Read the source material carefully before you answer Question 1.
Source material: The Belarus economy
Belarus fact file (2021): Cars produced: 32 000. Total cost of cars produced: $340.8m. Labour force employed in the tertiary sector: 52%. Labour force employed in the public sector: 49%. Share of output produced by state-owned firms: 70%. Inflation rate: 9.9%. Unemployment rate: 5.7%.
Belarus, which has a mixed economy, was among the poorest countries in Europe in the 1990s. Since then, GDP per head has risen and poverty has fallen. The country has also seen an increase in life expectancy. Table 1.1 compares life expectancy and Human Development Index (HDI) value in six selected countries in 2019.
From 2011 to 2021, the price level in Belarus increased. Higher energy prices raised firms’ production costs in both the public sector and the private sector. Over the same period, investment in Belarus rose, the size of the country’s labour force declined, and fewer students went to university.
Belarus produces a variety of goods. Milk is one agricultural product made in Belarus. The country is the fifth largest producer of milk in the world. The Belarus government is unwilling to subsidise milk production, although it has supplied large loans to mechanise the dairy industry.
The Belarus government wants to stimulate the production and purchase of electric vehicles. It intends to construct 1300 electric vehicle charging stations by 2030. Electric vehicles can bring environmental benefits. However, some other types of transport may offer greater benefits, and some people and firms may be unwilling to switch to electric vehicles.
A less popular government policy introduced in 2015 was a law that fined anyone unemployed for six months or more. Anyone who failed to pay the amount owed to the government for breaking the law was jailed. If suitable jobs were available, this may have reduced frictional unemployment. However, some of the unemployment may have been structural or cyclical. The law was abolished in 2018.
(a)[1]
Calculate the average cost of producing one car in Belarus in 2021.
(b)[2]
Identify two features that show why Belarus is classed as a mixed economy.
(c)[2]
Explain the type of inflation that Belarus experienced.
(d)[4]
Explain two reasons why the production possibility curve (PPC) of Belarus may have moved left between 2011 and 2021.
(e)[4]
Analyse the link between life expectancy and HDI value.
(f)[5]
Analyse, using a demand and supply diagram, how subsidising the production of milk would affect the market for milk.
(g)[6]
Discuss whether or not the construction of electric vehicle charging stations would benefit an economy.
(h)[6]
Discuss whether or not people should be fined for being unemployed.
Worked solution & mark scheme
This 30-mark question has a full step-by-step worked solution and mark scheme. One marking point: “The average cost of producing one car in Belarus in 2021 = $10 650” …