Instruc ons

Sec on A: MCQs and short ques ons

 There are five ques ons in this sec on. Answer all ques ons.
 For ques ons 1-3, there are four possible answers A, B, C and D. Choose the one you
consider correct and record your choice on your answer paper.
 For ques ons 4-5, plan your response and record your answers on your answer paper.
 The total mark for this sec on is 15.
 The number of marks for each ques on or part ques on is shown in brackets [].

Sec on B: Essay ques on

 There are two ques ons in this sec on. Answer all ques ons.
 Plan your response and record your answers on your answer paper.
 The total mark for this sec on is 10.
 The number of marks for each ques on or part ques on is shown in brackets [].

1
Sec on A: MCQs and short ques ons [15 marks]

Ques on 1 [1 mark]

What is an essen al feature of a market economy?

A. Central planners determine what, how and for whom to produce.

B. It aims for equality in the distribu on of goods and services.

C. The market price reflects both the private and external costs of produc on.

D. The price mechanism sends signals to consumers and producers to allocate resources.

Ques on 2 [1 mark]

An economy has a high rate of infla on. In response to this, its government increases income tax.
What is the most likely reason for this increase?

A. To discourage the consump on of harmful goods

B. To raise money for government spending

C. To redistribute income

D. To reduce total demand

Ques on 3 [1 mark]

Which method of protec on always reduces the supply of an imported good to zero?

A. Embargo

B. Quota

C. Subsidy

D. Tariff

Ques on 4 [6 marks]

The island of Borneo is famous interna onally for its rainforests which can bring many benefits,
both private and external. However, the economy is heavily dependent on a finite resource, oil.
The discovery of oil reserves in other parts of the world led to a significant fall in the world price
of oil. This affected producers of oil in Borneo.

i) Define finite resource. [2]

ii) Explain the difference between private and external benefits. [4]

2
Ques on 5 [6 marks]

The South Korean government thinks that Japan is dumping steel. South Korean firms trade with,
and produce in, other countries. Some South Korean mul na onal companies (MNCs) claim to
reduce poverty in their host countries. In 2019, South Korean firms were affected by a deprecia on
in South Korea’s foreign exchange rate. Some firms also experienced a shortage of workers,
which was influenced by the country’s very low birth rate.

i) Define dumping. [2]

ii) Explain two reasons why a country’s foreign exchange rate may depreciate. [4]

3
Sec on B: Essay ques on [10 marks]

Ques on 1 [6 marks]

The island of Borneo is famous interna onally for its rainforests which can bring many benefits,
both private and external. However, the economy is heavily dependent on a finite resource, oil.
The discovery of oil reserves in other parts of the world led to a significant fall in the world price
of oil. This affected producers of oil in Borneo.

i) Analyse, using a demand and supply diagram, the effects on the world price of oil of the

discovery of new reserves of oil. [6]

Ques on 2 [4 marks]

Figure below shows the correla on between HDI and the ecological footprints of every country.
Study the graph and answer the ques ons below.

The Human Development Index (HDI) is a tool developed by the United Na ons to measure and rank
countries' levels of social and economic development.

The ecological footprint is the impact of a person or community on the environment, expressed as
the amount of land required to sustain their use of natural resources.

i) Describe the pa erns you see for the African and European regions [4]