Examiner’s use only

Team Leader’s use only

Surname Initial(s)

Signature

Centre No.

Turn over

Candidate No.

Question Leave Number Blank

Section A Section B

Total

Paper Reference(s)

6356/01EdexcelGCEEconomicsAdvancedUnit 6 – The UK in the Global Economy(Synoptic Unit)Tuesday 2 February 2010 – AfternoonTime: 1 hour 45 minutes

Materialsrequiredforexamination ItemsincludedwithquestionpapersNil Nil

InstructionstoCandidatesIn the boxes above, write your centre number, candidate number, your surname, initial(s) and signature. Check that you have the correct question paper.Write your answers in the spaces provided in this question paper.Answer ONE Question from Section A and ONE Question from Section B.Indicate which question you are answering by marking the box ( ). If you change your mind, put a line through the box ( ) and then indicate your new question with a cross ( ).

InformationforCandidatesThis question paper is designed to give you the opportunity to use the skills and ideas developed throughout the course in a new context. You may include in your answers relevant information from the whole of your course, where appropriate.There are 32 pages in this question paper. Any blank pages are indicated.The marks for the various parts of questions are shown in round brackets: e.g. (2).Questions in Section A will be marked out of 100; those in Section B will be marked out of 50. The mark out of 100 for Section A will be divided by two and added to the mark out of 50 on the chosen question from Section B.

AdvicetoCandidatesYou are advised to divide your time equally between Section A and Section B. You will be assessed on your ability to organise and present information, ideas, descriptions and arguments clearly and logically, including your use of grammar, punctuation and spelling.

Paper Reference

6 3 5 6 0 1

This publication may be reproduced only in accordance with Edexcel Limited copyright policy. ©2010 Edexcel Limited.

Printer’s Log. No.

M36185AW850/6356/57570 1/1/1/1/1/1/

*M36185A0132*

M36185A_GCE_A_Economics_Unit_6_F1 1 29/09/2009 12:12:06

Leave blank

2

*M36185A0�3�*

SECTIONA

AnswerONEquestionfromthissection.

Youshouldspendapproximately45minutesonthissection.

Youmayincludeadiagraminyouranswerwherethisishelpful.

1. (a) Assess the impact on the world economy of the growth of regional trade blocs. (40)

(b) Examine the likely impact of global recession on interdependence between countries in the world economy.

(60) Q1

(Total100marks)

2. (a) In 2000/01 the UK’s public expenditure was 37 per cent of GDP. This is forecast to increase to over 45 per cent of GDP by 2009/10. Examine the likely economic effects, apartfromincreasedtaxation, of this trend.

(40)

(b) Assess the economic effects of a significant increase in taxation in the UK economy. (60) Q2

(Total100marks)

3. (a) Examine the likely factors which affect decisions by multinationals to invest in EU countries.

(40)

(b) The UK has been the largest recipient of inward foreign investment within the EU in recent years. Evaluate the benefits of such foreign investment for the UK economy.

(60) Q3

(Total100marks)

TOTALFORSECTIONA:100MARKS

Donotusepencil.Useblueorblackink.

PutacrossintheboxindicatingthequestionfromSectionAthatyouhavechosen( ).Ifyouchangeyourmind,putalinethroughthebox( )andthenindicateyournew

questionwithacross( ).

Chosen Question Number: Question1Question2Question3

M36185A_GCE_A_Economics_Unit_6_F2 2 29/09/2009 12:12:06

Leave blank

3

Turnover*M36185A033�*

Write your answer to Section A here:

___________________________________________________________________________

___________________________________________________________________________

___________________________________________________________________________

___________________________________________________________________________

___________________________________________________________________________

___________________________________________________________________________

___________________________________________________________________________

___________________________________________________________________________

___________________________________________________________________________

___________________________________________________________________________

___________________________________________________________________________

___________________________________________________________________________

___________________________________________________________________________

___________________________________________________________________________

___________________________________________________________________________

___________________________________________________________________________

___________________________________________________________________________

___________________________________________________________________________

___________________________________________________________________________

___________________________________________________________________________

___________________________________________________________________________

___________________________________________________________________________

___________________________________________________________________________

___________________________________________________________________________

___________________________________________________________________________

___________________________________________________________________________

___________________________________________________________________________

___________________________________________________________________________

___________________________________________________________________________

___________________________________________________________________________

___________________________________________________________________________

___________________________________________________________________________

___________________________________________________________________________

___________________________________________________________________________

___________________________________________________________________________

M36185A_GCE_A_Economics_Unit_6_F3 3 29/09/2009 12:12:06

Leave blank

4

*M36185A0�3�*

___________________________________________________________________________

___________________________________________________________________________

___________________________________________________________________________

___________________________________________________________________________

___________________________________________________________________________

___________________________________________________________________________

___________________________________________________________________________

___________________________________________________________________________

___________________________________________________________________________

___________________________________________________________________________

___________________________________________________________________________

___________________________________________________________________________

___________________________________________________________________________

___________________________________________________________________________

___________________________________________________________________________

___________________________________________________________________________

___________________________________________________________________________

___________________________________________________________________________

___________________________________________________________________________

___________________________________________________________________________

___________________________________________________________________________

___________________________________________________________________________

___________________________________________________________________________

___________________________________________________________________________

___________________________________________________________________________

___________________________________________________________________________

___________________________________________________________________________

___________________________________________________________________________

___________________________________________________________________________

___________________________________________________________________________

___________________________________________________________________________

___________________________________________________________________________

___________________________________________________________________________

___________________________________________________________________________

___________________________________________________________________________

___________________________________________________________________________

M36185A_GCE_A_Economics_Unit_6_F4 4 29/09/2009 12:12:06

Leave blank

5

Turnover*M36185A053�*

___________________________________________________________________________

___________________________________________________________________________

___________________________________________________________________________

___________________________________________________________________________

___________________________________________________________________________

___________________________________________________________________________

___________________________________________________________________________

___________________________________________________________________________

___________________________________________________________________________

___________________________________________________________________________

___________________________________________________________________________

___________________________________________________________________________

___________________________________________________________________________

___________________________________________________________________________

___________________________________________________________________________

___________________________________________________________________________

___________________________________________________________________________

___________________________________________________________________________

___________________________________________________________________________

___________________________________________________________________________

___________________________________________________________________________

___________________________________________________________________________

___________________________________________________________________________

___________________________________________________________________________

___________________________________________________________________________

___________________________________________________________________________

___________________________________________________________________________

___________________________________________________________________________

___________________________________________________________________________

___________________________________________________________________________

___________________________________________________________________________

___________________________________________________________________________

___________________________________________________________________________

___________________________________________________________________________

___________________________________________________________________________

___________________________________________________________________________

M36185A_GCE_A_Economics_Unit_6_F5 5 29/09/2009 12:12:07

Leave blank

6

*M36185A063�*

___________________________________________________________________________

___________________________________________________________________________

___________________________________________________________________________

___________________________________________________________________________

___________________________________________________________________________

___________________________________________________________________________

___________________________________________________________________________

___________________________________________________________________________

___________________________________________________________________________

___________________________________________________________________________

___________________________________________________________________________

___________________________________________________________________________

___________________________________________________________________________

___________________________________________________________________________

___________________________________________________________________________

___________________________________________________________________________

___________________________________________________________________________

___________________________________________________________________________

___________________________________________________________________________

___________________________________________________________________________

___________________________________________________________________________

___________________________________________________________________________

___________________________________________________________________________

___________________________________________________________________________

___________________________________________________________________________

___________________________________________________________________________

___________________________________________________________________________

___________________________________________________________________________

___________________________________________________________________________

___________________________________________________________________________

___________________________________________________________________________

___________________________________________________________________________

___________________________________________________________________________

___________________________________________________________________________

___________________________________________________________________________

___________________________________________________________________________

M36185A_GCE_A_Economics_Unit_6_F6 6 29/09/2009 12:12:07

Leave blank

7

Turnover*M36185A0�3�*

___________________________________________________________________________

___________________________________________________________________________

___________________________________________________________________________

___________________________________________________________________________

___________________________________________________________________________

___________________________________________________________________________

___________________________________________________________________________

___________________________________________________________________________

___________________________________________________________________________

___________________________________________________________________________

___________________________________________________________________________

___________________________________________________________________________

___________________________________________________________________________

___________________________________________________________________________

___________________________________________________________________________

___________________________________________________________________________

___________________________________________________________________________

___________________________________________________________________________

___________________________________________________________________________

___________________________________________________________________________

___________________________________________________________________________

___________________________________________________________________________

___________________________________________________________________________

___________________________________________________________________________

___________________________________________________________________________

___________________________________________________________________________

___________________________________________________________________________

___________________________________________________________________________

___________________________________________________________________________

___________________________________________________________________________

___________________________________________________________________________

___________________________________________________________________________

___________________________________________________________________________

___________________________________________________________________________

___________________________________________________________________________

___________________________________________________________________________

M36185A_GCE_A_Economics_Unit_6_F7 7 29/09/2009 12:12:07

Leave blank

8

*M36185A083�*

___________________________________________________________________________

___________________________________________________________________________

___________________________________________________________________________

___________________________________________________________________________

___________________________________________________________________________

___________________________________________________________________________

___________________________________________________________________________

___________________________________________________________________________

___________________________________________________________________________

___________________________________________________________________________

___________________________________________________________________________

___________________________________________________________________________

___________________________________________________________________________

___________________________________________________________________________

___________________________________________________________________________

___________________________________________________________________________

___________________________________________________________________________

___________________________________________________________________________

___________________________________________________________________________

___________________________________________________________________________

___________________________________________________________________________

___________________________________________________________________________

___________________________________________________________________________

___________________________________________________________________________

___________________________________________________________________________

___________________________________________________________________________

___________________________________________________________________________

___________________________________________________________________________

___________________________________________________________________________

___________________________________________________________________________

___________________________________________________________________________

___________________________________________________________________________

___________________________________________________________________________

___________________________________________________________________________

___________________________________________________________________________

___________________________________________________________________________

M36185A_GCE_A_Economics_Unit_6_F8 8 29/09/2009 12:12:07

Leave blank

9

Turnover*M36185A0�3�*

___________________________________________________________________________

___________________________________________________________________________

___________________________________________________________________________

___________________________________________________________________________

___________________________________________________________________________

___________________________________________________________________________

___________________________________________________________________________

___________________________________________________________________________

___________________________________________________________________________

___________________________________________________________________________

___________________________________________________________________________

___________________________________________________________________________

___________________________________________________________________________

___________________________________________________________________________

___________________________________________________________________________

___________________________________________________________________________

___________________________________________________________________________

___________________________________________________________________________

___________________________________________________________________________

___________________________________________________________________________

___________________________________________________________________________

___________________________________________________________________________

___________________________________________________________________________

___________________________________________________________________________

___________________________________________________________________________

___________________________________________________________________________

___________________________________________________________________________

___________________________________________________________________________

___________________________________________________________________________

___________________________________________________________________________

___________________________________________________________________________

___________________________________________________________________________

___________________________________________________________________________

___________________________________________________________________________

___________________________________________________________________________

___________________________________________________________________________

M36185A_GCE_A_Economics_Unit_6_F9 9 29/09/2009 12:12:07

Leave blank

10

*M36185A0103�*

SECTIONB–DATARESPONSE

AnswerONEquestionfromthissection.

Youshouldspendapproximately45minutesonthissection.

IfyouanswerQuestion4putacrossinthisbox.

Question4 TariffsonTextiles

Extract1 TheendofTextilesQuotas

The World Trade Organisation (WTO) ended its Multi-Fibre Agreement (MFA) on 31 December 2004. The MFA was established in the 1970s to give some protection to the textile industries of industrialised countries facing competition from countries with lower manufacturing costs such as Bangladesh and China. As part of the MFA, quotas were introduced to prevent a surge of imports which threatened to cause serious damage to a country’s own producers. Since 1995, the WTO has been gradually phasing out quotas.

The removal of quotas will not only harm industrial companies but also poor and middle income countries such as Sri Lanka, Bangladesh, Indonesia and Morocco. The worry is that, having no competitive advantage beyond abundant cheap labour, they will lose market share to countries such as China and India which have vertically integrated supply chains.

Some argue that quotas should be retained against other countries. For example, it is argued that China is keeping its currency at an artificially low level and giving state subisidies. However, supporters of the MFA claim it will mean increased efficiency and lower costs for Western consumers. Supporters also argue that the move will see more jobs created in India and China.

Producers in rich countries are also alarmed at the ending of the MFA. In the USA, textile manufacturers are pressing for protectionism, saying that China will ‘destroy’ the American textile industry. Trade unions also argued that 350,000 jobs have been lost in America’s textile sector between 2001 and 2004 and that, if nothing is done, many of the remaining 695,000 will likewise be on a fast boat to China with the abolition of quotas. In the EU the industry employed 2.7 million people in 2003 and had a turnover of €225 billion. But the EU’s imports of Chinese textiles and clothing almost doubled between 2001 and 2003 and employment in these industries is falling rapidly. However, in the UK, members of the 195,000 textiles workforce are finding jobs in companies at the top end of the spectrum where there are larger profit margins.

Source: adapted from www.bbc.co.uk and from The Economist, 13 November 2004

5

10

15

20

25

M36185A_GCE_A_Economics_Unit_6_F10 10 29/09/2009 12:12:07

Leave blank

11

Turnover*M36185A0113�*

Extract2 Tariffsontextiles

Even after quotas are phased out, exports of these goods from developing to industrialised nations will face tariff levels that are considerably higher than for other manufactured goods, as well as sharp tariff ‘peaks’ for certain goods. The average tax imposed by rich countries on textiles is 12 per cent, compared with 3.8 per cent for all manufactured goods; peaks reach up to a remarkable 30 or 40 per cent on particular goods. Men’s synthetic shirts face a huge 32 per cent tariff, for example, at US customs.

The disproportionate tariffs on these goods are evidenced by the fact that, while accounting for only 6.7 per cent of the value of US imports, shoes and clothes account for $8.7 billion tariff revenue – almost half of all tariff revenue collected. This can be likened to a system of regressive taxation.

Source: adapted from ‘Stitched Up’, Oxfam Briefing Paper, April 2004

(a) Briefly explain the role of the WTO.

___________________________________________________________________

___________________________________________________________________

___________________________________________________________________

___________________________________________________________________

___________________________________________________________________

___________________________________________________________________

___________________________________________________________________

___________________________________________________________________

___________________________________________________________________

___________________________________________________________________(4)

5

10

M36185A_GCE_A_Economics_Unit_6_F11 11 29/09/2009 12:12:07

Leave blank

12

*M36185A01�3�*

(b) Why might the removal of textile quotas harm ‘poor and middle-income countries’? (Extract 1, lines 7–8)

___________________________________________________________________

___________________________________________________________________

___________________________________________________________________

___________________________________________________________________

___________________________________________________________________

___________________________________________________________________

___________________________________________________________________

___________________________________________________________________

___________________________________________________________________

___________________________________________________________________

___________________________________________________________________

___________________________________________________________________

___________________________________________________________________

___________________________________________________________________

___________________________________________________________________

___________________________________________________________________

___________________________________________________________________

___________________________________________________________________(6)

(c) With reference to Extract 1, to what extent might the continued use of protectionist measures against imported textiles from China be justified?

___________________________________________________________________

___________________________________________________________________

___________________________________________________________________

___________________________________________________________________

___________________________________________________________________

___________________________________________________________________

___________________________________________________________________

___________________________________________________________________

___________________________________________________________________

___________________________________________________________________

___________________________________________________________________

___________________________________________________________________

___________________________________________________________________

___________________________________________________________________

M36185A_GCE_A_Economics_Unit_6_F12 12 29/09/2009 12:12:07

Leave blank

13

Turnover*M36185A0133�*

___________________________________________________________________

___________________________________________________________________

___________________________________________________________________

___________________________________________________________________

___________________________________________________________________

___________________________________________________________________

___________________________________________________________________

___________________________________________________________________

___________________________________________________________________

___________________________________________________________________

___________________________________________________________________

___________________________________________________________________

___________________________________________________________________

___________________________________________________________________

___________________________________________________________________

___________________________________________________________________

___________________________________________________________________

___________________________________________________________________

___________________________________________________________________

___________________________________________________________________

___________________________________________________________________

___________________________________________________________________

___________________________________________________________________

___________________________________________________________________

___________________________________________________________________

___________________________________________________________________

___________________________________________________________________

___________________________________________________________________

___________________________________________________________________

___________________________________________________________________

___________________________________________________________________

___________________________________________________________________

___________________________________________________________________

___________________________________________________________________

___________________________________________________________________(10)

M36185A_GCE_A_Economics_Unit_6_F13 13 29/09/2009 12:12:07

Leave blank

14

*M36185A01�3�*

(d) With the aid of a diagram, assess the effects of tariffs on imports of textiles into the EU.

___________________________________________________________________

___________________________________________________________________

___________________________________________________________________

___________________________________________________________________

___________________________________________________________________

___________________________________________________________________

___________________________________________________________________

___________________________________________________________________

___________________________________________________________________

___________________________________________________________________

___________________________________________________________________

___________________________________________________________________

___________________________________________________________________

___________________________________________________________________

___________________________________________________________________

___________________________________________________________________

___________________________________________________________________

___________________________________________________________________

___________________________________________________________________

___________________________________________________________________

___________________________________________________________________

___________________________________________________________________

___________________________________________________________________

___________________________________________________________________

___________________________________________________________________

___________________________________________________________________

___________________________________________________________________

___________________________________________________________________

___________________________________________________________________

___________________________________________________________________

___________________________________________________________________

___________________________________________________________________

___________________________________________________________________

___________________________________________________________________

M36185A_GCE_A_Economics_Unit_6_F14 14 29/09/2009 12:12:07

Leave blank

15

Turnover*M36185A0153�*

___________________________________________________________________

___________________________________________________________________

___________________________________________________________________

___________________________________________________________________

___________________________________________________________________

___________________________________________________________________

___________________________________________________________________

___________________________________________________________________

___________________________________________________________________

___________________________________________________________________

___________________________________________________________________

___________________________________________________________________

___________________________________________________________________

___________________________________________________________________

___________________________________________________________________

___________________________________________________________________

___________________________________________________________________

___________________________________________________________________(12)

M36185A_GCE_A_Economics_Unit_6_F15 15 29/09/2009 12:12:07

Leave blank

16

*M36185A0163�*

(e) With reference to Extract 2, discuss the impact of tariffs on textiles on the distribution of income in the US.

___________________________________________________________________

___________________________________________________________________

___________________________________________________________________

___________________________________________________________________

___________________________________________________________________

___________________________________________________________________

___________________________________________________________________

___________________________________________________________________

___________________________________________________________________

___________________________________________________________________

___________________________________________________________________

___________________________________________________________________

___________________________________________________________________

___________________________________________________________________

___________________________________________________________________

___________________________________________________________________

___________________________________________________________________

___________________________________________________________________(6)

M36185A_GCE_A_Economics_Unit_6_F16 16 29/09/2009 12:12:08

Leave blank

17

Turnover*M36185A01�3�*

(f) To what extent can supply-side policies influence the international competitiveness of a country’s textile industry?

___________________________________________________________________

___________________________________________________________________

___________________________________________________________________

___________________________________________________________________

___________________________________________________________________

___________________________________________________________________

___________________________________________________________________

___________________________________________________________________

___________________________________________________________________

___________________________________________________________________

___________________________________________________________________

___________________________________________________________________

___________________________________________________________________

___________________________________________________________________

___________________________________________________________________

___________________________________________________________________

___________________________________________________________________

___________________________________________________________________

___________________________________________________________________

___________________________________________________________________

___________________________________________________________________

___________________________________________________________________

___________________________________________________________________

___________________________________________________________________

___________________________________________________________________

___________________________________________________________________

___________________________________________________________________

___________________________________________________________________

___________________________________________________________________

___________________________________________________________________

___________________________________________________________________

___________________________________________________________________

___________________________________________________________________

___________________________________________________________________

M36185A_GCE_A_Economics_Unit_6_F17 17 29/09/2009 12:12:08

Leave blank

18

*M36185A0183�*

___________________________________________________________________

___________________________________________________________________

___________________________________________________________________

___________________________________________________________________

___________________________________________________________________

___________________________________________________________________

___________________________________________________________________

___________________________________________________________________

___________________________________________________________________

___________________________________________________________________

___________________________________________________________________

___________________________________________________________________

___________________________________________________________________

___________________________________________________________________

___________________________________________________________________

___________________________________________________________________

___________________________________________________________________

___________________________________________________________________(12) Q4

(Total50marks)

M36185A_GCE_A_Economics_Unit_6_F18 18 29/09/2009 12:12:08

19

Turnover*M36185A01�3�*

BLANKPAGE

M36185A_GCE_A_Economics_Unit_6_F19 19 29/09/2009 12:12:08

Leave blank

20

*M36185A0�03�*

IfyouanswerQuestion5putacrossinthisbox.

Question5 BalanceofPaymentsandExchangeRates

Figure1:UK’stradeingoodsandservicesbalances1999–2006(£million)atcurrentprices

Year Imports of Goods

Exports of Goods

Trade in Goods balance

Trade in Services balance

1999 195 217 166 166 -29 051 15 562

2000 220 912 187 936 -32 976 15 002

2001 230 305 189 093 -41 212 17 200

2002 234 229 186 534 -47 695 19 632

2003 236 927 188 320 -48 607 22 612

2004 251 770 190 877 -60 893 28 146

2005 280 297 211 608 -68 689 25 875

2006 319 947 243 635 -76 312 33 108

2007 309 955 220 703 -89 252 41 772

Source: www.statistics.gov.uk/downloads/theme_economy/PinkBook_2008

Figure2:UK’sGDPatcurrentprices(£million)1999–2006

Year GDP

1999 928,730

2000 976,533

2001 1,201,828

2002 1,075,564

2003 1,139,746

2004 1,200,595

2005 1,252,505

2006 1,321,860

2007 1,401,042

Source: www.statistics.gov.uk/statbase/product

M36185A_GCE_A_Economics_Unit_6_F20 20 29/09/2009 12:12:08

Leave blank

21

Turnover*M36185A0�13�*

Figure3Sterlingtrade-weightedexchangerateINDEX

110

105

100

95

90

85

801996 1998 2000 2002 2004 2006 2008

Source: The Independent, 17 November 2008

Figure4BankofEnglandbaserate8

6

4

2

097 99 01 03 05 07 08

Source: The Times, 2 March 2009

M36185A_GCE_A_Economics_Unit_6_F21 21 29/09/2009 12:12:08

Leave blank

22

*M36185A0��3�*

(a) (i) With reference to Figures 1 and 2, calculate the value of imports of goods as a percentage of GDP in 1999 and 2007.

________________________________________________________________

________________________________________________________________

________________________________________________________________

________________________________________________________________

________________________________________________________________

________________________________________________________________(3)

(ii) With reference to the data and other information, discuss the likely economic effects of increased import penetration on the UK economy

________________________________________________________________

________________________________________________________________

________________________________________________________________

________________________________________________________________

________________________________________________________________

________________________________________________________________

________________________________________________________________

________________________________________________________________

________________________________________________________________

________________________________________________________________

________________________________________________________________

________________________________________________________________

________________________________________________________________

________________________________________________________________

________________________________________________________________

________________________________________________________________

________________________________________________________________

________________________________________________________________

________________________________________________________________

________________________________________________________________

________________________________________________________________

________________________________________________________________

________________________________________________________________

________________________________________________________________

________________________________________________________________

________________________________________________________________

M36185A_GCE_A_Economics_Unit_6_F22 22 29/09/2009 12:12:08

Leave blank

23

Turnover*M36185A0�33�*

________________________________________________________________

________________________________________________________________

________________________________________________________________

________________________________________________________________

________________________________________________________________

________________________________________________________________

________________________________________________________________

________________________________________________________________

________________________________________________________________

________________________________________________________________

________________________________________________________________

________________________________________________________________

________________________________________________________________

________________________________________________________________

________________________________________________________________

________________________________________________________________

________________________________________________________________

________________________________________________________________

________________________________________________________________

________________________________________________________________

________________________________________________________________

________________________________________________________________

________________________________________________________________

________________________________________________________________

________________________________________________________________

________________________________________________________________(10)

M36185A_GCE_A_Economics_Unit_6_F23 23 29/09/2009 12:12:08

Leave blank

24

*M36185A0��3�*

(iii) Examine two possible causes of the decline in exports of goods between 2006 and 2007.

________________________________________________________________

________________________________________________________________

________________________________________________________________

________________________________________________________________

________________________________________________________________

________________________________________________________________

________________________________________________________________

________________________________________________________________

________________________________________________________________

________________________________________________________________

________________________________________________________________

________________________________________________________________

________________________________________________________________

________________________________________________________________

________________________________________________________________

________________________________________________________________

________________________________________________________________

________________________________________________________________(6)

M36185A_GCE_A_Economics_Unit_6_F24 24 29/09/2009 12:12:08

Leave blank

25

Turnover*M36185A0�53�*

(b) (i) What relationship might be expected between a country’s interest rate and its currency’s exchange rate? Explain your answer.

________________________________________________________________

________________________________________________________________

________________________________________________________________

________________________________________________________________

________________________________________________________________

________________________________________________________________

________________________________________________________________

________________________________________________________________

________________________________________________________________

________________________________________________________________(4)

(ii) To what extent do the data in Figures 3 and 4 support this relationship?

________________________________________________________________

________________________________________________________________

________________________________________________________________

________________________________________________________________

________________________________________________________________

________________________________________________________________(3)

M36185A_GCE_A_Economics_Unit_6_F25 25 29/09/2009 12:12:08

Leave blank

26

*M36185A0�63�*

(iii) Assess two reasons for the fall in the sterling trade weighted exchange rate as shown in Figure 3 since 2007.

________________________________________________________________

________________________________________________________________

________________________________________________________________

________________________________________________________________

________________________________________________________________

________________________________________________________________

________________________________________________________________

________________________________________________________________

________________________________________________________________

________________________________________________________________

________________________________________________________________

________________________________________________________________

________________________________________________________________

________________________________________________________________

________________________________________________________________

________________________________________________________________

________________________________________________________________

________________________________________________________________

________________________________________________________________

________________________________________________________________

________________________________________________________________

________________________________________________________________

________________________________________________________________

________________________________________________________________

________________________________________________________________

________________________________________________________________

________________________________________________________________

________________________________________________________________

________________________________________________________________

________________________________________________________________

________________________________________________________________

________________________________________________________________

________________________________________________________________

________________________________________________________________

M36185A_GCE_A_Economics_Unit_6_F26 26 29/09/2009 12:12:08

Leave blank

27

Turnover*M36185A0��3�*

________________________________________________________________

________________________________________________________________

________________________________________________________________

________________________________________________________________

________________________________________________________________

________________________________________________________________

________________________________________________________________

________________________________________________________________

________________________________________________________________

________________________________________________________________

________________________________________________________________

________________________________________________________________

________________________________________________________________

________________________________________________________________

________________________________________________________________

________________________________________________________________

________________________________________________________________(12)

M36185A_GCE_A_Economics_Unit_6_F27 27 29/09/2009 12:12:09

Leave blank

28

*M36185A0�83�*

(c) Evaluate the significance of a decrease in the external value of sterling for the simultaneous achievement of the government’s macroeconomic objectives of low inflation, economic growth and full employment.

___________________________________________________________________

___________________________________________________________________

___________________________________________________________________

___________________________________________________________________

___________________________________________________________________

___________________________________________________________________

___________________________________________________________________

___________________________________________________________________

___________________________________________________________________

___________________________________________________________________

___________________________________________________________________

___________________________________________________________________

___________________________________________________________________

___________________________________________________________________

___________________________________________________________________

___________________________________________________________________

___________________________________________________________________

___________________________________________________________________

___________________________________________________________________

___________________________________________________________________

___________________________________________________________________

___________________________________________________________________

___________________________________________________________________

___________________________________________________________________

___________________________________________________________________

___________________________________________________________________

___________________________________________________________________

___________________________________________________________________

___________________________________________________________________

___________________________________________________________________

___________________________________________________________________

___________________________________________________________________

___________________________________________________________________

___________________________________________________________________

M36185A_GCE_A_Economics_Unit_6_F28 28 29/09/2009 12:12:09

Leave blank

29

*M36185A0��3�*

___________________________________________________________________

___________________________________________________________________

___________________________________________________________________

___________________________________________________________________

___________________________________________________________________

___________________________________________________________________

___________________________________________________________________

___________________________________________________________________

___________________________________________________________________

___________________________________________________________________

___________________________________________________________________

___________________________________________________________________

___________________________________________________________________

___________________________________________________________________

___________________________________________________________________

___________________________________________________________________

___________________________________________________________________

___________________________________________________________________(12) Q5

(Total50marks)

TOTALFORSECTIONB:50MARKS

TOTALFORPAPER:100MARKS

END

M36185A_GCE_A_Economics_Unit_6_F29 29 29/09/2009 12:12:09

30

*M36185A0303�*

BLANKPAGE

M36185A_GCE_A_Economics_Unit_6_F30 30 29/09/2009 12:12:09

31

*M36185A0313�*

BLANKPAGE

M36185A_GCE_A_Economics_Unit_6_F31 31 29/09/2009 12:12:09

32

*M36185A03�3�*

BLANKPAGE

M36185A_GCE_A_Economics_Unit_6_F32 32 29/09/2009 12:12:09