Turkey's birth rate is falling which is likely to reduce its supply of labour. However, improvements in the quality of labour and the increase in foreign multinational companies (MNCs) operating in Turkey (the host country to the MNCs) may help the economy avoid a recession. One reason why economists are worried that a recession may occur is an expected rise in the interest rate. Each question is introduced by stimulus material. In your answers you may refer to the material and/or to other examples you have studied.

Mark scheme

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

1. [2] (a) The number of births per thousand of the population (1) in a year (1) live births (1).
2. [4] (b) Logical explanation which might include: Improvements in education (1) qualifications / knowledge (1).
3. [4] (b) Improvements in training (1) increasing skills (1).
4. [4] (b) Improvements in healthcare (1) making workers physically/mentally stronger (1).
5. [4] (b) Increases in pay (1) raising motivation (1).
6. [4] (b) Improvements in nutrition (1) enabling workers to work harder / concentrate more (1).
7. [4] (b) Reduction in working hours / length of working day (1) keeping workers fresher / enabling them to concentrate more (1).
8. [4] (b) Improvements in working conditions (1) raising motivation / enabling workers to work harder / concentrate more (1)
9. [4] (b) Immigration (1) of skilled workers (1).
10. [4] (b) Experience (1) becoming more familiar with tasks (1).
11. [4] (b) Specialisation (1) become more familiar with one task / 'practice makes perfect' (1).
12. [6] (c) Coherent analysis which might include: A higher interest rate would increase the cost of borrowing (1) reduce borrowing (1) reduce the spending power of people who have borrowed in the past (1) increase saving (1) consumer expenditure / spending may fall (1) investment may fall / may discourage MNCs (1) unemployment may increase / employment may fall (1) total demand may fall (1) the output of goods and services / GDP may fall (1) if output falls over a period of two quarters / six months there will be a recession (1).
13. [6] (c) A higher interest rate may encourage more people to buy the currency (1) to put money into the country's financial institutions (1) raising the value of the foreign exchange rate (1) raising the price of exports (1) lowering demand for exports (1) reducing the price of imports (1) increasing demand for imports (1).
14. [8] (d) Why they might: may bring in new technology and methods of production, increasing economic growth; may create new jobs, may reduce unemployment; may add to exports, reducing a current account deficit / increasing a current account surplus; may create more competition / have greater efficiency, lowering inflation; may increase tax revenue, enabling the government to spend more on e.g. education and healthcare.
15. [8] (d) Why they might not: may drive out domestic producers, leaving the country's output unchanged; may employ workers from their home country; may import capital equipment and raw materials from their home countries; may deplete non-renewable resources, reducing sustainable economic growth; may provide only low-skilled, low-paid jobs to locals; send profits back to home country; may cause external costs e.g. pollution.