0455 Economics November 2025 Question Paper 21

1 (a) Calculate the total financial sector contribution (in $) to Switzerland’s GDP. [1]

(b) Identify two microeconomic policy measures. [2]

(c) Explain one reason why overdependence on foreign markets is a disadvantage to the Swiss economy.

[2]

(d) Draw a demand and supply diagram to show how a subsidy to solar energy producers would affect the market for solar energy. [4]

(e) Explain two reasons why Switzerland had a current account surplus. [4]

(f) Analyse the relationship between the global GDP growth rate and the change in the value of the Swiss franc. [5]

(g) Discuss whether or not an increase in interest rates will harm the Swiss economy. [6]

(h) Discuss whether or not a bank merger will benefit Swiss consumers and workers. [6] Section B Answer any three questions. Each question is introduced by stimulus material. In your answers you may refer to the material and/or other examples you have studied.

2 In the first half of 2022, Guyana’s GDP grew by 36.4%. Most of this growth was due to higher output in the primary sector. The government used some of the tax revenue generated from this growth to fund long‑run development projects such as infrastructure and education. However, in the short run, there was a rise in house prices.

(a) Identify two examples of primary sector industries. [2]

(b) Explain two causes of rising GDP. [4]

(c) Analyse why house prices may increase. [6]

(d) Discuss whether or not increased government spending on education will lead to economic development. [8]

3 Japan has faced significant periods of deflation in recent decades. Despite efforts to stimulate the economy through fiscal policy measures and monetary policy measures, economic growth remains low. Some economists have also argued that the monetary policy used by the central bank is one of the causes of low productivity in Japan.

(a) Identify two fiscal policy measures. [2]

(b) Explain two influences on productivity.

[4]

(c) Analyse reasons why central banks are important for an economy. [6]

(d) Discuss whether or not deflation is a problem for an economy. [8]

4 Lanzarote, a Spanish island, was once an area with very high rates of poverty. However, the rise of tourism has greatly reduced unemployment. The government is trying to attract more workers to the island by using non‑wage factors. Lanzarote’s low taxes also attract workers to the island. Mobility of labour in the island’s economy has also increased.

(a) Identify two non‑wage factors that may influence a worker’s job choice. [2]

(b) Explain how unemployment can lead to poverty. [4]

(c) Analyse the influences on the mobility of labour. [6]

(d) Discuss whether or not low taxes are beneficial for an economy. [8]

5 Street vendors mostly operate outside of the formal economy to avoid government regulation. However, many are now entering the formal economy. This has led to more government revenue, increased productivity and higher economic growth. Some governments plan to take measures to increase the number of firms in the economy.

(a) Identify two reasons why workers may choose to work in the formal economy. [2]

(b) Explain two effects of economic growth on a country’s population. [4]

(c) Analyse how government regulation can reduce market failure. [6]

(d) Discuss whether or not an increase in the number of firms will benefit an economy. [8]