The money supply in Bangladesh increased every year from 2010 to 2018. Changes in the money supply and the foreign exchange rate can affect a government's macroeconomic policy aims, including full employment. There have been few mergers between commercial banks in Bangladesh, although its banks are larger than many of its other firms. 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) Two from: Medium of exchange, store of value, standard of deferred payments, unit of account / measure of value.
2. [4] (b) Logical explanation which might include: Greater market power/share (1) eliminating a competitor / providing a greater range of services (1).
3. [4] (b) More opportunity to take advantage of economies of scale (1) lower costs of production / higher profit / example e.g. share ATMs (1).
4. [4] (b) May enable the merged bank to operate in more than one country / become a multinational company (1) access to new market (1).
5. [4] (b) Become better known (1) large banks may be more likely to have a brand image (1).
6. [4] (b) May enable rationalisation (1) eliminate duplication / rase efficiency (1).
7. [4] (b) Survival (1) may have been loss making / at risk of going out of business (1).
8. [6] (c) Coherent analysis which might include: A fall in a country's foreign exchange rate will lower the price of exports (1) raise the price of imports (1) make domestically produced products more price competitive (1) reduce demand for imports (1) increase demand for exports (1) increase total demand (1) raise firms' revenue and/or profits (1) encourage firms to increase output (1) take on more workers (1).
9. [8] (d) Why it might: flexible, less people to consult, more in touch with consumers; may be able to provide more personal attention; may receive government subsidies; may be able to concentrate on a niche market; may have good labour relations; may avoid diseconomies of scale.
10. [8] (d) Why it might not: may not be able to take advantage of economies of scale; may be driven out of business by larger competitors; may be difficult to raise finance; risk of being taken over by a larger firm; may have difficulty recruiting highly skilled workers; may not have the resources to survive a fall in demand.