AQA A-level ECONOMICS 7136/2 Paper 2 National and International Economy Question Paper + Mark scheme [MERGED] June 2022 IB/M/Jun22/E5 7136/2 Time allowed: 2 hours Materials For this paper you must have: • an AQA 12-page answer book • a calculator. Instruc

AQA A-level ECONOMICS 7136/2 Paper 2 National and International Economy Question Paper + Mark scheme [MERGED] June 2022 IB/M/Jun22/E5 7136/2 Time allowed: 2 hours Materials For this paper you must have: • an AQA 12-page answer book • a calculator. Instructions • Use black ink or black ball-point pen. Pencil should only be used for drawing. • Write the information required on the front cover of your answer book. The Paper Reference is 7136/2. • In Section A, answer EITHER Context 1 OR Context 2. • In Section B, answer ONE essay. Information • The marks for questions are shown in brackets. • The maximum mark for this paper is 80. • There are 40 marks for Section A and 40 marks for Section B. Advice • You are advised to spend 1 hour on Section A and 1 hour on Section B. A-level ECONOMICS Paper 2 National and International Economy 2 IB/M/Jun22/7136/2 Section A Answer EITHER Context 1 OR Context 2. EITHER Context 1 Total for this context: 40 marks Investment in Africa Study Extracts A, B and C and then answer all parts of Context 1 which follow. Extract A Figure 1: Real GDP (US$ bn), selected African nations, 2015–2018 Figure 2: Foreign direct investment (FDI) net inflows (US$ bn), selected African nations, 2015–2018 Country Egypt 250.0 260.9 271.8 286.3 Kenya 52.3 55.4 58.1 61.7 Liberia 2.6 2.6 2.5 2.6 Morocco 113.4 114.6 119.5 123.2 Nigeria 461.8 454.4 458.0 466.9 Country Egypt 6.9 8.1 7.4 8.1 Kenya 0.6 0.7 1.3 1.6 Liberia 0.2 0.3 0.2 0.1 Morocco 3.3 2.2 2.7 3.5 Nigeria 3.0 4.5 3.5 2.0 Source: World Bank, 2020 Source: World Bank, 2020 Extract B: Foreign direct investment in Africa In 2018, foreign direct investment (FDI) in Africa rose to $46 billion, an 11% increase on the previous year. Morocco and Kenya saw some of the biggest rises in FDI, although many nations in Sub-Saharan and Central Africa experienced falls. Nations with high and stable growth seem better able to attract FDI inflows. It was expected that increased rates of economic growth in Africa, along with progress towards the African Continental Free Trade Area (AfCFTA) agreement and key improvements in infrastructure, would boost FDI. Multinational corporations (MNCs) from developing countries have been expanding their activities in Africa but investors from developed countries remain key. French companies are currently the largest investors in Africa, followed by the Netherlands, the United States and the UK. Africa is a key producer of commodities and with higher demand and rising commodity prices, FDI inflows are expected to increase even further. The growing number of special economic zones (SEZs) are also likely to help Africa attract more FDI. SEZs are areas with relaxed trade rules, little regulation and little or no tax on firms that invest in the zone. This makes locating in a SEZ very appealing to foreign firms. The creation of these zones has helped to promote development in several Asian economies and many African nations hope to make their economies more business-friendly. There are an estimated 237 SEZs in the African continent already. FDI can have many benefits. It should create employment, boost long-run economic growth and increase exports. SEZs and improving competitiveness should contribute to the achievement of key macroeconomic objectives and the development of a country’s economy. 5 10 15 20 Source: News reports, 2020 3 IB/M/Jun22/7136/2 Turn over ► Extract C: Problems for Africa It has been said that ‘investing in Africa is only for the brave’. Some of the issues faced by firms include lack of infrastructure such as poor electricity and transport networks, bureaucracy, political instability and corruption. African nations’ current share of global trade is only around 3%. Since African governments began to use SEZs in the early 1970s, they have failed to attract significant investment, to promote exports, or to create sustainable industrial development. SEZs create distortions in markets, with too much focus on short-term gains. Often, conflicts of interest occur between host governments and investors. Many MNCs, that have been attracted to Africa by the SEZs, have been accused of doing little to improve the living standards of the African people. It has been said that they do not create many jobs, they exploit workers and damage the environment. Too often, profits are not reinvested in Africa but distributed to shareholders or invested elsewhere. Some argue that African governments should be doing more to improve the living standards of their citizens, rather than relying on foreign firms. However, high debts, high unemployment rates and low tax revenues often make it difficult for the governments of African nations to develop their economies without investment from abroad. 5 10 15 Source: News reports, 2020 0 1 Using the data in Extract A (Figure 1), if 2015 is the base year, calculate the index of Egypt’s real GDP in 2018. Give your answer to one decimal place. [2 marks] 0 2 Explain how the data in Extract A (Figures 1 and 2) show that nations with high and stable economic growth attract rising foreign direct investment (FDI) inflows. [4 marks] 0 3 Extract B (lines 18–19) states: ‘FDI can have many benefits. It should create employment, boost long-run economic growth and increase exports.’ With the help of a suitable diagram, explain how a rise in inward foreign direct investment (FDI) may lead to increased exports. [9 marks] 0 4 Extract C (lines 13–14) states: ‘Some argue that African governments should be doing more to improve the living standards of their citizens, rather than relying on foreign firms.’ Using the data in the extracts and your knowledge of economics, assess the view that to improve the living standards of their citizens, African nations should pursue policies to attract foreign direct investment (FDI). [25 marks] 4 IB/M/Jun22/7136/2 Do not answer Context 2 if you have answered Context 1. OR Context 2 Total for this context: 40 marks Is inflation a problem? Study Extracts D, E and F and then answer all parts of Context 2 which follow. Extract D Figure 3: Unemployment rates (%), selected economies, 2015–2018 Figure 4: CPI inflation rates (%), selected economies, 2015–2018 Country Argentina 6.5 8.5 8.4 9.2 Brazil 8.3 11.3 12.8 12.3 France 10.4 10.0 9.4 9.0 UK 5.4 4.9 4.4 4.1 USA 5.3 4.9 4.3 3.9 Country Argentina 10.0 10.6 25.7 34.3 Brazil 9.0 8.7 3.4 3.7 France 0.1 0.3 1.2 2.1 UK 0.0 0.7 2.7 2.5 USA 0.1 1.3 2.1 2.4 Source: Knoema, 2020 Source: Knoema, 2020 Extract E: Argentina’s economic woes In 2019, Argentina’s inflation rate hit 53.8%, climbing to its highest level in thirty years. This confirmed Argentina’s place among the five countries with the highest inflation rates in the world, just behind Venezuela, Zimbabwe, South Sudan and Sudan. However, inflation isn’t the only problem faced by Argentina. The country has just suffered three years of recession and the government has often struggled to meet its debt repayments. Despite one of the tightest monetary policies in Argentina’s history, implemented in 2018 after a currency crisis, inflation continued to rise and the recession deepened. It was hoped that policy measures, including a reduction in tariffs and strict currency controls, would help to reduce inflation, but so far this has not happened. In 2020, Argentina’s central bank cut its base interest rate to support the recovery of the economy. However, it has been argued that lower interest rates would be likely to cause further inflation. “Loosening monetary policy without having a clear fiscal plan or winning over the confidence of businesses and consumers is a mistake”, said an Argentine economist. Some argue that Argentina should prioritise eliminating inflation over other objectives of economic policy. In the 1970s and 1980s, the UK experienced high inflation. Policies were put in place to reduce the money supply and reduce government spending. The control of inflation became the main target of UK government macroeconomic policy. However, reducing inflation often comes at the expense of growth and jobs, at least in the short term. 5 10 15 Source: News reports, 2020 5 IB/M/Jun22/7136/2 Turn over ► Extract F: Is the problem of high inflation in the past? These days, most advanced economies no longer suffer from rapidly rising prices. Despite over a decade of low interest rates, increases in the money supply and record employment levels, inflation rates in most advanced economies remain low. Since the 1990s, many governments have set inflation targets which their central banks are required to achieve. This has contributed to a reduction in inflation. In some countries, the risk of deflation has been greater than the risk of inflation. In the 2000s and the early 2010s, rising commodity prices added to inflationary pressures. However, since oil and some other commodity prices crashed in 2014, in many advanced economies inflation above 3% has been rare. In emerging markets, inflation tends to be higher, but the direction of change is the same. For nearly two decades, economists have talked about an era of ‘global disinflation’. Low inflation can be self-reinforcing as expectations change. Also, as inflation falls, the real rate of interest is likely to increase, weakening demand and further reducing inflation. This would not be a problem if central banks could cut nominal interest rates sufficiently to offset the risk of deflation, but many have little room to do so. Nominal rates are near zero in the UK, and only a little higher in the USA. Before the pandemic, two-thirds of countries in the Organisation for Economic Co-operation and Development (OECD) had low inflation and a record proportion of their population of working age in employment. This has led some to claim that the Phillips curve is outdated and no longer a relevant model. Low inflation and low unemployment can be achieved simultaneously. 5 10 15 Source: News reports, 2020 0 5 Using the data in Extract D (Figure 3), calculate the difference between the UK’s and Argentina’s mean unemployment rates over the period 2015 to 2018. Give your answer to two decimal places. [2 marks] 0 6 Explain how the data in Extract D (Figures 3 and 4) show that there may be a short-run trade-off between unemployment and inflation. [4 marks] 0 7 Extract E (lines 7–9) states: ‘It was hoped that policy measures, including a reduction in tariffs... would help to reduce inflation’. With the help of a diagram, explain how a reduction in tariffs could help to reduce inflation. [9 marks] 0 8 Extract E (lines 15–17) states: ‘Policies were put in place to reduce the money supply and reduce government spending. The control of inflation became the main target of UK government macroeconomic policy.’ Using the data in the extracts and your knowledge of economics, evaluate the view that achieving a low and stable rate of inflation should be the main economic objective of governments. [25 marks] 6 IB/M/Jun22/7136/2 Section B Answer one essay from this section. Each essay carries 40 marks. EITHER Essay 1 The UK has been running a deficit on its balance of trade in goods and services since 1998. Expenditure-reducing and expenditure-switching policies can both be used to correct a trade deficit. However, the UK government has focused on other objectives rather than achieving a trade balance. 0 9 Explain how expenditure-switching policies can be used to reduce a deficit on a country’s balance of trade in goods and services. [15 marks] 1 0 Assess the view that floating exchange rates are always better than fixed exchange rates. [25 marks] OR Essay 2 In 2018, the European Commission estimated that Bulgaria and Romania were both experiencing positive output gaps whilst the UK was experiencing a negative output gap. Persistent output gaps can cause problems for economies which may be addressed by supply-side improvements. 1 1 Explain the main problems for an economy of having a large positive output gap. [15 marks] 1 2 Evaluate the view that supply-side improvements in the UK economy can best be achieved through the use of interventionist policies. [25 marks] 7 IB/M/Jun22/7136/2 OR Essay 3 Over the past 20 years, the growth of world trade has averaged 6% per year, twice as fast as the growth in world output. As countries become ever more interconnected, they experience both economic opportunities and threats. 1 3 Explain reasons for changes in the value of exports from the UK to the rest of the world. [15 marks] 1 4 Evaluate the view that international trade always benefits nations. [25 marks] END OF QUESTIONS 8 IB/M/Jun22/7136/2 There are no questions printed on this page Copyright information For confidentiality purposes, all acknowledgements of third-party copyright material are published in a separate booklet. This booklet is published after each live examination series and is available for free download from Permission to reproduce all copyright material has been applied for. In some cases, efforts to contact copyright-holders may have been unsuccessful and AQA will be happy to rectify any omissions of acknowledgements. If you have any queries please contact the Copyright Team. Copyright © 2022 AQA and its licensors. All rights reserved. *226A7136/2* *226A7136/2/MS* A-level ECONOMICS 7136/2 Paper 2 National and International Economy Mark scheme June 2022 Version: 1.0 Final MARK SCHEME – A-LEVEL ECONOMICS – 7136/2 – JUNE 2022 2 Mark schemes are prepared by the Lead Assessment Writer and considered, together with the relevant questions, by a panel of subject teachers. This mark scheme includes any amendments made at the standardisation events which all associates participate in and is the scheme which was used by them in this examination. The standardisation process ensures that the mark scheme covers the students’ responses to questions and that every associate understands and applies it in the same correct way. As preparation for standardisation each associate analyses a number of students’ scripts. Alternative answers not already covered by the mark scheme are discussed and legislated for. If, after the standardisation process, associates encounter unusual answers which have not been raised they are required to refer these to the Lead Examiner. It must be stressed that a mark scheme is a working document, in many cases further developed and expanded on the basis of students’ reactions to a particular paper. Assumptions about future mark schemes on the basis of one year’s document should be avoided; whilst the guiding principles of assessment remain constant, details will change, depending on the content of a particular examination paper. Further copies of this mark scheme are available from Copyright information AQA retains the copyright on all its publications. However, registered schools/colleges for AQA are permitted to copy material from this booklet for their own internal use, with the following important exception: AQA cannot give permission to schools/colleges to photocopy any material that is acknowledged to a third party even for internal use within the centre. Copyright © 2022 AQA and its licensors. All rights reserved. MARK SCHEME – A-LEVEL ECONOMICS – 7136/2 – JUNE 2022 3 Level of response marking instructions Level of response mark schemes are broken down into levels, each of which has a descriptor. The descriptor for the level shows the average performance for the level. There are marks in each level. Before you apply the mark scheme to a student’s answer read through the answer and annotate it (as instructed) to show the qualities that are being looked for. You can then apply the mark scheme. Step 1 Determine a level Start at the lowest level of the mark scheme and use it as a ladder to see whether the answer meets the descriptor for that level. The descriptor for the level indicates the different qualities that might be seen in the student’s answer for that level. If it meets the lowest level then go to the next one and decide if it meets this level, and so on, until you have a match between the level descriptor and the answer. With practice and familiarity you will find that for better answers you will be able to quickly skip through the lower levels of the mark scheme. When assigning a level you should look at the overall quality of the answer and not look to pick holes in small and specific parts of the answer where the student has not performed quite as well as the rest. If the answer covers different aspects of different levels of the mark scheme you should use a best fit approach for defining the level and then use the variability of the response to help decide the mark within the level, ie if the response is predominantly level 3 with a small amount of level 4 material it would be placed in level 3 but be awarded a mark near the top of the level because of the level 4 content. Step 2 Determine a mark Once you have assigned a level you need to decide on the mark. The descriptors on how to allocate marks can help with this. The exemplar materials used during standardisation will help. There will be an answer in the standardising materials which will correspond with each level of the mark scheme. This answer will have been awarded a mark by the Lead Examiner. You can compare the student’s answer with the example to determine if it is the same standard, better or worse than the example. You can then use this to allocate a mark for the answer based on the Lead Examiner’s mark on the example. You may well need to read back through the answer as you apply the mark scheme to clarify points and assure yourself that the level and the mark are appropriate. Indicative content in the mark scheme is provided as a guide for examiners. It is not intended to be exhaustive and you must credit other valid points. Students do not have to cover all of the points mentioned in the Indicative content to reach the highest level of the mark scheme. An answer which contains nothing of relevance to the question must be awarded no marks. MARK SCHEME – A-LEVEL ECONOMICS – 7136/2 – JUNE 2022 4 Below is the levels of response marking grid to be used when marking any 25 mark question. Level of response Response Max 25 marks 5 Sound, focused analysis and well-supported evaluation that: • is well organised, showing sound knowledge and understanding of economic terminology, concepts and principles with few, if any, errors • includes good application of relevant economic principles to the given context and, where appropriate, good use of data to support the response • includes well-focused analysis with clear, logical chains of reasoning • includes supported evaluation throughout the response and in a final conclusion. 21–25 marks 4 Sound, focused analysis and some supported evaluation that: • is well organised, showing sound knowledge and understanding of economic terminology, concepts and principles with few, if any, errors • includes some good application of relevant economic principles to the given context and, where appropriate, some good use of data to support the response • includes some well-focused analysis with clear, logical chains of reasoning • includes some reasonable, supported evaluation. 16–20 marks 3 Some reasonable analysis but generally unsupported evaluation that: • focuses on issues that are relevant to the question, showing satisfactory knowledge and understanding of economic terminology, concepts and principles but some weaknesses may be present • includes reasonable application of relevant economic principles to the given context and, where appropriate, some use of data to support the response • includes some reasonable analysis but which might not be adequately developed or becomes confused in places • includes fairly superficial evaluation; there is likely to be some attempt to make relevant judgements but these aren’t well-supported by arguments and/or data. 11–15 marks 2 A fairly weak response with some understanding that: • includes some limited knowledge and understanding of economic terminology, concepts and principles is shown but some errors are likely • includes some limited application of relevant economic principles to the given context and/or data to the question • includes some limited analysis but it may lack focus and/or become confused • includes some evaluation which is weak and unsupported. 6–10 marks 1 A very weak response that: • includes little relevant knowledge and understanding of economic terminology, concepts and principles • includes application to the given context which is, at best, very weak • includes attempted analysis which is weak and unsupported. 1–5 marks MARK SCHEME – A-LEVEL ECONOMICS – 7136/2 – JUNE 2022 5 Section A Context 1 Total for this context: 40 marks 0 1 Using the data in Extract A (Figure 1), if 2015 is the base year, calculate the index of Egypt’s real GDP in 2018. Give your answer to one decimal place [2 marks] Response Max 2 marks For the correct answer (114.5) to one decimal place 2 marks For a correct answer but not to one decimal place, ie 114.52 OR For the correct method but the wrong answer, to 1 decimal place OR For an answer of 14.5% OR For a correct answer (114.5) but with symbols added such as $ or bn 1 mark Calculation: (286.3/250.0) X 100 = 114.52 = 114.5 to 1dp MAXIMUM FOR QUESTION 01: 2 MARKS MARK SCHEME – A-LEVEL ECONOMICS – 7136/2 – JUNE 2022 6 0 2 Explain how the data in Extract A (Figures 1 and 2) show that nations with high and stable economic growth attract rising foreign direct investment (FDI) inflows. [4 marks] Response: Max 4 marks • includes evidence that shows that nations with high and stable economic growth attract rising foreign direct investment inflows • clearly explains how this data is evidence that nations with high and stable economic growth attract rising foreign direct investment inflows. 4 marks • includes evidence that shows that nations with high and stable economic growth attract rising foreign direct investment inflows • explanation of how this data is evidence that nations with high and stable economic growth attract rising foreign direct investment inflows. 3 marks • includes some limited evidence that shows that nations with high and stable economic growth attract rising foreign direct investment inflows • limited explanation of how this data is evidence that nations with high and stable economic growth attract rising foreign direct investment inflows. 2 marks • includes evidence that does not clearly show that nations with high and stable economic growth attract rising foreign direct investment inflows • no explanation of how this data is evidence that nations with high and stable economic growth attract rising foreign direct investment inflows. 1 mark Relevant issues include: • the meaning of the terms ‘high and stable economic growth’ and ‘rising foreign direct investment inflows’ • economic growth is derived from Figure 1 by determining the annual percentage change in real GDP • explaining why high and stable economic growth may attract FDI such as improved confidence and the opportunity for greater profits • Kenya had the highest economic growth over the period (18.0%) and the largest proportionate increase in FDI (+166.7%) • Egypt had the second highest economic growth over the period (14.5%) and the second largest proportionate increase in FDI (+17.4%) • the country which had the largest absolute increase in FDI (Egypt going from $6.9bn in 2015 to $8.1bn in 2018) also achieved the second highest growth rate (14.5%) • the country which achieved the largest growth rate (Kenya at 18.0%) also achieved the second highest absolute increase in FDI ($0.6bn to $1.6bn) • in terms of stability, the two countries which both experienced negative economic growth (Liberia and Nigeria) both experienced falling FDI over the whole period. Liberia fell from $0.2bn to $0.1bn (a fall of 50%) and Nigeria fell from $3bn to $2bn (a fall of 33.3%) • the only country which had FDI increasing throughout (Kenya) also had high growth throughout. Data tables to help examiners with percentage changes (numbers are rounded): and include two data tables below MARK SCHEME – A-LEVEL ECONOMICS – 7136/2 – JUNE 2022 7 Country Change in FDI Egypt +17.4% Kenya +166.7% Liberia -50.0% Morocco +6.1% Nigeria -33.3% Country 15/16 16/17 17/18 Overall growth Egypt 4.4% 4.2% 5.3% 14.5% Kenya 5.9% 4.9% 6.2% 18.0% Liberia 0% -3.8% 4% 0% Morocco 1.1% 4.3% 3.1% 8.6% Nigeria -1.6% 0.8% 1.9% 1.1% MAXIMUM FOR QUESTION 02: 4 MARKS MARK SCHEME – A-LEVEL ECONOMICS – 7136/2 – JUNE 2022 8 0 3 Extract B (lines 18–19) states: ‘FDI can have many benefits. It should create employment, boost long-run economic growth and increase exports.’ With the help of a suitable diagram, explain how a rise in inward foreign direct investment (FDI) may lead to increased exports. [9 marks] Level of response Response: Max 9 marks 3 • is well organised and develops one or more of the key issues that are relevant to the question • shows sound knowledge and understanding of relevant economic terminology, concepts and principles • includes good application of relevant economic principles and/or good use of data to support the response • includes well-focused analysis with a clear, logical chain of reasoning • includes a relevant diagram that will, at the top of this level, be accurate and used appropriately. 7–9 marks 2 • includes one or more issues that are relevant to the question • shows reasonable knowledge and understanding of economic terminology, concepts and principles but some weaknesses may be present • includes reasonable application of relevant economic principles and/or data to the question • includes some reasonable analysis but it might not be adequately developed and may be confused in places • may include a relevant diagram. 4–6 marks 1 • is very brief and/or lacks coherence • shows some limited knowledge and understanding of economic terminology, concepts and principles but some errors are likely • demonstrates very limited ability to apply relevant economic principles and/or data to the question • may include some very limited analysis but the analysis lacks focus and/or becomes confused • may include a relevant diagram but the diagram is not used and/or is inaccurate in some respects. 1–3 marks MARK SCHEME – A-LEVEL ECONOMICS – 7136/2 – JUNE 2022 9 An AD/AS diagram which shows LRAS shifting right is expected although candidates may explain potential benefits from SRAS shifting right and the subsequent effects on the price level and exports. Candidates may also use a Production Possibility Frontier shifting right. Expected diagrams are: Note: Some candidates may show the ‘effect’ of a rise in investment or exports by only shifting AD to the right. However, this does not explain why FDI may lead to an increase in exports and should not be credited as a suitable/relevant diagram. MARK SCHEME – A-LEVEL ECONOMICS – 7136/2 – JUNE 2022 10 Relevant issues include: • definitions/explanations: investment, inward investment, foreign direct investment (FDI), exports • explaining reasons why inward FDI may occur such as reduced corporation tax • linking FDI to increases in productive capacity/potential • linking FDI to forcing domestic firms to become more efficient • the possible effects on the price level of boosts to efficiency/productive capacity • if firms’ costs fall (or at least don’t rise) then firms become relatively more competitive • linking FDI to possible benefits from economies of scale • if firms which used to provide imports have relocated to the domestic economy, they may now be providing exports • if total output rises firms may export surplus stock • linking the increases in FDI to disinflation or benign deflation • multinational corporations export around the world and hence FDI by a foreign MNC is likely to lead to an increase in exports. MAXIMUM FOR QUESTION 03: 9 MARKS MARK SCHEME – A-LEVEL ECONOMICS – 7136/2 – JUNE 2022 11 0 4 Extract C (lines 13–14) states: ‘Some argue that African governments should be doing more to improve the living standards of their citizens, rather than relying on foreign firms.’ Using the data in the extracts and your knowledge of economics, assess the view that to improve the living standards of their citizens, African nations should pursue policies to attract foreign direct investment (FDI). [25 marks] Areas for discussion include: • definitions/explanations: foreign direct investment (FDI), living standards • explaining how living standards can be measured in terms of monetary measures such as GDP per capita • explaining how living standards can be measured in terms of qualitative factors such as education, health, inequality, the environment, human development and sustainability • alternative measures of living standards such as the Human Development Index (HDI) • explaining the benefits of FDI on living standards in terms of: o employment o incomes and consumption possibilities o economic growth and GDP per capita o multiplier/accelerator arguments o human development/skills progression o potential improvements in infrastructure created by MNCs o possible health implications of increased formal, regular employment o generating more government tax revenue which may be spent on merit/public goods without creating debt o crowding in arguments • explaining the drawbacks of FDI on living standards in terms of: o exploitation of workers by MNCs o damages to the environment caused by MNCs o possible inflationary pressures causing the cost of living to rise o ‘footloose’ industries causing instability in employment for example o repatriation of profits acting as a leakage from the circular flow • considering that governments may not benefit from rising tax revenues as they may have been forced to offer tax breaks • how global shocks, such as the pandemic, may lead to changes in investment beyond the control of the domestic government • the alternatives to attracting FDI to improve living standards such as aid and the possible problems of tied aid • other possible alternatives such as government spending and the potential problems of rising debt • other possible alternatives such as the promotion of free trade or protectionism and the potential problems of each method • whether the government should intervene at all or if the free market would provide better solutions • the possible inequalities caused by FDI and the possible regional differences • issues such as corruption affecting the distribution of the benefits of FDI. The use of relevant diagrams to support the analysis should be taken into account when assessing the quality of the student’s response to the question. Use the level mark scheme on page 4 to award students marks for this question. MAXIMUM FOR QUESTION 04: 25 MARKS MARK SCHEME – A-LEVEL ECONOMICS – 7136/2 – JUNE 2022 12 Context 2 Total for this context: 40 marks 0 5 Using the data in Extract D (Figure 3), calculate the difference between the UK’s and Argentina’s mean unemployment rates over the period 2015 to 2018. Give your answer to two decimal places. [2 marks] Response Max 2 marks For the correct answer (3.45 percentage points or 3.45%) with the words ‘percentage points’ or % sign and to two decimal places Also allow answers written as a negative (or with a minus sign) 2 marks For a correct answer but without the words ‘percentage points’ or % sign and/or not to two decimal places OR For the correct method but the wrong answer, to two decimal places with the words ‘percentage points’ or % sign 1 mark Note: In the event that candidates calculate this as a percentage difference rather than an absolute difference – allow answers stating that the Argentina's mean unemployment is 73.40% greater than the UK’s or that the UK’s mean unemployment is 57.67% of Argentina’s. Calculation: Argentina’s mean = 6.5% + 8.5% + 8.4% + 9.2% = 32.6 32.6/4 = 8.15% UK’s mean = 5.4% + 4.9% + 4.4% + 4.1% = 18.8 18.8/4 = 4.70% 8.15% - 4.70% = 3.45 percentage points to 2 decimal places. MAXIMUM FOR QUESTION 05: 2 MARKS MARK SCHEME – A-LEVEL ECONOMICS – 7136/2 – JUNE 2022 13 0 6 Explain how the data in Extract D (Figures 3 and 4) show that there may be a short-run trade-off between unemployment and inflation. [4 marks] Response: Max 4 marks • includes evidence that shows that there may be a short-run trade-off between unemployment and inflation • clearly explains how this data is evidence that there may be a short-run trade-off between unemployment and inflation. 4 marks • includes evidence that shows that there may be a short-run trade-off between unemployment and inflation • explanation of how this data is evidence that there may be a short-run trade-off between unemployment and inflation. 3 marks • includes some limited evidence that shows that there may be a short-run tradeoff between unemployment and inflation • limited explanation of how this data is evidence that there may be a short-run trade-off between unemployment and inflation. 2 marks • includes evidence that does not clearly show that there may be a short-run trade-off between unemployment and inflation • no explanation of how this data is evidence that there may be a short-run tradeoff between unemployment and inflation. 1 mark Relevant issues include: • the meaning of ‘trade-off’ or ‘unemployment’ or ‘inflation’ • explaining the trade-off in terms of an inverse relationship with possible reference to the Phillips curve • explaining why a trade-off may occur between unemployment and inflation • the largest fall in unemployment rates occurred in both France (10.4% in 2015 to 9.0% in 2018) and the USA (5.3% in 2015 to 3.9% in 2018) which both experienced significant rises in inflation rates (France 0.1% in 2015 to 2.1% in 2018 and the USA 0.1% in 2015 and 2.4% in 2018) • the largest increase in unemployment was in Brazil (8.3% in 2015 to 12.3% in 2018) who also experienced a significant fall in their inflation rate (9.0% in 2015 to 3.7% in 2018) • other than Argentina, the largest increase in inflation was in the UK (0.0% in 2015 to 2.5% in 2018) who also had a large fall in unemployment (5.4% to 4.1%) • of the five nations displayed only Argentina appeared to not show a trade-off (unemployment rose from 6.5% in 2015 to 9.2% in 2018 whereas inflation rose from 10.0% to 34.3%). Note: Some candidates may attempt to illustrate the trade-off using diagrammatic analysis and the data. This should be rewarded as evidence of the trade-off. MAXIMUM FOR QUESTION 06: 4 MARKS MARK SCHEME – A-LEVEL ECONOMICS – 7136/2 – JUNE 2022 14 0 7 Extract E (lines 7–9) states: ‘It was hoped that policy measures, including a reduction in tariffs ... would help to reduce inflation.’ With the help of a diagram, explain how a reduction in tariffs could help to reduce inflation. [9 marks] Level of response Response: Max 9 marks 3 • is well organised and develops one or more of the key issues that are relevant to the question • shows sound knowledge and understanding of relevant economic terminology, concepts and principles • includes good application of relevant economic principles and/or good use of data to support the response • includes well-focused analysis with a clear, logical chain of reasoning • includes a relevant diagram that will, at the top of this level, be accurate and used appropriately. 7–9 marks 2 • includes one or more issues that are relevant to the question • shows reasonable knowledge and understanding of economic terminology, concepts and principles but some weaknesses may be present • includes reasonable application of r