In Ecuador, people purchase goods and services with several different kinds of money. The Ecuadorian government transfers public sector workers’ pay straight into their bank accounts. In 2019, advances in technology affected the profits of some Ecuadorian firms. In that year, the Ecuadorian government reduced the hours of public sector workers and, in 2020, it cut spending. Economists were unsure what impact the fall in government spending would have on unemployment.
(a)[2]
Identify two features of money.
(b)[4]
Explain two reasons why shorter working hours may not make public sector workers move into the private sector.
(c)[6]
Analyse how technological advances could influence firms’ profits.
(d)[8]
Discuss whether a fall in government spending will raise unemployment.
Worked solution & mark scheme
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