Exam Format: Cambridge IGCSE™ ECONOMICS 0455/23 Paper 2 Structured Questions
Duration: 2 hours 15 minutes
Total Marks: 90
Answering Instructions:
Answer four questions total
Section A: Must answer Question 1
Section B: Select three questions
Additional Paper: Request from invigilator if more space is needed
Calculator: Permitted for use
Section A: Malawian Economy Source Material
General Overview
Malawi is classified as a low-income country in East Africa.
The nation experiences regular natural disasters including droughts, floods, and storms.
Recent disaster: Storm Ana in January 2022 impacted various sectors including agriculture, factories, forests, and power infrastructure.
Demographics and Infrastructure
Population: 22 million
Access to Electricity: 15% of the population
Energy Sources: Households predominantly use wood and charcoal for cooking and heating, leading to deforestation and air quality degradation.
Agricultural Sector
Employment: Over 75% of the labor force engaged in agriculture.
Major Crops: Tea and Sugar.
Tea Supply Factors: Weather conditions, government subsidies, price of fertilizers.
Sugar Market Influences: Health concerns regarding sugar consumption affecting the global market.
Government Priorities
Key goals for government development:
Develop new industries
Increase educational standards
Pursue more sustainable energy sources
Education: Low percentage of children completing primary school, noted at 35% completion in 2022.
Economic Data in Context
Table 1.1: GDP per head and Primary Education Completion in 2022
Malawi: $650 - 35% completion
Mauritania: $2200 - 70% completion
Namibia: $4900 - 78% completion
Senegal: $1640 - 60% completion
South Africa: $7060 - 99% completion
Uganda: $890 - 22% completion
Energy Potential and Economic Impact
Solar Energy Potential: 3000 hours of sunshine annually feasible for solar development.
Challenges: Initial costs for installation, risk of storm damage, land consumption, and visual pollution from solar farms.
Benefits: Reduces fuel imports, potential favorable impact on exchange rates.
Currency Performance
2022 Decline: The currency, the kwacha, depreciated relative to the US dollar, influencing current account deficits, inflation rates, and economic growth.
Economic advice: Economists suggest government intervention to stabilize kwacha further.
Section B: Topics for Discussion
Question 2: Multinational Companies
Stimulus Material
A multinational food manufacturer increased prices by an average of 8%, with a United States markup of 11.6%.
Historical note: This MNC has evolved over 160 years primarily influenced by opportunity cost.
Sub-Questions
(a) Definition of Multinational Company:
A corporation that manages production or delivers services in more than one country.
(b) Pricing Variations: Factors for price differentiation in two different countries include:
Market demand and purchasing power
Production and transportation costs
(c) Opportunity Cost in Decision Making: Analysis includes how consumers, workers, and producers face trade-offs when choosing between alternatives, affecting resource allocation.
(d) Small Firm Benefits: Discussion on the competitive effects of more small firms in an industry on consumers' prices and choices.
Question 3: Central Banks and Commercial Banks
Central Banks' Role
Definition of Central Banks:
A public institution that manages the currency, money supply, and interest rates of a state or formal monetary union.
Changes in Banking Behavior
Recent technological advancement in commercial banks leading to a 14% increase in global online banking (2019-2022).
Sub-Questions
(a) Comparison with Commercial Banks:
Central banks regulate money supply and set interest rates, differing from commercial banks that focus on deposits and loans.
(b) Characteristics of Coins as Money:
Durability, divisibility, portability, and stability of value.
(c) Services to Households:
Loans, savings accounts, investments, and financial advice.
(d) Division of Labor Benefits: Discuss whether such practices enhance productivity and worker satisfaction.
Question 4: Chad’s Economic Overview
Economic Context
Population pyramid analysis indicating high poverty levels.
Current Account Information
Regular deficit with a surplus in secondary income.
Sub-Questions
(a) Definition of Primary Income:
Earnings from assets owned by residents paid to foreign residents, including investments and wages.
(b) Influences on Population Pyramid Shape:
Birth rates, death rates, immigration/emigration patterns.