Monday 20 May 2024 – Afternoon
A Level Economics
H460/02 Macroeconomics
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INSTRUCTIONS
• Use black ink. You can use an HB pencil, but only for graphs and diagrams.
• Write your answer to each question in the space provided. If you need extra space use
the lined pages at the end of this booklet. The question numbers must be clearly shown.
• Answer all the questions in Section A, one question in Section B and one question in
Section C.
INFORMATION
• The total mark for this paper is 80.
• The marks for each question are shown in brackets [ ].
• Quality of extended response will be assessed in questions marked with an asterisk (*).
• This document has 20 pages.
ADVICE
• Read each question carefully before you start your answer.
Read the stimulus material and answer all the parts of Question 1.
Changing economic conditions in Kenya
At the start of the 2010s, Kenya experienced high and unstable inflation. The inflation rate
peaked at 14.2% in 2011. This rapid rise in the price level reduced the amount of goods and
services that Kenyans’ households disposable income could buy. It also reduced the international
competitiveness of the country’s products, decreasing net exports.
At the end of the 2010s, Kenya’s inflation rate was lower and more stable. It was 5.2% in 2019 5
and 5.4% in 2020. The country’s relative export prices had also fallen. In 2019, Kenya’s export
price index was 146.2 and its import price index was 215.0.
Kenya’s economic growth rate and its government’s attempts to raise the living standards
of its citizens have been restricted by poor infrastructure. The country has received financial
assistance from the International Development Association (IDA). This part of the World 10
Bank is the world’s largest multilateral source of concessionary financing for low- and lower
middle-income countries. It provides development loans, grants and guarantees to these
countries to help them increase their economic growth and development. In 2020, the IDA lent
$306 billion to 76 countries Fig. 1 shows the IDA assistance per capita received by six of those
countries and their GDP per capita in 2020 expressed in terms of index figures. 15
Fig. 1
Index figures for the IDA assistance per capita and GDP per capita 2020
Index of GDP
per capita
160
140 Kenya
Bangladesh
120
100 Myanmar
80 Nepal
60
40 Democratic Republic
of the Congo
20 Somalia
0
50 100 150 200 250 300 350 400
Index of IDA assistance per capita
, 3
The Kenyan government has raised its spending on education in recent years. Education can
have an impact on life expectancy. Table 1 shows mean years of schooling and life expectancy in
the six countries shown in Fig. 1.
As well as increases in spending on education, the Kenyan government has spent more on
health care, infrastructure projects and subsidies given to farmers and tourist firms. It is expected 20
that this increase in government spending will affect Kenya’s international trade position.
However, it is uncertain whether it will reduce or increase Kenya’s government budget deficit.
Kenya’s main exports include tea and cut flowers. Fig. 2 shows Kenya’s main trading partners.
Fig. 2
Kenya’s main trading partners 2020
Key:
source of imports
destination of exports
USA
UK
USA JAPAN
CHINA
INDIA
Kenyans are affected by opportunities and challenges created by globalisation. In recent years,
the prices of some products bought by Kenyans have fallen and their quality has increased. The 25
gap between the pay of skilled and unskilled workers in the country has widened. Unemployment
is high in the country although some Kenyans have gained employment in foreign multinational
companies operating in Kenya.
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