Mark Scheme (Results)

November 2023

Pearson Edexcel International GCSE

In Economics (4EC1)
Paper 02 Macroeconomics and the Global
Economy
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November 2023
Question Paper Log Number P73499RA
Publications Code 4EC1_02_2311_MS
All the material in this publication is copyright
© Pearson Education Ltd 2023
General Marking Guidance

• All candidates must receive the same treatment.

Examiners must mark the first candidate in exactly the
same way as they mark the last.
• Mark schemes should be applied positively. Candidates
must be rewarded for what they have shown they can do
rather than penalised for omissions.
• Examiners should mark according to the mark scheme
not according to their perception of where the grade
boundaries may lie.
• There is no ceiling on achievement. All marks on the mark
scheme should be used appropriately.
• All the marks on the mark scheme are designed to be
awarded. Examiners should always award full marks if
deserved, i.e. if the answer matches the mark scheme.
Examiners should also be prepared to award zero
marks if the candidate’s response is not worthy of credit
according to the mark scheme.
• Where some judgement is required, mark schemes will
provide the principles by which marks will be awarded
and exemplification may be limited.
• When examiners are in doubt regarding the application
of the mark scheme to a candidate’s response, the team
leader must be consulted.
• Crossed out work should be marked UNLESS the
candidate has replaced it with an alternative response.
Question Which one of the following is a characteristic of progressive taxation?
Mark
Number Answer
1(a) AO1 1 mark

The only correct answer is:

C The tax rate increases as income increases

A is not correct because this does not describe a characteristic of

progressive taxation
B is not correct because this this does not describe a characteristic of
progressive taxation/ is regressive
D is not correct because progress taxation is not linked to GDP (1)

Question Which one of the following describes a fiscal surplus?

Mark
Number Answer
1(b) AO1 1 marks

The only correct answer is:

D Government revenue is greater than government expenditure

A is not correct because this describes current account surplus

B is not correct because this describes a current account deficit
C is not correct because this describes a fiscal deficit (1)

Question What is meant by the term income inequality?

Mark
Number Answer
1(c) AO1 2 marks

Award up to 2 marks for a correct definition

Differences in income (1) between different groups of earners (1)

OR

The unequal/uneven distribution of income (1) throughout an

economy/a society (1)
(2)
Accept any other appropriate response
Question Describe one role of the World Trade Organization (WTO).
Mark
Number Answer
1(d) AO1 2 marks

Award 1 mark for reference to the role and 1 mark for

development of the role

It helps to settle trade disputes between countries (1) by acting as a

mediator to find a solution (1)

Accept any other appropriate response (2)

Question Calculate, to two decimal places, the rate of unemployment. You are
Number advised to show your working. Mark
Answer
1(e) AO2 2 marks

Award 1 mark for showing the calculation

(34 million – 32 million) x 100 (1)

34 million

OR

2 million x 100 (1)

34 million

Award 1 mark for the correct answer

= 5.88% (1)

Award 2 marks if the correct answer is 5.88% even if no

calculations are shown

Award 1 mark if the answer given is 5.88 even if no calculations

are shown

Do not award marks for the formula (2)

Question Using the diagram below, draw the effects of the introduction of the
Number tariff on the equilibrium price and quantity of large tyres. Label the
new curve, the new equilibrium price and the new equilibrium Mark
quantity.
Answer
1(f) AO2 3 marks

Award 1 mark for a leftward shift of supply curve, labelled

Award 1 mark for a higher equilibrium price, labelled
Award 1 mark for a lower equilibrium quantity, labelled

(3)
Question Explain one advantage of free trade for businesses in Ecuador.
Mark
Number Answer
1(g) AO2 3 marks

Award 1 mark for identifying a relevant advantage

Award 1 mark for developing the advantage
Award 1 mark for the response being in context

• One advantage is that businesses can access a wider

market (1). Trade barriers will be removed for products
such as bananas (1) which could help to increase total
sales and revenue (1)

• One advantage is that there could be lower input costs

(1). Trade barriers will be removed for imports from
China (1) which could help businesses to sell goods for
lower prices in the domestic market (1)

Accept any other appropriate response

(3)

Question With reference to the data above and your knowledge of

Number economics, analyse the impact of high rates of inflation on
Mark
consumer confidence in a country such as Germany.
Indicative content
1(h) AO2 (3 marks)/AO3 (3 marks)

AO2 and AO3

• Consumer confidence is an economic indicator that gauges

consumers’ perception of the economy
• High rates of inflation could reduce confidence in Germany
• Inflation reduces purchasing power and a rate of 10.4%
will result in many consumers experiencing a reduction in
living standards
• This is because they cannot afford to purchase the same
amount of goods and services
• Consumer confidence will fall and may make them more
cautious and less willing to borrow money
• Savings may increase to safeguard against the future
• High rates of inflation can cause uncertainty for many
consumers making it difficult to plan ahead if prices are
rising so much (6)
Level Mark Descriptor
0 No rewardable material.
Level 1 1–2 • Demonstrates basic knowledge and understanding by
developing relevant points. Limited application of economic
terms, concepts, theories and calculations (AO2).
• Information presented will lack selectivity and organisation.
Interpretation of economic information will be limited, with a
lack of analysis of issues (AO3).
Level 2 3–4 • Demonstrates partial knowledge and understanding by
developing relevant points. Partial application of economic
terms, concepts, theories and calculations (AO2).
• Information presented will demonstrate some selectivity and
organisation. Interpretation of economic information will be
good, with some analysis of issues (AO3).
Level 3 5–6 • Demonstrates clear knowledge and understanding by
developing relevant points. Appropriate application of economic
terms, concepts, theories and calculations (AO2).
• Information presented will demonstrate excellent selectivity and
organisation. Interpretation of economic information will be excellent, with
a thorough analysis of issues (AO3).
Question What is the main reason for a government to devalue its currency?
Mark
Number Answer
2(a) AO1 1 mark

The only correct answer is:

A To increase the demand for its exports

B is not correct because devaluation aims to increase not decrease

the demand for exports
C is not correct because devaluation aims to make exports cheaper
rather than affect the price of imports
D is not correct because devaluation can make a country's assets and
investments cheaper in foreign currency terms, which can attract (1)
foreign investors

Question Which one of the following is the most likely reason for increased
Number globalisation? Mark
Answer
2(b) AO2 1 mark

The only correct answer is:

C An increase in the significance of MNCs

A is not correct because this would reduce trade

B is not correct because this would make trade more expensive and
less likely
D is not correct because this would result in less globalisation (1)

Question State one possible macroeconomic objective for a government.

Mark
Number Answer
2(c) AO1 1 mark

Award 1 mark for one macroeconomic objective.

• Economic growth
• Low and stable inflation
• Low unemployment
• Surplus or balance on the current account of the balance
of payments
• Protection of the environment
• Redistribution of income

Accept any other appropriate response (1)

Question What is meant by the term seasonal unemployment?
Mark
Number Answer
2(d) AO1 2 marks

Award up to 2 marks for a correct definition

When workers are only required for certain times of the year (1)
and unemployed for the rest of the year (1)

Accept any other appropriate response (2)

Question Explain one reason rapid economic growth may be harmful for an
Number economy such as Vietnam. Mark
Answer
2(e) AO2 3 marks

Award 1 mark for identifying a relevant reason

Award 1 mark for developing the reason
Award 1 mark for the response being in context

• One reason is because it may cause damage to the

environment (1). The increased production of goods and
services can cause pollution (1) which may result in
increased government expenditure to reduce the problem
(1)

• One reason is higher inflation (1). Rapid growth of 8.02%

may result in the economy overheating (1). This could
result in lower standards of living for people in Vietnam
due to less purchasing power (1)
(3)
Accept any other appropriate response
Question Using the diagram below, draw the effect of an increase in UK exports
Number to the US on the equilibrium exchange rate of the UK pound (£). Label
the new curve, the new equilibrium exchange rate and the new Mark
equilibrium quantity.
Answer
2(f) AO2 3 marks

Award 1 mark for rightward shift of demand, labelled

Award 1 mark for higher equilibrium exchange rate, labelled
Award 1 mark for higher equilibrium quantity, labelled

(3)
Question With reference to the data above and your knowledge of
Number economics, assess the disadvantages of higher business tax rates
Mark
on investment in a country such as the UK.
Indicative content
2(g) AO2 (3 marks)/AO3 (3 marks)/AO4 (3 marks)

AO2 and AO3

• Business tax is a direct tax on the profit of a firm

• Business tax rates in the UK have increased from 19% to 25%
in April 2023
• Increasing business tax rates by such a large percent (6%) may
result in less tax revenue for the UK Government if firms do
not locate in the UK or if UK firms relocate to the US
• The US has a much lower tax rate of 21% in comparison to the
UK which could be very attractive to MNCs
• Firms such as Associated British Foods will have to pay £20m
more in taxation
• This could result in the firm having less to invest in the UK
economy
• This is likely to result in a negative impact on GDP and
employment if many firms have less profit to invest and
expand in the UK

AO4

• However, increases in business tax rates can help provide the

UK Government with an additional £18bn in tax revenue
• This could be used by the UK Government to invest into public
services for the UK population which might offset any
reductions in investment by the private sector
• The UK’s tax rate of 25% is comparable to China and France
and is still significantly lower than Germany’s 30% tax rate
• This could mean that the impact of the higher rates of
business tax is minimal
• The level of investment is affected by a range of factors, such
as business confidence and not just the rate of business taxes
in a country
(9)
Level Mark Descriptor
0 No rewardable material.
Level 1 1–3 • Demonstrates basic knowledge and understanding by
developing relevant points. Limited application of economic
terms, concepts, theories and calculations (AO2).
• Information presented will lack selectivity and organisation.
Interpretation of economic information will be limited, with a
lack of analysis of issues (AO3).
• Only offers one viewpoint, meaning there is an unbalanced and
incomplete evaluation, showing limited understanding and
awareness (AO4).
Level 2 4–6 • Demonstrates partial knowledge and understanding by
developing relevant points. Partial application of economic
terms, concepts, theories and calculations (AO2).
• Information presented will demonstrate some selectivity and
organisation. Interpretation of economic information will be
good, with some analysis of issues (AO3).
• Offers more than one viewpoint but the argument may lack
balance, leading to an evaluation that may not demonstrate full
understanding and awareness (AO4).
Level 3 7–9 • Demonstrates clear knowledge and understanding by
developing relevant points. Appropriate application of economic
terms, concepts, theories and calculations (AO2).
• Information presented will demonstrate excellent selectivity and
organisation. Interpretation of economic information will be
excellent, with a thorough analysis of issues (AO3).
• Offers more than one viewpoint. The argument is well balanced
and coherent, leading to an evaluation that demonstrates full
understanding and awareness (AO4).
Question How many UK pounds (£) can be bought with $50 if the exchange rate
Number is $1=0.75? Mark
Answer
3(a) AO1 1 mark

The only correct answer is:

B £37.50

A is not correct because this is $75-£50

C is not correct because this is $50/£0.75 (1)
D is not correct because this is £0.75 x 100

Question Which one of the following is a reason for this provision?

Mark
Number Answer
3(b) AO1 1 mark

The only correct answer is:

C To reduce damage to the environment

A is not correct because parks increase the number of tourists

B is not correct because parks increase property values in the area
D is not correct because this increases the space for leisure and
recreation (1)

Question Explain one reason why an increase in the price of imports may have
Number had a positive impact on South Korea’s current account. Mark
Answer
3(c) AO2 3 marks

Award 1 mark for identifying a relevant reason

Award 1 mark for developing the reason
Award 1 mark for the response being in context

• One reason is demand may have decreased for imports (1)

as consumers switch to cheaper domestically produced
goods rather than imports (1). This means less money is
flowing out of the country resulting in a positive impact on
the current account (1)
(3)
Accept any other appropriate response
Question With reference to the data above and your knowledge of
Number economics, analyse how monetary policy can help to reduce
Mark
inflation in a country such as the US.
Indicative content
3(d) AO2 (3 marks)/AO3 (3 marks)

AO2 and AO3

• Monetary policy is the use of interest rates and money supply

to control (aggregate) demand in the economy
• Interest rates are the highest they have been for 15 years and
are predicted to increase to 5.25% by the end of 2023
• Higher interest rates will increase the cost of borrowing
• This will discourage investment and expenditure by firms and
consumers in the US economy
• There could be a greater incentive to save to take advantage of
higher interest rates, therefore reducing consumer spending
• This will lower overall aggregate demand and inflationary
pressures in the US economy
• Increased interest rates may boost the US currency's value,
which may lead to lower import costs and consequently a
decline in inflation (6)
Level Mark Descriptor
0 No rewardable material.
Level 1 1–2 • Demonstrates basic knowledge and understanding by
developing relevant points. Limited application of economic
terms, concepts, theories and calculations (AO2).
• Information presented will lack selectivity and organisation.
Interpretation of economic information will be limited, with a
lack of analysis of issues (AO3).
Level 2 3–4 • Demonstrates partial knowledge and understanding by
developing relevant points. Partial application of economic
terms, concepts, theories and calculations (AO2).
• Information presented will demonstrate some selectivity and
organisation. Interpretation of economic information will be
good, with some analysis of issues (AO3).
Level 3 5–6 • Demonstrates clear knowledge and understanding by
developing relevant points. Appropriate application of economic
terms, concepts, theories and calculations (AO2).
• Information presented will demonstrate excellent selectivity and
organisation. Interpretation of economic information will be excellent, with
a thorough analysis of issues (AO3).
Question With reference to the data above and your knowledge of economics,
Number assess the possible benefits of low unemployment rates on tax
Mark
revenues for a country such as Australia.
Indicative content
3(e) AO2 (3 marks)/AO3 (3 marks)/AO4 (3 marks)

AO2 and AO3

• Unemployment rate is a measure of the percentage of the total

labour force that is currently unemployed and actively seeking
employment
• Figure 4 shows that the rate of unemployment has steadily
fallen from a high of 4.2% in January to 3.4% in November 2022
• If Australia’s employment increases by 64,000, tax revenue
from newly employed workers could increase
• More indirect taxes such as VAT will be collected because
additional people will be spending money in the economy
• This could be used by the Australian Government in the
economy to improve standards of living
• Higher tax revenues will make it easier for the Australian
Government to finance spending on other projects such as
public services
• The Australian Government has more flexibility to lower taxes
elsewhere if more people are employed and tax revenue from
income rises

AO4
• However, low unemployment might not result in higher tax
revenue for the Australian Government
• If many of the workers are employed in low-wage jobs, they
may not contribute as much in tax revenue
• If there is a significant informal economy or tax evasion, tax
revenue might be lost
• If tax rates are too low or there are too many tax exemptions,
tax revenue may not increase as much as expected
• The Australian economy could see an increase in cost-push
inflation as firms compete for the same workers by offering
higher wages due to labour /lack of immigration
• Inflation could reduce tax revenues by reducing consumer
spending
• The overall impact will depend on how long unemployment (9)
remains low
Level Mark Descriptor
0 No rewardable material.
Level 1 1–3 • Demonstrates basic knowledge and understanding by
developing relevant points. Limited application of economic
terms, concepts, theories and calculations (AO2).
• Information presented will lack selectivity and organisation.
Interpretation of economic information will be limited, with a
lack of analysis of issues (AO3).
• Only offers one viewpoint, meaning there is an unbalanced and
incomplete evaluation, showing limited understanding and
awareness (AO4).
Level 2 4–6 • Demonstrates partial knowledge and understanding by
developing relevant points. Partial application of economic
terms, concepts, theories and calculations (AO2).
• Information presented will demonstrate some selectivity and
organisation. Interpretation of economic information will be
good, with some analysis of issues (AO3).
• Offers more than one viewpoint but the argument may lack
balance, leading to an evaluation that may not demonstrate full
understanding and awareness (AO4).
Level 3 7–9 • Demonstrates clear knowledge and understanding by
developing relevant points. Appropriate application of economic
terms, concepts, theories and calculations (AO2).
• Information presented will demonstrate excellent selectivity and
organisation. Interpretation of economic information will be
excellent, with a thorough analysis of issues (AO3).
• Offers more than one viewpoint. The argument is well balanced
and coherent, leading to an evaluation that demonstrates full
understanding and awareness (AO4).
Question Calculate, to two decimal places, the percentage of people living in
Number relative poverty in Kazakhstan in 2022. You are advised to show
Mark
your working.
Answer
4(a) AO2 2 marks

Award 1 mark for showing the calculation

3,063,500 x 100 (1)

19,700,000

Award 1 mark for the correct answer

= 15.55% (1)

Award 2 marks if the correct answer is 15.55% even if no

calculations are shown

Award 1 mark if the answer given is 15.55 even if no calculations

are shown
(2)
Do not award marks for the formula
Question With reference to the data above and your knowledge of economics,
Number analyse the possible disadvantages of the Kazakhstan Government
Mark
privatising the national railway company.
Indicative content
4(b) AO2 (3 marks)/AO3 (3 marks)

AO2 and AO3

• Privatisation involves selling state-owned assets to the

private sector
• Often privatisation forces the new private companies to
be efficient or at least find ways of reducing costs in order
to make a profit
• The most popular way of cutting costs is to reduce the size
of the workforce
• This would result in many railway workers losing their jobs
and see an increase in the number of people unemployed
in Kazakhstan
• KTZ is the largest employer in Kazakhstan so privatising
the railway could have a huge impact on unemployment
levels in the country
• KTZ’s operations are already profitable therefore any
future profits would be given to shareholders rather than
go to the government
• This might result in lower levels of investment and higher (6)
prices for railway users
Level Mark Descriptor
0 No rewardable material.
Level 1 1–2 • Demonstrates basic knowledge and understanding by
developing relevant points. Limited application of economic
terms, concepts, theories and calculations (AO2).
• Information presented will lack selectivity and organisation.
Interpretation of economic information will be limited, with a
lack of analysis of issues (AO3).
Level 2 3–4 • Demonstrates partial knowledge and understanding by
developing relevant points. Partial application of economic
terms, concepts, theories and calculations (AO2).
• Information presented will demonstrate some selectivity and
organisation. Interpretation of economic information will be
good, with some analysis of issues (AO3).
Level 3 5–6 • Demonstrates clear knowledge and understanding by
developing relevant points. Appropriate application of economic
terms, concepts, theories and calculations (AO2).
• Information presented will demonstrate excellent selectivity and
organisation. Interpretation of economic information will be excellent, with
a thorough analysis of issues (AO3).
Question With reference to the data above and your knowledge of economics,
Number evaluate the advantages of an increase in foreign direct investment
Mark
(FDI) for a country such as Kazakhstan.
Indicative content
4(c) AO2 (4 marks)/AO3 (4 marks)/AO4 (4 marks)

AO2 and AO3

• FDI is investment in one country that is made by a business,

organisation or a government from another country
• In 2022, Kazakhstan has received $22.1bn from countries such
as the Netherlands, the US and Switzerland
• Jobs may be created in Kazakhstan by the foreign firms
requiring local workers for building new factories or employing
workers in manufacturing or retail firms
• Local firms may benefit from supplying the foreign firms with
equipment or raw materials used in the production of goods
and services
• Often MNCs pay higher wages than local firms and help to
train the local workforce with new skills and technology
• Taxation from the foreign firms could be used to fund public
services within the country
• There could be an increase in GDP which could result in an
increase in the overall of standard of living in Kazakhstan from
increased FDI

AO4
• However, the advantages may come with some potential
problems
• Often foreign MNCs are only interested in accessing natural
resources and to take advantage of lower wages
• Kazakhstan has lots of oil and gas therefore this could result in
damage to the environment by foreign MNCs during the
extracting and mining processes
• The cost of cleaning up the damage caused to the environment
from mining could be left for the Kazakhstan Government
• There is no guarantee that wages paid by foreign firms will be
higher and working conditions may be poor
• Foreign MNCs may bring their own workforce and
management rather than training local workers with little
opportunity for developing skills
• Some MNCs might only spend a brief period of time in
Kazakhstan before moving on to other countries (12)
• The overall advantages will depend upon how foreign MNCs
behave in the economy
Level Mark Descriptor
0 No rewardable material.
Level 1 1–4 • Demonstrates isolated elements of relevant knowledge and
understanding; may lack development of relevant points.
Limited application of economic terms, concepts, theories and
calculations (AO2).
• Information presented will lack selectivity and organisation.
Chain of reasoning may be attempted. Interpretation of
economic information will be limited, with a lack of analysis of
issues (AO3).
• Only offers one viewpoint, meaning there is an unbalanced and
incomplete evaluation, showing limited understanding and
awareness. A judgement or conclusion is unlikely to be
attempted (AO4).
Level 2 5–8 • Demonstrates partial selectivity and some accurate knowledge
and understanding by developing some relevant points. Partial
application of economic terms, concepts, theories and
calculations (AO2).
• Information presented will demonstrate some selectivity and
organisation. Chain of reasoning will be present but may be
limited. Interpretation of economic information will be good,
with some analysis of issues (AO3).
• Offers more than one viewpoint but the argument may lack
balance, leading to an evaluation that may not demonstrate full
understanding and awareness. A judgement or conclusion is
attempted, but may not be fully supported (AO4).
Level 3 9–12 • Demonstrates specific and accurate knowledge and
understanding by developing relevant points. Appropriate
application of economic terms, concepts, theories and
calculations (AO2).
• Information presented will demonstrate excellent selectivity and
organisation. Chain of reasoning will be coherent and logical.
Interpretation of economic information will be excellent with a
thorough analysis of issues (AO3).
• Offers more than one viewpoint. The argument is well balanced
and coherent, leading to an evaluation that demonstrates full
understanding and awareness. A supported judgement or
conclusion is present (AO4).
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