100 marks · 18 question parts · Paper, mark scheme and report on Pearson's site
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Quantitative skills: QS 4 (construct and interpret a range of standard graphical forms); QS 9 (interpret, apply and analyse information in written, graphical tabular and numerical forms)
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This question tested whether the skills of this economist candidate include the use of data, and the majority found the 10% savings ratio. Some students misinterpreted the graph (1ap mark for reading off the savings level) but almost all students could calculate the percentage and score one mark that way. The only issue noticed with this question was that the 'quarter' markers did not tie up with the year changes, and were marking the end of the quarters rather than the start. This is a fair way to illustrate data, but not one that many students might be used to. This a lovely, clear and correct answer. 1 mark for data use, and 1 mark for correct calculation. Always show your working. It is imperative not to give 'subsequent information' that contradicts your answer. If you add something to your answer that makes it incorrect, we cannot allow this as fully correct. This is a tragedy – the workings did include the correct answer, but the answer finally presented was not correct, so only 1 mark could be awarded. Underline your final answer, and make sure you show the savings as requested.
Quantitative skills: QS 2 (calculate, use and understand percentages, percentage changes and percentage point changes); QS 9 (interpret, apply and analyse information in written, graphical tabular and numerical forms)
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In this 2-mark question there were no application marks (as the application was given in 1b), although most candidates did write further about the data. 2 mark ‘explain’ questions are not application marks, according to the Test Specification, which examiners have to use when setting papers. Although over this period, interest rates did not rise and were very low, we awarded rising in interest rates because there were no application marks and as a theoretical factor this could well have been a cause of the rise in savings, and this meant that most candidates scored very highly on this question. The most common answer was, unsurprisingly, Covid, and although again this is not on the specification it had to be allowed that a loss in confidence in the economy, potential fears of falls in income or the inability to spend money might cause people to save more. Do not waste time in short answer questions like this by using the data. It asks for a reason, and you have to explain that reason. There is no application mark here. This earns 2/2 but too much time has been spent here. Do not feel you have to use every line given. The marker is looking for the reason, then the explanation. There is no 'hidden' data expectation. Interest rates did not of course rise over this period, but because they are a 'likely reason' for a change in savings, this argument was awarded. 1 mark for identifying the rise in interest rates. The analysis does follow from the reasoning so this scores full marks. Short answers are highly recommended for Section A. If you fill up all the lines there is a huge opportunity cost.
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Quantitative skills: QS 10 (distinguish between changes in the level of a variable, and the rate of change); QS 2 (calculate, use and understand percentages, percentage changes and percentage point changes)
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For several years in a row there has been a test of the distinction between percentage changes and percentage point changes, and at last the penny seems to have dropped. This subtraction was simple but implies quite deep understanding of the important distinction. Interestingly some of the highest achieving candidates over-complicated the question and chose the percentage change instead. Look carefully at whether the question is looking for CAUSE or EFFECT. There is a sense of hesitancy but essentially this answer confuses cause and effect. A question like this is unlikely to be the same as the Q1 question asking about rises in savings. Remember that the examiner needs to look for new material from you, not repetition. A short answer such as this can get 4 marks. Second K is a soft mark: good example. Reference to data without the month is appropriate. There is clearly analysis – shown with the words 'causes' or 'therefore'. Short answers are effective, but make sure you refer to the data precisely – here the candidate does show the whole year of 2020 not just the months referred to in question 1a.
Quantitative skills: QS 9 (interpret, apply and analyse information in written, graphical tabular and numerical forms)
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This question seemed to differentiate well, although the extract was very helpful as a guide so very few answers gained zero marks. Many students did well if they read the data carefully. Market rigging is to be briefly explained for 1 mark. Examples not in the data are appropriate for Application marks although there were many pieces of data that could be used. Answers can discuss prices going up or down as part of collusion, but it is important to explain this in context, e.g. prices of financial products for consumers will rise, but prices of trading activities between banks would fall. 3b This question also felt very accessible. Several students linked to the causes of falling investment rather than effects, and wrote almost the same answer as the one given for the rise in savings 1c. The advice to students is that if it feels as if the question is asking for the same thing it is wise to go back to the question, underline the key terms, and go over the reasoning again (the so-called 'bug' technique). Notes to candidates There is always at least one application mark for a 4-mark question, so if causes not effects are discussed, they can still get an application mark. % change is fine to discuss here, but it is unwise to use the percentage point change given from April to July specifically, because that mark has already been awarded in 2a and to re- award would be double awarding. The data asks for the whole of 2020 so it is unwise to refer to a small part of it (April to July). Look for the more general trend if you can. In a 4 mark question, you must always use some data, but you must also show some sense of analysis (BLT, because, leads to or therefore). Just listing definitions is knowledge and cannot be awarded as analysis. 2 K 1 Ap but no An so max of 3. B.L.T. is analysis! Because, leads to and therefore and 'linking words' that illustrate an analytical process. There are of course many other linking works you could use. You need to remember that definitions are knowledge marks, and you have to make a step in your reasoning to gain the analysis mark. This is a good answer, and the analysis and application stand out. Clearly 4 marks – and probably could have stopped well short of the last line given! Make sure you include analysis, such as the 'which results from' in this answer.
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Quantitative skills: QS 4 (construct and interpret a range of standard graphical forms)
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4a This question felt very familiar and the mean score was high. The only errors seem to have arisen from the negative words in A and D (discourage, and restrict) which sometime cause processing errors when students are under mental and time pressure. 4b This again felt like an approachable question for many candidates. Although it appears easy at the outset it surprises examiners that very many students each year drop marks on making calculation errors, for example. 1/mpc and 1/(mpc-1) are common errors. Missing units (millions) 3 out of 4 Do note that £ sign not needed. Answer alone can get full marks on a calculation question, so there is no need to define or explain your answer. If you have the correct multiplier you can get 3 out of 4, so it is very wise to show your working, even if you make a mistake at the end. Make sure the answers seems right and logical. If students put 6.67 million this does not feel right as a total if the government has spent £60 million, when G is clearly part of AD. It is important to think about units (e.g. millions) and using a % sign here makes it seem there is some confusion going on. Wrong units so 3/4 Check your answer seems right. A total increase is unlikely to be a percentage. It is very helpful to show your working... ...although if the answer is correct it will not add marks. Examiners look through your working very carefully to see if they can add marks, if by chance your final answer is not correct. Show every step!
Quantitative skills: QS 1 (calculate, use and understand ratios and fractions)
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The question was accessible and there were almost no blank responses. It was mainly answered well by a significant number of students. Must apply to the steel market but then the analysis can be developed from this eg steel output up can lead to more employment or more AD. Diagram can be app or an. Decide at the end to give the candidate the highest mark. A diagram alone with no explanation will only get 1 mark, but a diagram used and explained well could access more than 1 mark. 25% is allowed as that is in the extract not the question. Definitions of a tariff do not get a Knowledge mark as this is an impact question. A diagram can earn the marks in many ways – in this case all 3 from the diagram! Good example with a diagram. Diagram and explanation is 4/4 in a box in the annotated pack. First part of the answer is also 4/4. A picture is the most wonderful way to earn marks, if you can link it, as here, to the question. This scores 2/5. 2 K not developed. Definitions ignored as this is an “impact” question. The question is asking about the IMPACT not the definition. You certainly don't need to try to evaluate in Section A!
Quantitative skills: QS 4 (construct and interpret a range of standard graphical forms)
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This was a successful question, in terms of differentiation, as it made sure that students had to use definitions of progressive and regressive accurately. Many were not able to give an example of a regressive tax, or did not spot the need to use own knowledge. Application had to be 1 mark for progressive and 1 mark for regressive. Rise in tax level/paid as income rises (this is insufficient as an answer) rather than percentage is a common mistake which cannot be awarded. No reference to regressive tax in the passage so the application is candidates' own example as stated in the mark scheme. The most important thing about this question is that progressive tax means the RATE rises as income or wealth rises, not just that it rises. Para 1: K, Ap, An Para 2: K, Ap Burden rising is enough to explain rising rate. 5/5 Think carefully about the difference between a proportional tax and a progressive tax. The RATE is the key issue. Try drawing a diagram showing tax rates against income. It will do your mind a lot of healthy exercise!! This illustrates an answer which cannot distinguish between rates of tax and levels of tax. This example illustrates the typical error where the “tax level rises” which needs emphasising. 1 Ap only. Draw a diagram to show a regressive tax. Surely you don't think higher income and wealth earners pay LESS TAX overall? It must be a rate issue.
Quantitative skills: QS 9 (interpret, apply and analyse information in written, graphical tabular and numerical forms)
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As discussed in the introduction to this report, this is a question where a good understanding of current macroeconomic issues paid huge dividends. In the current UK context, it would be highly unlikely that a government could last more than a few weeks if it tried to cut income taxes. However many candidates guessed that a freeze in thresholds meant that they paid less tax, even though the effects were clearly explained in Extract A. The passage stated while it might not look like a tax rise on the face of it, people will still end up paying more tax on their income. A surprisingly large number of answers spotted this only at the end of their answer and used it for evaluation, which of course could earn 2 marks. The AD/ AS was part of the analysis marks, which made it easy for many to access the analysis marks, but it must be linked with the knowledge, not just a stand-alone diagram. Advice to candidates – do not be caught some out thinking a tax freeze means rising income. K and An can be fluid in the way that they are awarded, and examiners want to give the highest mark that is possible. So for example: fiscal drag (k) explanation of the process (an). Or explanation of process (K) with the effect on household income (An) Additional income tax decreased to open up the answers. Data and eval can be 1 point each for 2 marks. Can write one point and get full marks as the question asks about “impact”. Analysis needs linked with knowledge in terms of AD/AS analysis. For this question it was assumed AD would fall, but with careful reasoning we could allow AD to change either way. Good example of full marks using one impact. 2 K 2Ap 2 An 2 Ev (AD can go the other way) Make sure your chains of reasoning are clear, and you will be awarded whatever your conclusion, if it is valid, as it is here. This is an excellent answer. 2 K (AD and fiscal drag) 2 Ap (2 x quotes from text) 2 An (explanation of fiscal drag) 2 ev (2 marks for final ev point) Always use a diagram if you can. A picture saves a thousand words. Even if it is incorrect it will not lose you marks, as we are positive markers.
Quantitative skills: QS 9 (interpret, apply and analyse information in written, graphical tabular and numerical forms)
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This question was very effective in testing important concepts (e.g. flow and stock) and very important issues (e.g. whether overspending matters) that differentiated answers effectively. Some candidates, as every year, tried to link to exports and imports. There were some good responses here, particularly linking to crowding out. One well-argued KAA paragraph which addresses BOTH fiscal deficit and national debt, along with one well-argued evaluation can achieve full marks and there is no need to write this answer as separate paragraphs, although this does make the answer clearer because there must be reference to both fiscal deficit and national debt. Doesn't matter if you argue it's a concern or not as long as you look at both sides. For Level 3 you must refer to the UK government. Borrowing to fund government spending to boost the economy was the most common evaluation point made. It is worth noting that the 10 mark question does not need a final judgement. For 4/4, the Level 2 evaluation must be sustained, and most answers do this by making two evaluation points with more than one step in each chain of reasoning. The evaluation can be short, but not throw-away comments, such as, ‘however there is a time lag’. An effective evaluation point might say there are benefits in the short run as AD rises, but in the long run taxes may have to rise if there is no long-term growth produced. This question does set out the argument really clearly – yes it is a concern, and no it is not. Not as much reference to national debt. The analysis should cover both distinctly, even if in the same paragraph. Para 1: L2 Para 2: E2 Para 3 : L2 Para 4 : E2 4/6 KAA 4E = 8/10 You do not need a judgement or overall evaluation for a 10-mark question. But you should make sure you address every element of the question. Looking at this initially this looks as if this is a microeconomics diagram. However on reading it you will find it is excellent, and clearly scores full marks. Good example however this is a long answer and not standard, and far more than the minimum required for full marks. Para 1 L3 Para 2 : E2 Para 3: L3 Para 4 :E2 Remember that some micro diagrams are very useful in macro exams, so do not omit any economics which builds up your analysis if you have time!
Quantitative skills: QS 9 (interpret, apply and analyse information in written, graphical tabular and numerical forms)
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This was a successful question, in that there was a clear instruction and area of analysis, with extremely helpful data to answer the question. It effectively differentiated students and for many it allowed them to show their high-level understanding of QE. Examiners found it easy to apply levels of response. It was significant that there were a number of high quality responses, and equally with ones of a lower quality where the subject matter was unfamiliar. Can refer to preventing deflation or causing inflation. If no reference to the changes in the general price level there was a maximum of L2. Magnitude of the spending was a clearly effective way to evaluate. 'Yield analysis' is credited, although not required at A Level. The 'use' in a 12 mark questions means you can stick to one point, singular, and not go into a list of uses. Para 1: L2 – Para 2: E1 Para 3: Confused analysis Para 4: E1 3 + 2e = 5/12 It is good to see a diagram and here is it explicitly linked to the question on preventing inflation (in the sense of causing inflation) but the analysis becomes increasingly confused as the essay goes on. The evaluation is very brief comments, not in-depth critical judgement. This example earns full marks. It is encouraging to see a brief and the use of data from the start. Spelling (e.g. comity for committee) does not matter as long as we understand what you mean. What examiners like about this answer is the clear handwriting and clear thought behind the answer.
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There were many confident and strong responses to this question. Students know this topic well and provided some excellent responses. It is clear this topic is well taught and well rehearsed. Overall, many candidates were able to answer this question well. The stronger answers provided detailed application points relevant to specific policies. To get Level 3 KAA there has to be more than one policy and a good deal of context, using but preferably going far beyond the final paragraph of Extract B. If one policy only is given, this was would mean the answer could not go above Level 2 for KAA. However with good evaluation, which is sustained, you can still gain full evaluation marks (6/6) if there is only one supply-side policy given. Some answers gave more than one policy, which was required, put only one piece of analysis, usually a rightward shift in the LRAS. It is enough to do one analysis point on this question for full marks. As long as an answer starts with a supply-side policy then reference to the effects of AD is relevant. Many students felt a need to do more analysis than an SRAS shift and therefore stretched to an AD shift. This was not expected, but of course it was awarded where the chains of reasoning were effective. The question asks for plural policies, so make sure you have two good policies. No point in doing more unless you have deeper analysis – the last thing the examiner wants is a list. Para 1: L2 no context Para 2: E2 – Para 3: L2+ no context Para 4: E2 – Fair analysis but lack of context. 6 + 3e = 9/15 Use the UK government policy-making as your starting point. Think education, NHS, trade, infrastructure and regional issues, and try to put demand-side policies completely out of your mind. They do not lose marks, but there is an opportunity cost if you stray into fiscal policy at the expense of supply-side policies. Some answers are set out extremely effectively, with point, explanation, example, diagram and then evaluation (PEEDE), twice over. Excellent example Para 1: L3+ Para 2: E3 Para 3: L3+ Para 4: E3 The diagram in the first page is ideal for this answer, and is explained in the text. Well done!
This was a surprisingly popular and effective question and enabled students to use theory to support their responses. Again those that used examples and models were rewarded with Level 4 marks. It was also notable that some students still confuse the Current Account deficit and Budget deficit. The question and topic area was straightforward and rehearsed in schools, and many answers were based on countries that were drawn from their own knowledge rather that that of Brazil. The context was very helpful as well used, but it should be reminded to all candidates that there is often a request to use knowledge of at least one developed or developing country. No introduction is required in any answers, and candidates are reminded to simply start by answering the question. Definitions can be a useful way to set the groundwork, but they are not required and the knowledge marks are clearly implicit when a strong argument begins. Since the question is about trade, relevant protectionist diagrams must refer to quantity and/or value of imports. Many candidates employed a basic subsidy diagram, for example, illustrating an outward shift in supply but did not reference the quantity imported at the world price, leading to a lower level of analysis. The Marshall-Lerner condition was effectively used to evaluate the impact of currency depreciation. However, candidates need to do more than merely mention the condition. The J-curve appeared in many answers, and was particularly useful in terms of higher-order evaluation. Advice to students: Try to stick to an evaluation point and develop it fully to get to Level 3. Many able candidates analysed a relevant evaluation point up to Level 2 and then introduced another point within the same paragraph. You only need to make two clear L3 evaluation points/arguments overall, and a final judgement, to be able to achieve 9/9 for evaluation. Country of choice to get to L4. Whatever policies you choose are likely to be valid, but it is unwise to discuss fixing of interest rates or exchange rates in countries such as the UK. Context of Brazil is used by many. Very open to the use of policies. You can use more than one country despite the question saying country, for example you could use a different country as your evaluation point. However if you use many different countries, the impact of your application is likely to be weakened. If the economics is correct then this is enough to hit the levels. Eg UK can manipulate the exchange rate but then explain in the eval it isn’t likely to happen. The evaluation does not need to link with the KAA to gain L2 ev. But the best answers link the evaluation to the point being made Current account/ trade deficit can be used interchangeably The essay does need models and diagrams but they need to be in context, analysed and evaluated on a deep a level as possible. Two points is enough, but there needs to be depth of analysis and evaluation. Para 1: L2+ Para 2: E2 Para 3 : L3 Para 4: E2 Para 5 : J E2 This is a barely Level 3 answer, with L2 eval, so 9 L3 – + 6e L2+ (top L2e for being a good sustained example and there is a judgement) = 15/25 The importance of extending your analysis in context of a real world example cannot be stressed enough! You are of course allowed to use Brazil for the data context – but you really must apply everything you can even if you haven't studied that country. The question tells you about the type of exchange rate system (managed) and that should be your starting point. It's not the UK after all! Para 1: L4 Para 2: E3 Diagram is contextualised Para 3: L4 Para 4: E3 Lack of context/application is the reason for the 14/16. There is inconsistency with analysis and diagram. Ev L3 – 7/9 14+7 = 21/25 Make sure you write about the diagram you have drawn, and explain it. Examiners do love diagrams, but they must be integrated into the analysis.
There were a range of responses here. Good responses used plenty of examples and linked to theory. However, others were more descriptive in their nature, not linked to any real-world examples. There was some good knowledge of trading blocs, trade creation and trade diversion, and some excellent diagrams. This was perceived as a more challenging question as many wished to discuss the cons of the factor they discussed, rather than evaluate whether the factors led to globalisation. To evaluate whether globalisation was ‘good’ was not the question, and therefore was not what the mark scheme wanted. The mean score on the second essay was 2 marks lower than on Question 7, largely because it offered limited opportunities for evaluation which was still addressing the question. Benefits were replaced by many as the factors causing globalisation. Diagrams can count as application marks, as well as analysis and of course knowledge. It certainly helped students score well if they showed a falling-tariff diagram, and a rising tariff diagram as part of the evaluation. Level 3+ was the maximum KAA mark if there was no clear application such as reference to countries. Very difficult to get above Level 3 is there is no reference to real-world examples or other context. There was a persistent confusion over absolute and comparative advantage. We marked positively throughout but it would be advised to make sure that the diagrams and explanations fit precisely. Try to keep abreast of changes, such as the disappearance of NAFTA. This of course is awarded because it is on the Specification, but you can add polish to your answers if you are aware of current developments to add. Lots of factors discussed not in as much depth. Para 1 : L3 – Para 2: L2 – Para 3: E2 NAFTA credited as fits time frame. One ev, not sustained but enough for E2. L3 – / E2 9/16 KAA + 4/9 Ev =13/25 Make two well applied and well analysed points, using your own learning about real-world economics. Two points well made and deeply is preferable to a long list of shallower points. This scores 24/25 and needs an overall judgement. Para 1: L4+, Clear application, chain of reasoning para 1. Para 2 : E3 Para 3 : L4 Para 4 : E3 Para 5: Sense of Judgement but not developed E1 but ignored as 2 sustained E3 from previous paragraphs. (Clear consensus on mark amongst the team) Make sure you make an overall judgement for the 25th mark!
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![The UK Economy Figure 1: UK national debt, percentage of GDP, 2001–2021 100 % 90 80 70 60 50 40 30 20 10 0 (Source: https://www.ons.gov.uk/economy/governmentpublicsectorandtaxes/ publicsectorfinance/bulletins/publicsectorfinances/december2021) Figure 2: UK fiscal deficit, percentage of GDP, 2001–2021 16 % 14 12 10 8 6 4 2 0 (Source: https://www.ons.gov.uk/economy/governmentpublicsectorandtaxes/ publicsectorfinance/bulletins/publicsectorfinances/december2021) Figure 3: Interest rate on a 10-year UK government bond, July 2022 to March 2023 4.5 % 4.0 3.5 3.0 2.5 2.0 1.5 0 Sep 22 Jul 22 Aug 22 Oct 22 Nov 22 Dec 22 Jan 23 Feb 23 Mar 23 (Source: https://www.ft.com/content/ece962c3-b7e5-48c6-a0b1-06f9823a4853# post-ad2ac225-0543-49e7-9ed5-af9907e83697) Figure 4: Income tax rates for 2023–24, compared to 2022–23 2022–23 2023–24 Tax band Income threshold Tax rate Income threshold Tax rate Personal Up to £12 570 0% Up to £12 570 0% allowance 20% 20% Basic rate £12 571–£50 270 £12 571–£50 270 Higher rate £50 271–£150 000 40% £50 271–£125 140 40% Additional rate Over £150 000 45% Over £125 140 45% (Source: Gov.uk) Extract A Freeze in income tax thresholds from 2023 onwards The freeze on the personal allowance, and the basic and higher-rate income tax bands in England, Wales and Northern Ireland will be extended to April 2028. While this freeze may not look like a tax rise on the face of it, having thresholds that fail to rise in line with salaries, people will still end up paying more tax on their income – particularly if they end 5 up in a higher tax band as a result. The biggest change announced in the Autumn Statement 2022 was the reduction of the additional-rate income tax threshold, dropping from £150 000 to £125 140 from 6 April 2023. It is estimated around 250 000 taxpayers will be pushed into the additional rate tax band, paying 45% tax on any income above the new limit. 10 The Chancellor said lowering the additional rate threshold means that a person earning £150 000 will pay an extra £1 200 income tax per year. (Source adapted from: https://www.which.co.uk/news/article/6- tax-changes-to-watch-out-for-in-2023) Extract B UK Monetary Policy Decisions At a special meeting on 19th March 2020, the monetary policy committee of the Bank of England announced further measures to help support the UK economy during the global health crisis. It voted to reduce the base rate of interest to 0.1% and restart the quantitative easing programme by buying £200 billion of UK government bonds and 5 corporate bonds. This followed a number of announcements by the UK government to try and limit the damage of the deep recession the country was facing and reduce the chances of deflation occurring in the UK. Government borrowing grew massively during 2020 and 2021 to fund support for businesses and workers. However, since then the monetary policy committee has rapidly increased the base 10 rate of interest – which reached 4% in February 2023. The UK government’s long-term borrowing costs are higher today than they were before former prime minister Liz Truss’s £45 billion proposed tax cuts caused the interest rate on 30-year government bonds to briefly rise above 5%, which almost caused a financial crisis. The Bank’s use of quantitative easing (QE) has also come in for criticism, with former 15 governor of the Bank of England Mervyn King saying that the decision to keep pumping money into the economy during the global health crisis was a mistake that fuelled inflation. He said: ‘central banks decided it was a good time to print a lot of money. That was a mistake [as] we had too much money chasing too few goods’. Experts have argued this pushed inflation higher in the UK by stimulating aggregate 20 demand. However, critics say QE does not cause inflation as most of the extra money is contained in the financial system and does not affect consumption and investment. Higher interest rates on the national debt may limit the ability of the UK government to increase spending on supply-side policies needed to boost economic growth, such as a £20 billion plan to transform carbon capture in the UK, which would create jobs and 25 support a move to cleaner electricity generation and technology. (Source: adapted from: https://www.bankofengland.co.uk/monetary-policy-summary-and- minutes/2020/monetary-policy-summary-for-the-special-monetary-policy-committee- meeting-on-19-march-2020 and https://www.ft.com)](/img/JUN24_9EC002/JUN24_9EC002_06_stem.webp)
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