relevant reason.

Award 1 mark for developing the reason.
Award 1 mark for the response being in the context of globalisation.

• One reason is due to the reduced cost of transport (1) brought

about by economies of scale (1) because of the use of larger
container ships (1).

• One reason is the increasing use of technology (1). The use of the
internet to purchase goods (1) gives access to a worldwide
market from many different countries (1).

Accept any other appropriate response. (3)

Question Indicative content
number
1(h) AO2 (3 marks)/AO3 (3 marks)

AO2 and AO3

• Globalisation is the interdependence and integration of the world’s

economies.
• Increased globalisation and trade should result in more jobs being created
as more employees are required to make goods/services in China.
• This will reduce unemployment in the countries such as China that make
the goods/services.
• More employment and income will lead to higher living standards.
• This should result in more tax revenue for the Chinese government which
can be used to finance healthcare and education.
• Increased globalisation may result in more choice as well as lower prices for
Chinese consumers as they have access to a wider number of firms that are
selling good/services.

Level Mark Descriptor

0 No rewardable material.

Level 1 1–2 • Demonstrates basic knowledge and understanding by

developing relevant points. Limited application of economic
terms, concepts, theories and calculations (AO2).
• Information presented will lack selectivity and organisation.
Interpretation of economic information will be limited, with a
lack of analysis of issues (AO3).
Level 2 3–4 • Demonstrates partial knowledge and understanding by
developing relevant points. Partial application of economic
terms, concepts, theories and calculations (AO2).
• Information presented will demonstrate some selectivity and
organisation. Interpretation of economic information will be
good, with some analysis of issues (AO3).
Level 3 5–6 • Demonstrates clear knowledge and understanding by
developing relevant points. Appropriate application of economic
terms, concepts, theories and calculations (AO2).
• Information presented will demonstrate excellent selectivity and
organisation. Interpretation of economic information will be excellent,
with a thorough analysis of issues (AO3).
Question Answer Mark
number
2(a) AO1 1 mark

D a visible import (1)

Question Answer Mark

number
2(b) AO2 1 mark

A Recession (1)

Question Answer Mark

number
2(c) AO1 1 mark

Award 1 mark for reference to a negative inflation rate.

When the rate of inflation becomes negative/fall in average prices. (1)

Question Answer Mark

number
2(d) AO1 2 marks

Award 1 mark for reference to exporting goods and 1 mark for

reference to below manufacturing costs.

A firm sells goods very cheaply in another country (1) below their
cost of production (1). (2)
Question Answer Mark
number
2(e) AO2 3 marks

Award 1 mark for identifying a relevant advantage of being a member of

a free trade bloc.
Award 1 mark for developing the advantage.
Award 1 mark for the response being in the context of a country.

• Lower prices for consumers (1). With more trade, Malaysian

businesses will face more competition from abroad (1) and it
may prevent Malaysian businesses from charging high prices (1).

• Wider markets for businesses (1). Removing trade barriers

results in Malaysian businesses being able to export to a wider
range of countries (1). This may result in an increase in demand
for Malaysian goods/services (1).

Accept any other appropriate response. (3)

Question Answer Mark

number
2(f) AO2 3 marks

Award 1 mark for identifying a limitation of GDP as a measure.

Award 1 mark for developing the limitation.
Award 1 mark for the response being in the context of a country.

• Different countries record GDP data differently (1). This makes

inter country comparisons difficult and less accurate/meaningful
(1). Bangladesh may include extra items that other countries do
not (1).

• Does not include hidden/informal economy (1). Voluntary and

unpaid work is not included in GDP figures (1). Therefore,
Bangladesh GDP figures may not be an accurate record of the
total economic activity in an economy (1).

Accept any other appropriate response. (3)

Question Indicative content
number
2(g) AO2 (3 marks)/AO3 (3 marks)/AO4 (3 marks)

AO2 and AO3

• With a weaker pound, sterling exports may become cheaper to foreign buyers.
• So, demand increases and improves the current account on balance of
payments.
• This can be seen by the increase in sales of British-built cars in India due to the
weaker pound against the rupee.
• Imports become relatively more expensive.
• So, demand decreases as consumers may switch to domestically produced
goods and this may improve the current account balance.

AO4

• The impact will depend on the elasticity of demand for imports and exports.
• The graph indicates that there has been a slight improvement in the current
account balance but it is still showing a current account deficit.
• It depends on how much the exchange rate depreciates and if this is a
temporary situation.
• Time lag issues may delay improvement in the current account and it also
depends on what is happening to other currencies as to the overall impact on
the UK current account.
Level Mark Descriptor

0 No rewardable material.

Level 1 1–3 • Demonstrates basic knowledge and understanding by

developing relevant points. Limited application of economic
terms, concepts, theories and calculations (AO2).
• Information presented will lack selectivity and organisation.
Interpretation of economic information will be limited, with a
lack of analysis of issues (AO3).
• Only offers one viewpoint, meaning there is an unbalanced and
incomplete evaluation, showing limited understanding and
awareness (AO4).
Level 2 4–6 • Demonstrates partial knowledge and understanding by
developing relevant points. Partial application of economic
terms, concepts, theories and calculations (AO2).
• Information presented will demonstrate some selectivity and
organisation. Interpretation of economic information will be
good, with some analysis of issues (AO3).
• Offers more than one viewpoint but the argument may lack
balance, leading to an evaluation that may not demonstrate full
understanding and awareness (AO4).
Level 3 7–9 • Demonstrates clear knowledge and understanding by
developing relevant points. Appropriate application of economic
terms, concepts, theories and calculations (AO2).
• Information presented will demonstrate excellent selectivity and
organisation. Interpretation of economic information will be
excellent, with a thorough analysis of issues (AO3).
• Offers more than one viewpoint. The argument is well balanced
and coherent, leading to an evaluation that demonstrates full
understanding and awareness (AO4).
Question Answer Mark
number
3(a) AO1 1 mark

C Structural (1)

Question Answer Mark

number
3(b) AO1 1 mark

A government spending (1)

Question Answer Mark

number
3(c) AO2 3 marks

Award 1 mark for identifying a way currency speculators could affect

the exchange rate of a country.
Award 1 mark for developing the way.
Award 1 mark for the response being in the context of a country’s
exchange rate.

• Speculators buy more currency (1), because they believe the

exchange rate will rise in the future (1). This increase in demand
will cause the value of the exchange rate to rise (1).

• Speculators sell a currency (1), because they believe the

exchange rate will fall in the future (1). This increase in supply
will cause the value of the exchange rate to fall (1).

Accept any other appropriate response. (3)

Question Indicative content
number
3(d) AO2 (3 marks)/AO3 (3 marks)

AO2 and AO3

• Saving will be less rewarding for consumers so they may spend more on
goods/services.
• Consumers often finance a lot of spending by using credit, especially for
expensive durable goods such as cars and electrical equipment.
• As borrowing and credit become cheaper so consumers spend more.
• A fall in the interest rate may cause the exchange rate to weaken.
• This may increase the price of imported goods leading to a reduction in
consumer spending.
• Firms may increase investment leading to greater employment which may
result in more consumer spending.

Level Mark Descriptor

0 No rewardable material.

Level 1 1–2 • Demonstrates basic knowledge and understanding by

developing relevant points. Limited application of economic
terms, concepts, theories and calculations (AO2).
• Information presented will lack selectivity and organisation.
Interpretation of economic information will be limited, with a
lack of analysis of issues (AO3).
Level 2 3–4 • Demonstrates partial knowledge and understanding by
developing relevant points. Partial application of economic
terms, concepts, theories and calculations (AO2).
• Information presented will demonstrate some selectivity and
organisation. Interpretation of economic information will be
good, with some analysis of issues (AO3).
Level 3 5–6 • Demonstrates clear knowledge and understanding by
developing relevant points. Appropriate application of economic
terms, concepts, theories and calculations (AO2).
• Information presented will demonstrate excellent selectivity and
organisation. Interpretation of economic information will be
excellent, with a thorough analysis of issues (AO3).
Question Indicative content
number
3(e) AO2 (3 marks)/AO3 (3 marks)/AO4 (3 marks)

AO2 and AO3

• Tariffs are a tax imposed on imported goods and services.

• Tariffs are an example of a trade barrier.
• Tariffs will reduce the demand for imports and this will increase the demand for
domestic goods.
• Higher tariffs on softwood imports will cause US firms to purchase more
domestically produced US softwood rather than Canadian softwood.
• This will benefit US softwood industry and protect/create jobs in US softwood
industry as businesses switch to US softwood rather than using imported
Canadian softwood.
• This could give an additional $1bn in tax revenue to the US from the tariff on
imported softwood from Canada.
• This may reduce the budget deficit for the US.

AO4

• The tariff will lead to higher costs of production and higher prices for US
construction firms who use Canadian softwood to build houses.
• This will increase the final price for consumers (house buyers) especially as the
US imports over 1/3 of softwood.
• Tariffs may lead to inflation rather than increased sales for domestic industries,
which will not benefit the developed economy.
• Canada may retaliate and raise tariffs on US exports, to protect their own
domestic industries.
• Tariffs always force a trade-off between industry and consumers.
Level Mark Descriptor

0 No rewardable material.

Level 1 1–3 • Demonstrates basic knowledge and understanding by

developing relevant points. Limited application of economic
terms, concepts, theories and calculations (AO2).
• Information presented will lack selectivity and organisation.
Interpretation of economic information will be limited, with a
lack of analysis of issues (AO3).
• Only offers one viewpoint, meaning there is an unbalanced and
incomplete evaluation, showing limited understanding and
awareness (AO4).
Level 2 4–6 • Demonstrates partial knowledge and understanding by
developing relevant points. Partial application of economic
terms, concepts, theories and calculations (AO2).
• Information presented will demonstrate some selectivity and
organisation. Interpretation of economic information will be
good, with some analysis of issues (AO3).
• Offers more than one viewpoint but the argument may lack
balance, leading to an evaluation that may not demonstrate full
understanding and awareness (AO4).
Level 3 7–9 • Demonstrates clear knowledge and understanding by
developing relevant points. Appropriate application of economic
terms, concepts, theories and calculations (AO2).
• Information presented will demonstrate excellent selectivity and
organisation. Interpretation of economic information will be
excellent, with a thorough analysis of issues (AO3).
• Offers more than one viewpoint. The argument is well balanced
and coherent, leading to an evaluation that demonstrates full
understanding and awareness (AO4).
Question Answer Mark
number
4(a) AO2 2 marks

Award 1 mark for calculating the number of people who are unemployed.

153,762 – 145,757= 8,005 (1)

Award 1 mark for calculating the percentage of unemployment for 2015.

8,005 ÷ 153,762 × 100 = 5.21% (1)

Award 2 marks if the unemployment rate is accurately calculated with no

workings shown.
Award 1 mark for answers to one decimal place i.e. 5.2%
Award 1 mark if percentage sign missing i.e. 5.21 (2)
Question Indicative content
number
4(b) AO2 (3 marks)/AO3 (3 marks)

AO2 and AO3

• Economic growth may result in a higher standard of living for people living in the
Maldives.
• Increased employment - jobs may be created in the hotels/restaurants/tour
guides resulting in reduced unemployment in the Maldives.
• Government revenues may increase enabling greater expenditure on public
services such as education and healthcare.
• Local infrastructure is improved as water and sanitation facilities, roads, buses,
taxis and airports are provided for tourists.
• Increased exports - tourists will have to buy currency to spend on
hotels/food/locally produced goods in the Maldives increasing
invisible/visible exports.

Level Mark Descriptor

0 No rewardable material.

Level 1 1–2 • Demonstrates basic knowledge and understanding by

developing relevant points. Limited application of economic
terms, concepts, theories and calculations (AO2).
• Information presented will lack selectivity and organisation.
Interpretation of economic information will be limited, with a
lack of analysis of issues (AO3).
Level 2 3–4 • Demonstrates partial knowledge and understanding by
developing relevant points. Partial application of economic
terms, concepts, theories and calculations (AO2).
• Information presented will demonstrate some selectivity and
organisation. Interpretation of economic information will be
good, with some analysis of issues (AO3).
Level 3 5–6 • Demonstrates clear knowledge and understanding by
developing relevant points. Appropriate application of economic
terms, concepts, theories and calculations (AO2).
• Information presented will demonstrate excellent selectivity and
organisation. Interpretation of economic information will be
excellent, with a thorough analysis of issues (AO3).
Question Indicative content
number
4(c) AO2 (4 marks)/AO3 (4 marks)/AO4 (4 marks)

AO2 and AO3

• Business activity can damage the environment as it has done in the Maldives.
• Pollution permits are a market based scheme aimed at reducing pollution and
trying to encourage firms to reduce the quantity of pollution they create.
• Pollution Permits involve giving firms such as hotels a legal right to pollute a
certain amount e.g. kg of waste per tourist per year.
• If a hotel produces less pollution/waste it can sell its pollution permits to other
hotels.
• Permits create a financial incentive to pollute less because hotels can then sell
their excess permits to other hotels.
• It can be a good way to reduce pollution, using the incentives of the market.

AO4

• However, in practice, pollution permits can be difficult to implement and it is

difficult to know how many permits to give out to hotels.
• If the Maldives’ government is too generous in the number of permits it allows,
there will be little pollution reduction.
• If the government is too strict in implementing permits, firms may complain it
adversely affects output because they cannot get enough permits.
• There may be an incentive to cheat and hide the amount of pollution a hotel
creates. This could make the scheme ineffective.
• There are alternatives to pollution permits which may be more effective such as
fining the hotels on the amount of waste produced or encouraging recycling by
the hotels.
• A combination of measures may be best along with educating the Maldives’
population as to why it is important to reduce the amount of waste created by
tourists.
Level Mark Descriptor

0 No rewardable material.

Level 1 1–4 • Demonstrates isolated elements of relevant knowledge and

understanding; may lack development of relevant points.
Limited application of economic terms, concepts, theories and
calculations (AO2).
• Information presented will lack selectivity and organisation.
Chain of reasoning may be attempted. Interpretation of
economic information will be limited, with a lack of analysis of
issues (AO3).
• Only offers one viewpoint, meaning there is an unbalanced and
incomplete evaluation, showing limited understanding and
awareness. A judgement or conclusion is unlikely to be
attempted (AO4).
Level 2 5–8 • Demonstrates partial selectivity and some accurate knowledge
and understanding by developing some relevant points. Partial
application of economic terms, concepts, theories and
calculations (AO2).
• Information presented will demonstrate some selectivity and
organisation. Chain of reasoning will be present but may be
limited. Interpretation of economic information will be good,
with some analysis of issues (AO3).
• Offers more than one viewpoint but the argument may lack
balance, leading to an evaluation that may not demonstrate full
understanding and awareness. A judgement or conclusion is
attempted, but may not be fully supported (AO4).
Level 3 9–12 • Demonstrates specific and accurate knowledge and
understanding by developing relevant points. Appropriate
application of economic terms, concepts, theories and
calculations (AO2).
• Information presented will demonstrate excellent selectivity and
organisation. Chain of reasoning will be coherent and logical.
Interpretation of economic information will be excellent with a
thorough analysis of issues (AO3).
• Offers more than one viewpoint. The argument is well balanced
and coherent, leading to an evaluation that demonstrates full
understanding and awareness. A supported judgement or
conclusion is present (AO4).