UG1 BUSINESS & MANAGEMENT ASSESSMENT

UG1: Introduction to Economics

March 2021
Coursework

Instructions

Answer one questions from Section A (total 30 marks) and answer ALL questions in Section
B (total 30 marks), you are required to write section B in report format.
The total mark for this paper is 60.
All answers and rough work should be submitted. Candidates are reminded of the need for
good English and orderly presentation of their answers.
Plagiarism will be checked and result in a Fail, please include any references and
bibliography

Advice
Read each question carefully before you start to answer it.
Check your answers before submitting.
Bellerbys College London UG1 BUSINESS & MANAGEMENT ASSESSMENT

SECTION A: ESSAY QUESTIONS

Read the questions and answer ONE question. This section is worth 30 marks.

Question 1
(a) Should the provision of public goods be left to the free market? Discuss.
(15 marks)
(b) Discuss the extent to which government failure may exist in the provision of national
defense. (15 marks)

Question 2
(a) With the use of examples, explain the term ‘merit good’ and ‘demerit good’.
(15 marks)
(b) Evaluate the arguments for government intervention in the healthcare market, with
reference to the coronavirus pandemic. (15 marks)

Question 3
Evaluate using examples, the different methods in which the government can intervene to
decrease obesity in the UK. (30 marks)

Question 4
Evaluate the policies that a government could use to reduce the externalities associated
with road congestion. (30 marks)

Total for Section A = 30 marks

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Bellerbys College London UG1 BUSINESS & MANAGEMENT ASSESSMENT

SECTION B: REPORT
In section B you are required to read the extract and then answer the questions below,
you should write you answers in a report format. 5 marks will be awarded for layout and
format of report.

You are required to write a report using the extract and questions below:

Extract

UK economy suffered record annual slump in 2020

The UK economy shrank by a record 9.9% last year as coronavirus restrictions hit output,
official figures show.

The contraction in 2020 "was more than twice as much as the previous largest annual fall on
record", the Office for National Statistics (ONS) said.
However, the economy looks set to avoid a double-dip recession after growth picked up at
the end of the year.

In December, the economy grew by 1.2%, after shrinking by 2.3% in November, as some
restrictions eased.

Hospitality, car sales and hairdressers recovered some lost ground, the ONS said.

The growth meant that in the October-to-December quarter the economy expanded by 1%.
As a result, the UK is expected to avoid what could have been its first double-dip recession
since the 1970s.

A double-dip is when the economy briefly recovers from recession, only to quickly sink back.
A recession is generally defined as two consecutive quarters where the economy contracts.

Has the UK economy been hit harder than other countries?

ONS deputy national statistician Jonathan Athow said: "An increase in Covid-19 testing and
tracing also boosted output. The economy continued to grow in the fourth quarter as a
whole, despite the additional [lockdown] restrictions in November."

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Bellerbys College London UG1 BUSINESS & MANAGEMENT ASSESSMENT

GDP was first measured in the aftermath of the Second World War, and the measure has
never previously dropped by more than 4.1% in a year. However, the Bank of England
models GDP going back centuries, and the 2020 contraction could be the worse since 1709.

Suren Thiru, the head of economics at the British Chambers of Commerce, said: "Despite
avoiding a double-dip recession, with output still well below pre-pandemic levels amid
confirmation that 2020 was a historically bleak year for the UK economy, there is little to
cheer in the latest data."

All four economic sectors tracked by the ONS saw a drop in output, with the highest fall
coming in the construction sector, which contracted by 12.5%.

Chancellor Rishi Sunak told the BBC: "Today's figures show that last year our economy
experienced a significant shock, and also some signs of resilience over winter.
"You know what's clear is right now, many families and businesses are experiencing
hardship. That's why we've put in place a comprehensive plan for jobs to support people
through this crisis, and we will set out the next stage of our economic response at our
Budget in early March."

Economy like a coiled spring, says Bank economist

But shadow chancellor Anneliese Dodds said: "These figures confirm that not only has the
UK had the worst death toll in Europe, we're experiencing the worst economic crisis of any
major economy.

"Businesses can't wait any longer. The chancellor needs to come forward now with a plan to
secure the economy in the months ahead, with support going hand-in-hand with health
restrictions."

However, Mr Sunak said international economic comparisons were not necessarily a useful
yardstick.

"We calculate GDP in a different way to pretty much everybody else. And if you either
correct for that difference or look at it in a way that's more comfortable with nominal GDP,
what you find, as the Bank of England and the ONS have pointed out, is that our
performance is very much in line and comparable to other countries."

Source: bbc.co.uk

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Bellerbys College London UG1 BUSINESS & MANAGEMENT ASSESSMENT

Questions

(1) Explain how fiscal policy can be used in response to the coronavirus pandemic.
(8 marks)

(2) Using a diagram explain the impact of cyclical unemployment on the UK economy
(7 marks)

(3) Discuss the benefits and problems of Economic growth in UK (15 marks)

Total for Section B = 30 marks

END OF ASSIGNMENT

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