It was reported in November 2016 that 500 and 1000 rupee banknotes could no longer be used in shops in India. The central bank, an institution that makes extensive use of division of labour, replaced these notes. In India, cash still remains an important form of money for economic transactions. Replacing the banknotes placed pressure on banking staff and tertiary-sector workers, and had an effect on the general price level.
(a)[2]
State two roles of a central bank other than issuing banknotes and coins.
(b)[4]
Explain two reasons why workers in the tertiary sector may earn more than workers in the primary sector.
(c)[6]
Analyse the benefits for firms of adopting division of labour.
(d)[8]
Discuss whether deflation is likely to benefit an economy.
Worked solution & mark scheme
This 20-mark question has a full step-by-step worked solution and mark scheme. One marking point: “Handles monetary policy” …