Economists are uncertain about the future United States (US) macroeconomic performance. For instance, in recent years, US unemployment has fallen while the deficit on the current account of the balance of payments has fluctuated. Whether its current account deficit will rise or fall in the future may be affected by proposed tax cuts. Some economists suggest that the US government should not be concerned about the country's current account deficit.

Mark scheme

Marking points from the official mark scheme (May/June 2020). The mark or mark type is shown in brackets.

1. [1] The study of the whole economy (2).
2. [1] Example of a macroeconomic topic e.g. unemployment/study of economics on a large scale (1).
3. [1] Lower demand (1) lower revenue (1).
4. [1] Lower ability to take advantage of economies of scale (1) due to lower output (1).
5. [1] Lower average costs (1) lower wages (1).
6. [1] Less risk of industrial action (1) workers afraid of losing their jobs (1).
7. [1] Greater ease of recruiting workers (1) reducing recruitment costs (1).
8. [1] Lower indirect taxes could reduce costs of production (1) could encourage investment (1) use of more advanced technology/more efficient methods of production (1) which could lower prices / make prices more internationally competitive (1).
9. [1] Lower income tax could motivate workers (1) raise productivity (1) lower price of exports (1) raise quality of exports (1).
10. [1] Lower taxes in other countries (1) e.g. a lower tariff will encourage foreigners to purchase more exports (1).
11. In assessing each answer, use the table below.
12. Level
13. 3
14. Description
15. A reasoned discussion which accurately examines both sides of the economic argument, making use of economic information and clear and logical analysis to evaluate economic issues and situations. One side of the argument may have more depth than the other but, overall, both sides of the argument are considered and developed. There is thoughtful evaluation of economic concepts, terminology, information and/or data appropriate to the question. The discussion may also point out the possible uncertainties of alternative decisions and outcomes.
16. Marks
17. 6-8
18. 2
19. A reasoned discussion which makes use of economic information and clear analysis to evaluate economic issues and situations. The answer may lack some depth and development may be one-sided. There is relevant use of economic concepts, terminology, information and data appropriate to the question.
20. 3-5
21. 1
22. There is a simple attempt at using economic definitions and terminology. Some reference may be made to economic theory, with occasional understanding.
23. 1-2
24. 0
25. A mark of zero should be awarded for no creditable content.
26. Why it might:
27. income/demand is leaving the economy
28. employment will be lower than it could be
29. it may put downward pressure on the exchange rate
30. the country will get into debt
31. other countries may not be willing to lend to it / invest in the country.
32. Why it might not:
33. deficit may be low / short term
34. enables the country to consume more than it produces
35. imports of raw materials and capital goods will increase output in the future.