Supply-side policies

(a) With reference to Figure 1, explain the distinction between direct and indirect taxation.

(b) With reference to Extract A, examine two factors influencing the short‑run aggregate supply of the German economy.

(c) With reference to the information provided and your own knowledge, assess the likely macroeconomic effects of the German government’s budget deficit.

(d) With reference to Extract B, discuss the impact of the planned investment by Intel in a new semiconductor factory on Germany’s aggregate demand. Use an aggregate demand and aggregate supply diagram in your answer.

(e) Discuss supply‑side policies the German government could use ‘to improve its economic performance’ (Extract A, line 6).

With reference to Figure 1, explain the distinction between direct and indirect taxation.

With reference to Extract A, examine two factors influencing the short‑run aggregate supply of the German economy.

With reference to the information provided and your own knowledge, assess the likely macroeconomic effects of the German government’s budget deficit.

With reference to Extract B, discuss the impact of the planned investment by Intel in a new semiconductor factory on Germany’s aggregate demand. Use an aggregate demand and aggregate supply diagram in your answer.

Discuss supply‑side policies the German government could use ‘to improve its economic performance’ (Extract A, line 6).

In 2022 the value of UK exports fell by 14% compared with 2020. In contrast, the global average increase in exports was 8.2% over the same time period. The UK’s competitiveness also fell, dropping five places from 18th in 2021 to 23rd in 2022 in the world competitiveness rankings.

(Sources: adapted from https://www.ft.com/content/021c629d-5853-4111-9600-ab5f0eb65a35 and https://www.imd.org/centers/world-competitiveness-center/rankings/ world-competitiveness)

Evaluate macroeconomic policies that could be used to increase international competitiveness in the UK’s export markets.

UK inflation, as measured by the CPI, rose to 10.1% in the 12 months to July 2022, compared to 2.0% in the 12 months to July 2021.

(Source: adapted from https://www.ons.gov.uk/economy/inflationandpriceindices/bulletins/ consumerpriceinflation/july2022)

Evaluate macroeconomic policies, apart from monetary policy, the UK government could use to reduce inflation.

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

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

With reference to Figure 2, assess whether an increase in real income improves subjective happiness within the UK.

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

With reference to Extract B, discuss the benefits of an increase in infrastructure spending on the UK economy. Use an aggregate demand and aggregate supply diagram to support your answer.

In 2018, the United States Government cut the corporation tax rate (tax on company profits) from 35% to 21%. Income tax rates for US citizens were also reduced: for example, the top rate of income tax was cut from 39.6% to 37%.

(Source adapted from: https://www.nytimes.com/)

Evaluate the likely impact of cutting tax rates as a policy to increase economic growth.

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

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

Discuss the likely success of policies to reduce the consumption of single‑use plastic bags in cities such as Istanbul.

EITHER

Evaluate the likely microeconomic and macroeconomic effects of a rise in interest rates in Turkey.

Evaluate the microeconomic and macroeconomic impact of large infrastructure projects such as the building of a third airport in Istanbul.

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With specific reference to Figure 3, explain why productivity is measured by ‘GDP per hour worked, nominal values at PPPs’.

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

Discuss factors that are causing many high street retailers in the UK to close some branches or shut down completely. Use a cost and revenue diagram to support your answer.

EITHER

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

Evaluate the microeconomic and macroeconomic effects of a decline in the literacy and numeracy skills of a country’s young workers.

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

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

Discuss the benefits of aid to Indonesia.

EITHER

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

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

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

With reference to the information provided and your own knowledge, examine two factors which might explain the change in the rate of Eurozone inflation as shown in Figure 2.

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

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

Discuss ‘looser fiscal policy’ and ‘supply-side reforms’ (Extract A, lines 20 and 21) that may be used by governments of Eurozone countries to increase economic growth.