M13/3/ECONO/SP1/ENG/TZ1/XX/M MARKSCHEME May 2013 ECONOMICS Standard Level Paper 1 17 pages –2– M13/3/ECONO/SP1/ENG/TZ1/XX/M This markscheme is confidential and for the exclusive use of examiners in this examination session. It is the property of the International Baccalaureate and must not be reproduced or distributed to any other person without the authorization of the IB Assessment Centre. –3– M13/3/ECONO/SP1/ENG/TZ1/XX/M In addition to the assessment criteria, use the paper-specific markscheme below. Award up to the maximum marks indicated. SECTION A Microeconomics 1. (a) Explain why the price elasticity of demand for primary commodities tends to be relatively low while the price elasticity of demand for manufactured products tends to be relatively high. [10 marks] Answers may include: • definitions of price elasticity of demand, primary commodities and manufactured products • application of theory of price elasticity of demand to primary commodities and manufactured products, explaining high and low PED, including reference to factors that determine the price elasticity of demand of primary products and of manufactured goods, eg, degree of necessity, availability of substitutes • diagrams to show the different degrees of price elasticity of demand • examples of primary commodities and manufactured products to which this might be, or has been, applied. Assessment Criteria Part (a) 10 marks Level Marks 0 The work does not reach a standard described by the descriptors below. 0 1 There is little understanding of the specific demands of the question. Relevant economic terms are not defined. There is very little knowledge of relevant economic theory. There are significant errors. 1–3 2 There is some understanding of the specific demands of the question. Some relevant economic terms are defined. There is some knowledge of relevant economic theory. There are some errors. 4–6 3 There is understanding of the specific demands of the question. Relevant economic terms are defined. Relevant economic theory is explained and applied. Where appropriate, diagrams are included and applied. Where appropriate, examples are used. There are few errors. 7–8 4 There is clear understanding of the specific demands of the question. Relevant economic terms are clearly defined. Relevant economic theory is clearly explained and applied. Where appropriate, diagrams are included and applied effectively. Where appropriate, examples are used effectively. There are no significant errors. 9–10 –4– M13/3/ECONO/SP1/ENG/TZ1/XX/M (b) “The income elasticity of demand for primary products tends to be lower than that for manufactured products and services.” Examine the implications of this for producers and for the economy as a whole. [15 marks] N.B. It should be noted that definitions, theory and examples that have already been given in part (a), and then referred to in part (b), should be rewarded. Answers may include: • definitions of income elasticity of demand, primary products and manufactured products/services; explanation of low YED • application of theory of income elasticity of demand to primary products, manufactured products and services; distinction between income inelastic and income elastic goods and services in relation to primary products, manufactured products and services • diagrams to show the possible impact on demand with appropriate explanation • examples of goods with different income elasticities of demand, perhaps related to ELDCs and EMDCs • synthesis or evaluation (examine). Examination may include: a consideration of the different implications for producers in terms of the rate of expansion of industries and hence future profitability; the implications for resource allocation; the implications for relative growth rates of the primary, secondary and tertiary sectors of the economy; the different effects for ELDCs and EMDCs; an evaluation of the significance of income elasticity of demand for firms and the economy as a whole. Examiners should be aware that candidates may take a different approach which, if appropriate, should be rewarded. Opinions or conclusions should be presented clearly and supported by appropriate examples. –5– M13/3/ECONO/SP1/ENG/TZ1/XX/M Assessment Criteria Part (b) 15 marks Level Marks 0 The work does not reach a standard described by the descriptors below. 0 1 There is little understanding of the specific demands of the question. Relevant economic terms are not defined. There is very little knowledge of relevant economic theory. There are significant errors. 1–5 2 There is some understanding of the specific demands of the question. Some relevant economic terms are defined. There is some knowledge of relevant economic theory. There are some errors. 6–9 3 There is understanding of the specific demands of the question. Relevant economic terms are defined. Relevant economic theory is explained and applied. Where appropriate, diagrams are included and applied. Where appropriate, examples are used. There is an attempt at synthesis or evaluation. There are few errors. 10–12 4 There is clear understanding of the specific demands of the question. Relevant economic terms are clearly defined. Relevant economic theory is clearly explained and applied. Where appropriate, diagrams are included and applied effectively. Where appropriate, examples are used effectively. There is evidence of appropriate synthesis or evaluation. There are no significant errors. 13–15 –6– M13/3/ECONO/SP1/ENG/TZ1/XX/M 2. (a) Analyse the consumption externalities which might arise from the provision of education and health care for the citizens of a country. [10 marks] Answers may include: • definition of positive externalities • theory of positive externalities in relation to MSB>MSC and/or MSB>MPB, applied to health care and education • diagrams to show the impact of positive externalities of consumption • examples of positive externalities arising from education and health care in terms of better educated and healthier labour force leading to increased productivity. –7– M13/3/ECONO/SP1/ENG/TZ1/XX/M Assessment Criteria Part (a) 10 marks Level Marks 0 The work does not reach a standard described by the descriptors below. 0 1 There is little understanding of the specific demands of the question. Relevant economic terms are not defined. There is very little knowledge of relevant economic theory. There are significant errors. 1–3 2 There is some understanding of the specific demands of the question. Some relevant economic terms are defined. There is some knowledge of relevant economic theory. There are some errors. 4–6 3 There is understanding of the specific demands of the question. Relevant economic terms are defined. Relevant economic theory is explained and applied. Where appropriate, diagrams are included and applied. Where appropriate, examples are used. There are few errors. 7–8 4 There is clear understanding of the specific demands of the question. Relevant economic terms are clearly defined. Relevant economic theory is clearly explained and applied. Where appropriate, diagrams are included and applied effectively. Where appropriate, examples are used effectively. There are no significant errors. 9–10 –8– M13/3/ECONO/SP1/ENG/TZ1/XX/M (b) Evaluate the use of government policies to increase the consumption of health care. [15 marks] N.B. It should be noted that definitions, theory and examples that have already been given in part (a), and then referred to in part (b), should be rewarded. Answers may include: • explanation of health care as a merit good/service which is likely to be underprovided by the free market (market failure) • diagrams to show under-provision of merit goods through the price mechanism • identification and explanation of different government responses, eg direct provision, subsidies, legislation and advertising to influence consumer behaviour • diagrams to show the use of subsidies and advertising • synthesis or evaluation. Evaluation may include: an assessment of the effectiveness of each of the relevant policies. Examiners should be aware that candidates may take a different approach which, if appropriate, should be rewarded. Opinions or conclusions should be presented clearly and supported by appropriate examples. –9– M13/3/ECONO/SP1/ENG/TZ1/XX/M Assessment Criteria Part (b) 15 marks Level Marks 0 The work does not reach a standard described by the descriptors below. 0 1 There is little understanding of the specific demands of the question. Relevant economic terms are not defined. There is very little knowledge of relevant economic theory. There are significant errors. 1–5 2 There is some understanding of the specific demands of the question. Some relevant economic terms are defined. There is some knowledge of relevant economic theory. There are some errors. 6–9 3 There is understanding of the specific demands of the question. Relevant economic terms are defined. Relevant economic theory is explained and applied. Where appropriate, diagrams are included and applied. Where appropriate, examples are used. There is an attempt at synthesis or evaluation. There are few errors. 10–12 4 There is clear understanding of the specific demands of the question. Relevant economic terms are clearly defined. Relevant economic theory is clearly explained and applied. Where appropriate, diagrams are included and applied effectively. Where appropriate, examples are used effectively. There is evidence of appropriate synthesis or evaluation. There are no significant errors. 13–15 – 10 – M13/3/ECONO/SP1/ENG/TZ1/XX/M SECTION B Macroeconomics 3. (a) Explain the difficulties involved in measuring the rate of inflation. [10 marks] Answers may include: • definitions of inflation, the rate of inflation and the consumer price index • an explanation of how the consumer price index is constructed and the difficulties involved in terms of different income earners; changes in consumption patterns; changes in quality of products; the measurement of a core rate of inflation • examples of actual instances of such difficulties. – 11 – M13/3/ECONO/SP1/ENG/TZ1/XX/M Assessment Criteria Part (a) 10 marks Level Marks 0 The work does not reach a standard described by the descriptors below. 0 1 There is little understanding of the specific demands of the question. Relevant economic terms are not defined. There is very little knowledge of relevant economic theory. There are significant errors. 1–3 2 There is some understanding of the specific demands of the question. Some relevant economic terms are defined. There is some knowledge of relevant economic theory. There are some errors. 4–6 3 There is understanding of the specific demands of the question. Relevant economic terms are defined. Relevant economic theory is explained and applied. Where appropriate, diagrams are included and applied. Where appropriate, examples are used. There are few errors. 7–8 4 There is clear understanding of the specific demands of the question. Relevant economic terms are clearly defined. Relevant economic theory is clearly explained and applied. Where appropriate, diagrams are included and applied effectively. Where appropriate, examples are used effectively. There are no significant errors. 9–10 – 12 – M13/3/ECONO/SP1/ENG/TZ1/XX/M (b) Discuss the view that deflation is a more serious problem than inflation for the economy of a country. [15 marks] N.B. It should be noted that definitions, theory and examples that have already been given in part (a), and then referred to in part (b), should be rewarded. Answers may include: • definitions of deflation and inflation • explanation of the effects of deflation and inflation • diagrams (AD/AS) to illustrate deflation and inflation and their effects on the economy • examples of deflation and inflation and their effects for particular countries • synthesis or evaluation (discuss). Discussion may include: a consideration of possible positive and/or negative consequences of deflation and inflation, eg, in terms of certainty/uncertainty; redistributive effects; impact on savers/borrowers; the impact on international competitiveness; the possibility of deflationary/inflationary spirals; the economic aims of government; the possible short-run and long-run implications; the impact on different stakeholders; whether one is more serious than the other. Examiners should be aware that candidates may take a different approach which, if appropriate, should be rewarded. Opinions or conclusions should be presented clearly and supported by appropriate examples. – 13 – M13/3/ECONO/SP1/ENG/TZ1/XX/M Assessment Criteria Part (b) 15 marks Level Marks 0 The work does not reach a standard described by the descriptors below. 0 1 There is little understanding of the specific demands of the question. Relevant economic terms are not defined. There is very little knowledge of relevant economic theory. There are significant errors. 1–5 2 There is some understanding of the specific demands of the question. Some relevant economic terms are defined. There is some knowledge of relevant economic theory. There are some errors. 6–9 3 There is understanding of the specific demands of the question. Relevant economic terms are defined. Relevant economic theory is explained and applied. Where appropriate, diagrams are included and applied. Where appropriate, examples are used. There is an attempt at synthesis or evaluation. There are few errors. 10–12 4 There is clear understanding of the specific demands of the question. Relevant economic terms are clearly defined. Relevant economic theory is clearly explained and applied. Where appropriate, diagrams are included and applied effectively. Where appropriate, examples are used effectively. There is evidence of appropriate synthesis or evaluation. There are no significant errors. 13–15 – 14 – M13/3/ECONO/SP1/ENG/TZ1/XX/M 4. (a) Explain how labour market reforms may be used to promote economic growth. [10 marks] Answers may include: • definitions of labour market reforms, economic growth • explanation of how making labour markets more flexible may lead to an increase in efficiency and economic growth • diagram to show the labour market (AD/AS or ADL/ASL) lending to economic growth • examples of labour market reforms, both interventionist and market-oriented, such as reducing unemployment benefits, reducing the power of labour unions and abolishing minimum wages, expenditure on education and training, introduction of minimum wages to increase participation rates, to increase consumption and promote economic growth. – 15 – M13/3/ECONO/SP1/ENG/TZ1/XX/M Assessment Criteria Part (a) 10 marks Level Marks 0 The work does not reach a standard described by the descriptors below. 0 1 There is little understanding of the specific demands of the question. Relevant economic terms are not defined. There is very little knowledge of relevant economic theory. There are significant errors. 1–3 2 There is some understanding of the specific demands of the question. Some relevant economic terms are defined. There is some knowledge of relevant economic theory. There are some errors. 4–6 3 There is understanding of the specific demands of the question. Relevant economic terms are defined. Relevant economic theory is explained and applied. Where appropriate, diagrams are included and applied. Where appropriate, examples are used. There are few errors. 7–8 4 There is clear understanding of the specific demands of the question. Relevant economic terms are clearly defined. Relevant economic theory is clearly explained and applied. Where appropriate, diagrams are included and applied effectively. Where appropriate, examples are used effectively. There are no significant errors. 9–10 – 16 – M13/3/ECONO/SP1/ENG/TZ1/XX/M (b) “Market-oriented supply-side policies will always be more effective in promoting economic growth than demand-side policies.” To what extent do you agree with this statement? [15 marks] N.B. It should be noted that definitions, theory and examples that have already been given in part (a), and then referred to in part (b), should be rewarded. Answers may include: • definitions of market-oriented policies (as against interventionist policies), demand-side policies and economic growth • theory of Aggregate Demand and Aggregate Supply and how either may be used to increase real GDP • diagrams to show increased real GDP resulting from changes to AD and AS • examples of market-oriented supply side policies and demand-side policies • synthesis and evaluation (to what extent). Consideration of the merits of the statement may include: discussion of the term effectiveness in the context of economics. Candidates may distinguish the effectiveness of each policy in the short run and the long run. Examiners should be aware that candidates may take a different approach which, if appropriate, should be rewarded. Opinions or conclusions should be presented clearly and should be supported by appropriate examples. – 17 – M13/3/ECONO/SP1/ENG/TZ1/XX/M Assessment Criteria Part (b) 15 marks Level Marks 0 The work does not reach a standard described by the descriptors below. 0 1 There is little understanding of the specific demands of the question. Relevant economic terms are not defined. There is very little knowledge of relevant economic theory. There are significant errors. 1–5 2 There is some understanding of the specific demands of the question. Some relevant economic terms are defined. There is some knowledge of relevant economic theory. There are some errors. 6–9 3 There is understanding of the specific demands of the question. Relevant economic terms are defined. Relevant economic theory is explained and applied. Where appropriate, diagrams are included and applied. Where appropriate, examples are used. There is an attempt at synthesis or evaluation. There are few errors. 10–12 4 There is clear understanding of the specific demands of the question. Relevant economic terms are clearly defined. Relevant economic theory is clearly explained and applied. Where appropriate, diagrams are included and applied effectively. Where appropriate, examples are used effectively. There is evidence of appropriate synthesis or evaluation. There are no significant errors. 13–15 M13/3/ECONO/SP1/ENG/TZ2/XX/M MARKSCHEME May 2013 ECONOMICS Standard Level Paper 1 17 pages –2– M13/3/ECONO/SP1/ENG/TZ2/XX/M This markscheme is confidential and for the exclusive use of examiners in this examination session. It is the property of the International Baccalaureate and must not be reproduced or distributed to any other person without the authorization of the IB Assessment Centre. –3– M13/3/ECONO/SP1/ENG/TZ2/XX/M In addition to the assessment criteria, use the paper-specific markscheme below. Award up to the maximum marks indicated. SECTION A Microeconomics 1. (a) Explain why a government might impose a price ceiling on the market for rented accommodation and a price floor on the market for agricultural products. [10 marks] Answers may include: • definitions of price ceiling and price floor • explanation of price ceilings in relation to rented accommodation: use of a maximum price below the equilibrium to protect consumers; explanation of price floors in relation to agricultural products: minimum price above the equilibrium to protect producers • diagrams to show a price ceiling and a price floor • examples of markets where price controls were used or might be used. Assessment Criteria Part (a) 10 marks Level Marks 0 The work does not reach a standard described by the descriptors below. 0 1 There is little understanding of the specific demands of the question. Relevant economic terms are not defined. There is very little knowledge of relevant economic theory. There are significant errors. 1–3 2 There is some understanding of the specific demands of the question. Some relevant economic terms are defined. There is some knowledge of relevant economic theory. There are some errors. 4–6 3 There is understanding of the specific demands of the question. Relevant economic terms are defined. Relevant economic theory is explained and applied. Where appropriate, diagrams are included and applied. Where appropriate, examples are used. There are few errors. 7–8 4 There is clear understanding of the specific demands of the question. Relevant economic terms are clearly defined. Relevant economic theory is clearly explained and applied. Where appropriate, diagrams are included and applied effectively. Where appropriate, examples are used effectively. There are no significant errors. 9–10 –4– M13/3/ECONO/SP1/ENG/TZ2/XX/M (b) Evaluate the possible consequences of price controls on the stakeholders in a market. [15 marks] N.B. It should be noted that definitions, theory and examples that have already been given in part (a), and then referred to in part (b), should be rewarded. Answers may include: • definitions of price controls and stakeholder • explanation of price controls (price ceilings and price floors) used to explain possible problems and benefits • diagrams to show possible negative and positive consequences, for example, shortages and surpluses • examples of where problems and benefits have occurred, or might occur • synthesis or evaluation. Evaluation may include: the consequences in terms of shortages/surpluses, resource allocation, welfare effects, parallel markets and the effects on different stakeholders; the short-run and long-run implications; a judgment regarding the relative significance of problems and benefits. Examiners should be aware that candidates may take a different approach which, if appropriate, should be rewarded. Opinions or conclusions should be presented clearly and supported by appropriate examples. –5– M13/3/ECONO/SP1/ENG/TZ2/XX/M Assessment Criteria Part (b) 15 marks Level Marks 0 The work does not reach a standard described by the descriptors below. 0 1 There is little understanding of the specific demands of the question. Relevant economic terms are not defined. There is very little knowledge of relevant economic theory. There are significant errors. 1–5 2 There is some understanding of the specific demands of the question. Some relevant economic terms are defined. There is some knowledge of relevant economic theory. There are some errors. 6–9 3 There is understanding of the specific demands of the question. Relevant economic terms are defined. Relevant economic theory is explained and applied. Where appropriate, diagrams are included and applied. Where appropriate, examples are used. There is an attempt at synthesis or evaluation. There are few errors. 10–12 4 There is clear understanding of the specific demands of the question. Relevant economic terms are clearly defined. Relevant economic theory is clearly explained and applied. Where appropriate, diagrams are included and applied effectively. Where appropriate, examples are used effectively. There is evidence of appropriate synthesis or evaluation. There are no significant errors. 13–15 –6– M13/3/ECONO/SP1/ENG/TZ2/XX/M 2. (a) Explain why common access resources, such as fishing grounds, might become depleted in the absence of a price mechanism. [10 marks] Answers may include: • definition of common access resources and price mechanism • explanation of the price mechanism to show how supply and demand ration scarce resources through the signalling and incentive functions of price; how the lack of a pricing mechanism is likely to lead to overuse/depletion • diagrams to illustrate the allocative function of the price mechanism • examples of common access resources, for example, common grazing land, the atmosphere. –7– M13/3/ECONO/SP1/ENG/TZ2/XX/M Assessment Criteria Part (a) 10 marks Level Marks 0 The work does not reach a standard described by the descriptors below. 0 1 There is little understanding of the specific demands of the question. Relevant economic terms are not defined. There is very little knowledge of relevant economic theory. There are significant errors. 1–3 2 There is some understanding of the specific demands of the question. Some relevant economic terms are defined. There is some knowledge of relevant economic theory. There are some errors. 4–6 3 There is understanding of the specific demands of the question. Relevant economic terms are defined. Relevant economic theory is explained and applied. Where appropriate, diagrams are included and applied. Where appropriate, examples are used. There are few errors. 7–8 4 There is clear understanding of the specific demands of the question. Relevant economic terms are clearly defined. Relevant economic theory is clearly explained and applied. Where appropriate, diagrams are included and applied effectively. Where appropriate, examples are used effectively. There are no significant errors. 9–10 –8– M13/3/ECONO/SP1/ENG/TZ2/XX/M (b) Evaluate the view that carbon taxes represent the most effective government response to the threat to sustainability posed by the use of fossil fuels. [15 marks] N.B. It should be noted that definitions, theory and examples that have already been given in part (a), and then referred to in part (b), should be rewarded. Answers may include: • definitions of sustainability, carbon taxes and fossil fuels • explanation of relevant strategies in terms of carbon taxes, legislation, cap and trade schemes and funding for clean technologies • diagrams to show resource depletion and/or over-use, diagrams to illustrate government responses • examples of where such responses have occurred, or might occur • synthesis or evaluation. Evaluation may include: the positive and negative consequences of the use of carbon taxes; the positive and negative consequences of other schemes such as legislation, cap and trade schemes and funding for clean technologies; discussion of the significance of the global nature of the problem, the lack of ownership of common access resources and the need for international cooperation; consideration of whether carbon taxes are the most effective response. Examiners should be aware that candidates may take a different approach which, if appropriate, should be rewarded. Opinions or conclusions should be presented clearly and supported by appropriate examples. –9– M13/3/ECONO/SP1/ENG/TZ2/XX/M Assessment Criteria Part (b) 15 marks Level Marks 0 The work does not reach a standard described by the descriptors below. 0 1 There is little understanding of the specific demands of the question. Relevant economic terms are not defined. There is very little knowledge of relevant economic theory. There are significant errors. 1–5 2 There is some understanding of the specific demands of the question. Some relevant economic terms are defined. There is some knowledge of relevant economic theory. There are some errors. 6–9 3 There is understanding of the specific demands of the question. Relevant economic terms are defined. Relevant economic theory is explained and applied. Where appropriate, diagrams are included and applied. Where appropriate, examples are used. There is an attempt at synthesis or evaluation. There are few errors. 10–12 4 There is clear understanding of the specific demands of the question. Relevant economic terms are clearly defined. Relevant economic theory is clearly explained and applied. Where appropriate, diagrams are included and applied effectively. Where appropriate, examples are used effectively. There is evidence of appropriate synthesis or evaluation. There are no significant errors. 13–15 – 10 – M13/3/ECONO/SP1/ENG/TZ2/XX/M SECTION B Macroeconomics 3. (a) Explain the difficulties involved in measuring the level of unemployment. [10 marks] Answers may include: • definitions of unemployment • explanation of how the unemployment rate is calculated and the difficulties involved in terms of the existence of underemployment, the existence of hidden unemployment, the fact that it is an average which ignores regional, ethnic, age and gender disparities, assessment of people’s willingness and ability to work • diagrams (AD/AS or ADL/ASL) to illustrate the existence of unemployment • examples of actual instances of such difficulties. – 11 – M13/3/ECONO/SP1/ENG/TZ2/XX/M Assessment Criteria Part (a) 10 marks Level Marks 0 The work does not reach a standard described by the descriptors below. 0 1 There is little understanding of the specific demands of the question. Relevant economic terms are not defined. There is very little knowledge of relevant economic theory. There are significant errors. 1–3 2 There is some understanding of the specific demands of the question. Some relevant economic terms are defined. There is some knowledge of relevant economic theory. There are some errors. 4–6 3 There is understanding of the specific demands of the question. Relevant economic terms are defined. Relevant economic theory is explained and applied. Where appropriate, diagrams are included and applied. Where appropriate, examples are used. There are few errors. 7–8 4 There is clear understanding of the specific demands of the question. Relevant economic terms are clearly defined. Relevant economic theory is clearly explained and applied. Where appropriate, diagrams are included and applied effectively. Where appropriate, examples are used effectively. There are no significant errors. 9–10 – 12 – M13/3/ECONO/SP1/ENG/TZ2/XX/M (b) Examine the reasons why the maintenance of a low level of unemployment is considered to be an important macroeconomic objective. [15 marks] N.B. It should be noted that definitions, theory and examples that have already been given in part (a), and then referred to in part (b), should be rewarded. Answers may include: • definitions of unemployment and macroeconomic objectives • explanation of the financial, economic and personal/social consequences of unemployment • diagrams (AD/AS or ADL/ASL or PPF) to illustrate unemployment • examples of the consequences of unemployment • synthesis or evaluation (examine). Examination may include: a consideration of the consequences of unemployment such as loss of GDP, loss of tax revenue, increased cost of unemployment benefits, loss of income for individuals, disparities in the distribution of income, increased crime levels and stress, indebtedness, family breakdown. Examiners should be aware that candidates may take a different approach which, if appropriate, should be rewarded. Opinions or conclusions should be presented clearly and supported by appropriate examples. – 13 – M13/3/ECONO/SP1/ENG/TZ2/XX/M Assessment Criteria Part (b) 15 marks Level Marks 0 The work does not reach a standard described by the descriptors below. 0 1 There is little understanding of the specific demands of the question. Relevant economic terms are not defined. There is very little knowledge of relevant economic theory. There are significant errors. 1–5 2 There is some understanding of the specific demands of the question. Some relevant economic terms are defined. There is some knowledge of relevant economic theory. There are some errors. 6–9 3 There is understanding of the specific demands of the question. Relevant economic terms are defined. Relevant economic theory is explained and applied. Where appropriate, diagrams are included and applied. Where appropriate, examples are used. There is an attempt at synthesis or evaluation. There are few errors. 10–12 4 There is clear understanding of the specific demands of the question. Relevant economic terms are clearly defined. Relevant economic theory is clearly explained and applied. Where appropriate, diagrams are included and applied effectively. Where appropriate, examples are used effectively. There is evidence of appropriate synthesis or evaluation. There are no significant errors. 13–15 – 14 – M13/3/ECONO/SP1/ENG/TZ2/XX/M 4. (a) Explain how labour market reforms may be used to promote economic growth. [10 marks] Answers may include: • definitions of labour market reforms, economic growth • explanation of how making labour markets more flexible may lead to an increase in efficiency and economic growth • diagram to show the labour market (AD/AS or ADL/ASL) lending to economic growth • examples of labour market reforms, both interventionist and market-oriented, such as reducing unemployment benefits, reducing the power of labour unions and abolishing minimum wages, expenditure on education and training, introduction of minimum wages to increase participation rates, to increase consumption and promote economic growth. – 15 – M13/3/ECONO/SP1/ENG/TZ2/XX/M Assessment Criteria Part (a) 10 marks Level Marks 0 The work does not reach a standard described by the descriptors below. 0 1 There is little understanding of the specific demands of the question. Relevant economic terms are not defined. There is very little knowledge of relevant economic theory. There are significant errors. 1–3 2 There is some understanding of the specific demands of the question. Some relevant economic terms are defined. There is some knowledge of relevant economic theory. There are some errors. 4–6 3 There is understanding of the specific demands of the question. Relevant economic terms are defined. Relevant economic theory is explained and applied. Where appropriate, diagrams are included and applied. Where appropriate, examples are used. There are few errors. 7–8 4 There is clear understanding of the specific demands of the question. Relevant economic terms are clearly defined. Relevant economic theory is clearly explained and applied. Where appropriate, diagrams are included and applied effectively. Where appropriate, examples are used effectively. There are no significant errors. 9–10 – 16 – M13/3/ECONO/SP1/ENG/TZ2/XX/M (b) “Market-oriented supply-side policies will always be more effective in promoting economic growth than demand-side policies.” To what extent do you agree with this statement? [15 marks] N.B. It should be noted that definitions, theory and examples that have already been given in part (a), and then referred to in part (b), should be rewarded. Answers may include: • definitions of market-oriented policies (as against interventionist policies), demand-side policies and economic growth • theory of Aggregate Demand and Aggregate Supply and how either may be used to increase real GDP • diagrams to show increased real GDP resulting from changes to AD and AS • examples of market-oriented supply-side policies and demand-side policies • synthesis and evaluation (to what extent). Consideration of the merits of the statement may include: discussion of the term effectiveness in the context of economics. Candidates may distinguish the effectiveness of each policy in the short run and the long run. Examiners should be aware that candidates may take a different approach which, if appropriate, should be rewarded. Opinions or conclusions should be presented clearly and should be supported by appropriate examples. – 17 – M13/3/ECONO/SP1/ENG/TZ2/XX/M Assessment Criteria Part (b) 15 marks Level Marks 0 The work does not reach a standard described by the descriptors below. 0 1 There is little understanding of the specific demands of the question. Relevant economic terms are not defined. There is very little knowledge of relevant economic theory. There are significant errors. 1–5 2 There is some understanding of the specific demands of the question. Some relevant economic terms are defined. There is some knowledge of relevant economic theory. There are some errors. 6–9 3 There is understanding of the specific demands of the question. Relevant economic terms are defined. Relevant economic theory is explained and applied. Where appropriate, diagrams are included and applied. Where appropriate, examples are used. There is an attempt at synthesis or evaluation. There are few errors. 10–12 4 There is clear understanding of the specific demands of the question. Relevant economic terms are clearly defined. Relevant economic theory is clearly explained and applied. Where appropriate, diagrams are included and applied effectively. Where appropriate, examples are used effectively. There is evidence of appropriate synthesis or evaluation. There are no significant errors. 13–15 M13/3/ECONO/SP2/ENG/TZ0/XX/M MARKSCHEME May 2013 ECONOMICS Standard Level Paper 2 18 pages –2– M13/3/ECONO/SP2/ENG/TZ0/XX/M This markscheme is confidential and for the exclusive use of examiners in this examination session. It is the property of the International Baccalaureate and must not be reproduced or distributed to any other person without the authorization of the IB Assessment Centre. –3– M13/3/ECONO/SP2/ENG/TZ0/XX/M In addition to the assessment criteria use the paper-specific markscheme below. Award up to the maximum marks as indicated. SECTION A 1. (a) (i) Define the term appreciation indicated in bold in the text (paragraph ). [2 marks] Level Marks 0 The work does not reach a standard described by the descriptors below. 0 1 Vague definition. 1 The idea that the exchange rate rises. 2 Accurate definition. 2 An explanation that it is an increase in the value of a currency plus one of the following: • in terms of another currency • in a floating exchange rate system (ii) Define the term interest rate indicated in bold in the text (paragraph ). [2 marks] Level Marks 0 The work does not reach a standard described by the descriptors below. 0 1 There is limited understanding. 1 The idea that it is something paid for a loan. 2 There is clear understanding. 2 An explanation that it is any one of the following: • the reward (payment received) for lending money • the cost of borrowing money. –4– M13/3/ECONO/SP2/ENG/TZ0/XX/M (b) Using an appropriate diagram, explain how the “increasing demand for Australian commodities” (paragraph ) is likely to affect the value of the Australian dollar. [4 marks] Level Marks 0 The work does not reach a standard described by the descriptors below. 0 1 There is a correct diagram or an accurate written response. 1–2 For drawing an accurately labelled exchange rate diagram for the Australian dollar showing a shift of the demand curve to the right leading to a rise in the exchange rate or an explanation that increased demand for exported commodities will lead to increased demand for the Australian dollar, resulting in an increase in the value of the Australian dollar. 2 There is a correct diagram and accurate written response. 3–4 For drawing an accurately labelled exchange rate diagram for the Australian dollar showing a shift of the demand curve to the right leading to a rise in the exchange rate and an explanation that increased demand for exported commodities will lead to increased demand for the Australian dollar, resulting in an increase in the value of the Australian dollar. Candidates who incorrectly label diagrams can be rewarded with a maximum of [3 marks]. For the vertical axis, the label may be exchange rate, other currencies/Aus$, price of Australian $ in terms of another currency, or Aus$. For the horizontal axis, quantity of Australian $ or quantity is sufficient. A title is not necessary. –5– M13/3/ECONO/SP2/ENG/TZ0/XX/M (c) Using an AD/AS diagram, explain how the higher Australian dollar reduced inflationary pressure in the Australian economy (paragraph ). [4 marks] Level Marks 0 The work does not reach a standard described by the descriptors below. 0 1 There is a correct diagram or an accurate written response. 1–2 For drawing an accurately labelled AD/AS diagram showing a shift to the right of the AS curve or for explaining that cheaper imported resources and consumer goods will reduce costs of production for Australian producers, leading to a reduction in inflationary pressure. 2 There is a correct diagram and accurate written response. 3–4 For drawing an accurately labelled AD/AS diagram showing a shift to the right of the AS curve and for explaining that cheaper imported resources and consumer goods will reduce costs of production for Australian producers as well as consumer prices, leading to a reduction in inflationary pressure. N.B. Candidates may also be rewarded if they shift AD to the left, explaining that the appreciation will make exports more expensive and/or imports cheaper, thus reducing demand for these exports and/or increasing demand for imports and therefore causing AD to decrease. Candidates who incorrectly label diagrams can be rewarded with a maximum of [3 marks]. For the vertical axis, the label may be Average (General) Price Level or Price level. For the horizontal axis, real output, real national output, real income, real national income, real GDP or real Y. A title is not necessary. –6– M13/3/ECONO/SP2/ENG/TZ0/XX/M (d) Using information from the text/data and your knowledge of economics, evaluate the possible effects of the appreciating Australian dollar on the Australian economy. [8 marks] Examiners should be aware that candidates may take a different approach, which, if appropriate, should be rewarded. Do not award beyond Level 2 if the answer does not contain reference to the information provided. Level Marks 0 The work does not reach a standard described by the descriptors below. 0 1 Few relevant concepts are recognized. 1–2 There is basic knowledge/understanding. 2 Relevant concepts are recognized and developed in reasonable depth. 3–5 There is clear knowledge/understanding. There is some attempt at application/analysis. 3 Relevant concepts are recognized and developed in reasonable depth. 6–8 There is clear knowledge/understanding. There is some effective application/analysis. There is synthesis/evaluation, supported by appropriate theory and evidence. Command term “Evaluate” requires candidates to make an appraisal by weighing up the strengths and limitations. Responses may include: Possible positive effects: • Australian tourists overseas benefitting from cheaper holidays (paragraph ) • imported manufactured goods become cheaper boosting consumers’ living standards • imported capital goods become cheaper encouraging domestic investment and potentially increasing productivity • inflationary pressure is reduced through lower import prices (paragraph ) • helps slow down interest rate rises (paragraph ) • may permit the government to lower interest rates, which is likely to have an expansionary effect on the economy. Possible negative effects: • local exporters in the manufacturing and services sectors suffer because Australian exports become less competitive (paragraph ) • increase in unemployment in export sector as demand for exports falls • fewer foreign students study in Australia (paragraph ) causing a fall in revenue for some Australian schools and universities • greater dependence on a narrow range of commodity exports which may lead to vulnerability to external shocks (paragraph ) • fewer tourists coming to Australia (paragraph ) • foreign investment may be discouraged as the cost of investment measured in foreign currency increases. Any reasonable evaluation on the relative strengths and limitations of the effects of an appreciating Australian dollar on the Australian economy.
Enter the password to open this PDF file:
-
-
-
-
-
-
-
-
-
-
-
-