® IGCSE is the registered trademark of Cambridge International Examinations. This document consists of 8 printed pages. © UCLES 2016 [Turn over Cambridge International Examinations Cambridge International Advanced Subsidiary and Advanced Level ECONOMICS 9708/42 Paper 4 Data Response and Essays October/November 2016 MARK SCHEME Maximum Mark: 70 Published This mark scheme is published as an aid to teachers and candidates, to indicate the requirements of the examination. It shows the basis on which Examiners were instructed to award marks. It does not indicate the details of the discussions that took place at an Examiners’ meeting before marking began, which would have considered the acceptability of alternative answers. Mark schemes should be read in conjunction with the question paper and the Principal Examiner Report for Teachers. Cambridge will not enter into discussions about these mark schemes. Cambridge is publishing the mark schemes for the October/November 2016 series for most Cambridge IGCSE ® , Cambridge International A and AS Level components and some Cambridge O Level components.
Page 2 Mark Scheme Syllabus Paper Cambridge International AS/A Level – October/November 2016 9708 42 © UCLES 2016 Section A 1 (a) Brief explanation of monetary policy, a change in the rate of interest, or a change in money supply or a change in exchange rate (1): interest rates, bond policy, quantitative easing, exchange rate (2 from 4)  (b) Explanation of increase output (1) increase in the rate of change of output (2). Growth might result in investment in capital, technological development, development of the infrastructure, investment in human capital, an increase in exports (I for simple statement + 1 for development of statement)  (c) Explain the concept of a balance of payments deficit(1). Balance of payments deficit and link to pressure on currency. (2). Reasons for pressure on currency in India, Indonesia, Turkey and Brazil Federal Reserve’s decision to reduce bond purchases (1) + (1 for development) or Lack of domestic economic reform (1+1). Conclusion(1)  (d) Reducing bonds purchases reduces the price of bonds, this leads to interest rate increases. (2) Effects on economy: Potentially it could damage investment in new projects as borrowing cost is increased, this would have a negative effect on growth. Reduced consumption, investment, increases exchange rates and reduces exports. (4) Conclusion (1)  (MAX 2 marks if reduced interest rate effects correctly explained)
Page 3 Mark Scheme Syllabus Paper Cambridge International AS/A Level – October/November 2016 9708 42 © UCLES 2016 Section B The essay questions carry a maximum mark of 25. Try not to 'bunch' marks, but use the whole mark range. If there is any doubt in your mind, give the benefit of doubt to the candidate.
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