42 questions from the Edexcel A-Level Economics papers, 2017–2024, covering Theme 2. Every question links to the official mark scheme at the page its answer begins on.
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With reference to Figure 4 and Extract A, examine the likely impact of the ‘freeze in income tax thresholds’ (Extract A line 1) on aggregate demand.
2.2.1 Aggregate Demand · 4.5.2 Taxation
With reference to Extract B, discuss the use of quantitative easing in preventing deflation.
Discuss supply-side policies the UK government could introduce to stimulate economic growth.
Discuss factors influencing the level of aggregate demand in Ghana. Use an aggregate demand and aggregate supply diagram in your answer.
2.2.1 Aggregate Demand
Evaluate the microeconomic and macroeconomic effects of high interest rates in Ghana, or another developing country of your choice.
One of two options in Section B — candidates answered this or the other.
Discuss the impact of improved transport links between African countries on economic growth rates.
UK inflation, as measured by the CPI, rose to 10.1% in the 12 months to July 2022, compared to 2.0% in the 12 months to July 2021. (Source: adapted from https://www.ons.gov.uk/economy/inflationandpriceindices/bulletins/consumerpriceinflation/july2022) Evaluate macroeconomic policies, apart from monetary policy, the UK government could use to reduce inflation.
One of two options in Section C — candidates answered this or the other.
Examine two reasons for the rise in inflation in the UK. Refer to the information provided in your answer.
Evaluate the likely microeconomic and macroeconomic effects of tax cuts in the UK.
One of two options in Section A — candidates answered this or the other.
Evaluate the microeconomic and macroeconomic effects of falling house prices.
One of two options in Section B — candidates answered this or the other.
2.2.2 Consumption · 4.4.1 Role of Financial Markets
Evaluate the microeconomic and macroeconomic effects of labour shortages in the UK, or a developed economy of your choice.
One of two options in Section B — candidates answered this or the other.
3.5.2 Supply of Labour · 2.1.3 Employment and Unemployment
With reference to Figure 2, assess whether an increase in real income improves subjective happiness within the UK.
2.1.1 Measuring Economic Growth · 2.5.4 The Impact of Economic Growth
With reference to Extract B, discuss the benefits of an increase in infrastructure spending on the UK economy. Use an aggregate demand and aggregate supply diagram to support your answer.
Evaluate the microeconomic and macroeconomic effects of decreasing interest rates in Kenya, or another developing country of your choice.
One of two options in Section B — candidates answered this or the other.
The European Central Bank introduced a new round of quantitative easing (QE) in March 2020, purchasing up to €750 billion of assets. The objective of this QE was to reduce the serious risks to the effectiveness of monetary policy resulting from a significant recession. The European Central Bank’s target for inflation remains at ‘below but close to 2%’. (Source adapted from: https://www.ecb.europa.eu/press/pr/date/2020/html/ecb.pr200318_1~3949d6f266.en.html) Evaluate the effectiveness of quantitative easing during ‘a significant recession’.
One of two options in Section C — candidates answered this or the other.
It has been estimated that if climate change led to the world’s temperature rising 2.5 °C compared to the temperature in 2010, then global GDP per capita would be 15% lower by 2100. If temperatures rise by 4 °C compared to the temperature in 2010, then by 2100 global GDP per capita would decline by more than 30%. (Source adapted from: https://www.nature.com/articles/s41586-018-0071-9) Evaluate the potential trade-offs between environmental protection and other macroeconomic objectives.
One of two options in Section C — candidates answered this or the other.
2.6.4 Conflicts Between Objectives · 2.5.4 The Impact of Economic Growth
Examine two likely effects of the forecast change in the rate of unemployment between 2019 to 2020, on firms in Germany. Refer to Figure 4 in your answer.
2.1.3 Employment and Unemployment
Discuss the likely impact of investment in new technology on the profitability of firms in Germany, as described in Extract C line 20. Use a cost and revenue diagram to support your answer.
2.2.3 Investment · 3.3.2 Costs
Evaluate the microeconomic and macroeconomic factors which are likely to determine the rate of economic growth in Germany relative to other developed economies.
One of two options in Section B — candidates answered this or the other.
Evaluate the microeconomic and macroeconomic impacts of ‘a much more expansionary fiscal policy’ (Extract C line 23) on the German economy.
One of two options in Section B — candidates answered this or the other.
In 2018, the United States Government cut the corporation tax rate (tax on company profits) from 35% to 21%. Income tax rates for US citizens were also reduced: for example, the top rate of income tax was cut from 39.6% to 37%. (Source adapted from: https://www.nytimes.com/) Evaluate the likely impact of cutting tax rates as a policy to increase economic growth.
One of two options in Section C — candidates answered this or the other.
Evaluate the likely microeconomic and macroeconomic effects of a rise in interest rates in Turkey.
One of two options in Section A — candidates answered this or the other.
Evaluate the microeconomic and macroeconomic impact of large infrastructure projects such as the building of a third airport in Istanbul.
One of two options in Section A — candidates answered this or the other.
With specific reference to Figure 3, explain why productivity is measured by ‘GDP per hour worked, nominal values at PPPs’.
2.1.1 Measuring Economic Growth
Apart from literacy and numeracy skills in young workers, examine one reason for the trend in productivity in the UK, over the period shown in Figure 4.
2.6.3 Supply-Side Policies · 4.1.9 International Competitiveness
Evaluate the microeconomic and macroeconomic effects of a decline in the literacy and numeracy skills of a country’s young workers.
One of two options in Section B — candidates answered this or the other.
2.6.3 Supply-Side Policies · 3.5.1 Demand for Labour
With reference to the last paragraph in Extract C, assess the impact of a fall in real incomes on subjective happiness.
2.1.1 Measuring Economic Growth
With reference to Extract C, discuss the potential conflicts between macroeconomic objectives when the central bank attempts to control inflation.
2.6.4 Conflicts Between Objectives · 2.1.2 Inflation
Evaluate the microeconomic and macroeconomic effects of increased government spending on education to promote healthy eating in the UK.
One of two options in Section A — candidates answered this or the other.
Evaluate the likely microeconomic and macroeconomic effects of relatively high inflation rates in many African countries.
One of two options in Section B — candidates answered this or the other.
In 2016 the UK Chancellor of the Exchequer announced that the government would spend an extra £23 billion on innovation and infrastructure over the following five years. Evaluate the likely economic effects of this planned increase in government expenditure.
One of two options in Section C — candidates answered this or the other.
2.2.4 Government Expenditure · 2.4.4 The Multiplier
The British pound fell by over 10% to a 30-year low against the US dollar after the UK voted to leave the European Union. To what extent will this depreciation impact on future economic growth in the UK?
One of two options in Section C — candidates answered this or the other.
With reference to the information provided and your own knowledge, evaluate the microeconomic and macroeconomic effects of increased UK demand for coffee at branded coffee shops.
One of two options in Section A — candidates answered this or the other.
1.2.2 Demand · 2.2.1 Aggregate Demand
Evaluate the likely microeconomic and macroeconomic effects of the supply-side policies recently introduced in Indonesia.
One of two options in Section B — candidates answered this or the other.
With reference to the information provided and your own knowledge, examine two factors which might explain the change in the rate of Eurozone inflation as shown in Figure 2.
Discuss the likely success of the ECB’s quantitative easing programme in moving Eurozone inflation closer to ‘the central bank’s ceiling of 2%’ (Extract A, line 17).
Discuss ‘looser fiscal policy’ and ‘supply-side reforms’ (Extract A, lines 20 and 21) that may be used by governments of Eurozone countries to increase economic growth.
Global oil prices fell from a 2008 peak of $147 a barrel to $27 in 2016. Evaluate the likely macroeconomic consequences of a significant fall in global oil prices.
One of two options in Section C — candidates answered this or the other.
2.1.2 Inflation · 2.3.2 Short-Run Aggregate Supply
With reference to the information provided and your own knowledge, evaluate the microeconomic and macroeconomic effects of policies that could be used to stimulate economic growth and development in Chile.
One of two options in Section A — candidates answered this or the other.
With reference to the information provided and your own knowledge, evaluate the microeconomic and macroeconomic impact on Chile’s economy of changes in the level of investment.
One of two options in Section A — candidates answered this or the other.
2.2.3 Investment · 4.3.2 Factors Influencing Growth
With reference to Extract D (line 18), explain the meaning of the term ‘output gap’. Use an aggregate demand and aggregate supply diagram in your answer.
2.5.2 Output Gaps
With reference to the information provided and your own knowledge, evaluate the microeconomic and macroeconomic effects of a government policy of cutting public expenditure rather than raising taxes as a means of reducing a fiscal deficit.
One of two options in Section B — candidates answered this or the other.
4.5.1 Public Expenditure · 2.6.2 Demand-Side Policies
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