List two of the Sustainable Development Goals (Text D, paragraph [1]).

Define the term tariffs indicated in bold in the text (Text D, paragraph [5]).

Sketch a production possibilities curve (PPC) diagram to show the effect of improved human capital on Malawi’s potential output (Text D, paragraph [2]).

Using information from Table 3, calculate real GDP (at 2010 prices) in 2019 using the price deflator.

Using a poverty cycle diagram, explain how an increase in funds for the education of teenage girls could break the poverty cycle (Text D, paragraph [2]).

Using an AD/AS diagram, explain how a reduction in government spending may reduce inflation (Text D, paragraph [4]).

Using an exchange rate diagram, explain how a reduction in the current account deficit could affect the exchange rate for the kwacha (Text D, paragraph [5]).

Using a demand and supply diagram, explain how the rise in the maximum price of maize would change the welfare loss associated with the maximum price (Text E, paragraph [2]).

Using information from the texts/data and your knowledge of economics, evaluate the government’s policies to promote economic growth and economic development in Malawi.

The diagram has three requirements:

• correctly labelled PPC diagram
• two PPC curves drawn
• shift to the right is clearly shown

Candidates who incorrectly label diagrams can be awarded a maximum of [2].

For a PPC diagram, there must be two goods or groups of goods competing for the same resources on the axes. Good X and Good Y are appropriate, but simply X and Y are not sufficient. A title is not necessary.

Clear labelling of the PPC curves such as PPC1 PPC2 is sufficient to indicate the shift to the right.

Labelling PPC diagram with P and Q or PL and RGDP are fundamental errors thus zero marks.

$\frac{29 882}{389.6}\times$ 100= 7669.92

Any valid working should be rewarded with [1]

(US)$ 7669.92 million

An answer of 7 669.92, without workings, without units or incorrect units, is sufficient for [1].

If the answer is rounded up, it cannot be awarded [1]. It has to be given correctly to 2 decimal places (in line with the examination “Instructions to candidates”).

The wording in the boxes may be different, so long as it is equivalent. No title is necessary.

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

For AD/AS diagram, the vertical axis may be Average (general) price level or price level. The horizontal axis may be real output, real national output, real national income, real GDP or real Y. Any abbreviation of the previous terms is acceptable. A title is not necessary.

An answer may alternatively draw a Keynesian AS curve, with the original intersection of AD and AS being in the upward sloping portion of the AS curve. Alternatively, the original intersection may be in the horizontal section of the AS curve and the PL may not fall. This can receive full marks if the explanation states that due to high unemployment/spare capacity in Malawi, contractionary fiscal policy will not be able to reduce inflation.

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

For an exchange rate diagram, the vertical axis may be exchange rate, price of kwacha in other currencies, other currency/ kwacha or other currency per kwacha. The horizontal axis should be quantity or quantity of kwacha. A title is not necessary.

N.B. Acceptable alternatives are the supply curve shifting left or both curves shifting.

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

For a demand and supply diagram, the vertical axis should be price or p. The horizontal axis should be quantity or q. A title is not necessary.

Accept any annotation that clearly shows the change in welfare loss.

N.B. Answers that only deal with development or only deal with growth should be awarded a maximum of level 3.

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:

• definition of development
• definition of growth.

Economic Models / theories may include

• an explanation of the links between growth and development
• an AD/AS diagram
• a poverty cycle diagram
• a diagram showing the effects of lowering tariffs
• PPC
• indicators of development.

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

Most could identify 2 SDG areas. However, many could not give precise SDGs. A significant minority offered imprecise or incomplete answers (some very narrow aspects of an SDG such as “provide access to higher education for girls” or broad areas without actual goals such as “education” or “climate”). To be awarded full marks, precise answers are expected with no ambiguity.

Almost all candidates were able to perform well on this question. The vast majority offered correct definitions, but a few failed to recognise that a tariff is a tax.

The majority of candidates sketched the PPC diagram and showed a shift in the PPC curve to the right and labelled the PPC diagram correctly. However, some labelled the diagram inaccurately, in many cases making fundamental errors, rendering the diagram meaningless. Examples of fundamental labelling errors found: “price and output” or “real GDP” or “actual and potential output” or “human capital and growth”.

Also many, probably most, offered a written explanation (sometimes extensive) of the diagram. This was not asked for and wasted a great deal of valuable exam time.

The majority of candidates were able to perform well on this question, although some rounded to a whole number or one decimal place, some ignored the units, and some forgot to multiply by 100.

Better answers gave a thorough appropriate poverty cycle and used the diagram to show where education could break the cycle. Some students provided a “reversed” diagram and so lost a mark for it. Often the diagram and/or explanations were incomplete for human capital and/or productivity were missing.

This was generally well answered. Students constructed accurate diagrams coupled with a full explanation. The possible impact of a decrease in government spending on inflation was well understood. One possible weakness was that students gave too much detail, again wasting valuable time.

Most candidates were able to perform well on this question. Most provided a correct diagram, although there were still cases of incorrect labelling of the vertical axis. The explanations offered by students demonstrated a good understanding of the links between a decreasing current account deficit and the exchange rate. Candidates often lost a mark for not distinguishing increase in exports from decrease in imports.

Some students spent too much time explaining how the deficit came about in the first place. This was not the question.

The identification of the welfare loss on the diagram was rarely accurate, despite the fact that it was clear that students understood the concept. Where candidates did not earn full marks in the diagram, the most common shortcoming was due to the confusion between the welfare loss in the international trade diagram and the welfare loss in the price control diagram.

In general this question was not well answered. However, there were a significant minority of outstanding responses. This question required students to evaluate policies given in the text which are aimed at promoting economic growth and economic development. Clearly, many candidates did not go through the text and pick out the policies being promoted for that purpose by the Government of Malawi.

Some students used strategies/policies that were not designed for the promotion of economic growth and development, such as contractionary fiscal policy, and some students introduced policies that were not in the text, so strayed away from what was being asked. Such parts of the answers were not only considered as irrelevant but wasted time that could have been used on relevant policies.

One of the main weaknesses was a lack of balance, with students focusing primarily on economic growth to the exclusion of economic development.

It is important to stress the importance of analysing policies rather than just describing them and then making appropriate judgments as to their efficacy.