Question 18N.3.HL.TZ0.3
| Date | November 2018 | Marks available | [Maximum mark: 25] | Reference code | 18N.3.HL.TZ0.3 |
| Level | HL | Paper | 3 | Time zone | TZ0 |
| Command term | Calculate, Define, Determine, Draw, Explain, Identify, Label, State | Question number | 3 | Adapted from | N/A |
The information provided in Table 1 represents data for Country X in 2015.
Table 1
Calculate gross domestic product (GDP) for Country X in 2015.
[2]
GDP = C + I + G + (X − M)
= 745 + 229 + 437 + 234 − 289
Any valid working is sufficient for [1].
= $1356 billion
An answer of 1356 billion or $1356 (without working) is sufficient for [1].
Calculate gross national income (GNI) for Country X in 2015.
[1]
GDP + net factor income = GNI
1356 − 111 = $1245 billion
An answer of 1245 (without working) is sufficient for [1].
OFR applies.
The information provided in Table 2 relates to Country Y.
Table 2
Calculate the rate of consumer price inflation in 2016.
[1]
An answer of 3.66 (without working) is sufficient for [1].
Using the GDP deflator, calculate the percentage change in real GDP between 2014 and 2015.
[2]
real GDP in 2015
rate of change
Any valid working is sufficient for [1].
= 2.57 %
An answer of 2.57 (without working) is sufficient for [1].
Figure 4 represents the circular flow of income in Country A, with values in billions of dollars ($).
Figure 4
Identify the term represented in Figure 4 by the letter V.
[1]
Income OR factor income OR household income OR factor payments.
Award [1] for identifying the term correctly.
Identify the term represented in Figure 4 by the letter M.
[1]
imports
Award [1] for identifying the term correctly.
State the four factor payments which constitute the income flow in the circular flow of income model.
[2]
rent, wages, interest and profit
Award [1] for three payments provided.
Award [2] for four payments provided.
Define the term leakages.
[2]
Determine the size of the budget surplus/deficit and state which using Figure 4.
[1]
budget surplus of $5 billion
Award [1] for determining the size of the budget correctly.
The government of Country A decides to increase the level of taxation to $34 billion.
Using an AD/AS diagram, explain how this may affect the level of unemployment.
[4]
NB A response in which the AS curve shifts to the left, on the basis that the increase in taxation may be indirect taxation, should be rewarded.
Table 3 provides information on the rates of direct tax in Country A.
Table 3
Calculate the average tax rate for an individual who earns $64 000 per year.
[2]
12 000 × 5 % + 15 500 × 12 % + 32 500 × 21.5 % + 4 000 × 32 %
= $10 727.50
Working is not required.
average tax rate
Any valid working is sufficient for [1].
= 16.76 %
An answer of 16.76 or 0.17 (without working) is sufficient for [1].
Table 4 provides information on the household distribution of income in Country A.
Table 4
Draw and label the Lorenz curve diagram for Country A on Figure 5.
[2]
Award [1] for an accurate Lorenz curve.
OR
Award [1] for a Lorenz curve which is inaccurate but which goes from (0,0) to (100,100) and which lies below the line of perfect equality AND axes labelled accurately.
Award [2] for an accurate Lorenz curve with axes correctly labelled.
NB The term “cumulative” is not necessary for labelling of axes.
Explain how an increase in the top rate of direct tax from 32 % to 36 % might affect equity and efficiency in Country A.
[4]
NB A response which explains that inequality will be reduced, without explicitly using the term equality/inequality, should be rewarded.