0455 Economics March 2025 Question paper 22

1 (a) Calculate Romania’s current account deficit on its balance of payments in $s. [1]

(b) Identify two reasons why Romania’s population fell between 1990 and 2022. [2]

(c) Explain why immigration into Romania may increase in the future. [2]

(d) Explain two reasons why household spending has increased in Romania. [4]

(e) Draw a demand and supply diagram to show the effect of setting a maximum price on electricity. [4]

(f) Analyse the relationship between GDP per head and average spending on food as a percentage of total household spending. [5]

(g) Discuss whether or not foreign MNCs reduce poverty in their host countries. [6]

(h) Discuss whether or not a higher proportion of women is likely to enter Romania’s labour force in the future. [6] Section B Answer any three questions. Each question is introduced by stimulus material. In your answer you may refer to this material and/or to other examples that you have studied.

2 South Korea makes use of both economic goods and free goods. Its output includes products with both elastic and inelastic supply. The country is building the world’s first floating city, estimated to cost $180m. This is to cope with rising sea levels caused by climate change. Governments take a number of measures to reduce greenhouse gases which contribute to climate change, including banning the burning of wood to heat homes.

(a) Identify a difference between economic goods and free goods. [2]

(b) Explain how opportunity cost will influence a government’s decision on whether to spend tax revenue on a large infrastructure project. [4]

(c) Analyse the influences on whether supply of a product is elastic or inelastic. [6]

(d) Discuss whether or not a government should ban the burning of wood to heat homes. [8]

3 Estonia’s factors of production are employed in a range of industries including education. In 2022, the country experienced a shortage of teachers. The government increased teachers’ wages to attract workers from other industries. Two of Estonia’s other industries are building and clothing. Estonia’s clothing industry has firms of different sizes. Estonia’s firms were affected in 2022 by the government increasing the money supply.

(a) Define factor of production. [2]

(b) Explain two reasons why building workers may not become teachers. [4]

(c) Analyse how a small firm can compete successfully with a large firm in the same industry.

[6]

(d) Discuss whether or not an increase in the money supply will benefit an economy. [8]

4 Nigeria has a mixed economic system. In January 2023, Nigeria had a high unemployment rate of 33% which created a number of costs. Its high inflation rate of 22% had several effects on the country’s firms. In 2022 and the start of 2023, Nigerians increased their demand for foreign currency.

(a) Identify two costs of unemployment. [2]

(b) Explain how the key resource allocation decisions are made in a mixed economic system.

[4]

(c) Analyse the causes of an increase in the demand for foreign currency. [6]

(d) Discuss whether or not inflation will harm a country’s firms. [8]

5 Finland is a high-income country that usually has a higher value of exports than imports. It has a strong commercial banking sector which has increased its lending in recent years. The country has an ageing population, with more than a quarter of its population aged over 65. In 2022, Finland’s Government had a budget deficit with government spending exceeding tax revenue.

(a) Identify a difference between an export and an import. [2]

(b) Explain why commercial banks may increase their lending. [4]

(c) Analyse how an ageing population may affect a country’s economic growth rate. [6]

(d) Discuss whether supply-side policy measures will reduce a government’s budget deficit. [8]