AQA A-level Paper 3, June 2017

TopicEconomic performanceEconomic growth & cycleUnemployment

TopicEconomic performanceEconomic growth & cycleUnemployment

TopicMarket failure and government interventionGovernment intervention (micro)Protectionism & trading blocsUnemployment

1. Aall people are motivated by the desire to maximise their incomes.
2. Beconomic analysis and decision making is assumed to be based on complete information.
3. Cthey are based on the same methodology as the natural sciences.
4. Dthey involve moral and political considerations as well as positive analysis.

TopicEconomic methodology and the economic problemPositive & normative

1. AA decrease in the rate of VAT on domestic gas and electricity used for home heating
2. BA ‘nudge’ to households to install loft insulation by offering to clear lofts of unwanted items if insulation is installed
3. CThe introduction of a maximum price for loft insulation
4. DThe introduction of a subsidy paid to the firms installing loft insulation

TopicMarket failure and government interventionGovernment intervention (micro)Behavioural economicsDemand & supply

1. Aas more of a product is consumed, the extra satisfaction will decline.
2. Bas more of all factors are employed, the additional output produced will fall.
3. Cas more variable factors are added to a fixed factor, the additional output produced will decline.
4. Dthe total satisfaction from consuming a product will be maximised when marginal utility starts to fall.

TopicIndividual economic decision makingUtility

1. AA cut in bank rate leading to a fall in mortgage interest rates
2. BA fall in the number of young people training as apprentice bricklayers
3. CAn improvement in working conditions in the construction industry
4. DAn increase in the wages paid to electricians in the construction industry

TopicThe labour marketLabour demand & supply

1. A500 to 1000 units.
2. B1000 to 2000 units.
3. C2000 to 3000 units.
4. D3000 to 4000 units.

TopicProduction, costs and revenueCosts & economies of scale

1. Agoods only services only Applies to changes in Applies to changes in
2. Bservices only goods only Discovering something Turns the results of
3. Centirely new invention into a product Turns the results of Discovering something
4. Dinnovation into a product entirely new

TopicProduction, costs and revenueTechnological change

1. A10 units
2. B11 units
3. C12 units
4. D13 units

TopicProduction, costs and revenueRevenue & profit

1. AOW
2. BOX
3. COY
4. DOZ

TopicMarket structuresMonopoly & market powerProductivity & efficiency

1. Aaddition to total revenue when the firm produces and sells an extra unit of output.
2. Bamount produced per worker per time period.
3. Cchange in total output that is produced when one extra worker is employed.
4. Drevenue gained by selling the extra output produced by employing one more worker.

TopicThe labour marketLabour demand & supply

1. Aexcess demand for good X at the initial price of P1.
2. Bexcess demand for good X at the new price P2.
3. Cexcess supply of good X at the initial price of P1.
4. Dexcess supply for good X at the new price P2.

TopicPrice determination in a competitive marketDemand & supply

1. A-0.5
2. B0
3. C0.5
4. D1

TopicDistribution of income and wealthInequality & poverty

1. AOver-fishing resulting in declining fish populations
2. BThe imposition of fishing quotas by the European Union
3. CThe positive externalities associated with fish consumption
4. DThe third-party effects on dolphins as a result of tuna fishing

TopicMarket failure and government interventionExternalitiesMarket failure (general)

1. Aa change in the pattern of demand results in structural unemployment.
2. Bthe education and training needed to reduce labour immobility is a public good.
3. Cthe government’s target for the rate of inflation is too high.
4. Dthe immobility of factors of production is a negative externality in production.

TopicMarket failure and government interventionMarket failure (general)Labour demand & supply

1. A124
2. B125
3. C126
4. D127

TopicMeasuring macroeconomic performanceGDP & national income

1. AExternal costs generated from economic activity have reduced the quality of life
2. BReal GDP per capita has fallen
3. CThe distribution of income has become more unequal
4. DThe standard of living of typical residents in the country has probably improved

TopicMeasuring macroeconomic performanceLiving standards & wellbeingGDP & national incomeInequality & poverty

1. A£31.7bn
2. B£47.5bn
3. C£76bn
4. D£114bn

TopicHow the macroeconomy works (AD/AS)Aggregate demandCircular flow

1. Anumber of people joining the labour force minus the number of people leaving the labour force.
2. Bnumber of people not working who are of working age.
3. Cthe number of people actively seeking work and available to start work.
4. Dproportion of the population of working age without a job.

TopicEconomic performanceUnemployment

1. Agovernment borrowing.
2. Blabour productivity.
3. Cthe rate of deflation.
4. Dmoney wage rates.

TopicHow the macroeconomy works (AD/AS)Aggregate demandAggregate supply

1. Acyclical unemployment increases by (ON3 – ON1).
2. Bfrictional unemployment increases by (ON2 – ON1).
3. Creal wage unemployment increases by (ON3 – ON1).
4. Dthe natural rate of unemployment increases by (ON2 – ON1).

TopicThe labour marketMinimum wageTrade unions & monopsonyUnemployment

1. AIncrease Increase Increases
2. BIncrease Fall Increases
3. CFall Increase Falls
4. DFall Fall Falls

TopicFinancial markets and monetary policyMoney & banking

1. A£100
2. B£105
3. C£106
4. D£120

TopicFinancial markets and monetary policyMoney & banking

1. Acurrency is exchanged at shares some point in the future The market where The market where commercial banks provide businesses obtain funds
2. Bshort-term loans to each to finance long-term other growth The main market in which The market where foreign
3. Ccommercial banks lend to currencies are traded each other The market where the The market where government finances its short-term debt is
4. Dbudget deficit by issuing converted into equity bonds finance

TopicFinancial markets and monetary policyMoney & banking

1. A$5 000
2. B$5 500
3. C$10 000
4. D$12 000

TopicFiscal policy and supply-side policiesFiscal policy & public finances

1. Aannual budget deficit plus the external trade deficit.
2. Bamount by which the budget deficit increases each year.
3. Cannual difference between government spending and tax receipts.
4. Dthe cumulative stock of outstanding central government borrowing.

TopicFiscal policy and supply-side policiesFiscal policy & public finances

1. ABrazil has a comparative advantage in the production of both motorbikes and cars.
2. BBrazil has a comparative advantage in the production of cars.
3. CThe opportunity cost of producing motorbikes is higher in the United States than Brazil.
4. DTrade will not take place because Brazil is better at producing both goods.

TopicThe international economyTrade & comparative advantageOpportunity cost

1. Aa high dependence on its primary sector.
2. Ba low level of life expectancy.
3. Crapid population growth.
4. Drelatively low levels of illiteracy.

TopicThe international economyDevelopmentLiving standards & wellbeing

1. AThe country suffered disinflation in Year 5
2. BThe inflation rate was highest in Year 7
3. CThe only time the country suffered deflation was in Year 2
4. DReal incomes fell between Year 1 and Year 7

TopicMeasuring macroeconomic performancePrice indices & inflation measurement

1. AA fall in the size of the labour force
2. BAn increase in imports
3. CAn increase in the value of the multiplier
4. DLower world commodity prices

TopicHow the macroeconomy works (AD/AS)Aggregate supply

1. AAs a result of this market failure, consumer surplus is reduced by ZXY
2. BAs a result of this market failure, there is a deadweight loss to society of P3P1XZ
3. CP1 minus P3 is the subsidy per unit that is required to correct the market failure and achieve the social optimum
4. DThe diagonal distance XY shows the amount by which marginal private cost exceeds marginal social cost at OQ2

TopicMarket failure and government interventionExternalitiesMarket failure (general)Indirect taxes & subsidies

1. A−8.3%
2. B−12.0%
3. C+8.3%
4. D+12.0% 30

TopicPrice determination in a competitive marketPrice elasticity of demand