National and International Economy · 7136/2
AQA A-level Paper 2, Specimen
All 14 written questions from AQA A-level Paper 2 (Specimen), National and International Economy. Case studies: International trade and Government policy. 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
International trade
Extracts: UK’s trade balance in goods with significant trading partners* 3 monthly balance · Transatlantic free trade? · China and Europe risk trade war
Q1
Using the data in Extract A, calculate, to one decimal place, the percentage change in the total net trade balance in goods with the UK’s top five trade partners from February–April 2012 to February–April 2013.
TopicThe international economyTrade & comparative advantage
Q2
Explain how the data in Extract A show that the UK is having more success in trading goods with the rest of the world than with Europe.
TopicThe international economyTrade & comparative advantage
Q3
Extract B (lines 12–13) states ‘The Government last night released research suggesting a US-EU agreement sweeping away trade barriers would particularly benefit the automotive, financial and chemical sectors.’
With the help of a diagram, explain the extent to which the removal of a tariff might affect the volume of imports into the UK.
With the help of a diagram, explain the extent to which the removal of a tariff might affect the volume of imports into the UK.
TopicThe international economyTrade & comparative advantageProtectionism & trading blocs
Examiner insight
- What to cover
- A tariff raises the domestic price of imports. Removing it lowers the price to the world price, so domestic consumption rises, domestic output falls and imports rise by the sum of both effects.
- Diagram
- Tariff diagram with world price, domestic supply and demand, showing imports before and after.
- Watch out
- The question says "the extent to which": use price elasticity of demand and supply to explain the size of the change.
Q4
Extract C (lines 10–11) suggests that ‘Increased protectionism could be damaging as the UK is placing much of its hopes for export success on the growing Chinese market.’
Using the data in the extracts and your economic knowledge, evaluate the view that the use of protectionism is inevitably damaging to economies.
Using the data in the extracts and your economic knowledge, evaluate the view that the use of protectionism is inevitably damaging to economies.
TopicThe international economyProtectionism & trading blocs
Examiner insight
- What to cover
- Protectionism can protect infant industries, strategic sectors and jobs, and correct dumping.
- Diagram
- Tariff diagram showing the deadweight loss.
- Evaluation
- It raises prices, reduces efficiency, invites retaliation and can hurt exporters. Judge by type of protection, time period and the extract on UK trade with China.
- Watch out
- "Inevitably" invites clear counter-examples, such as infant industry growth.
Context 2
Government policy
Extracts: IMF actual and forecast growth rates for selected economies (% per annum) · Rising rates? · Austerity remains
Q5
If UK GDP in 2012 was $2375 billion, use the data in Extract D to calculate, to the nearest $billion, the difference in forecast UK GDP between the IMF’s initial and revised growth forecasts.
TopicEconomic performanceEconomic growth & cycleGDP & national income
Q6
Explain how the data in Extract D show that the IMF has become less confident about growth rates.
TopicEconomic performanceEconomic growth & cycle
Q7
Extract E (lines 4–6) states ‘the UK may soon be growing at an annual rate of between 3 and 4% and the Bank could not be certain when it might need to tighten policy.’
With the help of a diagram, explain why interest rates may need to rise if growth rates increase.
With the help of a diagram, explain why interest rates may need to rise if growth rates increase.
TopicFinancial markets and monetary policyMonetary policy & interest rates
Examiner insight
- What to cover
- Faster growth raises AD towards or beyond capacity, which creates inflation pressure. The Bank of England may raise rates to keep inflation near target.
- Diagram
- AD/AS diagram with AD shifting right towards full capacity.
- Watch out
- Link growth, spare capacity and inflation, then the interest rate response.
Q8
Extract F (lines 14–17) states ‘Investment forecasts are being revised downward and on top of speculation of interest rate rises and criticism of the UK’s quantitative easing programme, the outlook is not looking as good as forecasts first indicated.’
Using the data in the extracts and your economic knowledge, evaluate the effectiveness of monetary policy in achieving macroeconomic stability in the UK.
Using the data in the extracts and your economic knowledge, evaluate the effectiveness of monetary policy in achieving macroeconomic stability in the UK.
TopicFinancial markets and monetary policyMonetary policy & interest rates
Examiner insight
- What to cover
- Monetary policy (Bank Rate, QE, forward guidance) changes AD through borrowing, saving, asset prices and the exchange rate.
- Diagram
- AD/AS diagram with AD shifting.
- Evaluation
- Limits: time lags, zero lower bound, weak confidence, global shocks, supply-side inflation. Judge using the extract data on growth forecasts.
- Watch out
- Define macroeconomic stability and judge against it.
Q9Essay 1
Explain why economic growth is a key objective of UK Government economic policy.
Essay stimulus. In recent years, growth rates in the UK have been low and unemployment has risen. For example, in 2012 output was still below its peak of 2008 and unemployment had risen from 6.4% from 7.8%. .
TopicEconomic performanceEconomic growth & cycle
Examiner insight
- What to cover
- Growth raises real incomes and living standards, creates jobs, increases tax revenue for public services and helps to reduce the debt ratio.
- Watch out
- Explain why each benefit matters to the government. Sustainable growth is a strong extra point.
Q10Essay 1
Evaluate the view that a reduction in UK unemployment is best achieved through the use of supply-side policies.
Essay stimulus. In recent years, growth rates in the UK have been low and unemployment has risen. For example, in 2012 output was still below its peak of 2008 and unemployment had risen from 6.4% from 7.8%. .
TopicEconomic performanceUnemploymentSupply-side policies
Examiner insight
- What to cover
- Supply-side policies (training, labour market reform, incentives) reduce structural and frictional unemployment.
- Diagram
- LRAS shifting right.
- Evaluation
- Cyclical unemployment needs demand-side policy. Supply-side policies are slow and costly. Judge by the type of unemployment in the UK.
- Watch out
- Identify the type of unemployment before you judge a policy.
Q11Essay 2
Explain the possible demand-side consequences of an increase in taxation in the UK.
Essay stimulus. In 2013, two key aims of the UK Government were: to move the budget deficit towards a surplus over the course of the Parliament and to ensure that the main burden of deficit reduction would be through reduced government spending, rather than increased taxation.
TopicFiscal policy and supply-side policiesFiscal policy & public finances
Examiner insight
- What to cover
- Higher taxes reduce disposable income and profits, so consumption and investment fall. AD shifts left and the multiplier reduces output further. Inflation pressure falls.
- Diagram
- AD/AS diagram with AD shifting left.
- Watch out
- Separate direct and indirect taxes and include the multiplier.
Q12Essay 2
Evaluate the view that the UK Government’s policy of deficit reduction through lower government spending is unnecessary and undesirable.
Essay stimulus. In 2013, two key aims of the UK Government were: to move the budget deficit towards a surplus over the course of the Parliament and to ensure that the main burden of deficit reduction would be through reduced government spending, rather than increased taxation.
TopicFiscal policy and supply-side policiesFiscal policy & public finances
Examiner insight
- What to cover
- Spending cuts reduce the deficit and debt, lower future interest costs and may restore confidence.
- Diagram
- AD/AS diagram.
- Evaluation
- Cuts can reduce AD, growth and public services, and may raise the deficit if growth falls. Judge by the state of the economy and the stimulus.
- Watch out
- Use the stimulus about the burden of deficit reduction.
Q13Essay 3
Using examples to illustrate your answer, explain the difference between economic growth and economic development.
Essay stimulus. In 2013 Ethiopia had a relatively high real GDP growth rate of 7% but only 42% of its population had access to improved water sources and life expectancy was only 63 years.
TopicThe international economyDevelopment
Examiner insight
- What to cover
- Economic growth is a rise in real GDP. Economic development is a wider improvement in living standards: health, education, life expectancy, access to water and freedom. Growth can happen without development.
- Watch out
- Use the Ethiopia stimulus: high growth but poor access to water.
Q14Essay 3
Discuss the view that free trade is more effective than aid in promoting economic development in developing countries such as Ethiopia.
Essay stimulus. In 2013 Ethiopia had a relatively high real GDP growth rate of 7% but only 42% of its population had access to improved water sources and life expectancy was only 63 years.
TopicThe international economyTrade & comparative advantageDevelopment
Examiner insight
- What to cover
- Free trade can raise growth through comparative advantage, exports and FDI.
- Diagram
- Trade or tariff diagram.
- Evaluation
- Aid can fund health, education and infrastructure directly. Risks: primary product dependency, poor terms of trade, aid dependency, corruption. Judge by country and type of aid.
- Watch out
- Use Ethiopia as the example.
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.