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1 Friday 23 May 2014 Afternoon GCSE ECONOMICS A592/01 How the Economy Works * * Candidates answer on the Question Paper. OCR supplied materials: None Other materials required: Calculators may be used Duration: 1 hour * A * INSTRUCTIONS TO CANDIDATES Write your name, centre number and candidate number in the boxes above. Please write clearly and in capital letters. Use black ink. HB pencil may be used for graphs and diagrams only. Answer all the questions. Read each question carefully. Make sure you know what you have to do before starting your answer. Write your answer to each question in the space provided. If additional space is required, you should use the lined pages at the end of this booklet. The question number(s) must be clearly shown. Do not write in the bar codes. INFORMATION FOR CANDIDATES The number of marks is given in brackets [ ] at the end of each question or part question. The total number of marks for this paper is 60. The quality of your written communication will be taken into account in the marking of your answers to the questions labelled with an asterisk (*). This document consists of 16 pages. Any blank pages are indicated. A calculator may be used for this paper [T/501/5498] DC (DTC/CGW) / /5 OCR is an exempt Charity Turn over
2 2 Answer all questions. 1 Fig. 1 shows the level of UK unemployment between 2008 and unemployment, millions Mar Jun Sep Dec Mar Jun Sep Dec Mar Jun Sep Dec Mar Jun Sep Dec Fig. 1 UK unemployment (millions), (a) Use the information in Fig. 1 to describe what happened to the level of unemployment between March 2008 and December [2] (b) (i) Identify the two methods by which the UK government measures unemployment [2] (ii) Explain the cause of seasonal unemployment.... [2]
3 (c) Explain two policies which the UK government could use to increase employment. 3 Policy 1... Policy 2... [6] Turn over
4 4 (d)* Discuss whether unemployment is always a problem for an economy.... [8]
5 5 BLANK PAGE Question 2 begins on page 6 PLEASE DO NOT WRITE ON THIS PAGE Turn over
6 6 2 Fig. 2 shows the UK Bank rate (also known as the base rate) as set by the Bank of England s Monetary Policy Committee. The Bank rate is shown for the period July 2007 to November (a) Using the information in Fig. 2, calculate the difference in the UK Bank rate between May 2008 and November Show your working.... [2] (b) Other than the UK Bank rate, explain two factors which affect the rate of interest on loans. Factor 1... Factor 2... [4]
7 7 Jul 07 Aug 07 Sep 07 Oct 07 Nov 07 Dec 07 Jan 08 Feb 08 Mar 08 Apr 08 May 08 Jun 08 Jul 08 Aug 08 Sep 08 Oct 08 Nov 08 Dec 08 Jan 09 Feb 09 Mar 09 Apr 09 May 09 Jun 09 Jul 09 Aug 09 Sep 09 Oct 09 Nov 09 Dec 09 Jan 10 Feb 10 Mar 10 Apr 10 May 10 Jun 10 Jul 10 Aug 10 Sep 10 Oct 10 Nov 10 Dec 10 Jan 11 Feb 11 Mar 11 Apr 11 May 11 Jun 11 Jul 11 Aug 11 Sep 11 Oct 11 Nov 11 Dec 11 Jan 12 Feb 12 Mar 12 Apr 12 May 12 Jun 12 Jul 12 Aug 12 Sep 12 Oct 12 Nov month Fig. 2 UK Bank rate, UK Bank rate (%) Turn over
8 (c) (i) 8 Would savers benefit from the trend shown in Fig. 2? Explain your answer.... [2] (ii) Explain why the trend shown in Fig. 2 could encourage spending in the economy.... [4]
9 9 (d)* Does the UK economy benefit from a period of low interest rates? Give reasons for your answer.... [8] Turn over
10 3 Fig. 3 shows estimated UK government tax revenue for the year council tax 26 bn income tax 155 bn VAT 102 bn excise duties 48 bn national insurance 106 bn other taxes 84 bn corporation tax 45 bn business rates 26 bn Fig. 3 Estimated UK government tax revenue, (total = 592 bn) (a) Using Fig. 3, identify: a direct tax an indirect tax. [2]
11 (b) (i) 11 Definitions of two taxes are given below. Identify the tax in Fig. 3 which matches each definition. Tax on company profits... Tax on the purchase of goods and services... [2] (ii) Estimated government spending in was 683 bn. Using Fig. 3, calculate the estimated budget deficit for Show your working.... [2] Turn over
12 12 (c) Explain how the government could use progressive taxes and transfer payments to reduce income inequalities in the UK.... [6]
13 13 (d)* Discuss whether increases in taxes on tobacco products benefit the economy.... [8] END OF QUESTION PAPER
14 14 ADDITIONAL ANSWER SPACE If additional answer space is required, you should use the following lined page(s). The question number(s) must be clearly shown in the margins
15
16 16 PLEASE DO NOT WRITE ON THIS PAGE Copyright Information OCR is committed to seeking permission to reproduce all third-party content that it uses in its assessment materials. OCR has attempted to identify and contact all copyright holders whose work is used in this paper. To avoid the issue of disclosure of answer-related information to candidates, all copyright acknowledgements are reproduced in the OCR Copyright Acknowledgements Booklet. This is produced for each series of examinations and is freely available to download from our public website ( after the live examination series. If OCR has unwittingly failed to correctly acknowledge or clear any third-party content in this assessment material, OCR will be happy to correct its mistake at the earliest possible opportunity. For queries or further information please contact the Copyright Team, First Floor, 9 Hills Road, Cambridge CB2 1GE. OCR is part of the Cambridge Assessment Group; Cambridge Assessment is the brand name of University of Cambridge Local Examinations Syndicate (UCLES), which is itself a department of the University of Cambridge.
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