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This document contains an examination paper for IGCSE Economics. It includes 4 questions testing students' knowledge of economics concepts and ability to interpret data and graphs. The paper provides instructions to candidates, information about the exam, and advice. It contains content on topics such as supply and demand, labor markets, economic development, trade, and foreign direct investment. Students are asked to define terms, draw and label graphs, calculate changes, and give explanations and opinions in response to various economic scenarios. The paper is designed to comprehensively assess students' understanding of introductory economics.

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Surname Initial(s) Centre Paper Reference No. 4 3 5 0 2 H Candidate Signature No. Paper Reference(s) 4350/2H Examiner’s use only London Examinations Team Leader’s use only IGCSE Economics Question Leave Number Blank Paper 2H 1 Higher Tier 2 Friday 5 June 2009 – Morning 3 Time: 2 hours 15 minutes 4 Materials required for examination Items included with question papers Nil Nil Instructions to Candidates In the boxes above, write your centre number, candidate number, your surname, initial(s) and signature. Check that you have the correct question paper. Some questions must be answered with a cross in a box ( ). If you change your mind about an answer, put a line through the box ( ) and then mark your new answer with a cross ( ). Answer ALL the questions. Write your answers in the spaces provided in this question paper. Do not use pencil. Use blue or black ink. Information for Candidates The marks for individual questions and the parts of questions are shown in round brackets: e.g. (2). There are 4 questions in this question paper. The total mark for this paper is 100. There are 20 pages in this question paper. Any blank pages are indicated. Calculators may be used. Advice to Candidates Write your answers neatly and in good English. You are advised to spend the same amount of time on each of the 4 questions. Total This publication may be reproduced only in accordance with Turn over Edexcel Limited copyright policy. *H33990A0120* ©2009 Edexcel Limited. Printer’s Log. No. H33990A W850/4350/57570 4/4/2/
Leave blank Answer ALL the questions. Question 1 In 2007, difficult weather conditions in California, USA, caused the orange crop to fall by 70%. The effect of the crop failure on the price of oranges between 2006 and 2007 is shown in the following table and on Figure 1a below. Price of oranges Year ($ per kilo) 2006 0.5 2007 1.5 Supply 2006 Price 0.5 Demand Quality Figure 1a On Figure 1a (a) (i) Draw and label the supply curve for oranges in 2007. (2) (ii) Show the new equilibrium price and quantity in 2007. (2) (iii) If the price elasticity of demand for Californian oranges is elastic, what will happen to the incomes of orange farmers from 2006 to 2007? Place a cross in the correct box. Incomes will rise Incomes will fall Incomes will stay the same (1) 2 *H33990A00*
Leave blank (iv) Explain your answer to (iii). ................................................................................................................................ ................................................................................................................................ ................................................................................................................................ ................................................................................................................................ ................................................................................................................................ (2) (v) Oranges can be squeezed to make fresh orange juice. Explain why the supply of fresh orange juice is likely to be less elastic than the supply of soft drinks like cola. ................................................................................................................................ ................................................................................................................................ ................................................................................................................................ ................................................................................................................................ ................................................................................................................................ ................................................................................................................................ ................................................................................................................................ ................................................................................................................................ ................................................................................................................................ (4) 3 *H33990A030* Turn over
Leave blank (b) (i) On Figure 1b show the effects of introducing a national minimum wage rate on the demand and supply of labour. Wage S rate WR D Qn Quantity Figure 1b (4) (ii) Many of the workers in orange growing are paid the minimum wage. In your opinion do the benefits of a minimum wage rate outweigh the disadvantages? Give reasons for your answer. ................................................................................................................................ ................................................................................................................................ ................................................................................................................................ ................................................................................................................................ ................................................................................................................................ ................................................................................................................................ ................................................................................................................................ ................................................................................................................................ ................................................................................................................................ ................................................................................................................................ ................................................................................................................................ ................................................................................................................................ ................................................................................................................................ ................................................................................................................................ ................................................................................................................................ (5) 4 *H33990A00*
Leave blank (c) Do you think that the factors affecting the supply of labour are the main cause of the difference in wage rates between agricultural workers and doctors in a country? Give reasons for your answer. ....................................................................................................................................... ....................................................................................................................................... ....................................................................................................................................... ....................................................................................................................................... ....................................................................................................................................... ....................................................................................................................................... ....................................................................................................................................... ....................................................................................................................................... ....................................................................................................................................... ....................................................................................................................................... ....................................................................................................................................... ....................................................................................................................................... ....................................................................................................................................... ....................................................................................................................................... ....................................................................................................................................... (5) Q1 (Total 25 marks) 5 *H33990A00* Turn over
Leave blank Question 2 Figure 2a shows the sectors of the economy of Georgia in 2006. 70 65 60 55 50 45 % 40 % of Gross Domestic 35 Product 30 % workforce in sector 25 20 15 10 5 0 Primary Secondary Tertiary Figure 2a (a) Use the information in Figure 2a to identify the sector which: (i) contributed the highest percentage to Gross Domestic Product in 2006. ................................................................................................................................ ................................................................................................................................ (1) (ii) employed the highest percentage of the workforce in 2006. ................................................................................................................................ ................................................................................................................................ (1) (iii) With the aid of an example, explain what is meant by the tertiary sector. ................................................................................................................................ ................................................................................................................................ ................................................................................................................................ ................................................................................................................................ ................................................................................................................................ (2) 6 *H33990A00*
Leave blank (iv) What is meant by ‘division of labour’? ................................................................................................................................ ................................................................................................................................ ................................................................................................................................ ................................................................................................................................ ................................................................................................................................ (2) (v) With reference to the secondary sector, to what extent do the advantages of division of labour outweigh the disadvantages in the secondary sector? ................................................................................................................................ ................................................................................................................................ ................................................................................................................................ ................................................................................................................................ ................................................................................................................................ ................................................................................................................................ ................................................................................................................................ ................................................................................................................................ ................................................................................................................................ ................................................................................................................................ ................................................................................................................................ (5) (vi) Identify and briefly explain one other factor, apart from division of labour, which could increase labour productivity in the secondary sector. ................................................................................................................................ ................................................................................................................................ ................................................................................................................................ ................................................................................................................................ ................................................................................................................................ (2) 7 *H33990A00* Turn over
Leave blank Figure 2b shows the percentage Gross Domestic Product of Georgia in 2002 and 2006. 70 60 50 40 % of Gross Domestic Product 2002 30 % of Gross Domestic 20 Product 2006 10 0 Primary Secondary Tertiary Figure 2b (b) Using the data in Figure 2b, explain why Georgia can be seen as a developing economy. ....................................................................................................................................... ....................................................................................................................................... ....................................................................................................................................... ....................................................................................................................................... ....................................................................................................................................... ....................................................................................................................................... ....................................................................................................................................... ....................................................................................................................................... ....................................................................................................................................... (4) 8 *H33990A00*
Leave blank (c) Figure 2c shows the combined market share of the largest 5 firms in the UK’s soft drinks industry. 5 Firm Market Share in UK’s Soft Drinks Industry 2004 1993 0% 20% 40% 60% 80% Figure 2c (i) Place a cross in the correct box to identify the structure of the industry shown in Figure 2c. Explain your answer. Oligopoly Monopoly Public (1) Explanation: ................................................................................................................................ ................................................................................................................................ ................................................................................................................................ ................................................................................................................................ (2) 9 *H33990A090* Turn over
Leave blank (ii) In your opinion is an industry with a few large producers good for consumers? Give reasons for your answer. ................................................................................................................................ ................................................................................................................................ ................................................................................................................................ ................................................................................................................................ ................................................................................................................................ ................................................................................................................................ ................................................................................................................................ ................................................................................................................................ ................................................................................................................................ ................................................................................................................................ ................................................................................................................................ (5) Q2 (Total 25 marks) 10 *H33990A0100*
BLANK PAGE 11 *H33990A0110* Turn over
Leave blank Question 3 GDP at constant prices (m Euro) 300 250    200   m Euro  150 100 50 0 2001 2002 2003 2004 2005 2006 Figure 3a Figure 3a shows the Gross Domestic Product (GDP) of Greece 2001–2006. (a) (i) What is meant by Gross Domestic Product (GDP)? ................................................................................................................................ ................................................................................................................................ ................................................................................................................................ ................................................................................................................................ (2) Figure 3b shows Investment in Greece 2001–2006. (ii) With the aid of an example, define investment. ................................................................................................................................ ................................................................................................................................ ................................................................................................................................ ................................................................................................................................ (2) 12 *H33990A010*
Leave blank Investment at constant prices (m Euro) 70  60   50   40  m Euro 30 20 10 0 2001 2002 2003 2004 2005 2006 Figure 3b (iii) Using the data in Figures 3a and 3b, briefly explain the likely relationship between GDP and the level of investment between 2001–2006. ................................................................................................................................ ................................................................................................................................ ................................................................................................................................ ................................................................................................................................ ................................................................................................................................ ................................................................................................................................ ................................................................................................................................ ................................................................................................................................ ................................................................................................................................ (4) 13 *H33990A0130* Turn over
Leave blank (iv) Explain how changes in the rate of interest might be used to increase the level of investment in Greece. ................................................................................................................................ ................................................................................................................................ ................................................................................................................................ ................................................................................................................................ ................................................................................................................................ ................................................................................................................................ ................................................................................................................................ ................................................................................................................................ ................................................................................................................................ (4) (v) Identify and briefly explain one other measure a government could use to increase the level of investment in a country. ................................................................................................................................ ................................................................................................................................ ................................................................................................................................ ................................................................................................................................ (2) 14 *H33990A010*
Leave blank (vi) Does an increase in the level of investment always benefit the people of the country? Give reasons for your answer. ................................................................................................................................ ................................................................................................................................ ................................................................................................................................ ................................................................................................................................ ................................................................................................................................ ................................................................................................................................ ................................................................................................................................ ................................................................................................................................ ................................................................................................................................ ................................................................................................................................ ................................................................................................................................ (5) (b) Figure 3c shows the current account of the balance of payments of Greece in 2005 and 2006. 2005 2006 Imports € m 57171 56522 Exports € m 40413 44287 Figure 3c (i) Place a cross in the correct box to show whether the balance of payments on current account between 2005–2006 had Improved Worsened Stayed the same (1) 15 *H33990A010* Turn over
Leave blank (ii) Examine one measure of fiscal policy a government may use to reduce a deficit on the current account of the balance of payments. ................................................................................................................................ ................................................................................................................................ ................................................................................................................................ ................................................................................................................................ ................................................................................................................................ ................................................................................................................................ ................................................................................................................................ ................................................................................................................................ ................................................................................................................................ ................................................................................................................................ ................................................................................................................................ (5) Q3 (Total 25 marks) 16 *H33990A010*
Leave blank Question 4 In 2007 the United States government announced a record trade deficit with China of $233bn. It blamed the deficit on the low exchange rate of the Chinese currency. (a) Read the following passage and complete the blank spaces by choosing from the list below. Items in the list may be used more than once: • supply • value • demand • currency Exchange rates show the (i) ...................................... of one currency in terms of another (ii) ...................................... . (2) (iii) Place a cross in the correct box to complete the following sentence. The United States government thought that imports from China into the United States were Too expensive Too cheap Good quality (1) (iv) Tariffs and quotas can be used to protect domestic firms from foreign imports. Distinguish between tariffs and quotas. ................................................................................................................................ ................................................................................................................................ ................................................................................................................................ ................................................................................................................................ ................................................................................................................................ ................................................................................................................................ ................................................................................................................................ (4) 17 *H33990A010* Turn over
Leave blank (v) Examine the advantages and disadvantages of a government protecting domestic firms from foreign competition. ................................................................................................................................ ................................................................................................................................ ................................................................................................................................ ................................................................................................................................ ................................................................................................................................ ................................................................................................................................ ................................................................................................................................ ................................................................................................................................ ................................................................................................................................ ................................................................................................................................ ................................................................................................................................ ................................................................................................................................ ................................................................................................................................ (5) The Republic of Azerbaijan is the leading FDI (foreign direct investment) destination in the region surrounding the Caspian Sea. In the last decade the total FDI in Azerbaijan exceeded $US25 billion. (b) (i) Place a cross in a box to identify which of the following definitions refers to FDI (foreign direct investment) into a country. Overseas investment into a country by multinational enterprises. The international transfer of public and private funds in the form of loans or grants from donor countries to recipient countries. (1) 18 *H33990A010*
Leave blank (ii) Identify two ways in which a government can encourage FDI into the country. ................................................................................................................................ ................................................................................................................................ ................................................................................................................................ ................................................................................................................................ (2) (iii) Do the advantages of FDI outweigh the disadvantages? Give reasons for your answer. ................................................................................................................................ ................................................................................................................................ ................................................................................................................................ ................................................................................................................................ ................................................................................................................................ ................................................................................................................................ ................................................................................................................................ ................................................................................................................................ ................................................................................................................................ ................................................................................................................................ ................................................................................................................................ ................................................................................................................................ ................................................................................................................................ (6) 19 *H33990A0190* Turn over
Leave blank (c) Briefly explain one advantage and one disadvantage of a country receiving foreign aid. ....................................................................................................................................... ....................................................................................................................................... ....................................................................................................................................... ....................................................................................................................................... ....................................................................................................................................... ....................................................................................................................................... ....................................................................................................................................... ....................................................................................................................................... ....................................................................................................................................... (4) Q4 (Total 25 marks) TOTAL FOR PAPER: 100 MARKS END 20 *H33990A000*

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IGCSE Jun 09

  • 1. Surname Initial(s) Centre Paper Reference No. 4 3 5 0 2 H Candidate Signature No. Paper Reference(s) 4350/2H Examiner’s use only London Examinations Team Leader’s use only IGCSE Economics Question Leave Number Blank Paper 2H 1 Higher Tier 2 Friday 5 June 2009 – Morning 3 Time: 2 hours 15 minutes 4 Materials required for examination Items included with question papers Nil Nil Instructions to Candidates In the boxes above, write your centre number, candidate number, your surname, initial(s) and signature. Check that you have the correct question paper. Some questions must be answered with a cross in a box ( ). If you change your mind about an answer, put a line through the box ( ) and then mark your new answer with a cross ( ). Answer ALL the questions. Write your answers in the spaces provided in this question paper. Do not use pencil. Use blue or black ink. Information for Candidates The marks for individual questions and the parts of questions are shown in round brackets: e.g. (2). There are 4 questions in this question paper. The total mark for this paper is 100. There are 20 pages in this question paper. Any blank pages are indicated. Calculators may be used. Advice to Candidates Write your answers neatly and in good English. You are advised to spend the same amount of time on each of the 4 questions. Total This publication may be reproduced only in accordance with Turn over Edexcel Limited copyright policy. *H33990A0120* ©2009 Edexcel Limited. Printer’s Log. No. H33990A W850/4350/57570 4/4/2/
  • 2. Leave blank Answer ALL the questions. Question 1 In 2007, difficult weather conditions in California, USA, caused the orange crop to fall by 70%. The effect of the crop failure on the price of oranges between 2006 and 2007 is shown in the following table and on Figure 1a below. Price of oranges Year ($ per kilo) 2006 0.5 2007 1.5 Supply 2006 Price 0.5 Demand Quality Figure 1a On Figure 1a (a) (i) Draw and label the supply curve for oranges in 2007. (2) (ii) Show the new equilibrium price and quantity in 2007. (2) (iii) If the price elasticity of demand for Californian oranges is elastic, what will happen to the incomes of orange farmers from 2006 to 2007? Place a cross in the correct box. Incomes will rise Incomes will fall Incomes will stay the same (1) 2 *H33990A00*
  • 3. Leave blank (iv) Explain your answer to (iii). ................................................................................................................................ ................................................................................................................................ ................................................................................................................................ ................................................................................................................................ ................................................................................................................................ (2) (v) Oranges can be squeezed to make fresh orange juice. Explain why the supply of fresh orange juice is likely to be less elastic than the supply of soft drinks like cola. ................................................................................................................................ ................................................................................................................................ ................................................................................................................................ ................................................................................................................................ ................................................................................................................................ ................................................................................................................................ ................................................................................................................................ ................................................................................................................................ ................................................................................................................................ (4) 3 *H33990A030* Turn over
  • 4. Leave blank (b) (i) On Figure 1b show the effects of introducing a national minimum wage rate on the demand and supply of labour. Wage S rate WR D Qn Quantity Figure 1b (4) (ii) Many of the workers in orange growing are paid the minimum wage. In your opinion do the benefits of a minimum wage rate outweigh the disadvantages? Give reasons for your answer. ................................................................................................................................ ................................................................................................................................ ................................................................................................................................ ................................................................................................................................ ................................................................................................................................ ................................................................................................................................ ................................................................................................................................ ................................................................................................................................ ................................................................................................................................ ................................................................................................................................ ................................................................................................................................ ................................................................................................................................ ................................................................................................................................ ................................................................................................................................ ................................................................................................................................ (5) 4 *H33990A00*
  • 5. Leave blank (c) Do you think that the factors affecting the supply of labour are the main cause of the difference in wage rates between agricultural workers and doctors in a country? Give reasons for your answer. ....................................................................................................................................... ....................................................................................................................................... ....................................................................................................................................... ....................................................................................................................................... ....................................................................................................................................... ....................................................................................................................................... ....................................................................................................................................... ....................................................................................................................................... ....................................................................................................................................... ....................................................................................................................................... ....................................................................................................................................... ....................................................................................................................................... ....................................................................................................................................... ....................................................................................................................................... ....................................................................................................................................... (5) Q1 (Total 25 marks) 5 *H33990A00* Turn over
  • 6. Leave blank Question 2 Figure 2a shows the sectors of the economy of Georgia in 2006. 70 65 60 55 50 45 % 40 % of Gross Domestic 35 Product 30 % workforce in sector 25 20 15 10 5 0 Primary Secondary Tertiary Figure 2a (a) Use the information in Figure 2a to identify the sector which: (i) contributed the highest percentage to Gross Domestic Product in 2006. ................................................................................................................................ ................................................................................................................................ (1) (ii) employed the highest percentage of the workforce in 2006. ................................................................................................................................ ................................................................................................................................ (1) (iii) With the aid of an example, explain what is meant by the tertiary sector. ................................................................................................................................ ................................................................................................................................ ................................................................................................................................ ................................................................................................................................ ................................................................................................................................ (2) 6 *H33990A00*
  • 7. Leave blank (iv) What is meant by ‘division of labour’? ................................................................................................................................ ................................................................................................................................ ................................................................................................................................ ................................................................................................................................ ................................................................................................................................ (2) (v) With reference to the secondary sector, to what extent do the advantages of division of labour outweigh the disadvantages in the secondary sector? ................................................................................................................................ ................................................................................................................................ ................................................................................................................................ ................................................................................................................................ ................................................................................................................................ ................................................................................................................................ ................................................................................................................................ ................................................................................................................................ ................................................................................................................................ ................................................................................................................................ ................................................................................................................................ (5) (vi) Identify and briefly explain one other factor, apart from division of labour, which could increase labour productivity in the secondary sector. ................................................................................................................................ ................................................................................................................................ ................................................................................................................................ ................................................................................................................................ ................................................................................................................................ (2) 7 *H33990A00* Turn over
  • 8. Leave blank Figure 2b shows the percentage Gross Domestic Product of Georgia in 2002 and 2006. 70 60 50 40 % of Gross Domestic Product 2002 30 % of Gross Domestic 20 Product 2006 10 0 Primary Secondary Tertiary Figure 2b (b) Using the data in Figure 2b, explain why Georgia can be seen as a developing economy. ....................................................................................................................................... ....................................................................................................................................... ....................................................................................................................................... ....................................................................................................................................... ....................................................................................................................................... ....................................................................................................................................... ....................................................................................................................................... ....................................................................................................................................... ....................................................................................................................................... (4) 8 *H33990A00*
  • 9. Leave blank (c) Figure 2c shows the combined market share of the largest 5 firms in the UK’s soft drinks industry. 5 Firm Market Share in UK’s Soft Drinks Industry 2004 1993 0% 20% 40% 60% 80% Figure 2c (i) Place a cross in the correct box to identify the structure of the industry shown in Figure 2c. Explain your answer. Oligopoly Monopoly Public (1) Explanation: ................................................................................................................................ ................................................................................................................................ ................................................................................................................................ ................................................................................................................................ (2) 9 *H33990A090* Turn over
  • 10. Leave blank (ii) In your opinion is an industry with a few large producers good for consumers? Give reasons for your answer. ................................................................................................................................ ................................................................................................................................ ................................................................................................................................ ................................................................................................................................ ................................................................................................................................ ................................................................................................................................ ................................................................................................................................ ................................................................................................................................ ................................................................................................................................ ................................................................................................................................ ................................................................................................................................ (5) Q2 (Total 25 marks) 10 *H33990A0100*
  • 11. BLANK PAGE 11 *H33990A0110* Turn over
  • 12. Leave blank Question 3 GDP at constant prices (m Euro) 300 250    200   m Euro  150 100 50 0 2001 2002 2003 2004 2005 2006 Figure 3a Figure 3a shows the Gross Domestic Product (GDP) of Greece 2001–2006. (a) (i) What is meant by Gross Domestic Product (GDP)? ................................................................................................................................ ................................................................................................................................ ................................................................................................................................ ................................................................................................................................ (2) Figure 3b shows Investment in Greece 2001–2006. (ii) With the aid of an example, define investment. ................................................................................................................................ ................................................................................................................................ ................................................................................................................................ ................................................................................................................................ (2) 12 *H33990A010*
  • 13. Leave blank Investment at constant prices (m Euro) 70  60   50   40  m Euro 30 20 10 0 2001 2002 2003 2004 2005 2006 Figure 3b (iii) Using the data in Figures 3a and 3b, briefly explain the likely relationship between GDP and the level of investment between 2001–2006. ................................................................................................................................ ................................................................................................................................ ................................................................................................................................ ................................................................................................................................ ................................................................................................................................ ................................................................................................................................ ................................................................................................................................ ................................................................................................................................ ................................................................................................................................ (4) 13 *H33990A0130* Turn over
  • 14. Leave blank (iv) Explain how changes in the rate of interest might be used to increase the level of investment in Greece. ................................................................................................................................ ................................................................................................................................ ................................................................................................................................ ................................................................................................................................ ................................................................................................................................ ................................................................................................................................ ................................................................................................................................ ................................................................................................................................ ................................................................................................................................ (4) (v) Identify and briefly explain one other measure a government could use to increase the level of investment in a country. ................................................................................................................................ ................................................................................................................................ ................................................................................................................................ ................................................................................................................................ (2) 14 *H33990A010*
  • 15. Leave blank (vi) Does an increase in the level of investment always benefit the people of the country? Give reasons for your answer. ................................................................................................................................ ................................................................................................................................ ................................................................................................................................ ................................................................................................................................ ................................................................................................................................ ................................................................................................................................ ................................................................................................................................ ................................................................................................................................ ................................................................................................................................ ................................................................................................................................ ................................................................................................................................ (5) (b) Figure 3c shows the current account of the balance of payments of Greece in 2005 and 2006. 2005 2006 Imports € m 57171 56522 Exports € m 40413 44287 Figure 3c (i) Place a cross in the correct box to show whether the balance of payments on current account between 2005–2006 had Improved Worsened Stayed the same (1) 15 *H33990A010* Turn over
  • 16. Leave blank (ii) Examine one measure of fiscal policy a government may use to reduce a deficit on the current account of the balance of payments. ................................................................................................................................ ................................................................................................................................ ................................................................................................................................ ................................................................................................................................ ................................................................................................................................ ................................................................................................................................ ................................................................................................................................ ................................................................................................................................ ................................................................................................................................ ................................................................................................................................ ................................................................................................................................ (5) Q3 (Total 25 marks) 16 *H33990A010*
  • 17. Leave blank Question 4 In 2007 the United States government announced a record trade deficit with China of $233bn. It blamed the deficit on the low exchange rate of the Chinese currency. (a) Read the following passage and complete the blank spaces by choosing from the list below. Items in the list may be used more than once: • supply • value • demand • currency Exchange rates show the (i) ...................................... of one currency in terms of another (ii) ...................................... . (2) (iii) Place a cross in the correct box to complete the following sentence. The United States government thought that imports from China into the United States were Too expensive Too cheap Good quality (1) (iv) Tariffs and quotas can be used to protect domestic firms from foreign imports. Distinguish between tariffs and quotas. ................................................................................................................................ ................................................................................................................................ ................................................................................................................................ ................................................................................................................................ ................................................................................................................................ ................................................................................................................................ ................................................................................................................................ (4) 17 *H33990A010* Turn over
  • 18. Leave blank (v) Examine the advantages and disadvantages of a government protecting domestic firms from foreign competition. ................................................................................................................................ ................................................................................................................................ ................................................................................................................................ ................................................................................................................................ ................................................................................................................................ ................................................................................................................................ ................................................................................................................................ ................................................................................................................................ ................................................................................................................................ ................................................................................................................................ ................................................................................................................................ ................................................................................................................................ ................................................................................................................................ (5) The Republic of Azerbaijan is the leading FDI (foreign direct investment) destination in the region surrounding the Caspian Sea. In the last decade the total FDI in Azerbaijan exceeded $US25 billion. (b) (i) Place a cross in a box to identify which of the following definitions refers to FDI (foreign direct investment) into a country. Overseas investment into a country by multinational enterprises. The international transfer of public and private funds in the form of loans or grants from donor countries to recipient countries. (1) 18 *H33990A010*
  • 19. Leave blank (ii) Identify two ways in which a government can encourage FDI into the country. ................................................................................................................................ ................................................................................................................................ ................................................................................................................................ ................................................................................................................................ (2) (iii) Do the advantages of FDI outweigh the disadvantages? Give reasons for your answer. ................................................................................................................................ ................................................................................................................................ ................................................................................................................................ ................................................................................................................................ ................................................................................................................................ ................................................................................................................................ ................................................................................................................................ ................................................................................................................................ ................................................................................................................................ ................................................................................................................................ ................................................................................................................................ ................................................................................................................................ ................................................................................................................................ (6) 19 *H33990A0190* Turn over
  • 20. Leave blank (c) Briefly explain one advantage and one disadvantage of a country receiving foreign aid. ....................................................................................................................................... ....................................................................................................................................... ....................................................................................................................................... ....................................................................................................................................... ....................................................................................................................................... ....................................................................................................................................... ....................................................................................................................................... ....................................................................................................................................... ....................................................................................................................................... (4) Q4 (Total 25 marks) TOTAL FOR PAPER: 100 MARKS END 20 *H33990A000*