In 2019, Russia had an unemployment rate of 4.6%. Russia experienced full employment in the past. Its government wants unemployment to be lower. In 2018, the Russian government cut its spending which may have increased poverty. In both 2018 and 2019, the government did not change its income tax rate. Russia operates a proportional tax rate system.

Mark scheme

Marking points from the official mark scheme (Oct/Nov 2022). The mark or mark type is shown in brackets.

1. [2] The lowest unemployment possible (very low percentage) / job vacancies matching the number unemployed (2); Low unemployment (1); May still be some workers in between jobs / some frictional unemployment (1); Zero unemployment (1).
2. [4] Logical explanation which might include: Proportional income tax system takes the same percentage / proportion of income (1) from all income groups (1); In a proportional income tax rate system, the tax rate does not change (1) as income changes (1) has no effect on the distribution of income (1).
3. [4] Progressive income tax system takes a larger percentage / smaller percentage (1) of the income of the rich / the poor / places a larger burden on the rich (1) helps redistribute income from the rich to the poor / reduces the gap between rich and poor / may be used to promote equity (1); In a progressive income tax rate system, the tax rate increases (1) as income increases (1).
4. [6] Coherent analysis which might include: A cut in government spending might reduce total demand (1) increasing unemployment (1) reducing incomes (1); Government spending on subsidies to firms might be reduced (1) which may raise prices (1); Government spending on education might be reduced (1) this might cause a decrease in skills (1) reducing wages (1) may lead to vicious cycle of poverty (1); Government spending on healthcare might be reduced (1) lowering productivity and wages (1); Government spending on state / unemployment benefits might be reduced (1) reducing goods and services that can be bought (1); Government spending on state pensions might be reduced (1) the old may not be able to buy basic necessities (1).
5. [8] Why it might be: • increase choice of jobs; • increase wages; • raise living standards; • increase job security; • competition for workers may raise working conditions; • more may be spent on training.
6. [8] Why it might not be: • may be result of workers leaving the labour force e.g. emigrating; • may not benefit all workers as some may still be unemployed; • may not be high quality jobs; • may be low-paid jobs; • may be temporary jobs; • may cause inflation reducing real wages.