Question:

3 Indonesia operates a mixed economic system. Indonesia’s central bank, Bank Indonesia, aims for stable prices.

The country’s price level can be influenced by changes in population size.
Indonesia’s population continues to grow but at a slower rate. Many of the country’s industries are
growing with particularly fast growth in Indonesian domestic and international air travel.

(a) Identify who allocates resources in a mixed economic system. [2]
(b) Explain two benefits a firm may gain from an increase in the size of the country’s population. [4]
(c) Analyse the reasons why governments aim for stable prices. [6]
(d) Discuss whether or not the global economy would benefit from an increase in air travel. [8]

Sample Answers: