Extract 1: Kenya's GDP per capita (current US$) rose from about $1080 in 2010 to about $2100 in 2022. Its HDI is 0.60, ranked 146th in the world. Around a third of Kenyans live below the international poverty line. Agriculture employs more than half of the workforce; tea, coffee, cut flowers and horticulture are major exports.
Extract 2: The mobile money service M-Pesa allows people without bank accounts to send money, save and borrow by phone. Studies suggest it helped lift around 2% of Kenyan households out of poverty, especially households headed by women. Remittances from Kenyans working abroad exceed $4 billion a year.
Extract 3: Kenya's government has borrowed heavily to fund infrastructure, including a Chinese-financed railway from Mombasa to Nairobi. Public debt has risen to around 70% of GDP and interest payments take a large share of tax revenue. The IMF has supported Kenya on condition of tax rises and spending cuts.
1(a)2 marks
Nominal GDP rises from £2.5 trillion to £2.7 trillion while the GDP deflator rises from 100 to 105. Calculate the growth of real GDP.
1(b)3 marks
Explain one limitation of using GDP per capita to compare living standards between countries.
2(a)2 marks
The marginal propensity to withdraw is 0.4. Calculate the size of the multiplier and the final change in national income from a £10 billion increase in investment.
2(b)3 marks
Explain why the actual multiplier effect might be smaller than predicted.
3(a)2 marks
1.5 million people are unemployed and the labour force is 33.5 million. Calculate the unemployment rate.
3(b)3 marks
Explain one cause of structural unemployment.
4(a)2 marks
A country's export price index is 110 and its import price index is 125. Calculate its terms of trade.
4(b)3 marks
Explain one possible effect of this deterioration in the terms of trade.
5(a)2 marks
A bank has assets of £500 billion and capital of £25 billion. Calculate its capital ratio.
5(b)3 marks
Explain why regulators require banks to hold more capital.
Section B — Data: Kenya's development
Extract 1: Kenya's GDP per capita (current US$) rose from about $1080 in 2010 to about $2100 in 2022. Its HDI is 0.60, ranked 146th in the world. Around a third of Kenyans live below the international poverty line. Agriculture employs more than half of the workforce; tea, coffee, cut flowers and horticulture are major exports.
Extract 2: The mobile money service M-Pesa allows people without bank accounts to send money, save and borrow by phone. Studies suggest it helped lift around 2% of Kenyan households out of poverty, especially households headed by women. Remittances from Kenyans working abroad exceed $4 billion a year.
Extract 3: Kenya's government has borrowed heavily to fund infrastructure, including a Chinese-financed railway from Mombasa to Nairobi. Public debt has risen to around 70% of GDP and interest payments take a large share of tax revenue. The IMF has supported Kenya on condition of tax rises and spending cuts.
6(a)5 marks
With reference to Extract 1, calculate the percentage increase in Kenya's GDP per capita from 2010 to 2022, and explain why this may overstate the improvement in living standards.
6(b)5 marks
Explain how the Human Development Index measures development.
6(c)8 marks
Examine the role of mobile money in reducing poverty in Kenya.
6(d)12 marks
Discuss the problems for Kenya of relying on exports of agricultural products.
6(e)20 marks
Evaluate whether government-led infrastructure investment is the best strategy for promoting development in Kenya.
725 marks
Section C
Evaluate the effectiveness of fiscal policy in reducing income inequality in the UK.
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This paper is written by Plasmo in the style of the Edexcel A-Level Economics exam. It is not a past paper and is not produced or endorsed by the exam board.
Edexcel A-Level Economics Mock Exam: Paper 2: The national and global economy | Plasmo