Content text Feb-Mar_2025_9708_42_QP - Crack A Level.pdf
[Turn over Cambridge International AS & A Level This document has 4 pages. Any blank pages are indicated. *7414777531* DC (WW/FC) 342062/1 © UCLES 2025 ECONOMICS 9708/42 Paper 4 A Level Data Response and Essays February/March 2025 2 hours You must answer on the enclosed answer booklet. You will need: Answer booklet (enclosed) INSTRUCTIONS ● Answer three questions in total: Section A: answer Question 1. Section B: answer one question. Section C: answer one question. ● Follow the instructions on the front cover of the answer booklet. If you need additional answer paper, ask the invigilator for a continuation booklet. ● You may use a calculator. ● You may answer with reference to any economy you have studied where relevant to the question. INFORMATION ● The total mark for this paper is 60. ● The number of marks for each question or part question is shown in brackets [ ].
2 © UCLES 2025 9708/42/F/M/25 Section A Answer all parts of Question 1. 1 China’s population trend China’s economic miracle has been built on a seemingly endless supply of affordable labour from a population of 1.4 billion. In the 60 years since it last experienced a population decline, China has become the world’s second largest economy. There are increasing signs, however, that China faces a labour force challenge. Its population is decreasing, its citizens are growing older and the workforce that once came with few demands now wants higher pay, more benefits and better pensions. In 1979 China introduced a ‘one child’ per family policy to reduce the growth in population. It relaxed these restrictions in 2016, allowing couples to have two children instead of one. Despite the government’s attempts to persuade couples to have more children, fewer are being born. Recently, two cities have proposed cash incentives for parents to have a third child. These would continue until the child is three years old. Economists have observed changes in China’s population. When the number of younger people falls, innovation and entrepreneurship decline. The effect of this is felt throughout the economy. As the population ages, investment and savings rates fall, the need for support for the elderly increases, government debt rises and demand for social security grows. Without enough workers all this becomes a burden for the government and the country as the population would not be at its optimum. China’s central government regards the views of economists as alarmist. It recognises the days of a vast unskilled workforce are gone. The decreasing workforce has become a concern for policy makers who want to see the export-orientated economy supported by more domestic consumption. What policy makers want are skilled workers assisted by technology. They recognise the need for an internationally competitive labour force. There have been suggestions that China will have to begin raising the retirement age. It also urgently needs to introduce other policies to encourage couples to have more children. The population crisis is a test of whether China can evolve from an economy built on the size of its workforce to one based on its skills, especially in the fields of automation and artificial intelligence (AI). Fig. 1.1 shows the annual population change in China. –0.5 0 0.5 1 1.5 % 2 2.5 3 1970 1980 1990 2000 2010 2020 2030 2040 2050 Key estimates One-child policy is introduced Two-child policy is introduced Fig. 1.1 Annual population change in China, 1970 to 2050 Sources: Didi Tang, The Times, 29 April 2021 and 12 January 2023 US Census International Database, 15 February 2023
3 © UCLES 2025 9708/42/F/M/25 (a) Explain what is meant by an optimum population. [2] (b) Explain how China’s population structure changed between 1970 and 2020 and consider whether the statement ‘its population is decreasing’ is supported by Fig. 1.1. [5] (c) Identify two observations economists have made about changes in China’s population and analyse how these changes would affect GDP. [6] (d) China’s government has a different view from what it says are the alarming statements made by economists. Consider the effects on the economy of the population policies suggested by China’s government. [7] Section B Answer one question. EITHER 2 Oligopolies are able to avoid price competition while maintaining supernormal profits in the long run. Evaluate this statement. [20] OR 3 With the help of a diagram, evaluate the consequences of imposing an effective minimum wage on the employment level and the wage level in a monopsony labour market. [20] Section C Answer one question. EITHER 4 With the help of a diagram, assess the effectiveness of government policies that might be used to reduce demand-pull inflation. [20] OR 5 With the help of a diagram, evaluate the effectiveness of the use of expenditure-switching policies to reduce a current account deficit on the balance of payments. [20]
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