In Tunisia, resource allocation decisions are made by both the public sector and private sector. Tunisia's GDP increased from 2014 to 2018 but its households saved less. Income levels can be affected by changes in trade union activity and the foreign exchange rate. From 2014 to 2018, Tunisia experienced a number of strikes organised by its largest trade union, the Tunisian General Labour Union. There was also a significant fall in its foreign exchange rate.

Mark scheme

Marking points from the official mark scheme (Oct/Nov 2021). The mark or mark type is shown in brackets.

1. [2] (a) Two from: what to produce; how to produce; who to produce for.
2. [4] (b) Logical explanation which might include: Fall in the rate of interest (1) which would reduce the return from saving / spend/borrow rather than save (1). Inflation (1) spend more now before prices rise further / may reduce the real rate of interest (1). Increase in confidence about the future (1) less motive to save for hard times / less concerned will experience unemployment or fall in income (1). Fall in range, number or reliability of financial institutions (1) which would reduce the safe places to save (1). Greater consumption opportunities / spend more / higher living standards (1) with the introduction of new products / lower prices / may be able to afford private education / healthcare (1). Increase in taxes (1) reducing disposable income (1). Rise in family size (1) increasing household expenses (1). Rise in debt (1) may reduce ability of households to e.g. to put money into a savings account (1). Change in social attitudes (1) due to e.g. change in age of households (1).
3. [6] (c) Coherent analysis which might include: A trade union may negotiate with employers (1) to raise wages (1) improve working conditions (1) example (1) increase fringe benefits (1) example (1) through collective bargaining (1) and sometimes industrial action / strikes (1). A trade union may settle disputes between the employer and the workers (1) e.g. over changes in working practices (1) protect workers' rights (1). A trade union may seek to protect the employment of its members (1) in some cases negotiate favourable redundancy terms (1). A trade union may negotiate / put pressure on the government (1) to e.g. raise a national minimum wage or reduce the retirement age (1). In some countries, trade unions provide benefits and services to members (1) e.g. training services (1).
4. [8] (d) Why it might: export prices will fall and import prices will rise; demand for exports may rise and demand for imports may fall; domestic output will increase, economic growth may rise; more workers may be employed, reducing unemployment; a deficit on the current account of the balance of payments may be reduced or a surplus increased; may encourage foreign investment if it is thought assets can be bought more cheaply. Why it might not: rise in price of imported capital goods and raw materials may increase costs of production, causing cost-push inflation; higher total (aggregate) demand may cause demand-pull inflation, especially if the economy is working close to full capacity; demand for exports and imports may be price inelastic, causing export revenue to fall and import expenditure to rise - in such a case may benefit more from a rise in the exchange rate; trade restrictions imposed by other countries may prevent the country from exporting more products; may discourage foreign investment due to a lack of confidence in the country's future economic prospects.