Read the source material closely before you answer Question 1.
Source material: Population, household spending and poverty in Romania
From 1990 to 2022, Romania’s population dropped from 23 million to 19 million. Over this same period, both the birth rate and the death rate declined. Some workers from other countries, including Sri Lanka and Vietnam, moved to live in Romania. However, more Romanian workers left the country to work and live mainly in other European countries.
If the Romanian economy keeps expanding at its relatively high rate, fewer people may leave and more immigrants may be drawn in. Recent economic growth has been driven largely by rises in household spending. Romanians have become wealthier, more optimistic about the future and have experienced low interest rates.
In April 2022, the Romanian Government set a maximum price for electricity. Romanians spend a relatively large share of their income on electricity and on food. Table 1.1 shows selected countries’ GDP per head and average spending on food as a percentage of total household spending.
The poor are especially affected by changes in electricity prices and food prices. Romania has a relatively high level of poverty. To reduce poverty, some economists have suggested that the government should attract more foreign multinational companies (MNCs) to Romania. More MNCs may influence poverty because of the possible effects on unemployment and prices.
Another way to reduce poverty would be to encourage more women to work. The proportion of women in Romania who work or look for work has fallen in recent years. Whether women join the labour force is influenced by a range of factors. These include social attitudes, female education and whether childcare facilities and part-time work are available.
(a)[1]
Calculate Romania’s current account deficit on its balance of payments in $s.
(b)[2]
Identify two reasons why Romania’s population declined between 1990 and 2022.
(c)[2]
Explain why immigration to Romania may rise in the future.
(d)[4]
Explain two reasons why household spending has risen in Romania.
(e)[4]
Draw a demand and supply diagram to show the impact of imposing a maximum price on electricity.
(f)[5]
Analyse the link between GDP per head and average spending on food as a percentage of total household spending.
(g)[6]
Discuss whether foreign MNCs do or do not reduce poverty in their host countries.
(h)[6]
Discuss whether a larger proportion of women is likely to enter Romania’s labour force in the future.
Worked solution & mark scheme
This 30-mark question has a full step-by-step worked solution and mark scheme. One marking point: “27 bn” …