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ghhh
rereOxford Cambridge and RSA
kfMonday 19 May 2025 – Afternoon
Gyghxhvxgjcnxcbvnsmsnnvvhs
Hgfvb chcvxsdhsnd sjx
sdsfdydhdbs fjd fhfvsdjhsd ssbndsm
A-Level
tfA Level Economicsjhjxkxkkxkxkxmcx OCR 2025
ygH460/02 Macroeconomics Economics Paper 2
rrtTime allowed: 2 hours
Please write clearly in black ink. Do not write in the barcodes.
Centre number Candidate number
First name(s)
Last name
INSTRUCTIONS
• Use black ink. You can use an HB pencil, but only for graphs and diagrams.
• Write your answer to each question in the space provided. If you need extra space use
the lined pages at the end of this booklet. The question numbers must be clearly shown.
• Answer all the questions in Section A, one question in Section B and one question in
Section C.
INFORMATION
• The total mark for this paper is 80.
• The marks for each question are shown in brackets [ ].
• Quality of extended response will be assessed in questions marked with an asterisk (*).
• This document has 20 pages.
ADVICE
• Read each question carefully before you start your answer.
1 Turn over
, 2
Section A
Read the stimulus material and answer all parts of Question 1.
What is the future for Bolivia?
Export tariffs and quotas are imposed by a number of countries. Reducing exports can increase
domestic supply which can affect the price of products sold on the home market and the
country’s tax revenue. It can also affect the supply of the country’s raw materials available to rival
foreign producers.
Both Argentina and Bolivia, impose export tariffs on soya beans. Argentina also imposes an 5
export tariff on lithium, a rare earth metal used in the production of electric cars. Bolivia has the
world’s largest resources of lithium which it is just beginning to extract. Bolivia already mines
gold, silver, nickel and other natural metals. Mining is part of the primary sector. Fig. 1 shows the
share of the labour force in the different sectors in Argentina and Bolivia in 2021.
Fig. 1
Share of the labour force in the different sectors in Argentina and Bolivia 2021
Primary sector
Secondary sector
Tertiary sector
Argentina Bolivia
5%
27%
28%
49%
63%
24%
Exporting lithium can affect Bolivia’s terms of trade and the current account of its balance of 10
payments. In 2021, Bolivia’s terms of trade were 62 and its index of average export prices was
85.56. In that year, Bolivia had a surplus on its current account. It also had the lowest inflation
rate in South America.
Fig. 2 shows the inflation rate and current account balance as a percentage of GDP of selected
countries in 2021, when the global average inflation rate was 3.5%. 15
© OCR 2025
, 3
Fig. 2
The inflation rate and current account balance as a percentage of GDP of selected
countries 2021
3
Bolivia
2 China
1
0 Canada
0 1 2 3 4 5 6 7
–1 Paraguay
Current account
balance as –2
% of GDP Peru
–3
Bangladesh
–4
–5
–6
Chile
–7
Inflation rate (%)
A current account surplus can put upward pressure on a country’s exchange rate. There are,
however, other influences on a country’s exchange rate. Bolivia has a fixed exchange rate
against the US dollar. This fixed exchange rate has provided some certainty and is credited with
helping to keep inflation low. In 2023, speculation put downward pressure on the exchange rate.
Bolivia’s central bank, Banco Central de Bolivia, intervened to support the value of the boliviano 20
which significantly reduced the country’s foreign exchange reserves.
As well as maintaining the exchange rate, the Banco Central de Bolivia manages the country’s
national debt. A country’s national debt increases as a result of government budget deficits.
Bolivia has had a government budget deficit for many years. A relatively high proportion of
Bolivians work in the informal economy and do not pay any income tax. The country has a 25
relatively low flat rate of income tax of 13%. Some economists suggest that a rise in this rate of
income tax would increase government tax revenue and reduce the budget deficit. Others have
suggested that Bolivia should introduce a progressive income tax system. Bolivia has the highest
income inequality in South America, that is gradually reducing.
Bolivia has a standard rate of VAT of 13%. Additional indirect taxes are imposed on other 30
products such as cigarettes, alcohol and luxuries, including perfume and cosmetics.
© OCR 2025 Turn over
ghhh
rereOxford Cambridge and RSA
kfMonday 19 May 2025 – Afternoon
Gyghxhvxgjcnxcbvnsmsnnvvhs
Hgfvb chcvxsdhsnd sjx
sdsfdydhdbs fjd fhfvsdjhsd ssbndsm
A-Level
tfA Level Economicsjhjxkxkkxkxkxmcx OCR 2025
ygH460/02 Macroeconomics Economics Paper 2
rrtTime allowed: 2 hours
Please write clearly in black ink. Do not write in the barcodes.
Centre number Candidate number
First name(s)
Last name
INSTRUCTIONS
• Use black ink. You can use an HB pencil, but only for graphs and diagrams.
• Write your answer to each question in the space provided. If you need extra space use
the lined pages at the end of this booklet. The question numbers must be clearly shown.
• Answer all the questions in Section A, one question in Section B and one question in
Section C.
INFORMATION
• The total mark for this paper is 80.
• The marks for each question are shown in brackets [ ].
• Quality of extended response will be assessed in questions marked with an asterisk (*).
• This document has 20 pages.
ADVICE
• Read each question carefully before you start your answer.
1 Turn over
, 2
Section A
Read the stimulus material and answer all parts of Question 1.
What is the future for Bolivia?
Export tariffs and quotas are imposed by a number of countries. Reducing exports can increase
domestic supply which can affect the price of products sold on the home market and the
country’s tax revenue. It can also affect the supply of the country’s raw materials available to rival
foreign producers.
Both Argentina and Bolivia, impose export tariffs on soya beans. Argentina also imposes an 5
export tariff on lithium, a rare earth metal used in the production of electric cars. Bolivia has the
world’s largest resources of lithium which it is just beginning to extract. Bolivia already mines
gold, silver, nickel and other natural metals. Mining is part of the primary sector. Fig. 1 shows the
share of the labour force in the different sectors in Argentina and Bolivia in 2021.
Fig. 1
Share of the labour force in the different sectors in Argentina and Bolivia 2021
Primary sector
Secondary sector
Tertiary sector
Argentina Bolivia
5%
27%
28%
49%
63%
24%
Exporting lithium can affect Bolivia’s terms of trade and the current account of its balance of 10
payments. In 2021, Bolivia’s terms of trade were 62 and its index of average export prices was
85.56. In that year, Bolivia had a surplus on its current account. It also had the lowest inflation
rate in South America.
Fig. 2 shows the inflation rate and current account balance as a percentage of GDP of selected
countries in 2021, when the global average inflation rate was 3.5%. 15
© OCR 2025
, 3
Fig. 2
The inflation rate and current account balance as a percentage of GDP of selected
countries 2021
3
Bolivia
2 China
1
0 Canada
0 1 2 3 4 5 6 7
–1 Paraguay
Current account
balance as –2
% of GDP Peru
–3
Bangladesh
–4
–5
–6
Chile
–7
Inflation rate (%)
A current account surplus can put upward pressure on a country’s exchange rate. There are,
however, other influences on a country’s exchange rate. Bolivia has a fixed exchange rate
against the US dollar. This fixed exchange rate has provided some certainty and is credited with
helping to keep inflation low. In 2023, speculation put downward pressure on the exchange rate.
Bolivia’s central bank, Banco Central de Bolivia, intervened to support the value of the boliviano 20
which significantly reduced the country’s foreign exchange reserves.
As well as maintaining the exchange rate, the Banco Central de Bolivia manages the country’s
national debt. A country’s national debt increases as a result of government budget deficits.
Bolivia has had a government budget deficit for many years. A relatively high proportion of
Bolivians work in the informal economy and do not pay any income tax. The country has a 25
relatively low flat rate of income tax of 13%. Some economists suggest that a rise in this rate of
income tax would increase government tax revenue and reduce the budget deficit. Others have
suggested that Bolivia should introduce a progressive income tax system. Bolivia has the highest
income inequality in South America, that is gradually reducing.
Bolivia has a standard rate of VAT of 13%. Additional indirect taxes are imposed on other 30
products such as cigarettes, alcohol and luxuries, including perfume and cosmetics.
© OCR 2025 Turn over
