I don't think that it'll come up in like a 15 mark or 12 mark question (or at least, I would hope not), but it can definitely feature in a 10 marker or below. I think you'd define microfinance: small loans and financial services for people that don't have access to traditional banking and credit. Then you'd expand based on the provided context. If the context had to do with how cocoa farmers would increase their incomes using a microfinance scheme for a 10 marker, then your answer might look a bit like this:

A way in which cocoa farmers can increase their incomes using microfinance schemes is by diversifying their crop production. After taking a small loan out, cocoa farmers without traditional access to banking and credit are able to put this money towards purchasing different crop seeds such as wheat seeds that can then produce additional yield. By doing this, cocoa farmers are able to start selling more high value crops at higher prices, and they are able to reduce the risks associated with cocoa beans going bad or being destroyed due to some adverse event like crop disease or natural disaster, as their wheat production would be able to cross-subsidise the loss encountered with cocoa beans. This diversification also means that cocoa farmers are less susceptible to the fluctuations in prices for commodities like cocoa beans and wheat, as a drop in the price of one commodity is likely not to be the same for the other commodity, so farmers can maintain a reasonably high income. This additional income can then be used for greater diversification of crop varieties or towards a greater standard of living as a greater disposable income affords cocoa farmers greater purchasing power.

However, microfinance schemes often have incredibly high interest rates attached to their loans. A reason for this may be that organisations that run microfinance schemes believe small-scale borrowers to be highly unreliable, so place high interest rates on loans. An effect of this may be that cocoa farmers have to hand over any additional income they earn from crop diversification to the lender, negating the benefits of diversification. A worse outcome may be that crop diversification has not awarded cocoa farmers any additional income perhaps due to a poor choice of crop seed, and an accumulation of high interest payments, which would leave cocoa farmers in unsustainable levels of debt which would severely impact their standard of living as paying off this debt may involve sacrificing necessities.

^^ I'm obviously waffling here, because I don't know what the question is - I just used an example of a different question I answered on a past paper and twisted it so that the question was focused on microfinance schemes. Honestly, I don't think this would be too difficult of a question if it came up, since your KAA paragraph(s) would just involve the microfinance schemes providing the borrower with a certain amount of money, and the challenge is coming up with what the money would be put towards to satisfy the contextual demands of the question since this would pop up in a section B. Though this could probably be employed as a concept in a 25 marker, this would be on your terms, and you'd have to employ a country of your choice where microfinance schemes are being used. When it comes to a microfinance scheme in say a 12 marker (very unfortunate outcome), then you'd have to use more higher tier knowledge - I had to refer to a textbook for this (the above was what I made up using existing knowledge) but this was what I found. Micro-credit (or loans) is only one function of microfinance. Two other things I think are worth talking about include micro-savings which are self-explanatory where savings can be gathered and micro-insurance which essentially helps someone avoid bankruptcy. Two point you would make: one on economic growth by contextually linking a use of money on a certain method of long term growth for a firm or individual, and economic development by discussing how microfinance schemes can make sure that people aren't living in poverty and can afford a reasonable standard of living. I hope this helps, but there's much more I could probably come up with on this if you want (though I'd say not to bother since there are like 17 other strategies for development so it's really not worth doing such a deep dive on every single one).

Reply 4

toxicgamage56

Universities Forum Helper

19

Original post by mima223

i think micro finance
trade negotiation
Supply side policy and income distribution

Microfinance is fine - probably won't be a high mark question.

Trade negotiation sounds very general so I don't know what you're getting at - I assume you mean trading blocs and varying levels of economic integration, in which case, that is very likely to come up since it forms the main body of theme 4.

Supply side policy - this is an interesting prediction, and why not demand side policy? I don't think this should be too hard but I only have a few supply-side policies that I've got learnt: building infrastructure, reducing income tax, reducing the power of trade unions, reducing corporation tax, increasing investment in training/education.

Income distribution - so this would be income inequality (and maybe wealth inequality?). This is one of the macroeconomic objectives so maybe you could reference trade-offs? I think if I got a question on income inequality in section B then it might be worth referencing the north-south divide in the UK and how income inequality may be due to an incentive structure within the economy, or because executives are being paid too much. This could probably be linked to the level of unemployment in the UK (3.9%) and how some people are overqualified for their role. Income is a "flow" concept that is measured over time whilst wealth is a "stock" concept that is measured at any one time. I guess you could throw in the Kuznets curve, Lorenz curve, and Gini coefficient. My main point about income inequality would probably be the distinction between the agricultural and manufacturing industry, as agriculture is prone to price volatility. A secondary point may just be concerning the supply and demand for labour based on varying occupations.

Sorry for the word vom, I was just brainstorming the sort of things that I might talk about should any of your predictions ring true (much more likely than expected should the thread for paper 1 teach me anything lol). Thanks.

Reply 5

m00dled00dle

12

Original post by toxicgamage56

I don't think that it'll come up in like a 15 mark or 12 mark question (or at least, I would hope not), but it can definitely feature in a 10 marker or below. I think you'd define microfinance: small loans and financial services for people that don't have access to traditional banking and credit. Then you'd expand based on the provided context. If the context had to do with how cocoa farmers would increase their incomes using a microfinance scheme for a 10 marker, then your answer might look a bit like this:

A way in which cocoa farmers can increase their incomes using microfinance schemes is by diversifying their crop production. After taking a small loan out, cocoa farmers without traditional access to banking and credit are able to put this money towards purchasing different crop seeds such as wheat seeds that can then produce additional yield. By doing this, cocoa farmers are able to start selling more high value crops at higher prices, and they are able to reduce the risks associated with cocoa beans going bad or being destroyed due to some adverse event like crop disease or natural disaster, as their wheat production would be able to cross-subsidise the loss encountered with cocoa beans. This diversification also means that cocoa farmers are less susceptible to the fluctuations in prices for commodities like cocoa beans and wheat, as a drop in the price of one commodity is likely not to be the same for the other commodity, so farmers can maintain a reasonably high income. This additional income can then be used for greater diversification of crop varieties or towards a greater standard of living as a greater disposable income affords cocoa farmers greater purchasing power.

However, microfinance schemes often have incredibly high interest rates attached to their loans. A reason for this may be that organisations that run microfinance schemes believe small-scale borrowers to be highly unreliable, so place high interest rates on loans. An effect of this may be that cocoa farmers have to hand over any additional income they earn from crop diversification to the lender, negating the benefits of diversification. A worse outcome may be that crop diversification has not awarded cocoa farmers any additional income perhaps due to a poor choice of crop seed, and an accumulation of high interest payments, which would leave cocoa farmers in unsustainable levels of debt which would severely impact their standard of living as paying off this debt may involve sacrificing necessities.

^^ I'm obviously waffling here, because I don't know what the question is - I just used an example of a different question I answered on a past paper and twisted it so that the question was focused on microfinance schemes. Honestly, I don't think this would be too difficult of a question if it came up, since your KAA paragraph(s) would just involve the microfinance schemes providing the borrower with a certain amount of money, and the challenge is coming up with what the money would be put towards to satisfy the contextual demands of the question since this would pop up in a section B. Though this could probably be employed as a concept in a 25 marker, this would be on your terms, and you'd have to employ a country of your choice where microfinance schemes are being used. When it comes to a microfinance scheme in say a 12 marker (very unfortunate outcome), then you'd have to use more higher tier knowledge - I had to refer to a textbook for this (the above was what I made up using existing knowledge) but this was what I found. Micro-credit (or loans) is only one function of microfinance. Two other things I think are worth talking about include micro-savings which are self-explanatory where savings can be gathered and micro-insurance which essentially helps someone avoid bankruptcy. Two point you would make: one on economic growth by contextually linking a use of money on a certain method of long term growth for a firm or individual, and economic development by discussing how microfinance schemes can make sure that people aren't living in poverty and can afford a reasonable standard of living. I hope this helps, but there's much more I could probably come up with on this if you want (though I'd say not to bother since there are like 17 other strategies for development so it's really not worth doing such a deep dive on every single one).