The economy of country U is in recession. The Government has cut interest rates to attract businesses to set up in country U. JWR is a large multinational energy company. JWR may decide to open a power station in country U. The Government thinks that opening a new power station will create many external benefits. Some pressure groups do not want companies like JWR operating in their country.

Mark scheme

Marking points from the official mark scheme (May/June 2014). The mark or mark type is shown in brackets.

1. [2] Knowledge [2 × 1] one mark per feature
2. Features could include: falling demand, fall in business output, rising unemployment, business losses or lower profit or closure, less money circulating, less growth
3. [2] Application [2 × 1] - award 1 mark per effect
4. Points could include: Lower cost of borrowing money, existing loans could become cheaper, encourage businesses to expand, increased demand.
5. [4] Knowledge [2 × 1] - award 1 mark for each relevant action
6. Application [2 × 1] - award 1 mark for each relevant explanation of how it would affect the decision to set up a new power station
7. Actions include:
8. • Lobbying government [k] to try to stop JWR from locating the power station in certain locations [app]
9. • Organise a boycott [k] so customers do not buy electricity from JWR [app]
10. • Write letters to newspapers [k]
11. • Hold public meetings [k]
12. • Arrange a meeting with JWR [k]
13. • Protest / demonstration [k]
14. • Petitions [k]
15. • Direct action [k].
16. [6] Knowledge [2 × 1] – award 1 mark for each relevant benefit identified
17. Application [2 × 1] – award 1 mark if relevant context
18. Analysis [2 × 1] – award 1 mark for each relevant explanation
19. For each reason maximum 3 marks [1k + 1app + 1an].
20. Points might include:
21. • Job creation [k] as JWR will need to employ local workers at the power station [app] so provide a wage / income for many local employees [an]
22. • Increased orders for suppliers [k] as JWR will need to purchase materials [app] so increasing their sales [an]
23. • Provide essential resources for community [k] as people will have access to energy [app] so improving their standard of living [an]
24. • Improved road infrastructure [k] as JWR will need to ensure there is good access to the power station [app] which could help reduce congestion for local people [an]
25. • Tax revenue [k].
26. [6] Knowledge [2] – award up to 2 marks for identification of relevant issue(s).
27. Analysis [2] – award 1 mark for relevant development of point(s)
28. Evaluation [2] – justified decision made as to whether the government of country U should try to attract businesses like JWR. Either viewpoint is acceptable.
29. Relevant points might include:
30. • Increased employment [k] which can help improve living standards [an]
31. • Improved international reputation[k] could encourage other businesses to set up in country [an] helping economic growth [an]
32. • Depletion of local resources or damage environment [k] could increase pollution levels [an]
33. • Can switch profits between countries to avoid taxes [k] so country might not receive much additional tax revenue [an]
34. • MNCs are given incentives [k] money which could have been spent supporting local business [an]
35. • Can force local businesses to close [k] as they cannot compete with such large and powerful businesses [an].