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GCE
Economics
Advanced GCE
Unit F585: The Global Economy

Mark Scheme for January 2011

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It is also responsible for developing new specifications to meet national requirements and the
needs of students and teachers
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This mark scheme is published as an aid to teachers and students, to indicate the requirements
of the examination
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It does not
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commenced
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Mark schemes should be read in conjunction with the published question papers and the Report
on the Examination
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2

F585
Question
1 (a) (i)

Mark Scheme
Answer

January 2011

Marks

The average price of a country’s exports relative to the
average price of its imports

2

Guidance
Annotate using

(1 tick for each mark)

Also accept for 2 marks the terms of trade formula:
= (index of average price of exports/index of average price
of imports) x 100

2 marks for an accurate definition

Award 1 mark for:

missing out ‘average’ or n ‘index’ from the formula

formula is correct but wrong way around

X 100 is missing from formula

amount of imports a country can buy for a set amount of
exports or the rate of exchange between two countries
...
2
...

0 marks for ‘value’ (P x Q) rather than ‘price’ (P)

1

F585

Mark Scheme

Question
Answer
Primary commodities tend to have both price inelastic
1 (b)
demand and supply and are subject to demand and/or
supply shocks
...
The causes of these shifts depends on the commodity
but may include reference to derived demand for
commodities (such as bauxite, alumina), rising/falling global
income/GDP, good/poor harvests (crop disease, weather),
new suppliers
...

Wrongly labelled axes no marks for diagram (must be price
and quantity or quantity traded or quantity demanded and
supplied)
No marks for labelling equilibrium POINTS not PRICES
...

1 mark for the cause of the shift in demand/supply or
the reason why PED or PES is inelastic
...

Price

S

S1

P

P1

D

Price

Quantity

S

P

P1

D1

2

D

Quantity

F585
Question
1 (c)

Mark Scheme
Answer
Case for preferential access to EU markets
for bananas from ACP states

without preferential access ACP
bananas would struggle to compete
because producers lack economies of
scale and/or yields are low;

low yields may be the result of a lack
of capital for investment or
inappropriate resource endowment;

access to EU markets generates
higher export revenue, higher
employment and incomes contributing
to higher levels of development
...


Marks
10

January 2011
Guidance

Content
Answers in Level 4 should be
underpinned by relevant economic
analysis and marks should be awarded
as follows:

one stated comment 7 marks
maximum

several stated comments 8 marks

one comment with brief elaboration
8 marks

one comment with brief elaboration
+ one stated comment 9 marks

one comment well developed or
two comments with brief
elaboration 10 marks
RESPONSES WHICH USE A TRADE
CREATION/DIVERSION DIAGRAM TO
ANALYSE AND COMMENT ARE
CAPPED TO BOTTOM OF L4
Level 3 responses are characterised by
the use of the economist’s toolkit of
concepts, theories and models
...


3

Levels of Response
Level 4
[7 – 10 marks]
For a commentary on the case for
preferential access to EU market
...

Level 3
[4 – 6 marks]
For analysis of the case for or case
against but not both
...

Level 2
[3 marks]
For an application of knowledge
and understanding of arguments
for and against preferential access
...

Level 1
[1 – 2 marks]
For knowledge and understanding
of preferential access only
...







Guidance
Composition of HDI was changed in 2010 – some candidates
may be aware of this
...

Watch out for explanations, therefore, that refer to differences
in mean years of schooling, expected years of schooling or
net property income from abroad (given that reference is
made to GDP per capita in the question)
...
Since Dominican Republic has a higher growth
rate in GDP per capita than Guatemala, relevant
explanations include:




January 2011

Do not accept ‘lower level of HDI therefore easier to achieve
higher growth rate in HDI’ for application marks

lower growth/fall in life expectancy (1);
lower growth/fall in adult literacy rates (1);
lower growth/fall in primary, secondary or tertiary
education enrolment (1);
lower growth in government expenditure on health care
(1) or lower priority given to government expenditure
on health care (1);
lower growth in government expenditure on education
(1) or lower priority given to government expenditure
on education (1) ;
greater priority given to government expenditure on
area not related to components of HDI eg defence (1);
lower growth in foreign aid directed to these areas (1)
...


6

Use the following annotations in Scoris to distinguish between
application and analysis marks

Analysis marks
Up to 2 marks only for a basic analysis of the impact on
Caribbean economies such as:

fall in demand for tourism because it is income elastic
(1);

fall in exports earnings (1);

worsening of current account position (1);

lower employment/higher unemployment (1);

fiscal deficit (1);

increased debt (1);

fall in remittances (1);

reduction in FDI/construction projects (1);

capital outflows (1)
...

Only reward as analysis if the diagram is incorporated into the
textual explanation ie no marks for unexplained diagrams

F585
Question
2 (c)

Mark Scheme
Answer
Government debt is the total amount of
money owed by central and local
government
...

High levels of government debt may act as a
constraint on economic development
because:

it limits government expenditure on
health and education or capital
investment reducing life expectancy
literacy causing fall in HDI ;

it limits government expenditure on
capital investment which may impact
negatively on AS and on economic
growth in the long run;

results in high levels of debt interest
payments = opportunity cost;

Marks
10

January 2011
Guidance

Content
The most common route into Level 4 is
going to be via an analysis of the ways
in which government debt constrains
economic development followed by an
explanation of why it might not
...
Kitts and Jamaica, act as a
constraint on economic
development
...

Candidates in this level will make
use of economic concepts and
explain cause and consequence
...

Answers in this level will contain
NO economic analysis/concepts
and not make clear cause and
consequence
...


Level 1
[1 – 2 marks]
For knowledge and understanding
of government debt and/or
economic development

6

F585
Question
3

Mark Scheme
Answer
Economic integration brings benefits in
terms of:

trade creation;

greater competition;

more innovation and R&D;

a larger market and economies of
scale
...


Marks

20

January 2011
Guidance

Content
Candidates are expected to introduce
some analysis of the benefits opposite
(Level 3) in their responses rather than
just list the benefits (Level 2)
...

Give BOD for a single error but not
where there is consistent confusion
...

Where the issues have not been
expressed clearly and fluently and where
sentences and paragraphs have not
been well structured marks at the bottom
of Level 4 Band 1 should be awarded
...
Please highlight
relevant context
...
Lucia
...

Level 4, Band 2 [15 – 17 marks]
For a discussion of the benefits of
regional economic integration for a
small economy, such as St
...

There will be some development of
the benefits and costs and a
recognition that the question
focuses specifically on a
small/Caribbean economy
...
This is likely to be
an analysis of the benefits of
integration plus a list of some of the
costs of integration without
reference to a small OR a
Caribbean economy
...

Lucia;

the degree to which the benefits of
economic integration shield a small
economy from the negative aspects of
globalisation;

the extent to which regional integration
allows a small economy to maximise
the gains from globalisation;

the factors that determine the extent of
the benefits and/or costs
...

Annotate judgements using

Levels of Response
Level 3
[5 – 10 marks]
For an analysis of the benefits of
regional economic integration for a
small economy, such as St
...

Level 2
[3 – 4 marks]
For an application of knowledge
and understanding of the benefits
and/or costs of regional economic
integration for a small economy,
such as St
...

Responses must NOT be placed in
this Level where candidates have
included relevant, if limited,
economic analysis of either
benefits or costs of economic
integration
Level 1
[1 – 2 marks]
For knowledge and understanding
of regional economic integration
only
...
Sentences and
paragraphs, consistently relevant, have been well structured, using appropriate technical terminology
...

Level 3
Relatively straightforward ideas have been expressed with some clarity and fluency
...
There will be some errors of spelling, punctuation and grammar, but these are unlikely to be intrusive or obscure meaning
...
There will be some errors of spelling, punctuation and grammar
...


9

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