Essay Skills 2 nd attempt!

Olde Edexcel Essay style! Feb 2010 UNIT 6 paper. 1. (a) Assess the impact on the world economy of the growth of regional trade blocs. (20) (b) Examine the likely impact of global recession on interdependence between countries in the world economy. (30) 2. (a) In 2000/01 the UK’s public expenditure was 37 per cent of GDP. This is forecast to increase to over 45 per cent of GDP by 2009/10. Examine the likely economic effects, apart from increased taxation, of this trend. (20) (b) Assess the economic effects of a significant increase in taxation in the UK economy. (30) 3. (a) Examine the likely factors which affect decisions by multinationals to invest in EU countries. (20) (b) The UK has been the largest recipient of inward foreign investment within the EU in recent years. Evaluate the benefits of such foreign investment for the UK economy. (30)

Olde Edexcel Essay style! Feb 2010 UNIT 6 paper. 1. (a) Assess the impact on the world economy of the growth of regional trade blocs. (20) (b) Examine the likely impact of global recession on interdependence between countries in the world economy. (30) 2. (a) In 2000/01 the UK’s public expenditure was 37 per cent of GDP. This is forecast to increase to over 45 per cent of GDP by 2009/10. Examine the likely economic effects, apart from increased taxation, of this trend. (20) (b) Assess the economic effects of a significant increase in taxation in the UK economy. (30) 3. (a) Examine the likely factors which affect decisions by multinationals to invest in EU countries. (20) (b) The UK has been the largest recipient of inward foreign investment within the EU in recent years. Evaluate the benefits of such foreign investment for the UK economy. (30) Which one would you choose to write in the exam?

Mark scheme – 20 mark question LevelMarkDescriptor Level Identification of points only Level Consideration of 1 factor with 1 evaluative points or 2 points with no evaluation Level 311 – 14Consideration of 2 factors with 1 evaluative points or 3 points with no evaluation Level 415 – 16Consideration of 3 factors with 1 evaluative point Level Consideration of 3 factors with 2 evaluative points

Mark scheme – 30 mark question LevelMarkDescriptor Level Identification of points only Level factors with 2 evaluative points or 3 points with 1 evaluation comment Level factors with 2 evaluative points Level factors with 2 evaluative points Level factors with at least 3 evaluative points

1. (a) Assess the impact on the world economy of the growth of regional trade blocs. (20) (b) Examine the likely impact of global recession on interdependence between countries in the world economy. (30)

Assess the impact on the world economy of the growth of regional trade blocs. (20) Possible areas of discussion include: Understanding of trade blocs Trade creation within blocs based on law of comparative advantage; Significant because of the increase in number and size of trading blocs Increase in economic growth and employment But benefits are not distributed evenly – countries outside trading blocs might be worse off Trade diversion associated with the use of protectionist measures against non-members – distortion of comparative advantage However, impact depends on the level and range of trade restrictions Other evaluation could include: Short run/long run implications Prioritisation of factors

Examine the likely impact of global recession on interdependence between countries in the world economy. (30) Possible areas of discussion include: Decline in world output associated with decline in exports and imports – fall in trade as a proportion of world GDP (Could count as two points if imports and exports are dealt with Separately) Less FDI Reduced capital movements between countries Reduction in labour movements between countries Increase in protectionism Evaluation points could include: Magnitude of effect: since countries are more integrated, impact is likely to be greater How impact will differ between countries depending on their degree of integration into the world economy Whether recession is brief or lengthy Other factors may be more significant in influencing interdependence e.g. communication costs; reduction in trade barriers

2. (a) In 2000/01 the UK’s public expenditure was 37 per cent of GDP. This is forecast to increase to over 45 per cent of GDP by 2009/10. Examine the likely economic effects, apart from increased taxation, of this trend. (20) (b) Assess the economic effects of a significant increase in taxation in the UK economy. (30)

2. (a) In 2000/01 the UK’s public expenditure was 37 per cent of GDP. This is forecast to increase to over 45 per cent of GDP by 2009/10. Examine the likely economic effects, apart from increased taxation, of this trend. (20) Factors include: Improved public services But: money might go on increased wages or administration Crowding Out: resource and financial But: not a problem if unemployed resources Reduction in freedom and choice But: might enable the poor to experience more freedom and choice Danger of inflation if increased expenditure is financed by borrowing from the Bank of England But: other factors might reduce inflationary pressures e.g. China Increased employment Increased fiscal deficit

(b) Assess the economic effects of a significant increase in taxation in the UK economy. (30) Effects include: Decrease in aggregate demand and real output But: depends on what is happening to public expenditure Possibility of a lower rate of inflation But: could lead to inflationary wage demands Disincentives to work if income tax is increased Depends on relative strength of substitution and income effects Improvement in the balance of trade in goods and services But: other factors might be more significant in influencing the balance of trade Reduction in fiscal deficit and so less need for borrowing But: higher unemployment might have a detrimental effect on the public finances. Also Laffer curve analysis. Significance of tax increases relative to other countries – this is likely to be used as an evaluative point. Impact on distribution of income

3. (a) Examine the likely factors which affect decisions by multinationals to invest in EU countries. (20) (b) The UK has been the largest recipient of inward foreign investment within the EU in recent years. Evaluate the benefits of such foreign investment for the UK economy. (30)

3. (a) Examine the likely factors which affect decisions by multinationals to invest in EU countries. (20) Factors include: wage costs; level of National Minimum Wage non-wage costs e.g. national insurance contributions; health and safety regulations; environmental regulations; VAT; parental leave; planning regulations government grants level of corporate taxes size/quality/flexibility of the workforce strength of EU economies e.g. expectation of gaining a return on investment quality of infrastructure desire to gain access to EU market and to avoid tariffs membership of single currency Evaluation points: prioritisation of factors e.g. significance of wage costs consideration of differences in attractiveness of particular EU countries for FDI distinction between short and long run issues

(b) The UK has been the largest recipient of inward foreign investment within the EU in recent years. Evaluate the benefits of such foreign investment for the UK economy. (30) Possible benefits include: Credit on B/P capital account Future benefit on B/P current account if exports rise and imports fall For economic growth: multiplier effects Increased employment New methods of production and working practices: impact on UK producers Tax revenue to government Evaluation points might include: Negative impact on B/P (investment income to shareholders abroad) Increased competition for domestic producers: unemployment? Net employment affect might be small Increased dependence of economy on decisions made by managers overseas. Significant if investment is withdrawn in the future. Impact on the economy might be small (if there is little value added in the UK) FDI is a small % of GDP.

Mark scheme – 20 mark question LevelMarkDescriptor Level Identification of points only Level Consideration of 1 factor with 1 evaluative points or 2 points with no evaluation Level 311 – 14Consideration of 2 factors with 1 evaluative points or 3 points with no evaluation Level 415 – 16Consideration of 3 factors with 1 evaluative point Level Consideration of 3 factors with 2 evaluative points

Mark scheme – 30 mark question LevelMarkDescriptor Level Identification of points only Level factors with 2 evaluative points or 3 points with 1 evaluation comment Level factors with 2 evaluative points Level factors with 2 evaluative points Level factors with at least 3 evaluative points