Mark Scheme (Results) Summer 2012 - examtestprep.com · Mark Scheme (Results) Summer 2012 GCE Economics (6EC04) Paper 01 . Edexcel and BTEC Qualifications Edexcel and BTEC qualifications

Mark Schem e (Results)

Sum m er 2012

GCE Econom ics (6EC04) Paper 01

Edexcel and BTEC Qualificat ions

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Sum m er 2012

Publicat ions Code UA032047

All the m ater ial in this publicat ion is copyright

© Pearson Educat ion Ltd 2012

General Marking Guidance

� All candidates m ust receive the sam e t reatm ent . Exam iners m ust m ark the first candidate in exact ly the sam e way as they m ark the last .

� Mark schem es should be applied posit ively. Candidates m ust be rewarded for what they have shown they can do rather than penalised for om issions.

� Exam iners should m ark according to the m ark schem e not according to their percept ion of where the grade boundaries m ay lie.

� There is no ceiling on achievem ent . All m arks on the m ark schem e should be used appropr iately.

� All the m arks on the m ark schem e are designed to be awarded. Exam iners should always award full m arks if deserved, i.e. if the answer m atches the m ark schem e. Exam iners should also be prepared to award zero m arks if the candidate’s response is not worthy of credit according to the m ark schem e.

� Where som e judgem ent is required, m ark schem es will provide the pr inciples by which m arks will be awarded and exem plificat ion m ay be lim ited.

� When exam iners are in doubt regarding the applicat ion of the m ark schem e to a candidate’s response, the team leader m ust be consulted.

� Crossed out work should be m arked UNLESS the candidate has replaced it with an alternat ive response.

Mark schem e: 6 EC0 4 JUNE 2 0 1 2

* * SECTI ON A: ESSAYS – PLEASE USE DETAI LED MARKI NG CRI TERI A

W HI CH ARE TO BE FOUND AT THE END OF THI S MARKSCHEME* *

QUALI TY OF W RI TTEN COMMUNI CATI ON:

Quality of w rit ten com m unicat ion ( QW C) is assessed in both parts of

the essays and in parts ( d) & ( e) of the data response quest ions and should be assessed on the candidate’s abilit y:

� To present an argum ent and conclude on the basis of that argum ent

� To organise inform at ion clearly and coherent ly

� To use econom ics vocabulary appropriately � To use gram m ar, spelling and punctuat ion appropriately

FOR ALL QUESTI ONS: No m ark schem e can cover a ll possible

responses. Therefore, rew ard analysis w hich is relevant to the

quest ion even if this is not specifically ident ified in the m ark

schem e.

Quest ionNum ber

Answer Mark

1 ( a) Effects include: � Cost push inflat ionary pressures – AD/ AS analysis

showing leftward shift in AS curve for m anufactured goodsBut increased costs m ight be offset by increased

product iv it y or efficiency gains

� Danger of wage pr ice spiral and r ising inflat ionary expectat ions

But .. m onetary policy m ight help to keep inflat ion

under cont rol

� Lower growth – AD/ AS analysis But… if the r ise in com m odity pr ices is caused by

rapid world growth, then the im pact on growth m ight

be lim ited

� Possibilit y of increased unem ploym ent But not so likely if increased global dem and is the

cause of higher com m odity pr ices

� I m pact on the t rade in goods balance Different ial effects depending on whether the count ry is

a net im porter or exporter of com m odit ies. I n the UK’s

case, there is likely to be an adverse effect on the t rade

in goods balance but count r ies export ing com m odit ies

will see a r ise in their term s of t rade and will benefit

from increasing export revenues (assum ing dem and is

pr ice inelast ic)

� I m pact on incom e dist r ibut ion � I m pact on real incom es and consum pt ion

N.B. I f analysis is related to just one country i.e . no

reference to the global econom y then 1 4 / 2 0

Also for evaluat ion:

� I m pact will be different on com m odity producers

com pared with com m odity im porters

� different effects before and after the financial cr isis

(Synopt ic elem ent : reference to inflat ion, growth, unem ploym ent and AD/ AS analysis (unit 2) and use of Econom ist ’s tool-kit in analysis and evaluat ion and in approach to quest ion)

( 2 0 )

Level Mark Descriptor

Level 1 1-7 I dent ificat ion of points which are largely irrelevant

Level 2 8-10 Typically, answers will consider 1 factor with 1 evaluat ive point or 2 points with no evaluat ion or list of several points with lit t le analysis

Level 3 11-14 Typically, answers will consider 2 factors with 1 evaluat ive point or 3 points with no evaluat ion

Level 4 15-16 Typically, answers will consider 3 factors with 1 evaluat ive point

Level 5 17-20 Typically, answers will consider 3 factors with at least 2 evaluat ive points

Quest ionNum ber

Answer Mark

1 ( b) N.B Answ ers m ay discuss reflat ionary or deflat ionary

dem and- side policies but if there is no reference to

context of the quest ion ‘i.e . r ising com m odity pr ices

and to slow econom ic grow th’ then aw ard a m axim um

of 2 1 / 3 0 ( top of level 3 )

Candidates m ust use at least tw o m acroeconom ic policies ( fiscal, m onetary, and supply side) . I f only one of the above discussed up to 21/ 30 – top of level 3.

Policies include: Monetary policy : discussion of t ransm ission m echanism ; AD/ AS analysis

Evaluat ion:

� considerat ion of whether it is appropriate to target

inflat ion or asset pr ices;

� adverse effects on other variables of changing interest

rates e.g. on exchange rate;

� t im e lags;

� Negat ive im pact on growth and em ploym ent

� I nappropriate to raise interest rates when inflat ion is

caused by cost push factors

Supply side policies: discussion of those which im pact on the pr ice level i.e. m easures to increase com pet it ion and product ivity; t ransm ission m echanism ; educat ion and t raining Evaluat ion: som e policies will have im plicat ions for public

finances; t im e lags

Fiscal policy: discussion of t ransm ission m echanism ; AD/ AS analysis

( 3 0 )

Evaluat ion: ineffect ive if consum ers reduce savings

following a r ise in taxes; very blunt inst rum ent –

adverse im pact on other variables e.g. unem ploym ent .

� I n the case of oil, governm ents m ight react by cut t ing the tax on pet rol

(Synopt ic elem ents: reference to analysis int roduced in unit 2 e.g. m onetary, fiscal and supply side policies; use of Econom ist ’s tool-kit in analysis and evaluat ion and in approach to quest ion)



Level 2 12-15 Typically, answers will consider 2 factors with 1 evaluat ive point or 3 points with no evaluat ion or list of several points with lit t le analysis


Level 4 22-25 Typically, answers will consider 4 factors with 2 evaluat ive points


Quest ionNum ber

Answer Mark

2 ( a) A wide range of factors m ay be considered. For exam ple:

� Prim ary product dependency But less of an issue if pr ices of pr im ary products are

r ising; som e count r ies have developed on the basis

of specialisat ion in pr im ary products

� Savings gap But could be offset by FDI or aid;

� Foreign exchange gap But could be offset by debt cancellat ion

� Protect ionism by developed econom ies But WTO act ive in br inging about a reduct ion in

tar iffs

� DebtBut could be offset by debt cancellat ion

� Rapid populat ion growth: creat ing a high dependency rat io

But : larger m arkets will be created in the future and

larger workforces

� Poor educat ion and health care � Poor/ inadequate infrast ructure; land- locked

count r ies� Corrupt ion; poor governance � Polit ical instabilit y; Civil war � Disease e.g. AI DS

Other evaluat ive com m ents could include:

� Prior it isat ion of factors

� Problem of defining econom ic developm ent

precisely

� Som e problem s m ay be of a short term nature

only

N.B. I f there is no reference to econom ic

developm ent ( either explicit ly or im plicit ly) then

aw ard a m axim um of 1 4 / 2 0 ( top of level 3 )

(Synopt ic elem ent : analysis of pr ice fluctuat ions of pr im ary products (unit 1) and use of Econom ist ’s tool-kit in analysis and evaluat ion and in approach to quest ion)

( 2 0 )


Level

1

1-7 I dent ificat ion of points which are largely irrelevant

Level

2

8-10 Typically, answers will consider 1 factor with 1 evaluat ive point or 2 points with no evaluat ion or list of several points with lit t le analysis

Level

3

11-14

Typically, answers will consider 2 factors with 1 evaluat ive point or 3 points with no evaluat ion

Level

4

15-16

Typically, answers will consider 3 factors with 1 evaluat ive point

Level

5

17-20

Typically, answers will consider 3 factors with at least 2 evaluat ive points

Quest ionNum ber

Answer Mark

2 ( b) Case for debt cancellat ion:

� To reduce absolute poverty: no m ore interest paym ents on debt

� More resources available for health care leading to increased life expectancy

� More resources for educat ion leading to increased school enrolm ent and higher literacy rates

� To provide resources for investm ent : m ult iplier effects: link to increased growth and m ore resources for health, educat ion….

� Effect ive as an im m ediate way to fill savings gap � Helps to fill foreign exchange gap enabling LEDCs to buy capital

equipm ent ; oil etc

� Opportunity cost of debt servicing � More resources for public services

However:

� Danger of corrupt ion: m oney saved not spent e.g. to im prove

health and educat ion

� Misuse of m oney saved e.g. for defence purposes

� Creat ion of a dependency culture

� Moral hazard

� May be used to generate polit ical influence

Case for t rade liberalisat ion: � LEDCs have access to m arkets in developed count r ies: increased

exports and higher GDP, the proceeds of which m ay be used for health, educat ion, im proved access to clean water

� I ncreased com pet it ion m ight prom ote increase efficiency in LEDCs

� I ncent ive for m ult inat ionals to establish product ion plants in the count ry so cont r ibut ing to indust r ialisat ion

� Consum ers benefit from lower pr ices and m ore choice

� More efficient use of resources – based on law of com parat ive advantage leading to increased growth

� Enables LEDCS to becom e less dependent on aid � Use of tar iff diagram to illust rate im pact of cut in tar iffs e.g. on

( 3 0

)

consum er surplus, producer surplus, welfare gains However:

� Dom est ic firm s in LEDCs m ay be unable to com pete with TNCs

from developed econom ies

� I nfant indust r ies m ay be unable to survive

� Monopsony power of TNCs m ight result in exploitat ion of

resources of LEDcs

� Environm ental argum ents against free t rade

� Problem s of overspecialisat ion

� Dum ping by developed count r ies

Other evaluat ive com m ents:

� I t could be argued that without individual freedom , dem ocracy

and the rule of law, econom ic developm ent is not possible

� Difficulty of defining econom ic developm ent precisely

N.B. I f there is no reference to econom ic developm ent ( either

explicit ly or im plicit ly) then aw ard a m axim um of 2 1 / 3 0 ( top of

level 3 )

(Synopt ic elem ents: reference to concepts int roduced in unit 1 e.g. negat ive externalit ies and from unit 3 e.g. m onopsony; use of Econom ist ’s tool-kit in analysis and evaluat ion and in approach to quest ion)



Level 2 12-15 Typically, answers will consider 2 factors with 1 evaluat ive point or 3 points with no evaluat ion or list of several points with lit t le analysis




Quest ionNum ber

Answer Mark

3 ( a) N.B. Candidates m ay take either perspect ive as

analysis and use the reverse argum ents for

evaluat ion i.e . m ight argue that TNCs are or are not

the m ain cause of globalisat ion. How ever, there

m ust be som e considerat ion of TNCs in the answ er,

otherw ise m axim um 1 4 / 2 0 .

Meaning of globalisat ion: increased econom ic interdependence between count r ies e.g. increased t rade as a % of GDP; m ore FDI ; capital m arket liberalisat ion. Com m ent on increased significance of t ransnat ional com panies as m ajor cause of globalisat ion e.g. growth of offshor ing and outsourcing by m ult inat ionals result ing from factors such as:

� Reduct ion in t ransport costs

� Reduct ion in com m unicat ion costs

� Low labour costs � Regulat ions (health & safety and environm ental)

less st r ingent than in developed econom ies � Capital m arket liberalisat ion

Other factors causing globalisat ion (These m ay be regarded as evaluat ion or further analysis) :

� Reduct ion in t rade barr iers linked to the work of the WTO; applicat ion of law of com parat ive advantage

� Opening up of econom ies to world m arket e.g. China; form er Com m unist count r ies

� Econom ic developm ent in LDCs leading to m ore dem and for foreign goods

� Higher real incom es create increased dem and for im ported goods (depending on value of the m arginal propensity to im port )

� I ncrease in the num ber and size of t rading blocs Other evaluat ive com m ents could include:

� Prior it isat ion of factors

� Crit ical view of accuracy of m easures of t rade and

world GDP

� Applicat ion of concepts such as incom e elast icity of

dem and and m arginal propensity to im port

� Deglobalisat ion result ing from financial cr isis

(Synopt ic elem ent : reference to t rade (unit 2) and use of Econom ist ’s tool-kit in analysis and evaluat ion and in approach to quest ion)

( 2 0 )



Level 2 8-10 Typically, answers will consider 1 factor with 1 evaluat ive point or 2 points with no evaluat ion or list of several points with lit t le analysis


Level 4 15-16 Typically, answers will consider 3 factors with 1 evaluat ive point

Level 5 17-20 Typically, answers will consider 3 factors with at least 2 evaluat ive points

Quest ionNum ber

Answer Mark

3 ( b) N.B. Candidates m ay take either perspect ive as

analysis and use the reverse argum ents for

evaluat ion .

Costs of globalisat ion include: � Over-dependence on im ports or on exports � Exploitat ion of labour � Negat ive externalit ies from increased t rade e.g.

increased air freight causing pollut ion- clim ate change

� I ncreased inequality between developed econom ies and LEDCs

� TNCs m ight engage in tax avoidance policies so causing reduct ion in tax revenues for governm ents

Benefits of globalisat ion include: � Applicat ion of the law of com parat ive advantage:

explanat ion leading to…….. � I ncreased world output ; higher liv ing standards; � Reduct ion in absolute poverty in LDCs � Consum ers: Lower pr ices ( increased consum er

surplus) ; m ore choice � Firm s: Larger m arkets; benefits ar ising from

econom ies of scale � Technology t ransfer � I ncreased tax revenues

Other evaluat ive approaches which m ay be rewarded

include:

� Conclusions based on a weighing up of the

argum ents

� Assessm ent of the significance of the point (s)

considered

� Prior it isat ion of the points m ade supported by

reasoned argum ents

( 3 0 )

� Considerat ion of costs and benefits for different

count r ies and different econom ic agents

(Synopt ic elem ents: reference to concepts int roduced in unit 1 e.g. consum ers’ surplus; negat ive externalit ies; reference to concepts int roduced in unit 3 e.g. econom ies of scale; use of Econom ist ’s tool-kit in analysis and evaluat ion and in approach to quest ion)


Level

1

1-11 I dent ificat ion of points which are largely irrelevant

Level

2

12-15

Typically, answers will consider 2 factors with 1 evaluat ive point or 3 points with no evaluat ion or list of several points with lit t le analysis

Level

3

16-21

Typically, answers will consider 3 factors with 1 evaluat ive point or 4 points with no evaluat ion

Level

4

22-25

Typically, answers will consider 4 factors with 2 evaluat ive points

Level

5

26-30


Quest ion No. Answer Mark

4 ( a) Absolute poverty: insufficient resources to m eet basic needs e.g. food, shelter, water, clothing OR m easurem ent of absolute poverty: those liv ing on less than $1.25 a day (accept $1 or $2 a day)

Relat ive poverty: those liv ing below a certain incom e threshold in a count ry OR m easurem ent of relat ive poverty: e.g. the % of the populat ion liv ing below 60% (accept 50% ) of the m edian incom e

Applicat ion: Reference to exam ple from Ext ract 1: e.g. China: fall in absolute poverty (1) ; r ise in relat ive poverty (1)

3 m arks for knowledge (2 + 1 or 1 + 2) for definit ions) 2 for applicat ion/ i.e. 2 data references

( 5 )

Level Mark

Descriptor

Level

1

1-3 Up to 3 m arks for knowledge – see above

Level

2

4-5 Up to 3 m arks for knowledge and 2 m arks for data references

Quest ion No. Answer

4 ( b) Lorenz curve diagram : 4 m arks aw arded as follow s:

Axis correct ly labelled: 1 m ark for incom e and populat ion/ households; 1 m ark for cum ulat ive % Line of incom e equality (45º line) : 1 m ark Lorenz curve: 1 m ark.

Explanat ions: up to 2 m arks for any one of the following: � Measurem ent of Gini coefficient :

Area A (between 45° line and Lorenz curve) ÷ Area A + B (whole area under 45° line)

� Further explanat ion of diagram (e.g. how a change in inequality would affect the Lorenz curve) and/ or Gini coefficient

� Explanat ion of other m easures of inequality

Applicat ion: Specific data reference from Figure 1 e.g. to a specific count ry and its Gini Coefficient (2)

8

Level Mark

Descriptor

Level

1

1-2 2 m arks for knowledge

Level

2

3-4 2 m arks for knowledge; 2 for applicat ion ( i.e. data reference to a count ry and its Gini Coefficient in Figure 1)

Level

3

5-8 2 m arks for knowledge; 2 for applicat ion (e.g. data reference to a count ry and it s Gini Coefficient in Figure 1) and 4 for analysis (2 for explanat ion and other 2 m arks for diagram )

Quest ion No. Answer Mark

4 ( c) Understanding of capitalism - explicit or im plicit e.g. pr ivate ownership of resources; free enterprise(1)

Reasons why inequality is necessary (up to 3 m arks for one good point or 2+ 1 m arks) :

� I ncent ive for ent repreneurs

� Profit s necessary for investm ent , R & D

� Private ownership of resources � Owners of resources will tend to becom e r icher

relat ive to those who own none

� Wage determ inat ion through supply and dem and for labour

� Price m echanism ignores equalit y/ inequalit y

Applicat ion e.g. reference to 2 exam ples of count r ies e.g. USA & Sweden from the inform at ion provided or from own knowledge; or reference to one count ry including data (2 m arks)

Evaluat ive com m ents (up to 4 m arks: 2 + 2; 3 + 1) could

include:

� Although inequality m ay be an essent ial ingredient ,

the degree of inequality m ay vary between different

capitalist system s

� I nequality m ight be reduced by governm ent policy

� Private ownership of resources is a key reason for

inequality because these m ay be used to gain further

incom e

� Argum ent that capitalism is reducing global

inequality

( 1 0 )

Level Mark

Descriptor

Level

1

1-3 1 m ark for understanding of capitalism ; 2 for applicat ion (e.g. reference to 2 exam ples of count r ies from the inform at ion provided or from own knowledge or reference to one count ry including data)

Level

2

4-6 1 m ark for understanding of capitalism ; 2 for applicat ion (e.g. reference to 2 exam ples of count r ies from the inform at ion provided or from own knowledge or reference to one count ry including data) ; 3 for analysis.

Level

3

7-10

1 m ark for understanding of capitalism ; 2 for applicat ion (e.g. reference to 2 exam ples of count r ies from the inform at ion provided or from own knowledge or reference to one count ry including data) ; 3 for analysis; 4 m arks for any 2 evaluat ive points (2 + 2; 1 + 3; or 3 + 1)

Quest ion No. Answer Marks

4 ( d) Reasons include (up to 5 m arks; m axim um 2 for ident ificat ion only) :

� I ncom e gap between rural and urban areas increases as indust r ialisat ion takes hold – workers in m ore product ive m anufactur ing indust r ies earn m ore than those in less product ive agriculture But workers m ay be exploited and paid low wages i.e.

owners of resources are get t ing r icher at the expense

of workers

� Entrepreneurs and shareholders in these indust r ies benefit from profits But profits m ay be repat r iated to shareholders of TNCs

in developed econom ies

� I ncreased capitalism in developing count r ies

� Corrupt ion � I ncreased rewards for those producing com m odit ies in

high dem and � Discrim inat ion

� Falling dem and for unskilled workers and those of low skills

� Differences in qualificat ions But st ill possible to becom e very wealthy without

form al qualificat ions

� I ncreased incom es of the top 1% - bankers’ bonuses But now being subject to 50% tax and special taxes

� I m pact of public expenditure cuts e.g. cuts in benefits; job losses am ong low paid; benefits and pension increased in line with CPI rather than RPI But m ore generous public sector pensions have

cont r ibuted to increased inequality am ongst the elderly

� The increased inequality is part of a long term t rend associated with declining t rade union power But : unt il recent ly state m eans- tested benefits have

been increasing to reduce inequality

� Shift from direct to indirect taxat ion � Globalisat ion


� Changes in factors over t im e

� Differences in causes of incom e and wealth inequalit y

Marks for evaluat ion (points in italics above) : (2 + 3; or 3 +

2; or 2 + 2 + 1)

Applicat ion e.g.reference to 2 relevant exam ples or use of Gini coefficients (2m arks) ; (Synopt ic elem ent : wage determ inat ion from unit 1; concept of product ivity from unit 2. Also, the use of the Econom ist ’s tool-kit in analysis and evaluat ion and in approach to quest ion)

1 2

Level Mark

Descriptor

Level

1

1-2 2 m arks for ident ificat ion of 2 reasons;

Level

2

3-7 2 m arks for ident ificat ion of 2 reasons; 2 for applicat ion ( reference to 2 relevant exam ples or use of Gini coefficients) ; 3 for analysis of 2 reasons

Level

3

8-12

2 m arks for ident ificat ion of 2 reasons; 2 for applicat ion ( reference to 2 relevant exam ples or use of Gini coefficients) ; 3 for analysis of 2 reasons; 5 m arks for up to 3 evaluat ive points (2 + 3; or 3 + 2; or 2 + 2 + 1)


4 ( e) For knowledge, applicat ion and analysis: 3 x 3 m arks or 4 + 5 m arks) A range of policies m ay be considered including:

� Educat ion: im proving access to educat ion for all; governm ent efforts directed especially to those who need it m ost

But : m uch depends on the quality of

educat ion; also considerable t im e lag

� Rem oval of subsidies- m oney saved m ight be used for job creat ion program m es

� prom ot ion of free t rade But could cause som e dom est ic indust r ies to

close down if they are unable to com pete

� Measures to elim inate m onopolies But could result in loss of econom ies of scale

� Measures to increase the geographical m obilit y of labour e.g. housing subsidies; increased provision of affordable houses

But cost of these schem e to the governm ent ;

im plicat ions for taxes

N.B. Credit discussion of policies not in the ext ract e.g.

� increase in m eans- tested benefits; � m ore progressive tax system on incom es � wealth taxes � I ncreased public expenditure � Nat ional Minim um Wage


� Differences in im pact of policies on incom e

and wealth inequality

Marks for evaluat ion (points in italics above) : (3

+ 3; or 4 + 2; or 2 + 2 + 2)

( 1 5 )

(Synopt ic elem ent : im m obilit y of labour from Unit 1; educat ion as a supply side policy from unit 2. Also, the use of the Econom ist ’s tool-kit in analysis and evaluat ion and in approach to quest ion)

Level Mark

Descriptor

Level Mark

Descriptor

Level

1

1-4 I dent ificat ion of one or two argum ents with superficial analysis

Level

2

5-9 I dent ificat ion and analysis of at least two argum ents

Level

3

10-15

At least two argum ents analysed well with at least one convincing evaluat ive com m ent


5 ( a) Budget deficit : governm ent expenditure greater than tax revenues with data reference Nat ional Debt : cum ulat ive total of past governm ent borrowing with data reference

3 m arks for knowledge (2 + 1 or 1 + 2) for definit ions) 2 for applicat ion: 2 data references (one for budget deficit and one for nat ional debt from Figures 1 and 2)

( 5 )

Level Mark

Descriptor

Level

1

1-3 Up to 3 m arks for knowledge – see above

Level

2

4-5 Up to 3 m arks for knowledge and 2 m arks for 2 data references

Quest ion no. Answer Marks

5 ( b) Analysis of any 2 issues arising from weak growth and high unem ploym ent : 2x 2 m arks. For exam ple:

� Rising/ high unem ploym ent and the im plicat ions of this for public expenditure on benefits

� Slow r ise in tax revenues from incom e tax and expenditure taxes

� More bankruptcies/ lower profit s leading to a fall in corporate tax revenues

� I m plicat ions for servicing debt

� I ssues relat ing to credit rat ing

This im plies an increase in the budget deficit and, in turn, an increase in the Nat ional Debt (2)

Applicat ion: Reference to Ext ract 1 e.g. one data reference to nat ional debt to GDP rat io of Greece, I reland or Spain (2) or to growth rates (2) . Do not credit references to unem ploym ent rates.

( 8 )

Level Mark

Descriptor

Level

1

1-2 2 m arks for ident ifying 2 problem s

Level

2

3-4 2 m arks for ident ify ing 2 problem s; 2 for applicat ion as indicated above

Level

3

5-8 2 m arks for ident ify ing 2 problem s; 2 for applicat ion as indicated above and 4 for analysis


5 ( c) Reasons include (up to 4 m arks; m axim um 1 for ident ificat ion only) :

� I ndependent m onetary policy could be followed by these count r ies (UK interest rate 0.5% ; Euro-zone 1.0% unt il Apr il 2011)

� Currencies of count r ies outside the Eurozone could (and did) depreciate against other currencies

� High unit labour costs in peripheral euro zone count r ies result ing in a loss in com pet it iveness

� More flexible labour m arkets � Eurozone growth average brought down by poor

perform ance of weaker econom ies

Applicat ion e.g. reference to 2 relevant exam ples of count r ies (2 m arks)

Evaluat ion (up to 4 m arks: 2 + 2; 3 + 1 ) could include:

� Prior it isat ion e.g. significance of depreciat ion of

currency

� Average figure disguises st rong perform ance of

econom ies such as Germ any

� Situat ion after 2010 changed: e.g. UK econom y had

negat ive econom ic growth by end of 2011

� Mem bership of Eurozone m ight be an insignificant

factor influencing growth e.g. FDI m ight be m ore

im portant

� Size of difference in interest rates

� Possible long run benefits of Eurozone m em bership

(Synopt ic elem ent : econom ic growth and m onetary policy from unit 2. Also, the use of the Econom ist ’s tool-kit in analysis and evaluat ion and in approach to quest ion)

( 1 0 )

Level Mark

Descriptor

Level

1

1-3 1 m ark for ident ificat ion of 1 reason; 2 for applicat ion ( reference to 2 relevant exam ples of count r ies)

Level

2

4-6 1 m ark for ident ificat ion of 1 reason; 2 for applicat ion ( reference to 2 relevant exam ples of count r ies) ; 3 for analysis of 2 issues.

Level

3

7-10

1 m ark for ident ificat ion of 1 reason; 2 for applicat ion ( reference to 2 relevant exam ples of count r ies) ; 3 for analysis of 2 issues; 4 m arks for any 2 evaluat ive points (2 + 2; 1 + 3; or 3 + 1)


5 ( d) Policies include: (up to 5 m arks; m axim um 2 for ident ificat ion only) :

� Labour m arket reform s e.g. m aking easier to hire and fire workers; increasing ret irem ent age; reducing m inim um wages; reducing unem ploym ent benefits

But : danger of worker exploitat ion; increased inequality;

som e count r ies like the UK are already very flexible

� Measures to increase product ivity e.g. t raining, educat ion; investm ent allowances

But : costs are difficult to finance when budget deficits

have to be cut

� Measures to increase com pet it iveness in the product m arket e.g. further pr ivat isat ions

But : m ost count r ies have exhausted potent ial indust r ies

to be privat ised

� Also: m easures to increase incent ives for FDI e.g. decrease corporat ion tax

But : if confidence is low foreign investm ent is unlikely to

take place

� Allow answers suggest ing that these count r ies should leave the euro so allowing currency depreciat ion

But could lead to cost push inflat ion reducing gain in

com pet it iveness

Marks for evaluat ion (points in italics above) : (2 + 3; or 3 +

2; or 2 + 2 + 1)

Applicat ion e.g. reference to 2 relevant exam ples or references from Figure 4 (2m arks)

(Synopt ic elem ent : Supply side policies and concept of product ivity from unit 2; wage determ inat ion from unit 1. Also, the use of the Econom ist ’s tool-kit in analysis and evaluat ion and in approach to quest ion)

( 1 2 )

Level Mark

Descriptor

Level

1

1-2 2 m arks for ident ificat ion of 2 policies;

Level

2

3-7 2 m arks for ident ificat ion of 2 policies; 2 for applicat ion (e.g. reference to 2 relevant exam ples or references from Figure 4) ; 3 for analysis of 2 policies

Level

3

8-12

2 m arks for ident ificat ion of 2 policies; 2 for applicat ion (e.g. ( reference to 2 relevant exam ples or references from Figure 4) ; 3 for analysis of 2 policies; 5 m arks for up to 3 evaluat ive points (2 + 3; or 3 + 2; or 2+ 2 + 1)


5 ( e) N.B. Candidates m ay take either side of the

argum ent for analysis and then evaluate by

discussing the opposing view .

For knowledge, applicat ion and analysis: 3 x 3 m arks or 4 + 5 m arks) : Argum ents for reducing budget deficits quickly:

� To prevent loss of confidence of purchasers of governm ent bonds (which could result in higher bond yields) and so avoid the need for a bailout

� High budget deficit s lead to increasing nat ional debts. I n turn, the debt servicing paym ents r ise so that the governm ent has less m oney to spend on public services

� Could cause crowding out

� Possible inflat ionary consequences of persistent and high deficits

� High debt increases the r isk prem ium on governm ent bonds increasing financing costs

Argum ents against reducing budget deficits quickly:

� Danger that auster ity m easures will cause another recession and then higher budget deficits

� Higher taxes m ight cause disincent ive effects so that tax revenues do not r ise

� Austerity m easures m ay result in rapidly increasing unem ploym ent and the em igrat ion of workers e.g. I reland: 50 000 people leaving each week

� I ncreased inequalit y if m eans- tested benefits are cut

� Reduct ion in quality of public services leading to a fall in product ivity

Marks for evaluat ion 3 + 3; or 4 + 2; or 2 + 2 + 2)

(Synopt ic elem ent : fiscal policy, inflat ion and unem ploym ent from unit 2. Also, the use of the Econom ist ’s tool-kit in analysis and evaluat ion and in approach to quest ion)

( 1 5 )


Level

1

1-4 I dent ificat ion of one or two argum ents with superficial analysis

Level

2

5-9 I dent ificat ion and analysis of at least two argum ents

Level

3

10-15

At least two argum ents analysed well with at least one convincing evaluat ive com m ent

Unit 4 Assessm ent Grid JUNE 2 0 1 2

Quest ion

Num ber AO1 Marks AO2 Marks

AO3

Marks

AO4

Marks

Total

m arks

for

quest ion

Sect ion Know ledge Applicat ion Analysis Evaluat ion

A

Qu.1(a) 4 4 6 6 20

Qu.1(b) 6 6 9 9 30

Total 1 0 1 0 1 5 1 5 5 0

Qu.2(a) 4 4 6 6 20

Qu.2(b) 6 6 9 9 30

Total 1 0 1 0 1 5 1 5 5 0

Qu.3(a) 4 4 6 6 20

Qu.3(b) 6 6 9 9 30

Total 1 0 1 0 1 5 1 5 5 0

B

Qu.4(a) 3 2 5

Qu.4(b) 2 2 4 8

Qu.4(c) 1 2 3 4 10

Qu.4(d) 2 2 3 5 12

Qu.4(e) 2 2 5 6 15

Total 1 0 1 0 1 5 1 5 5 0

Qu.5(a) 3 2 5

Qu.5(b) 2 2 4 8

Qu.5(c) 1 2 3 4 10

Qu.5(d) 2 2 3 5 12

Qu.5(e) 2 2 5 6 15

Total 1 0 1 0 1 5 1 5 5 0

Com bined

% ( A +

B)

2 0 2 0 3 0 3 0 1 0 0

GUI DELI NES FOR MARKI NG ESSAY QUESTI ONS 6 EC0 4 June 2 0 1 2

Level Part ( a) Quest ions: Perform ance Criter ia for Mark base 2 0

Level 1 1-7 � Displays knowledge presented as facts without awareness of other viewpoints

� Dem onst rates lim ited understanding with lit t le or no analysis � At tem pts at select ing, applying, evaluat ing and present ing

m aterial which are irrelevant and unclear � None of the assessm ent object ives are covered sat isfactor ily

I dent ificat ion of points which are largely ir relevant

Level 2 8-10 � Displays elem entary knowledge of well learnt econom ic facts showing a generalised understanding together with lim ited analysis i.e. ident ificat ion of points or a very lim ited discussion

� Displays a lim ited abilit y to select and apply different econom ic ideas

� Evidence presented has a basic relevance

Typically, answers will consider 1 factor with 1 evaluat ive point or

2 points with no evaluat ion or list of several points with lit t le

analysis

Level 3 11-14

11-12

13-14

� Displays knowledge and understanding of econom ic pr inciples, concepts and theories as well as som e analysis of issues i.e. answer m ight lack sufficient breadth and depth to be worthy of a higher m ark

� Shows som e abilit y to apply econom ic ideas and relate them to econom ic problem s

� Em ploys different approaches to reach conclusions, present ing evidence with som e relevance and coherence


or 3 points with no evaluat ion

Award in this range for 2 factors and 1 evaluat ive com m ent (or 3 factors with no evaluat ion) which are not welldeveloped/ reasoned

Award in this range for 2 factors and 1 evaluat ive com m ent (or 3 factors with no evaluat ion) which are well developed and reasoned

Level 4 15-16 � Displays a good knowledge of econom ic pr inciples, concepts and theories together with an analysis of the issues involved

� Dem onst rates an abilit y to select and apply econom ic ideas and to relate them to econom ic problem s

� Evidence of som e evaluat ion of alternat ive approaches leading to conclusions which are presented in a relevant and coherent way


Level 5 17-20 � Displays a wide range of knowledge of econom ic pr inciples, concepts and theories together with a r igorous analysis of

issues � Dem onst rates an outstanding abilit y to select and apply

econom ic ideas to econom ic problem s � Evaluat ion is well balanced and cr it ical leading to valid

conclusions � Material is presented in a relevant , clear and coherent way with

evidence fully and reliably integrated � Excellence is displayed across all assessm ent object ives


GUI DELI NES FOR MARKI NG ESSAY QUESTI ONS 6 EC0 4 June 2 0 1 2

Level Part ( b) Quest ions: Perform ance Criter ia for Mark base 3 0

Level 1 1-11 � Displays knowledge presented as facts without awareness of other viewpoints

� Dem onst rates lim ited understanding with lit t le or no analysis � At tem pts at select ing, applying, evaluat ing and present ing

m aterial which are irrelevant and unclear � None of the assessm ent object ives are covered sat isfactor ily

I dent ificat ion of points which are largely ir relevant

Level 2 12-15 � Displays elem entary knowledge of well learnt econom ic facts showing a generalised understanding together with lim ited analysis i.e. ident ificat ion of points or a very lim ited discussion

� Displays a lim ited abilit y to select and apply different econom ic ideas

� Evidence presented has a basic relevance

Typically, answers will consider 2 factors with 1 evaluat ive point or

3 points with no evaluat ion or list of several points with lit t le

analysis

Level 3 16-21

16-18

19-21

� Displays knowledge and understanding of econom ic pr inciples, concepts and theories as well as som e analysis of issues i.e. answer m ight lack sufficient breadth and depth to be worthy of a higher m ark

� Shows som e abilit y to apply econom ic ideas and relate them to econom ic problem s

� Em ploys different approaches to reach conclusions, present ing evidence with som e relevance and coherence

Typically, answers will consider 3 factors with 1 evaluat ive point or

4 points with no evaluat ion

Award in this range for 3 factors and 1 evaluat ive com m ent (or 4 factors with no evaluat ion) which are not well developed/ reasoned

Award in this range for 3 factors and 1 evaluat ive com m ent (or 4 factors with no evaluat ion) which are well developed and reasoned

Level 4 22-25 � Displays a good knowledge of econom ic pr inciples, concepts and theories together with an analysis of the issues involved

� Dem onst rates an abilit y to select and apply econom ic ideas and to relate them to econom ic problem s

� Evidence of som e evaluat ion of alternat ive approaches leading to conclusions which are presented in a relevant and coherent way


Level 5 26-30 � Displays a wide range of knowledge of econom ic pr inciples, concepts and theories together with a r igorous analysis of issues

� Dem onst rates an outstanding abilit y to select and apply econom ic ideas to econom ic problem s

� Evaluat ion is well balanced and cr it ical leading to valid conclusions

� Material is presented in a relevant , clear and coherent way with evidence fully and reliably integrated

� Excellence is displayed across all assessm ent object ives


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