In 2023, India became the country with the largest population. This may affect the government's macroeconomic aims. In 2018, the Indian Government cut the country's corporation (corporate income) tax rate from 35% to 25%. Between 2019 and 2022, India's inflation rate averaged 6%. Some economists suggested that to achieve its central inflation rate target, the government should cut its spending.

Mark scheme

Marking points from the official mark scheme (May/June 2025). The mark or mark type is shown in brackets.

1. [1] Full employment / low unemployment
2. [1] price stability
3. [1] Economic growth
4. [1] current account balance
5. [1] Price stability
6. [1] redistribution of income / poverty reduction
7. [1] Economic growth
8. [1] economic sustainability
9. [1] High birth rate
10. [1] due to e.g. low age of marriage / lack of education on birth control
11. [1] Low death rate / high life expectancy
12. [1] due to e.g. good quality healthcare
13. [1] Immigration /net immigration
14. [1] due to e.g. high incomes
15. [1] High fertility rates
16. [1] due to e.g. young female population
17. [1] Birth rate higher than the death rate
18. [1] results in higher natural growth rate
19. [1] Cut in corporation (corporate income) tax will increase the amount of profits that can be kept by firms
20. [1] may attract MNCs to country
21. [1] this will increase the funds firms have to spend
22. [1] on capital goods
23. [1] and increase incentive to invest
24. [1] more to spend on wages
25. [1] may create job opportunities / reduce unemployment
26. [1] raise consumer expenditure
27. [1] firms grow faster
28. [1] Higher investment
29. [1] will increase total demand
30. [1] It may also increase the quality of capital goods
31. [1] may introduce new technology
32. [1] may increase productivity /productive capacity
33. [1] increase output / GDP
34. [1] Provide an incentive to enterprise
35. [1] as more profits can be retained / higher profits
36. [L3] 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.
37. [L2] 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.
38. [L1] There is a simple attempt at using economic definitions and terminology. Some reference may be made to economic theory, with occasional understanding.
39. [0] A mark of zero should be awarded for no creditable content.
40. [1] may reduce total demand
41. [1] lower total demand may reduce demand-pull inflation
42. [1] if near full employment, lower demand may have a significant impact on inflation
43. [1] may reduce need for taxes, lower indirect taxes may reduce prices
44. [1] lower government subsidies may raise prices
45. [1] lower government spending on education and training may reduce productivity and may increase cost of production
46. [1] lower government spending on infrastructure could increase transport costs
47. [1] higher costs of production may increase cost-push inflation
48. [1] may be other causes of inflation e.g. rise in wages