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OCR A Level EconomicsH460/02 Macroeconomics MERGED QUESTION PAPER AND MARK SCHEME FOR MAY 2024
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OCR A Level EconomicsH460/02 Macroeconomics MERGED QUESTION PAPER AND MARK SCHEME FOR MAY 2024
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Monday 20 May 2024 – AfternoonA Level Economics
H460/02 Macroeconomics
Time allowed: 2 hours
Turn over
, 2
Section A
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
© OCR 2024
, 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.
Table 1
Mean years of schooling and life expectancy 2019
© hdr.undp.org,Human Development Reports. Permission to reproduce all copyright material has been applied for. In some cases, efforts to contact copyright-holders have been unsuccessful and OCR will be happy to rectify any omissions of acknowledgements in future papers if notified. Item removed due to third party
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.
© OCR 2024 Turn over
, 4
1
(a) Using information from the stimulus material, identify two components of Kenya’s aggregate
demand.
Component 1 ....................................................................................................................................
..........................................................................................................................................................
Component 2 ....................................................................................................................................
..........................................................................................................................................................
[2]
(b) Using information from the stimulus material, calculate to one decimal place Kenya’s terms of
trade in 2019.
..........................................................................................................................................................
..................................................................................................................................................... [1]
(c) Explain if the relationship in Fig. 1 between IDA assistance per capita and GDP per capita is the
expected one.
..........................................................................................................................................................
..........................................................................................................................................................
..........................................................................................................................................................
..........................................................................................................................................................
..........................................................................................................................................................
..................................................................................................................................................... [3]
© OCR 2024
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