CIE IGCSE Topical Past Paper 2
4.5 Supply-side policy
0455/22/F/M/24
Since 2016, South Korea’s population has declined, due to a falling birth rate, and a high proportion of its population is now aged over 64. The South Korean government has used tax revenue to give cash incentives to couples to have more children. However, many parents have chosen to have fewer children and spend more on each child to ensure they get a good education. South Korea now has fewer but larger schools.
a) Identify two benefits people may gain from a good education. [2]
0455/21/M/J/22
Uganda specialises in agricultural products and has a relatively small secondary sector. In the 1990s, the Ugandan government privatised most of its firms, including banks and railways. Some economists thought this privatisation was unsuccessful because poverty increased and unemployment remained high. In recent years, the Ugandan government has used supply-side policy measures to reduce unemployment.
d) Discuss whether or not the use of supply-side policy measures will reduce unemployment.[8]
0455/22/F/M/21
It is estimated that half of Egyptian men smoke. This is one of the highest rates in the world. In recent years the Egyptian government has increased the tax on cigarettes. The government and central bank have also tried to reduce inflation and improve Egypt’s international trade performance. The Egyptian government could use subsidies to reduce its deficit on the current account of its balance of payments.
c) Analyse how a central bank could reduce inflation. [6]
0455/23/O/N/20
The use of supply-side policy measures, including deregulation, is moving China closer to a market economic system. Some supply-side policy measures, such as education and subsidies, can also increase a country’s economic growth rate. China joined the World Trade Organisation in 2001 and has since removed some quotas on imports and reduced some import tariffs. These measures may influence the size of its current account surplus.
a) Define deregulation. [2]
b) Analyse how education and subsidies can increase a country’s economic growth rate. [6]
0455/21/O/N/20
Free trade has allowed the Mexican economy to specialise in low-cost manufacturing. Unemployment nationally is relatively low, but approximately 50 million people were still considered to be in poverty in 2016. In addition, there are worries that technological advances will soon replace labour with capital.
d) Discuss whether or not supply-side policy measures can reduce unemployment. [8]
0455/23/M/J/18
In early 2016, the central bank of the Republic of Turkey cut interest rates five times. This was despite an inflation rate of 7.6%. The economy had a combination of a low saving rate and weak investment. To stimulate economic growth the Turkish government announced a package of reforms including subsidies for research and investment.
d) Discuss the impact of supply-side policy measures on government expenditure and on government revenue. [8]