National and International Economy · 7136/2

AQA A-level Paper 2, November 2020

All 14 written questions from AQA A-level Paper 2 (November 2020), National and International Economy. Case studies: Unemployment and the labour market and Trade wars and protectionism. 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.

Question paperMark schemeExaminer report

Summer exams were cancelled, so this paper was sat in the autumn series. The paper itself is headed June.

Context 1

Unemployment and the labour market

Extracts: Unemployment and real wages · Free market, supply-side labour market reforms

Q3Explain9 marks
Extract C (line 19) states: ‘Improving workers’ productivity is the key to increasing real GDP’.
With the help of a diagram, explain how improving productivity should lead to rising real GDP.

TopicHow the macroeconomy works (AD/AS)Aggregate supplyEconomic growth & cycle

Examiner insight

What to cover
Higher productivity increases potential output. LRAS shifts right, so real GDP can rise without inflation.
Diagram
LRAS shifting right.
Watch out
Define productivity clearly.
Question paper p.3Mark scheme p.7Examiner report p.4Open in the toolDraw it: AD/AS diagram
Q4Evaluate25 marks
Extract B (lines 13–14) states: ‘It can be argued that supply-side reforms have gone too far in creating a highly flexible workforce and the government needs to do more in terms of protecting the nation’s workers’.
Using the data in the extracts and your knowledge of economics, evaluate the view that free market supply-side reforms to labour markets are beneficial to the UK economy.

TopicFiscal policy and supply-side policiesLabour demand & supplySupply-side policies

Examiner insight

What to cover
Flexible labour markets can lower unemployment and costs and attract investment.
Diagram
LRAS shifting right.
Evaluation
They can cause insecurity, low pay and weak real wage growth. Judge using the data on real wages in the extracts.
Watch out
Use the extract data.
Question paper p.3Mark scheme p.9Examiner report p.4Open in the toolPractise the AD/AS diagram

Context 2

Trade wars and protectionism

Extracts: US and China trade wars · Protectionism in Brazil

Q7Explain9 marks
Extract E (lines 10–11) states: ‘US tariffs on $200bn of Chinese imports came into effect in September.’
With the help of a diagram, explain how the imposition of a tariff may affect the volume of imports.

TopicThe international economyTrade & comparative advantageProtectionism & trading blocs

Examiner insight

What to cover
A tariff raises the price of imports. Domestic supply rises, domestic demand falls, so imports fall.
Diagram
Tariff diagram with world price and domestic supply and demand.
Watch out
Show the fall in imports clearly on the diagram.
Question paper p.5Mark scheme p.12Examiner report p.5Open in the tool
Q8Assess25 marks
Extract F (lines 17–19) states: ‘Some argue that many developed countries that now champion free trade, only achieved economic prosperity through protectionist policies.’
Using the data in the extracts and your knowledge of economics, assess the view that developing economies, such as Brazil and China, should pursue protectionist policies to achieve greater economic development.

TopicThe international economyProtectionism & trading blocsDevelopment

Examiner insight

What to cover
Protection can help infant industries grow and diversify the economy.
Diagram
Tariff diagram.
Evaluation
It can cause inefficiency, higher prices and retaliation. Judge by country, industry and time period.
Watch out
Use Brazil and China from the extracts.
Question paper p.5Mark scheme p.14Examiner report p.5Open in the tool
Q9Essay 1Explain15 marks
Explain the possible causes of a falling budget deficit.
Essay stimulus. In 2017, the UK’s annual budget deficit was 2.3% of GDP, the lowest level since 2001. In 2017, the UK’s deficit on the current account of the balance of payments fell to 3.3% of GDP, the lowest level since 2011.

TopicFiscal policy and supply-side policiesFiscal policy & public finances

Examiner insight

What to cover
Causes of a falling deficit: economic growth (higher tax revenue, lower benefit spending), tax rises, spending cuts, lower interest payments.
Watch out
Explain automatic and discretionary causes.
Question paper p.6Mark scheme p.16Examiner report p.5Open in the tool
Q10Essay 1To what extent25 marks
To what extent do you agree that reducing the budget deficit is more important to the UK’s macroeconomic performance than reducing the current account deficit on its balance of payments? Justify your answer.
Essay stimulus. In 2017, the UK’s annual budget deficit was 2.3% of GDP, the lowest level since 2001. In 2017, the UK’s deficit on the current account of the balance of payments fell to 3.3% of GDP, the lowest level since 2011.

TopicEconomic performanceMacro objectives & conflictsFiscal policy & public financesBalance of payments

Examiner insight

What to cover
The budget deficit affects debt, interest payments and confidence. The current account deficit reflects competitiveness and borrowing from abroad.
Evaluation
Judge by size, how each is financed, and the stage of the economic cycle.
Watch out
Give a justified judgement.
Question paper p.6Mark scheme p.17Examiner report p.6Open in the tool
Q11Essay 2Explain15 marks
Explain how demand-side and supply-side shocks might increase unemployment in an economy.
Essay stimulus. During 2018, the UK experienced an annual growth rate of 1.4%, an unemployment rate of around 4.1%, inflation close to target at 2.5% and a reduced current account deficit on the balance of payments. However, in November 2018, the Bank of England warned that economic shocks could damage the UK’s prosperity.

TopicEconomic performanceUnemploymentAggregate demandAggregate supply

Examiner insight

What to cover
A negative demand shock reduces AD, so firms cut output and jobs (cyclical unemployment). A negative supply shock raises costs and reduces output, so employment falls.
Diagram
AD/AS diagrams for both shocks.
Watch out
Explain both shocks with real examples.
Question paper p.6Mark scheme p.18Examiner report p.6Open in the toolPractise the AD/AS diagram
Q12Essay 2Evaluate25 marks
Evaluate the view that the main objectives of UK government macroeconomic policy can be achieved without conflicting with each other.
Essay stimulus. During 2018, the UK experienced an annual growth rate of 1.4%, an unemployment rate of around 4.1%, inflation close to target at 2.5% and a reduced current account deficit on the balance of payments. However, in November 2018, the Bank of England warned that economic shocks could damage the UK’s prosperity.

TopicEconomic performanceMacro objectives & conflicts

Examiner insight

What to cover
Supply-side growth can achieve several objectives together: growth, low inflation and low unemployment.
Diagram
LRAS shifting right.
Evaluation
Conflicts: inflation and unemployment, growth and the current account, growth and the environment. Judge by time period.
Watch out
Name the conflicts with real examples.
Question paper p.6Mark scheme p.19Examiner report p.6Open in the toolPractise the Phillips curve diagramPractise the AD/AS diagram
Q13Essay 3Explain15 marks
Explain how an appreciation of its currency is likely to affect a country’s rate of economic growth.
Essay stimulus. In 2015, Lithuania joined the eurozone, adopting the euro as its currency. Since then, the euro has appreciated by more than 15% against the pound sterling. Some have argued that this will reduce economic growth in Lithuania and other countries within the eurozone.

TopicThe international economyExchange ratesEconomic growth & cycle

Examiner insight

What to cover
An appreciation makes exports dearer and imports cheaper, so net exports and AD fall and growth slows.
Diagram
AD/AS diagram with AD shifting left.
Watch out
Consider cheaper imported raw materials as a counter-effect.
Question paper p.7Mark scheme p.20Examiner report p.6Open in the toolPractise the AD/AS diagram
Q14Essay 3Evaluate25 marks
Evaluate the costs and benefits for a country of joining a currency union, such as the eurozone.
Essay stimulus. In 2015, Lithuania joined the eurozone, adopting the euro as its currency. Since then, the euro has appreciated by more than 15% against the pound sterling. Some have argued that this will reduce economic growth in Lithuania and other countries within the eurozone.

TopicThe international economyExchange ratesProtectionism & trading blocs

Examiner insight

What to cover
Benefits of a currency union: lower transaction costs, no exchange rate risk, more trade and investment. Costs: loss of independent monetary policy and the exchange rate as a tool.
Evaluation
Judge by how similar the economies are and how flexible labour markets are.
Watch out
Use the eurozone as the example.
Question paper p.7Mark scheme p.21Examiner report p.6Open in the tool

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.