In Ecuador, people purchase goods using different kinds of money. The Ecuadorian government transfers public sector workers’ wages straight into their bank accounts. In 2019, advances in technology affected the profits of some Ecuadorian firms. In that year, the Ecuadorian government shortened public sector workers’ hours and, in 2020, cut its spending. Economists were unsure how the fall in government spending would affect unemployment.
(a)[2]
State any two characteristics of money.
(b)[4]
Explain two reasons why shorter working hours might not make public sector workers move into private sector jobs.
(c)[6]
Analyse how advances in technology may influence firms’ profits.
(d)[8]
Discuss whether a reduction in government spending will increase unemployment.
Worked solution & mark scheme
This 20-mark question has a full step-by-step worked solution and mark scheme. One marking point: “widely accepted” …