PMT

Mark Scheme (Results)

November 2020

Pearson Edexcel International GCSE

In Economics (4EC1)
Paper 2: Macreconomics and The Global
Economy
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Autumn 2020
Publications Code 4EC1_02_2011_MS
All the material in this publication is copyright
© Pearson Education Ltd 2020
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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.
• When examiners are in doubt regarding the application of the
mark scheme to a candidate’s response, the team leader must
be consulted.
• Crossed out work should be marked UNLESS the candidate has
replaced it with an alternative response.
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Question Answer
Mark
Number
1(a) AO1 1 marks

B unemployment
(1)

Question Answer
Mark
Number
1(b) AO1 1 mark

C Subsidies
(1)

Question Answer
Mark
Number
1(c) AO1 2 marks

Award 1 mark for reference to value of goods/services and 1 mark to

time period

GDP is the market value of all goods and services (1) produced in a
year (1)

Accept any other appropriate response (2)

Question Answer
Mark
Number
1(d) AO1 2 marks

Award 1 mark for reference to the positive impact and 1 mark for
development of the positive impact

An improvement in standards of living (1) due to more income from

jobs (1)

Accept any other appropriate response (2)

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Question Answer
Mark
Number
1(e) A02 2 marks

Award 1 mark for showing the calculation

130.3 - 120.4 x 100 (1)

120.4

Award 1 mark for the correct answer

= 8.22% (1)

Award 2 marks if the correct answer 8.22% is shown, with

percentage sign, even if no calculation is shown

Award 1 mark if correct answer is shown 8.22, but with no

percentage sign, even if no calculation is shown

Do not award marks for the formula (2)

Question Answer
Mark
Number
1(f) AO2 3 marks

Award 1 mark for boom, labelled

Award 1 mark for downturn, labelled
Award 1 mark for recovery, labelled

(3)
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Question Answer
Mark
Number
1(g) 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 due to generous welfare benefits (1). If a teacher

is able to have a good standard of living on welfare benefits (1)
then there is a disincentive to work at the current wage rates
being offered in the education sector (1)

• One reason is due to high rates of income tax (1). If a

person has to give a large proportion of earned income to
the government (1) then there is less of an incentive to be
employed as a teacher (1)

Accept any other appropriate response (3)

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Question Indicative content

Mark
Number
1(h) AO2 (3 marks)/AO3 (3 marks)

AO2 and AO3

• Firms need to transport goods and services around the world

and often use large container ships or air to transport goods
long distances
• Larger cargo ships have resulted in a reduction in the cost
of transporting goods by up to 70% on ships as more
goods are able to be transported at the same time
• This reduces the cost of fuel and economies of scale can
be achieved by operating on a larger scale
• Transport improvements in aviation also mean that goods
and people can travel more quickly between different
countries
• This has enabled firms to react quickly to consumers
around the world
• Firms are able to provide perishable goods such as food
more easily to a wider geographical area
• All these factors have contributed to the increase in
globalisation (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).
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Question Answer
Mark
Number
2(a) AO2 1 mark

(1)

Question Answer
Mark
Number
2(b) AO1 1 mark

A Deregulation
(1)

Question Answer
Mark
Number
2(c) AO1 1 mark

Award 1 mark for one correct disadvantage

• Foreign competition
• Increasing unemployment

Accept any other appropriate responses (1)

Question Answer
Mark
Number
2(d) AO1 2 marks

Award 1 mark for reference to price of a currency and 1 mark for

reference to another currency

The price of one currency (1) in terms of another currency (1)

Accept any other appropriate response (2)

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Question Answer
Mark
Number
2(e) 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 that there may be increased demand for

German exports (1) if consumers overseas are responsive to
the cheaper export prices (1). This has a positive impact on
the current account of Germany if there is an overall increase
in net exports (1)

• One reason is that this may reduce the quantity of imports

into Germany (1) as it is now relatively more expensive to
import goods due to the fall in the euro (1). This could result
in a decrease in net imports (1)

Accept any other appropriate response (3)

Question Answer
Mark
Number
2(f) AO2 3 marks

Award 1 mark for identifying a possible way Award 1

mark for developing the possible way
Award 1 mark for the response being in context

• One way is that privatisation introduces competition into

the airport market (1). It creates incentives to lower unit
costs (1) to increase productivity and profit (1)

• One way is that privatisation may improve the quality of

the factors of production of airports (1). This means that
an airport can produce more services (1) without
increasing inputs (1)

Accept any other appropriate response (3)

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Question Indicative content

Mark
Number
2(g) 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 unemployment benefit, state
pension and in this case, child benefit
• The advantages are that benefit payments help to reduce
inequality and reduce relative poverty as the money is given
directly to people on no or low-incomes
• Benefit payments will give those on low income a better living
standard and help contribute to a more cohesive society
• Canada estimates that 300,000 children have been lifted out of
poverty due to the child benefit payments
• This could be due to more working mothers being able to
return to work and therefore being able to contribute to
society

AO4
• However, increasing welfare benefits creates a disincentive to
work
• Many families may face the poverty trap and are often better
off on benefits than working
• The cost of the benefits has to be borne by society so there is
often an opportunity cost to a country from using benefit
payment to redistribute income
• Not all people are entitled to receive the child benefit which
could result in resentment
• There are other methods which might be more effective in
redistributing income, such as progressive taxation or
investment in education
• The Canadian Government should use a combination of
methods to reduce inequality and poverty (9)
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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).
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Question Answer
Mark
Number
3(a) AO1 1 mark

B Increased inflation
(1)

Question Answer
Mark
Number
3(b) AO1 1 mark

B Progressive
(1)

Question Answer
Mark
Number
3(c) AO2 3 marks

Award 1 mark for identifying an advantage

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

• One advantage is the MNCs may create jobs (1).The palm

plantations require many workers to harvest the palm oil
(1). This can reduce the amount of unemployment in
Indonesia (1)

• One advantage is the contribution to government revenue

(1). Foreign MNCs might be required to pay taxes to the
Indonesian Government (1). This can be used to fund
public services within Indonesia (1)

Accept any other appropriate response (3)

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Question
Indicative content Mark
Number
3(d) AO2 (3 marks)/AO3 (3 marks)

AO2 and AO3

• Recession is when GDP falls for two consecutive quarters

• During a recession there is a decline in consumption and
investment
• There is often a loss of confidence which makes
consumers buy fewer goods and services
• Lower consumption of goods and services results in some
firms requiring fewer workers
• Manufacturers may cut back on recruitment and/or the
number of employees in reaction to falling orders
• Overall, the unemployment rate rises in a recession
(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).
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Question Indicative content

Mark
Number
3(e) AO2 (3 marks)/AO3 (3 marks)/AO4 (3 marks)

AO2 and AO3

• Monetary policy is the use of interest rates and money supply

to affect the level of economic activity
• Expansionary monetary policy aims to boost economic growth
by lowering interest rates
• China has lowered interest rates to 4.35% in 2018/2019 from a
high of 6% in 2014
• This makes borrowing more attractive to firms and households
as a lower rate of interest is charged on loans
• Firms and consumers with existing loans and mortgages will
also see a drop in interest payments and therefore will have
more disposable income to spend
• This may increase the demand for goods and services within
the Chinese economy, thus increasing economic growth

AO4
• However, not all economic growth is dependent upon interest
rates
• Other factors such as business and consumer confidence play
a huge role in the demand for goods and services
• Often there is a time lag for a reduction in interest rates to
feed through into the economy in terms of increased demand
• Lower interest rates may increase demand for goods and
services but can result in inflationary pressures if supply is not
able to keep up with demand
• The effectiveness may depend upon a range of factors within
the Chinese economy (9)
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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).
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Question
Answer Mark
Number
4(a) AO2 2 marks

Award 2 marks for calculating the fiscal deficit

€8 119 601 – €8 197 243 (1)

= -€77 642m (1)

Award 2 marks if fiscal deficit is accurately calculated -€77 642m

with no workings shown

Award 1 mark if € sign is missing i.e. -77 642m

Do not award marks for the formula

(2)

Question Indicative content

Number Mark

4(b) AO2 (3 marks)/AO3 (3 marks)

AO2 and AO3

• Fiscal policy is the use of government spending and taxation to

affect macroeconomic objectives
• An increase in taxation through either direct or indirect
taxation may result in reduced spending for consumers and
businesses in Estonian as there is less disposable income
available
• This reduced spending puts less pressure on prices and
therefore can help to control inflationary pressures within the
Estonian economy which increased to 4.4% in October
• In addition, lower government spending within the Estonian
economy may also have a downward effect on prices as
government spending contributes to demand
• Both measures may result in less demand-pull inflation within
the Estonian economy (6)
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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).
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Question Indicative content

Mark
Number
4(c) AO2 (4 marks)/AO3 (4 marks)/AO4 (4 marks)

AO2 and AO3

• Subsidies are given by a government to a producer to reduce

the costs of production or to a consumer to reduce the price of
consumption
• The Estonian Government gives subsidies to public transport
so that more people are able to use these services rather than
cars
• The Minister of Economic Affairs said that there has been an
increase in 33% of people using the buses
• Cheaper public transport has also reduced the number of cars
and pollution in Estonia
• The amount given to bus services has grown from €34.8m to
€43.3m in 2019 which should encourage even more people to
switch from cars to public transport reducing the
environmental impact

AO4
• However, the Estonian Government will have to fund the
public transport subsidies creating an opportunity cost
• The money used to subsidise public transport could have been
used elsewhere within the Estonian economy
• Many people might argue that the Estonian Government
should not be increasing the subsidy paid for air travel to
€5.53m as this is a major cause of damage to the environment
• There are other ways in which the government can protect the
environment which may have less opportunity cost to the
Estonian Government
• Regulation through the use of laws and fines could be used to
protect the environment which may have less of a financial
burden upon the Estonian Government
• Revenue from fines could be used to tackle some of the
damaged caused by transport
• The overall advantages will depend upon how much public (12)
transport contributes to environmental damage
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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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