Mark Scheme (Results)

Summer 2022

Pearson Edexcel International GCSE

In Economics (4EC1)
Paper 02R Macroeconomics and Global
Economy
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Summer 2022
Question Paper Log Number P66330A
Publications Code 4EC1_02R_2206_MS
All the material in this publication is copyright
© Pearson Education Ltd 2022
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.
• Crossed out work should be marked UNLESS the
candidate has replaced it with an alternative response.
Question Answer
Mark
Number
1(a) AO2 1 mark

The only correct answer is:

D An airline cuts jobs during a global recession

A is not correct because it is structural unemployment

B is not correct because it is seasonal unemployment
C is not correct because it is frictional unemployment (1)

Question Answer
Mark
Number
1(b) AO1 1 mark

The only correct answer is:

B devaluation

A is not correct because this is caused by market forces

C is not correct because this is an increase in the exchange rate
D is not correct because this is an increase in the exchange rate
caused by market forces (1)

Question What is meant by the term exports?

Mark
Number Answer
1(c) AO1 2 marks

Award 1 mark for reference to goods and 1 mark for reference to

being to another country

The sale of goods or services (1) to another country (1)

(2)
Accept any other appropriate response
Question Describe one impact that education may have on inequality and
Number poverty. Mark
Answer
1(d) AO1 2 marks

Award 1 mark for reference reducing inequality and poverty and 1

mark for reference to skills

Education helps to reduce inequality and poverty (1) by providing

skills needed to get a job (1)
(2)
Accept any other appropriate response

Question Calculate how much inflation there has been between 2015 and 2019.
Mark
Number Answer
1(e) A02 2 marks

Award 1 mark for showing the calculation

110.2 - 100 (1)

Award 1 mark for the correct answer

= 10.2% (1)

Award 2 marks if the correct answer 10.2% is shown, with

percentage sign, even if no calculations are shown

Award 1 mark if the answer given is 10.2, but with no percentage

sign, with or without calculations shown

Do not award marks for the formula. (2)

Question Draw the effects of the introduction of a subsidy on the equilibrium
Number price and quantity of renewable energy. Label the new curve, the new
Mark
equilibrium price and the new equilibrium quantity.
Answer
1(f) AO2 3 marks

Award 1 mark for rightward shift of supply, labelled

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

(3)

Question Explain the likely impact of a decrease in the UK interest rates on the
Number UK pound. Mark
Answer
1(g) AO2 3 marks

Award 1 mark for identifying a relevant impact

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

• One impact is that the currency will depreciate (1). It will

become less attractive to deposit money in the UK (1).
Therefore, demand for the UK pound (£) will fall (1)

Accept any other appropriate response.

(3)
 Question Analyse the disadvantages of free trade for domestic businesses
Number located within this free trade area. Mark
Indicative content
1(h) AO2 (3 marks)/AO3 (3 marks)

AO2 and AO3

• Free trade is a situation in which goods and services coming

into or going out of a country/trade area are not controlled or
taxed
• Free trade means that domestic businesses are no longer
protected
• Domestic businesses will face greater competition from
firms within the free trade area
• Businesses may see increased competition from cheaper,
low-cost firms within the free trade area who may have
lower wage costs compared to domestic businesses
• This could result in falling sales for businesses in the EU
that will tend to have higher labour costs compared to
Vietnam

(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 Answer
Mark
Number
2(a) AO1 1 marks

The only correct answer is:

B Trade-off

A is not correct because this is a result of inflation

C is not correct because this the loss of the next best alternative
D is not correct because this is the name for a group of countries with
a preferential trading agreement (1)

Question Answer
Mark
Number
2(b) AO1 1 mark

The only correct answer is:

C Asset purchasing

A is not correct because the central bank does not lend to firms
B is not correct because this is the role of government
D is not correct because is the role of the high street banks (1)

Question State one type of inflation.

Mark
Number Answer
2(c) AO1 1 mark

Award 1 mark for one type.

• Demand-pull
• Cost-push (1)
Question What is meant by the term fiscal surplus?
Mark
Number Answer
2(d) AO1 2 marks

Award 1 mark for reference to government revenue and 1 mark

for reference to being greater than expenditure

When government revenue (1) is greater than government

expenditure (1)

OR

When government expenditure (1) is less than government

revenue (1)

Accept any other appropriate response. (2)

Question Explain one disadvantage of deregulation for a country such as

Number Indonesia. Mark
Answer
2(e) AO2 3 marks

Award 1 mark for identifying a relevant disadvantage

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

• One disadvantage is damage to the environment (1).

Mining often has a negative impact on the environment
(1) and this may increase as mines no longer have to
follow government controls (1)

Accept any other appropriate response. (3)

Question Using the diagram below label the remaining three stages of the
Number economic cycle in the boxes on the diagram. Mark
Answer
2(f) AO2 3 marks

Award 1 mark for boom, labelled correctly

Award 1 mark for recession, labelled correctly
Award 1 mark for recovery, labelled correctly

(3)
Question Assess the effectiveness of infrastructure spending to reduce
Number unemployment in a country such as Canada. Mark
Indicative content
2(g) AO2 (3 marks)/AO3 (3 marks)/AO4 (3 marks)

AO2 and AO3

• Infrastructure spending is an example of a

supply-side policy
• The local government in Alberta is investing in a wide range of
projects including repairing roads, bridges and upgrading
technology in schools and universities
• In the short term, building or upgrading the transport network
can boost (aggregate) demand through increased construction
activity and employment
• Canadian construction, road and technology firms may require
additional employees to complete the projects
• In the long term, infrastructure investment can reduce
unemployment by increasing the potential supply capacity of
an economy
• The latest unemployment figures increased to 8.7% in March
so investing in infrastructure projects could help to boost
output without the danger of inflation

AO4
• However, it can be argued that spending $1.9bn may not
reduce unemployment in the long term
• There is an opportunity cost of these investments with no
guarantee that unemployment will decrease in the long term
• By nature, supply-side policies tend to take a very long time to
work and infrastructure investments can be highly complex to
manage
• The overall impact on output will depend upon whether the
projects can add to (aggregate) demand and (aggregate) supply
• The local government in Alberta should use a range of supply-
side and fiscal policies to reduce unemployment

(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
Answer Mark
Number
3(a) AO1 1 mark

The only correct answer is:

C The costs of searching for cheaper suppliers when inflation is high

A is not correct because these are variable costs

B is not correct because these are input costs
D is not correct because these are menu costs
(1)

Question Answer
Mark
Number
3(b) AO1 1 mark

The only correct answer is:

D Higher quality of domestic goods

A is not correct because this would increase imports and reduce a

surplus
B is not correct because this would reduce the demand for exports
and reduce a surplus
C is not correct because it is would make imports cheaper and reduce
a surplus (1)
Question Explain one possible reason why the Kazakhstan Government
Number introduced quotas on imports of wheat and flour. 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 to protect domestic firms (1). By only

allowing 200,000 tonnes and 70,000 tonnes of wheat and
flour into the country (1) domestic producers may gain
more market share (1)

• One reason is higher revenue for domestic producers (1).

By only allowing 200,000 tonnes and 70,000 tonnes of
wheat and flour into the country (1) domestic producers
might be able to increase supply to meet any shortages (1)

Accept any other appropriate response. (3)

Question Analyse the impact of deflation on consumer confidence in a country
Number such as Singapore. Mark
Indicative content
3(d) AO2 (3 marks)/AO3 (3 marks)

AO2 and AO3

• Deflation is a persistent fall in the general price level of

goods and services/ when the inflation rate is negative
• Consumer confidence is the outlook that consumers have
towards the economy
• In the case of Singapore, the prices of airfares and
holidays have declined due to the government lockdown
as people cannot travel and demand has fallen sharply
• Changes in prices of goods and services often cause
uncertainty and may influence the confidence of
consumers
• Changes in prices might make consumers more anxious
and cautious
• This results in a fall in consumer confidence as consumers
worry about the state of the economy
• In times of deflation consumers will postpone spending
particularly on consumer durables such as holidays and
cars
• This is because consumers expect prices to fall even
further or wait until the economy improves before buying
goods (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 Assess the advantages of using benefit payments to redistribute
Number income in a country such as the UK. Mark
Indicative content
3(e) AO2 (3 marks)/AO3 (3 marks)/AO4 (3 marks)

AO2 and AO3

• Benefit payments are payments given to people to ensure they

have a minimum standard of living
• These include benefits such as Universal Credit
• Universal Credit involves giving money directly to people on no
or low incomes
• For example, people aged 25 and under can receive £342.72
and this can be used to pay for living costs
• This will give those on low incomes a better living standard and
the ability to be able to purchase basic necessities
• Benefits can help to contribute to a more cohesive society and
reduce inequality within a society by redistributing income
• Benefit payments can help to reduce relative poverty in the UK

AO4
• However, using benefit payments may create a disincentive to
work
• Many families may face the poverty trap and are often better
off on benefit payments than working
• The cost of the benefit payments has to be borne by society so
there is often an opportunity cost to a country from using
benefit payments to redistribute income
• There are other methods which might be more effective in
redistributing income, such as progressive taxation or
investment in education
• The UK Government should use a combination of methods to
reduce inequality and poverty

(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 Calculate, to two decimal places, the percentage increase in GDP
Number per capita between 2018 and 2019. Mark
Answer
4(a) AO2 2 marks

Award 1 mark for showing the calculation.

$2715 - $2590 x 100 (1)

$2590

Award 1 mark for the correct answer.

= 4.83% (1)

Award 2 marks if the percentage change of 4.83% is accurately

calculated with or without workings shown

Award 1 mark if % is missing i.e. 4.83 with or without calculations

shown

Do not award marks for formula (2)

Question Analyse the impact of falling unemployment rates on tax revenues for
Number a country such as Vietnam. Mark
Indicative content
4(b) AO2 (3 marks)/AO3 (3 marks)

AO2 and AO3

• Unemployment is when those actively seeking work are

unable to find a job
• Figure 5 shows that unemployment has steadily fallen from a
high of 2.3% in January 2017 to 2.15% in October 2019
• Higher rates of employment in Vietnam could result in higher
tax revenue from taxing income from employment
• Lower unemployment leads to higher spending which will
increase revenue from indirect taxes
• This could be used by the government in the economy to
improve standards of living
• This decline should increase tax revenues because most taxes
are linked to income and spending (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 Evaluate the effectiveness of increasing taxation on petrol and diesel
Number to protect the environment in a country such as Vietnam. Mark
Indicative content
4(c) AO2 (4 marks)/AO3 (4 marks)/AO4 (4 marks)

AO2 and AO3

• Taxation can be imposed on activities that damage the

environment
• Taxation is used to ensure consumers and producers pay the
full social cost of producing a good or service
• Up to 60,000 people died from air pollution and it reduces GDP
by 5% per year
• Increasing taxation by 33% on fuel would substantially increase
the price of petrol and diesel for consumers which may result
in less demand for transportation
• This would reduce the amount of air pollution caused by the
3.6 million automobiles and 58 million motorbikes
• Increased taxation could also raise additional revenue of
$650.2m for the Vietnamese Government
• This could be used to finance other pollution reduction
schemes or to improve public transport
• Taxation provides a market incentive for firms and consumers
to switch to transport alternatives such as public transport
which may not cause as much environmental damage

AO4
• However, increasing taxes on fuel reduces the income
available to spend on other goods and services
• Many of these journeys may be essential for getting to work or
for delivering goods
• Therefore demand for petrol and diesel may be quite inelastic
and an increase in tax may do little to reduce demand and
therefore only marginally reduce the amount of air pollution
• The 33% increase in taxation is likely to result in an increase in
inflation
• The public transport in Vietnam might be unable to cope with
additional passengers
• There are other methods that might be more effective in
protecting the environment, such as subsidies, fines or
pollution permits
• Phasing out polluting vehicles could be encouraged by
providing subsidies for removing old cars from the road or for
the purchase of electric vehicles
• The Vietnamese Government should use a combination of
methods to protect the environment (12)
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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