National and International Economy · 7136/2
AQA A-level Paper 2, June 2022
All 14 written questions from AQA A-level Paper 2 (June 2022), National and International Economy. Case studies: Investment in Africa and Is inflation a problem?. Each question shows its marks and topic, with an examiner insight on 10, and opens the question paper and mark scheme at the right page.
Context 1
Investment in Africa
Extracts: Foreign direct investment in Africa · Problems for Africa
Q1
Using the data in Extract A (Figure 1), if 2015 is the base year, calculate the index of Egypt’s real GDP in 2018.
Give your answer to one decimal place.
Give your answer to one decimal place.
TopicMeasuring macroeconomic performanceGDP & national income
Q2
Explain how the data in Extract A (Figures 1 and 2) show that nations with high and stable economic growth attract rising foreign direct investment (FDI) inflows.
TopicThe international economyGlobalisationEconomic growth & cycle
Q3
Extract B (lines 18–19) states: ‘FDI can have many benefits. It should create employment, boost long-run economic growth and increase exports.’
With the help of a suitable diagram, explain how a rise in inward foreign direct investment (FDI) may lead to increased exports.
With the help of a suitable diagram, explain how a rise in inward foreign direct investment (FDI) may lead to increased exports.
TopicThe international economyGlobalisationTrade & comparative advantageAggregate demand
Examiner insight
- What to cover
- Inward FDI builds new factories and brings technology, so productive capacity and export supply rise. LRAS shifts right.
- Diagram
- LRAS shifting right.
- Watch out
- Link FDI to exports clearly.
Q4
Extract C (lines 13–14) states: ‘Some argue that African governments should be doing more to improve the living standards of their citizens, rather than relying on foreign firms.’
Using the data in the extracts and your knowledge of economics, assess the view that to improve the living standards of their citizens, African nations should pursue policies to attract foreign direct investment (FDI).
Using the data in the extracts and your knowledge of economics, assess the view that to improve the living standards of their citizens, African nations should pursue policies to attract foreign direct investment (FDI).
TopicThe international economyGlobalisationDevelopmentLiving standards & wellbeing
Examiner insight
- What to cover
- FDI brings investment, jobs, technology and growth.
- Evaluation
- Profit repatriation, dependence on foreign firms and poor working conditions can limit gains. Governments can improve living standards directly. Judge using the data on Africa.
- Watch out
- Use the data in the extracts.
Context 2
Is inflation a problem?
Extracts: Argentina’s economic woes · Is the problem of high inflation in the past?
Q5
Using the data in Extract D (Figure 3), calculate the difference between the UK’s and Argentina’s mean unemployment rates over the period 2015 to 2018.
Give your answer to two decimal places.
Give your answer to two decimal places.
TopicEconomic performanceUnemployment
Q6
Explain how the data in Extract D (Figures 3 and 4) show that there may be a short-run trade-off between unemployment and inflation.
TopicEconomic performanceUnemploymentInflation & deflationMacro objectives & conflicts
Q7
Extract E (lines 7–9) states: ‘It was hoped that policy measures, including a reduction in tariffs... would help to reduce inflation’.
With the help of a diagram, explain how a reduction in tariffs could help to reduce inflation.
With the help of a diagram, explain how a reduction in tariffs could help to reduce inflation.
TopicEconomic performanceInflation & deflationProtectionism & trading blocs
Examiner insight
- What to cover
- Lower tariffs reduce import prices and costs, so SRAS shifts right and the price level falls.
- Diagram
- SRAS shifting right.
- Watch out
- Explain the fall in costs.
Q8
Extract E (lines 15–17) states: ‘Policies were put in place to reduce the money supply and reduce government spending. The control of inflation became the main target of UK government macroeconomic policy.’
Using the data in the extracts and your knowledge of economics, evaluate the view that achieving a low and stable rate of inflation should be the main economic objective of governments.
Using the data in the extracts and your knowledge of economics, evaluate the view that achieving a low and stable rate of inflation should be the main economic objective of governments.
TopicEconomic performanceInflation & deflation
Examiner insight
- What to cover
- Low, stable inflation supports growth, confidence and competitiveness.
- Evaluation
- Growth and unemployment are also key objectives. Judge using Argentina's data.
- Watch out
- Use the data on Argentina.
Q9Essay 1
Explain how expenditure-switching policies can be used to reduce a deficit on a country’s balance of trade in goods and services.
Essay stimulus. The UK has been running a deficit on its balance of trade in goods and services since 1998. Expenditure-reducing and expenditure-switching policies can both be used to correct a trade deficit. However, the UK government has focused on other objectives rather than achieving a trade balance.
TopicThe international economyBalance of paymentsProtectionism & trading blocsExchange rates
Examiner insight
- What to cover
- Expenditure-switching: a depreciation, tariffs or quotas make imports dearer and exports cheaper, so demand switches to domestic goods.
- Watch out
- Explain how imports fall and exports rise.
Q10Essay 1
Assess the view that floating exchange rates are always better than fixed exchange rates.
Essay stimulus. The UK has been running a deficit on its balance of trade in goods and services since 1998. Expenditure-reducing and expenditure-switching policies can both be used to correct a trade deficit. However, the UK government has focused on other objectives rather than achieving a trade balance.
TopicThe international economyExchange rates
Examiner insight
- What to cover
- Floating rates adjust automatically and allow an independent monetary policy.
- Evaluation
- Fixed rates give certainty for trade and can control inflation. Judge by type of economy.
- Watch out
- "Always" invites counter-examples.
Q11Essay 2
Explain the main problems for an economy of having a large positive output gap.
Essay stimulus. In 2018, the European Commission estimated that Bulgaria and Romania were both experiencing positive output gaps whilst the UK was experiencing a negative output gap. Persistent output gaps can cause problems for economies which may be addressed by supply-side improvements.
TopicEconomic performanceEconomic growth & cycle
Examiner insight
- What to cover
- A large positive output gap means demand exceeds capacity: inflation, skills shortages, rising imports and a widening current account deficit.
- Diagram
- AD/AS diagram near full capacity.
- Watch out
- Define a positive output gap.
Q12Essay 2
Evaluate the view that supply-side improvements in the UK economy can best be achieved through the use of interventionist policies.
Essay stimulus. In 2018, the European Commission estimated that Bulgaria and Romania were both experiencing positive output gaps whilst the UK was experiencing a negative output gap. Persistent output gaps can cause problems for economies which may be addressed by supply-side improvements.
TopicFiscal policy and supply-side policiesSupply-side policies
Examiner insight
- What to cover
- Interventionist policies: spending on education, infrastructure and industrial policy. Free-market policies: deregulation and tax cuts.
- Evaluation
- Judge by cost, effectiveness and time lag.
- Watch out
- Compare both approaches directly.
Q13Essay 3
Explain reasons for changes in the value of exports from the UK to the rest of the world.
Essay stimulus. Over the past 20 years, the growth of world trade has averaged 6% per year, twice as fast as the growth in world output. As countries become ever more interconnected, they experience both economic opportunities and threats.
TopicThe international economyTrade & comparative advantage
Examiner insight
- What to cover
- UK exports change with the exchange rate, world incomes, competitiveness, trade agreements and product quality.
- Watch out
- Give real examples.
Q14Essay 3
Evaluate the view that international trade always benefits nations.
Essay stimulus. Over the past 20 years, the growth of world trade has averaged 6% per year, twice as fast as the growth in world output. As countries become ever more interconnected, they experience both economic opportunities and threats.
TopicThe international economyTrade & comparative advantage
Examiner insight
- What to cover
- Trade raises efficiency through comparative advantage, lowers prices and increases choice.
- Evaluation
- It can cause job losses, inequality and dependence. Judge by country and sector.
- Watch out
- "Always" invites counter-examples.
Question text is quoted from the question papers, © AQA, for students’ private study. Open the official papers and mark schemes from the links on each question. Examiner insights are written with AI assistance and moderated by Finn.