The global economy often experiences periods of economic instability.

Mark scheme

Marking points from the official mark scheme. The mark or mark type is shown in brackets.

1. Question 10(a)
2. Award 1 mark for identification of a cause (e.g., fall in aggregate demand, financial crisis, external shocks, lack of confidence) (K1)
3. Award 1 mark for an outline of the cause (App1)
4. Repeat for a second cause (K1, App1)
5. Example 1: A fall in aggregate demand (K1) / due to reduced consumer spending or business investment (App1).
6. Example 2: A financial crisis (K1) / leading to restricted credit availability for firms and consumers (App1).
7. Question 10(b)
8. Award 1 mark for identification of an impact (e.g., reduced sales/revenue, increased bankruptcies, reduced investment, increased unemployment, decreased profits) (K1)
9. Award up to 3 marks for analysis of the impact (App1, An1, An1)
10. Example: During a recession, consumer spending falls (K1) / due to lower incomes and reduced confidence (App1). This leads to a decrease in demand for goods and services for many businesses / which may result in lower sales and revenues (An1). Consequently, firms may experience reduced profits, leading to job losses or even business closures if they cannot cover their costs (An1).