Edexcel Theme 4: A Global Perspective — Past Paper Questions

With reference to Figure 4 and your own knowledge, explain the distinction between a progressive and a regressive tax.

4.5.2 Taxation

With reference to Figure 4 and Extract A, examine the likely impact of the ‘freeze in income tax thresholds’ (Extract A line 1) on aggregate demand.

2.2.1 Aggregate Demand · 4.5.2 Taxation

Assess whether a fiscal deficit and national debt should be a cause for concern for the UK government.

4.5.3 Public Sector Finances

With reference to Extract B, discuss the use of quantitative easing in preventing deflation.

2.6.2 Demand-Side Policies · 4.4.3 Role of Central Banks

In 2021 Brazil’s current account deficit on the balance of payments was US$46.12 billion. The Central Bank of Brazil intervened to sell its own currency, the real, on September 23rd 2022. This was the first time it has intervened in foreign currency markets since December 2021. (Source adapted from: https://www.statista.com/statistics and https://www.centralbanking.com/central-banks/reserves/foreign-exchange/7953193/brazil-makes-first-fx-intervention-of-the-year) Evaluate macroeconomic policies that could be used to reduce a current account deficit. Refer to a country of your choice in your answer.

One of two options in Section C — candidates answered this or the other.

4.1.7 Balance of Payments

In 2020, exports as a share of world GDP were 12% higher than in 2000, almost twice as high as 50 years ago. (Source adapted from: https://www.dhl.com/content/dam/dhl/global/dhl-spotlight/documents/pdf/2021-gci-update-report.pdf) Evaluate the possible factors contributing to globalisation.

One of two options in Section C — candidates answered this or the other.

4.1.1 Globalisation

Evaluate the microeconomic and macroeconomic advantages for a country specialising in energy production using gas.

One of two options in Section A — candidates answered this or the other.

4.1.2 Specialisation and Trade

Explain one reason why a country might operate a managed exchange rate. Refer to Extract D in your answer.

4.1.8 Exchange Rates

With reference to the second paragraph of Extract E, examine two likely problems for the expansion of the chocolate industry in Ghana.

4.3.2 Factors Influencing Growth

Evaluate the microeconomic and macroeconomic effects of high interest rates in Ghana, or another developing country of your choice.

One of two options in Section B — candidates answered this or the other.

2.6.2 Demand-Side Policies · 4.4.3 Role of Central Banks

Evaluate the microeconomic and macroeconomic effects of Ghana joining the African Continental Free Trade Agreement (Extract F).

One of two options in Section B — candidates answered this or the other.

4.1.5 Trading Blocs and the WTO

With reference to Extract A, explain what is meant by a ‘regional trade agreement’ (Extract A, line 7).

4.1.5 Trading Blocs and the WTO

With reference to Extract A, examine two causes of the high cost of transporting goods between African countries.

4.3.2 Factors Influencing Growth

Discuss the impact of improved transport links between African countries on economic growth rates.

4.3.2 Factors Influencing Growth · 2.5.1 Causes of Growth

Assess two likely benefits of debt relief to Angola. Refer to Extract B in your answer.

4.3.3 Development Strategies

Discuss market-orientated strategies the Angolan government could use to improve development.

4.3.3 Development Strategies

In 2022 the value of UK exports fell by 14% compared with 2020. In contrast, the global average increase in exports was 8.2% over the same time period. The UK’s competitiveness also fell, dropping five places from 18th in 2021 to 23rd in 2022 in the world competitiveness rankings. (Sources: adapted from https://www.ft.com/content/021c629d-5853-4111-9600-ab5f0eb65a35 and https://www.imd.org/centers/world-competitiveness-center/rankings/world-competitiveness) Evaluate macroeconomic policies that could be used to increase international competitiveness in the UK’s export markets.

One of two options in Section C — candidates answered this or the other.

4.1.9 International Competitiveness

Evaluate microeconomic and macroeconomic policies that could be used to reduce inequality in the UK.

One of two options in Section A — candidates answered this or the other.

4.2.2 Inequality

Evaluate the likely microeconomic and macroeconomic effects of tax cuts in the UK.

One of two options in Section A — candidates answered this or the other.

4.5.2 Taxation · 2.6.2 Demand-Side Policies

Using the data provided in Extract D, explain one role of financial markets.

4.4.1 Role of Financial Markets

Evaluate the microeconomic and macroeconomic effects of falling house prices.

One of two options in Section B — candidates answered this or the other.

2.2.2 Consumption · 4.4.1 Role of Financial Markets

Using a Lorenz curve diagram, explain how income inequality is measured using the Gini coefficient. Refer to Extract A in your answer.

4.2.2 Inequality

With reference to Figure 1 and Extract A, examine two likely causes of income inequality within the UK.

4.2.2 Inequality

With reference to Extract C and your own knowledge, discuss methods the UK government could use to increase tax revenue.

4.5.2 Taxation

Both China and the United States have been gradually increasing the tariffs imposed on each other’s exports as their trade dispute continues. The IMF estimated that the trade dispute between China and the United States would reduce global GDP growth by 0.8 percentage points by the end of 2020. (Source: adapted from https://www.theguardian.com/business/2019/oct/15/imf-recession-world-growth-forecast-central-banks) Evaluate the likely impact of an increase in protectionism on the global economy.

One of two options in Section C — candidates answered this or the other.

4.1.6 Restrictions on Free Trade

With global economic growth slowing and inequality rising, the case against globalisation is strengthening. But there are also many benefits to globalisation. Global trade and international trade agreements allow countries to focus on their strengths and share expertise, as well as reducing risk through diversification. (Source: adapted from https://www.ft.com/content/7b365844-9b75-11ea-adb1-529f96d8a00b) Evaluate the likely impact of globalisation on the global economy.

One of two options in Section C — candidates answered this or the other.

4.1.1 Globalisation

Evaluate the microeconomic and macroeconomic effects of a depreciation of the pound. Refer to restaurants or other food delivery services in your answer.

One of two options in Section A — candidates answered this or the other.

4.1.8 Exchange Rates

Explain what is meant by the Lewis model. Refer to Extract D in your answer.

4.3.2 Factors Influencing Growth

Examine two demographic factors influencing development in Kenya.

4.3.2 Factors Influencing Growth

Using the example of cut flowers (Extract F), discuss how the concept of absolute advantage may lead to growth in Kenya. Use numerical or diagrammatic analysis in your answer.

4.1.2 Specialisation and Trade

Evaluate the microeconomic and macroeconomic effects of decreasing interest rates in Kenya, or another developing country of your choice.

One of two options in Section B — candidates answered this or the other.

2.6.2 Demand-Side Policies · 4.4.3 Role of Central Banks

Evaluate the microeconomic and macroeconomic strategies that could be used to promote development in Kenya, or another developing country of your choice.

One of two options in Section B — candidates answered this or the other.

4.3.3 Development Strategies

Using the data in Figures 1 and 2, calculate the change in the level of total aid funding to Rwanda between 2011 and 2012.

4.3.3 Development Strategies

With reference to the information provided, examine two likely benefits for the Rwandan economy of the growth in the country’s population.

4.3.2 Factors Influencing Growth

With reference to the information provided, assess the likely impact on the Rwandan economy of the change in aid received between 2017 and 2018.

4.3.3 Development Strategies

Discuss the likely impact on Rwandan consumers and clothing manufacturers of the increase in the tariff on imports of second-hand clothes. Use an appropriate diagram to support your answer.

4.1.6 Restrictions on Free Trade

Discuss policies, other than import tariffs, that the Rwandan government could use to develop its manufacturing industries.

4.3.3 Development Strategies

The European Central Bank introduced a new round of quantitative easing (QE) in March 2020, purchasing up to €750 billion of assets. The objective of this QE was to reduce the serious risks to the effectiveness of monetary policy resulting from a significant recession. The European Central Bank’s target for inflation remains at ‘below but close to 2%’. (Source adapted from: https://www.ecb.europa.eu/press/pr/date/2020/html/ecb.pr200318_1~3949d6f266.en.html) Evaluate the effectiveness of quantitative easing during ‘a significant recession’.

One of two options in Section C — candidates answered this or the other.

2.6.2 Demand-Side Policies · 4.4.3 Role of Central Banks

Explain one reason why a country such as Germany wants to avoid an increase in the national debt relative to GDP (Figure 2).

4.5.3 Public Sector Finances

With reference to Figure 1 and Extract A, explain the likely impact of a Fairtrade scheme on agricultural communities.

4.3.3 Development Strategies

Examine two ways, apart from Fairtrade schemes, in which cocoa farmers could boost their incomes despite the falling price of cocoa.

4.3.3 Development Strategies · 1.2.5 Price Elasticity of Supply

Discuss the problems for the Ivory Coast of dependency on cocoa for a large proportion of their exports. Refer to Figure 2 in your answer.

4.1.3 Pattern of Trade · 4.3.2 Factors Influencing Growth

Nigeria is considering joining the African Continental Free Trade Agreement. Assess policies the Nigerian government could use in response to the concerns of the country’s ‘manufacturers and trade unions’ (Extract B paragraph 3) if they join this trading bloc.

4.1.5 Trading Blocs and the WTO

Discuss the likely benefits of increased economic integration for sub‑Saharan African countries.

4.1.5 Trading Blocs and the WTO · 4.3.3 Development Strategies

In 2018, the United States Government cut the corporation tax rate (tax on company profits) from 35% to 21%. Income tax rates for US citizens were also reduced: for example, the top rate of income tax was cut from 39.6% to 37%. (Source adapted from: https://www.nytimes.com/) Evaluate the likely impact of cutting tax rates as a policy to increase economic growth.

One of two options in Section C — candidates answered this or the other.

4.5.2 Taxation · 2.6.3 Supply-Side Policies

In terms of income distribution and wealth distribution Brazil is one of the most unequal countries in the world. Its income Gini coefficient is 0.449 and it is ranked number 2 in the world for its wealth inequality. Evaluate possible economic causes of income and wealth inequalities within a country such as Brazil. (Source: https://www.gfmag.com/)

One of two options in Section C — candidates answered this or the other.

4.2.2 Inequality

Explain how the Turkish central bank intervenes in the currency market to prevent ‘excessive appreciation or depreciation of the Turkish lira’ (Extract A, lines 7–8).

4.1.8 Exchange Rates · 4.4.3 Role of Central Banks

Examine two reasons why the Turkish government may want to avoid a significant fall in the exchange rate of the Turkish lira.

4.1.8 Exchange Rates

Apart from literacy and numeracy skills in young workers, examine one reason for the trend in productivity in the UK, over the period shown in Figure 4.

2.6.3 Supply-Side Policies · 4.1.9 International Competitiveness

Evaluate possible microeconomic and macroeconomic policies which could be used to improve UK competitiveness.

One of two options in Section B — candidates answered this or the other.

4.1.9 International Competitiveness

With reference to Extract A, explain the role of forward markets in currencies.

4.1.8 Exchange Rates · 4.4.1 Role of Financial Markets

With reference to Extract A and Figure 1, examine the likely impact of the change in the sterling exchange rate on the UK economy.

4.1.8 Exchange Rates

Discuss whether providing substantial government financial support to banks is the best policy response during a financial crisis.

4.4.2 Market Failure in Finance · 4.4.3 Role of Central Banks

Three of Africa’s main trading blocs have agreed to form the Tripartite Free Trade Agreement (TFTA). This will create one of the world’s largest free trade areas, stretching across 26 countries with a combined GDP of around £1 trillion. (Source: https://uk.reuters.com/article/uk-africa-trade/mega-african-trade-bloc-paves-way-for-continental-commerce-idUKKBN0OR28M20150611) Evaluate the effects of the growth of trading blocs such as the TFTA on global trading patterns.

One of two options in Section C — candidates answered this or the other.

4.1.5 Trading Blocs and the WTO · 4.1.3 Pattern of Trade

Japan’s budget deficit for 2017/18 is expected to be 4.6% of GDP. Its national debt is forecast to increase to above 250% of GDP by 2019. Evaluate the impact of a large fiscal deficit and national debt on a country’s economy.

One of two options in Section C — candidates answered this or the other.

4.5.3 Public Sector Finances

Apart from changes in indirect taxes and subsidies, examine two causes of income inequality within a developed economy such as the UK.

4.2.2 Inequality

With reference to Extract D line 21, explain why ‘opportunity cost’ is a problem for governments of developing countries when servicing debt.

1.1.3 The Economic Problem · 4.3.3 Development Strategies

Examine two reasons, apart from access to finance, why 90% of the manufacturing sector in Mozambique ‘is made up of small enterprises’ (Extract E, line 9).

3.1.1 Sizes and Types of Firms · 4.3.2 Factors Influencing Growth

Discuss whether borrowers benefit from microfinance. Make reference to Mozambique in your answer.

4.3.3 Development Strategies · 4.4.1 Role of Financial Markets

Evaluate the microeconomic and macroeconomic factors, apart from access to credit and banking, influencing growth and development in Mozambique.

One of two options in Section B — candidates answered this or the other.

4.3.2 Factors Influencing Growth

With reference to the information provided, explain the distinction between absolute poverty and relative poverty.

4.2.1 Absolute and Relative Poverty

With reference to the information provided and your own knowledge, examine two factors that might explain the differing rates of decline in absolute poverty in East Asia and Sub-Saharan Africa.

4.3.2 Factors Influencing Growth · 4.2.1 Absolute and Relative Poverty

With reference to Extract A, discuss two macroeconomic policies, apart from protectionism, that a government could use to reduce the negative effects of globalisation.

4.1.1 Globalisation · 4.5.4 Policies in a Global Context

Assess the view that ‘some level of inequality is desirable to maintain an appropriate incentive structure in the economy’ (Extract B, lines 19 and 20).

4.2.2 Inequality

Discuss the role of the financial sector in the growth and development of developing countries.

4.4.1 Role of Financial Markets · 4.3.3 Development Strategies

The British pound fell by over 10% to a 30-year low against the US dollar after the UK voted to leave the European Union. To what extent will this depreciation impact on future economic growth in the UK?

One of two options in Section C — candidates answered this or the other.

4.1.8 Exchange Rates · 2.5.1 Causes of Growth

Evaluate the microeconomic and macroeconomic factors that may influence Starbucks’ decision whether to expand in a particular country.

One of two options in Section A — candidates answered this or the other.

3.1.2 Business Growth · 4.1.1 Globalisation

Using the data in Figure 4 and other information provided, explain the likely change to Indonesia’s terms of trade since 2011.

4.1.4 Terms of Trade

Examine the likely effects on the profitability of Indonesian rice farmers of the government’s increased investment in dams (Extract E, lines 43-48). Use a cost and revenue diagram to support your answer.

3.3.2 Costs · 4.3.3 Development Strategies

Discuss the benefits of aid to Indonesia.

4.3.3 Development Strategies

With reference to the information provided and your own knowledge, evaluate the microeconomic and macroeconomic effects on Indonesia of the volatility of prices of commodities such as coal.

One of two options in Section B — candidates answered this or the other.

4.1.3 Pattern of Trade · 1.2.5 Price Elasticity of Supply

Evaluate the likely microeconomic and macroeconomic effects of the supply-side policies recently introduced in Indonesia.

One of two options in Section B — candidates answered this or the other.

2.6.3 Supply-Side Policies · 4.3.3 Development Strategies

With reference to Figure 1, calculate the percentage change in the value of the euro in pounds from the start of 2009 to the start of 2015.

4.1.8 Exchange Rates

Since mid-2015 the euro has appreciated. Assess the likely impact of an appreciation of the euro on the current account of the balance of payments for Eurozone countries.

4.1.8 Exchange Rates · 4.1.7 Balance of Payments

Discuss the likely success of the ECB’s quantitative easing programme in moving Eurozone inflation closer to ‘the central bank’s ceiling of 2%’ (Extract A, line 17).

2.6.2 Demand-Side Policies · 4.4.3 Role of Central Banks

Since the global financial crisis of 2008 there have been over 5 700 increases in tariffs, quotas and administrative controls on international trade. Evaluate the likely effects of an increase in protectionism on the economy of a developing country of your choice.

One of two options in Section C — candidates answered this or the other.

4.1.6 Restrictions on Free Trade

With reference to Figure 2, explain one likely reason for the change in the Chile peso exchange rate between 2013 and 2015.

4.1.8 Exchange Rates

Apart from externalities, discuss the problems that Chile faces as a result of dependency on copper mining.

4.1.3 Pattern of Trade · 4.3.2 Factors Influencing Growth

With reference to the information provided and your own knowledge, evaluate the microeconomic and macroeconomic effects of policies that could be used to stimulate economic growth and development in Chile.

One of two options in Section A — candidates answered this or the other.

4.3.3 Development Strategies · 2.5.1 Causes of Growth

With reference to the information provided and your own knowledge, evaluate the microeconomic and macroeconomic impact on Chile’s economy of changes in the level of investment.

One of two options in Section A — candidates answered this or the other.

2.2.3 Investment · 4.3.2 Factors Influencing Growth

With reference to Figures 4 and 5 and your own knowledge, examine the relationship between the national debt as a proportion of GDP and the fiscal deficit.

4.5.3 Public Sector Finances

With reference to the information provided and your own knowledge, evaluate the likely microeconomic and macroeconomic influences on the UK’s international competitiveness.

One of two options in Section B — candidates answered this or the other.

4.1.9 International Competitiveness

With reference to the information provided and your own knowledge, evaluate the microeconomic and macroeconomic effects of a government policy of cutting public expenditure rather than raising taxes as a means of reducing a fiscal deficit.

One of two options in Section B — candidates answered this or the other.

4.5.1 Public Expenditure · 2.6.2 Demand-Side Policies