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GCE JAN 2008 : (AS 3) The National Economy

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ADVANCED SUBSIDIARY (AS) General Certificate of Education 2008 Economics assessing Module 2: The National Economy ASE31 Assessment Unit AS 3 [ASE31] FRIDAY 25 JANUARY, AFTERNOON TIME 1 hour 30 minutes. INSTRUCTIONS TO CANDIDATES Write your Centre Number and Candidate Number on the Answer Booklet provided. Answer Question 1 and any one of Questions 2, 3 or 4. INFORMATION FOR CANDIDATES The total mark for this paper is 80. Quality of written communication will be assessed in all questions except Question 1 part (a). Figures in brackets printed down the right-hand side of pages indicate the marks awarded to each question or part question. ADVICE TO CANDIDATES You are advised to take account of the marks for each part question in allocating the available examination time. ASE3W8 3847 You must answer this question. 1 Study the information below and answer the questions which follow. Can t work, won t work 14 76 12 74 10 72 8 70 6 68 4 66 2 64 Employment rate (per cent) 78 0 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 UK employment (Left-hand axis) ILO unemployment rate (per cent) UK employment and unemployment rates UK unemployment (Right-hand axis) Figure 1 In December 2006, the Work and Pensions Secretary, John Hutton, pledged to end the can t work, won t work culture and asked investment banker, David Freud, to submit a report into reform of the UK welfare state. His recommendations were published in March 2007. (Paragraph 1) That there is something fundamentally flawed in UK welfare provision cannot be disputed. The employment rate which measures the proportion of the working-age population who have a job is around 75%. The remainder are either unemployed (meaning that they have no job but are actively seeking employment) or they are economically inactive, (meaning that they also have no job but have no intention of finding one). (Paragraph 2) An astonishing 4.9 million people of working age claim benefit and of these 3.1 million have been on benefits for more than a year. This comes at considerable expense to the government which estimates that the cost of benefits plus the loss of tax income amounts to 9000 per person per year. There are also significant costs to society which are associated with long term welfare-dependency. It is the government s target to increase the employment rate to 80%. This would require a 42% reduction in the 3.1 million people who are long term unemployed or economically inactive. (Paragraph 3) The Freud report suggests a number of ways in which this could be achieved. One major group of the economically inactive is single parents who are currently not required to prove that they are available for work. Instead of being work-tested in this way they are able to claim benefit until their youngest child turns 16. Under Freud s proposals these parents will be transferred to the work-tested Jobseekers Allowance when their youngest child is 12. Britain is almost alone in not work-testing single parents. France, Germany, Norway and Switzerland impose work tests when children turn 3 years of age. (Paragraph 4) ASE3W8 3847 2 Another of Freud s proposals is that private sector organisations such as recruitment agencies should deal with the most difficult cases and be rewarded by receiving some of the cost-savings received by government. (Paragraph 5) One of Freud s more headline-grabbing suggestions is that long term unemployed should receive help with hair cuts and tattoo removal to make them more presentable at interview. All of this falls far short of Bill Clinton s reform in the USA which cut off all benefits after 5 years, no matter how many children a parent has! (Paragraph 6) Traditionally unemployment has been attributed to job shortages and some on the political left still hold to this view. John McDonnell, a left wing Labour MP, referred to Freud s proposals as yet another instance of brutality against people who are in desperate situations and asked, Are the jobs out there for people to do? (Paragraph 7) However another Labour MP, Frank Field answers McDonnell by pointing out that two million immigrants have entered the UK and found employment at a time when 3.1 million UK citizens were long term benefit claimants. (Paragraph 8) Source: Adapted from The Times April 3rd 2007, author John Paul Flintoff and Budget 2007 published by H M Treasury (a) Using the information in Figure 1, describe the trends in UK employment and unemployment from 1984 to 2006. [6] (b) Explain some of the factors which contribute to high levels of economic inactivity in the UK. [8] (c) Explain why reducing long term welfare-dependency has become one of the government s top economic priorities. [6] (d) Explain why expansionary fiscal and monetary policies would be inappropriate tools in tackling long-term unemployment. [8] (e) Critically examine some of the other policies which government could use to reduce the UK s high level of long term welfare-dependency and unemployment. [12] ASE3W8 3847 3 [Turn over Answer any one of Questions 2, 3 or 4. 2 (a) Explain what is meant by the term Gross Domestic Product (GDP). [8] (b) Analyse some of the factors which determine the long term growth rate of real GDP. [16] (c) Evaluate the view that any measure of growth which does not allow for estimates of damage to the environment is fundamentally flawed. [16] 3 (a) Explain what is meant by the rate of inflation. (b) Analyse the main factors which may influence the UK s rate of inflation. [8] [16] (c) Accurate measurement of the rate of inflation is impossible, so it should cease to be a target for government policy. Discuss this view. [16] 4 (a) Explain what is meant by macroeconomic equilibrium. [8] (b) Using aggregate demand and supply analysis, explain how a country s macroeconomic equilibrium is likely to be affected by a significant cut in government spending. [16] (c) Critically examine the main policy options available to government in attempting to maintain stability in the economy. [16] Permission to reproduce all copyright material has been applied for. In some cases, efforts to contact copyright holders may have been unsuccessful and CCEA will be happy to rectify any omissions of acknowledgement in future if notified. ASE3W8 3847 SP (SC/SLM) T51320/3

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Additional Info : Gce Economics January 2008 Assessment Unit AS 3 Module 2: The National Economy
Tags : General Certificate of Education, A Level and AS Level, uk, council for the curriculum examinations and assessment, gce exam papers, gce a level and as level exam papers , gce past questions and answer, gce past question papers, ccea gce past papers, gce ccea past papers

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