Define the term multinational corporations indicated in bold in the text (paragraph [5]).

Define the term green GDP indicated in bold in the text (paragraph [7]).

Using a business cycle diagram from 2010 to 2019, explain how cyclical unemployment may have changed during the economic boom (paragraph [1]) and the recession (paragraph [2]) in Brazil.

Using an externalities diagram, explain how manufacturing companies in Brazil are contributing to market failure (paragraph [7]). 

Using information from the text/data and your knowledge of economics, evaluate the impact of market-oriented policies on economic development in Brazil.

Candidates who incorrectly label diagrams can be awarded a maximum of [3].

For a business cycle diagram, the vertical axis should be (Real) GDP, (Real) GDP growth/%, level of economic activity, (Real) output. The horizontal axis should be time and show dates from 2010–19. A title is not necessary.

If a student labels growth and shows a recession as positive the student can not be awarded full marks.

Candidates who incorrectly label diagrams can be awarded a maximum of [3].

The y axis may be labelled price but could be costs or benefits and the x axis labelled quantity.

Examiners should be aware that candidates may take a different approach which, if appropriate, should be rewarded.

Do not award beyond Level 2 if the answer does not contain reference to the information provided.

Command term
“Evaluate” requires candidates to make an appraisal by weighing up the strengths and limitations. Opinions and conclusions should be presented clearly and supported with appropriate evidence and sound argument.

Answers may include:

• Definitions of:
  
  • Economic development.
  • Market-orientated policies.

Economic analysis, focusing on economic development, may include:

• AD/AS analysis.
• Poverty cycle.
• Lorenz curve.
• Externalities.

Positive outcomes on economic development may include:

• Labour reforms (raising retirement age), may increase the size of the labour force, which may increase LRAS as quantity of labour has increased. This may increase LRAS, leading to increased real GDP/potential output, which may increase job opportunities and increase income, for low income earners and encourage economic development (paragraph [6]).
• Lowering business costs through labour reforms, making the hiring and firing of employees easier, may increase AS, leading to increased real GDP and a possibility of more employment opportunities for low income earners.
• Privatization may decrease public debt and government can redirect spending into economic development (paragraph [5]).
• More multinationals/foreign investment – may lead to more jobs (paragraph [4]).
• Trade liberalization may lead to lower prices for consumers, more choice (paragraph [5]).
• May promote diversification and move away from commodities (paragraph [1]).
• Encouraging more competition from MNCs may promote more efficiency (paragraph [5]).

Negative outcomes on economic development may include:

• Spending on education in the past has been ineffective (paragraph [3]).
• Labour reforms decreasing standard of living through lower job security (paragraph [4]).
• Privatization may increase prices of goods and services / cause unemployment as private firms aim for efficiency and profit maximization (paragraph [5]).
• Multinationals repatriate profits and may not employ local people (paragraph [5]).
• Some industries may suffer from increased competition due to trade liberalization (paragraph [3]).
• Concern of environment destruction and externalities (paragraph [7]).
• Increasing the retirement age may decrease standards of living (paragraph [6]).
• Inequalities may occur through market-orientated policies.
• Dual economy can develop as a result of market-orientated policies.

Any reasonable evaluation.

This question was quite well answered although some responses were somewhat vague. It is important to note that the answer must indicate that companies must have productive units in another country (not just shares in a company as some students suggested), whether it be in the form of direct physical investment or FDI.

There were some excellent definitions of green GDP which were clear and precise. Some were, however, too imprecise. This included not fully understanding the meaning of the 'green' element of GDP, not defining GDP itself and a number not defining it in value terms.

Most candidates were able to construct an accurate business cycle diagram but a significant minority failed to use the data as required in the question, not incorporating the timeline. The term cyclical unemployment was generally understood but again in a significant minority of cases, the term was inaccurately defined. Some students provided a purely generic answer, which was totally unrelated to the text provided.

There were some excellent answers, with explanations fully integrated and with accurate diagrams (although some students failed to identify the external costs / DWL). In other instances, the concept of market failure was not understood and the link to external costs was missing. This resulted in inaccurate diagrams (e.g. basic supply and demand) and explanations. Where there was basic understanding some candidates did not emphasise the impact of negative externalities on third parties which inevitably left a gap in the analysis. Again, some students provided a purely generic answer which did not relate to the case study, to manufacturing companies dumping wastewater into rivers.

This in general was not well answered. Too many students did not fully understand the link between market-oriented policies and economic development. Most relied on listing market-oriented policies with very little reference to economic development. Some focused on economic growth which in isolation would attract few marks.

Too often there was limited analysis with some candidates relying on statements / unjustified assertions instead of reasoned arguments. Answers tended to be primarily descriptive and overly reliant on quotes / paraphrases of the extract with no or very little added value. At the other extreme some students made virtually no reference to the extract. In some cases, potentially relevant diagrams were drawn (e.g. poverty cycle diagram) but not used or explained in the context of the question.