Read the source material carefully before answering Question 1. Source material: The Belarus economy Belarus fact file 2021 Number of cars produced 32000 Total cost of cars produced $340.8m Labour force employed in the tertiary sector 52% Labour force employed in the public sector 49% Share of output produced by state-owned firms 70% Inflation rate 9.9% Unemployment rate 5.7% Belarus, a mixed economy, was one of the poorest countries in Europe in the 1990s. Since then, the country's GDP per head has increased and poverty has been reduced. The country has also experienced a rise in life expectancy. Table 1.1 shows life expectancy and Human Development Index (HDI) value in six selected countries in 2019. Table 1.1 Life expectancy and HDI value in six selected countries in 2019 Country Life expectancy (years) HDI value Belarus 74.8 0.823 Norway 82.4 0.957 Tajikistan 71.1 0.668 Thailand 77.2 0.777 Uganda 63.4 0.544 United States 78.9 0.926 Between 2011 and 2021, there was a rise in the price level in Belarus. Increases in the price of energy pushed up the costs of production of firms in both the public sector and the private sector. Over this period, there was also an increase in investment in Belarus, a decline in the size of the country's labour force and a decrease in the number of students going to university. Belarus produces a range of products. Milk is one of the agricultural products that Belarus produces. The country is the fifth largest producer of milk in the world. The Belarus government is reluctant to subsidise the production of milk, but it has provided large loans for the mechanisation of the dairy industry. The Belarus government wants to encourage the production and purchase of electric vehicles. It plans to build 1300 electric vehicle charging stations by 2030. The use of electric vehicles can have beneficial environmental effects. However, some other forms of transport may provide more benefits and some people and firms may be reluctant to switch to buying electric vehicles. A more unpopular government measure that was introduced in 2015 was a law which imposed fines on those people who were unemployed for six months or more. Anyone who did not pay the sum of money to the government for breaking the law was jailed. This may have reduced frictional unemployment if suitable jobs were available. However, some of the unemployment might have been structural or cyclical. This law was ended in 2018. Answer all parts of Question 1. Refer to the source material in your answers.

Mark scheme

Marking points from the official mark scheme (Oct/Nov 2024). The mark or mark type is shown in brackets.

1. [1] $10 650
2. [1] There is a public sector / some people work in the public sector / there are state-owned firms / there is government intervention e.g. fining the unemployed.
3. [1] There is a private sector.
4. [1] Cost-push
5. [1] due to a rise in the price of energy / increase in costs of production of firms.
6. [2] A decline in the size of the country's labour force leading to a reduction in the quantity of resources / fewer workers, which will likely reduce the country's ability to produce products.
7. [2] A decrease in the number of students going to university leading to a reduction in the quality of resources / labour skills / productivity.
8. [1] A high life expectancy is expected to be associated with a high HDI value / positive or direct relationship.
9. [1] Supporting evidence: two countries with the longest life expectancy have the highest HDI value OR two countries with the lowest life expectancy also have the lowest HDI value (e.g. Norway).
10. [1] Life expectancy is one of the components of HDI, accounting for a third of its value / explanation of how better health / life expectancy raises standard of living.
11. [1] Exception: Belarus / Thailand (1) Belarus has a shorter life expectancy but a higher HDI value (1) and analysis of exception: there are other components of the HDI: education / GDP (GNI) per head (1).
12. [1] Axes correctly labelled – price and quantity or P and Q.
13. [1] Original demand and supply curves correctly labelled.
14. [1] New supply curve shifted to the right.
15. [1] Equilibriums – shown by lines P₁ and Q1 and P2 and Q2 or equilibrium points marked as E₁ and E2.
16. [1] Reduction in cost of production / increase in supply / increase in quantity traded / reduction in price.
17. [1] Likely to encourage use of electric vehicles.
18. [1] Stations and vehicles are complements.
19. [1] Improve the environment / reduce external costs (e.g., air/noise pollution) / reduce healthcare costs / improve health of workers.
20. [1] Building the stations / more electric cars may create employment.
21. [1] Government / private sector investment / purchase of electric vehicles may raise total (aggregate) demand, causing higher output / economic growth.
22. [1] Other forms of transport may have more beneficial effects on the environment (e.g., cycling / buses).
23. [1] Some people may be reluctant to switch (e.g., price of electric cars may be too high, resources are wasted).
24. [1] If people do switch, it may cause unemployment in e.g. oil firms / production of diesel and petrol cars / less public transport.
25. [1] Increase in electric vehicles on road causes road congestion.
26. [1] Opportunity cost of government investment (monies could have been spent e.g. education / health / infrastructure).
27. [1] If economy at full employment, investment may lead to demand-pull inflation.
28. [1] If frictional unemployment, a fine would encourage workers to put more effort into finding a job / spend less time between jobs.
29. [1] Help move economy towards full employment / higher output and economic growth.
30. [1] Fines may increase government revenue, which could be spent on e.g. healthcare / support to find a job.
31. [1] May encourage those not seeking jobs (due to benefits) to find work and reduce government spending on unemployment benefits.
32. [1] There may be a lack of suitable jobs available / unemployed may lack required skills / unable to move to other areas / have disabilities / ill-health.
33. [1] Providing support may reduce unemployment more quickly.
34. [1] Unemployment may be structural / cyclical; it would have been more effective to increase training / increase total demand.
35. [1] Unemployed may have little income to pay the fine, which may increase their debt / lead to greater poverty / unable to pay for basic necessities.
36. [1] Fines may affect their mental health / wellbeing / cause depression.
37. [1] May encourage the growth of the shadow/unofficial/informal economy as not registered as unemployed.
38. [1] May reduce wages / workers may be forced to accept low-paid jobs.