2023 Prelim SL P2 Ans Collated

ACS(I) 2023 Y6 SL Economics Paper 2 Prelim Exam Suggested Answers Question 1 Suggested Answers ai) Define the term economic grow th (Text B, paragraph 2). [2] Level Marks 0 The work does not meet a standard described by the descriptors below. 0 1 Vague definition. 1 The idea that it is about the economy growing such as increase in actua l or potential output/national income/GDP, including idea about per head or per capita. 2 Accurate definition. 2 The growth of the real value of output in an economy over time. Usua lly measured as growth in real GDP. *give full credit if idea of an increase and real GDP / output / nat ional income is there. Markers’ comments Mostly well done, except for a handful which provided imprecise definitions, missing out on the concept of real value. a ii) Define the term tariffs (Text C, paragraph 1). [2] Level Marks 0 The work does not meet a standard described by the descriptors below. 0 1 Vague definition. 1 The idea that it is a bar rier to trade, tax on goods and services / indirect tax. 2 Accurate definition. 2 A duty (tax) that is placed upon imports to protect domestic ind ustries from foreign competition and to raise revenue for the government. *give full credit for the understanding that they are taxes (duty) on imports / expo rts. Markers’ comments Mostly well done, except some who were imprecise in their definitions. Students need to know that the definition of tariff as a trade barrier that reduce foreign supply and increase price of imports is imprecise as such a definition can also apply to quotas. STUDENTS MUST MEMORISE DEFINITIONS TO AVOID LOSING UNNECESSARY MARKS. 1

ACS(I) 2023 Y6 SL Economics Paper 2 Prelim Exam Suggested Answers  2  bi) Using a business cycle diagram, indicate where China is on the business cycle in 2021. (Table 1). [3] 1m for fully labelled diagram; 1m for correctly drawn business c ycle 1m for indicating that China’s economy is in the expansion/recovery phase (in between a trough and peak). *Diagram title not necessary. Long term growth trend not needed. Markers’ comments Students lost marks because of wrong labelling of axes, wrong business cycles (no downswings) or incorrect indication of China’s position on the business cycle. bii) Calculate China’s unemployment rate in 2021 (Table 1). [2] Unemployment rate = [1 – (746.52m/780.24m)] * 100% = 4.32% 1m for valid working and 1m for correct final answer. Markers’ comments Well done except for minority that calculated based on the wrong year. c) Using a demand and supply diagram, explain how rising affluence of Chinese households can impact the market for residential housing (Text B, paragraph 2). [4] Level Descriptor Marks 1 There is a correct diagram or an accurate written response. 1-2 For drawing a correctly labelled demand and supply diagram sh owing the rightward shift of demand and increase in price and quantity OR for the explanation that rising affluence of Chinese households results in higher disposable income, which increases the demand for goods such as residential housing, resulting in an increase in price and quantity. Real GDP/  GDP/  Economic  activities  Time  China

ACS(I) 2023 Y6 SL Economics Paper 2 Prelim Exam Suggested Answers    3    2 There is a correct diagram and an accurate written response. 3-4 For drawing a correctly labelled demand and supply diagram showing the rightward shift of demand and increase in price and quantity AND for the explanation that rising affluence of Chinese households results in higher disposable income, which increases the demand for goods such as residential housing, resulting in an increase in price and quantity.                             Diagram 2: Market for Residential Housing (title is optional)  Markers’ comments Majority of the responses were able to access Level 2 marks. Those who failed to score full credit were mainly due to missing demand determinant (rising income/purchasing power) or did not reference to diagram drawn.                           Price  Quantity  P1  Q1  D1  S1  Q2  D2  P2

ACS(I) 2023 Y6 SL Economics Paper 2 Prelim Exam Suggested Answers    4    d)  Using an AD/AS diagram, explain how currency manipulation could have impacted China’s economic growth. (Text C, paragraph ) (SL paper only) [4] Level Descriptor Marks 1 There is a correct diagram or an accurate written response. 1-2 For drawing a correctly labelled AD/AS diagram showing the rightward shift of AD OR the explanation that China has undervalued their currency to make their exports relatively cheaper, hence increasing the exports, and their imports relatively more expensive, decreasing imports. This results in an overall increase in net exports and AD increases, resulting in an increase in real GDP and economic growth. 2 There is a correct diagram and an accurate written response. 3-4 For drawing a correctly labelled AD/AS diagram showing the rightward shift of AD AND the explanation that China has undervalued their currency to make their exports relatively cheaper, hence increasing the exports, and their imports relatively more expensive, decreasing imports. This results in an overall increase in net exports and AD increases, resulting in an increase in real GDP and economic growth. Markers’ comments Generally, well done. Most students could understand from the passage that the impact of currency manipulation should be to increase exports as mentioned in the text. Some students instead inferred that exports would fall as a secondary effect, which was not accepted. Explanations of both exports and imports are needed for the full credit.

ACS(I) 2023 Y6 SL Economics Paper 2 Prelim Exam Suggested Answers    5    e) Using an international trade diagram, explain the impact of China’s subsidies on the market for high-tech products in China. (Text B, paragraph 5). [4]   Level Descriptor Marks 1 There is a correct diagram or an accurate written response. 1-2 For drawing a correctly labelled international trade diagram show the rightward shift in domestic supply and lower imports and price unchanged OR explanation that the subsidies would reduce the cost of production of domestic producers, incentivising greater production to increase the supply to the right, resulting in lower imports but price remaining the same. 2 There is a correct diagram and an accurate written response. 3-4 For drawing a correctly labelled international trade diagram show the rightward shift in domestic supply and lower imports and price unchanged AND explanation that the subsidies would reduce the cost of production of domestic producers, incentivising greater production to increase the supply to the right, resulting in lower imports but price remaining the same. No change to quantity demanded.                           Diagram 4: Market for high‐tech products in China (title is optional)  Markers’ comments: While most responses were awarded Level 2, most scored 3m due to failure to include the supply determinant (fall in cost of production), incomplete or incorrect explanation for diagram which included failure to mention increase in price of high-tech products, no mention of change in Qs, vol of imports or impact on Qd. Answers that drew an export subsidy diagram instead were awarded max 1m as most of the time, the supporting explanation is inaccurate. Price   Quantity  Q1  Ddomestic  Sworld  Q2  Sdomestic   Pw  Sdomestic +  subsidy  Q3

ACS(I) 2023 Y6 SL Economics Paper 2 Prelim Exam Suggested Answers    6    f) Using a poverty cycle diagram, explain how China’s increased investment can affect the poverty rate (Text B, paragraph 1). [4] Level Descriptor Marks 1 There is a correct diagram or an accurate written response. 1-2 For drawing a correctly labelled poverty cycle diagram OR the explanation that the increased investments in infrastructure would result