A-LevelEconomicsThe macroeconomy9708/23 · Oct/Nov 2019 · Q320 Marks

In March 2017, the Indian government announced a new five year programme of investment in the country's nationalised railway system.

(a)Explain, with the help of an aggregate demand and aggregate supply diagram, how this investment is likely to affect India's output, prices and employment.[8]
(b)Discuss whether a nationalised or a privatised railway system is likely to generate a better market for rail travel.[12]

This question uses a diagram from the original paper, which isn't shown here. Open the full paper from the past papers archive to see it.

Mark scheme

Marking points from the official mark scheme (Oct/Nov 2019). The mark or mark type is shown in brackets.

[8] a diagram with correctly labelled axes showing aggregate demand and aggregate supply (1 mark)
with equilibrium price level and national output (1 mark)
shows the effect of an increase in investment upon aggregate supply and the impact on output, prices and employment (up to 2 marks)
shows the effect of an increase in investment upon aggregate demand and the impact on output, prices and employment (up to 2 marks)
elaboration that shows the impact on output, prices and employment of the combined effects of the changes in aggregate demand and aggregate supply (up to 2 marks)
[12] analysis that considers the advantages and disadvantages of state provision of rail transport (up to 4 marks)
analysis that considers the advantages and disadvantages of private provision of rail transport (up to 4 marks)
evaluative judgement that makes clear which is likely to best at providing new investment funding (up to 3 marks) with a conclusion (1 mark)

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