In November 2016, it was declared that 500 and 1000 rupee banknotes would no longer be accepted in shops in India. They were then replaced by the central bank, an institution that makes extensive use of division of labour. In India, cash remains an important medium of money in economic transactions. The replacement of banknotes increased pressure on banking employees and other workers in the tertiary sector, and it influenced the general price level.
(a)[2]
State two functions of a central bank apart from issuing banknotes and coins.
(b)[4]
Explain two reasons why workers in the tertiary sector might receive higher pay than workers in the primary sector.
(c)[6]
Analyse the benefits for firms from using division of labour.
(d)[8]
Discuss whether deflation will, or will not, benefit an economy.
Worked solution & mark scheme
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