This document consists of 3 printed pages, 1 blank page and 1 Insert. DC (CW/CGW) 119594/2 © UCLES 2016 [Turn over Cambridge International Examinations Cambridge International Advanced Subsidiary and Advanced Level * 6 3 7 8 8 9 6 7 6 4 * ECONOMICS 9708/42 Paper 4 Data Response and Essays October/November 2016 2 hours 15 minutes No Additional Materials are required. READ THESE INSTRUCTIONS FIRST An answer booklet is provided inside this question paper. You should follow the instructions on the front cover of the answer booklet. If you need additional answer paper ask the invigilator for a continuation booklet. Section A Answer Question 1 . Section B Answer any two questions. You may answer with reference to your own economy or other economies that you have studied where relevant to the question. The number of marks is given in brackets [ ] at the end of each question or part question.
2 9708/42/O/N/16 © UCLES 2016 Section A Answer this question. 1 Risks of reduced US monetary stimulus The US Central Bank (the Federal Reserve) announced in January 2014 that it would reduce its quantitative easing (QE) by cutting its monthly bond purchases by another $10 billion. It said that it was optimistic that ‘the economy is about to start growing faster and there is underlying strength in the wider global economy’. It had set interest rates near to zero. This policy of the Federal Reserve contributed to a global shift in investments. Turkey, for example, which depends heavily on foreign investment, tried to bolster its currency by raising its interest rate to attract funds, but this did not work.