AQA A-level Paper 3, June 2018

TopicPrice determination in a competitive marketCommodity marketsExternalities

TopicThe international economyDevelopment

TopicMarket structuresOligopolyCommodity markets

1. ATheir marginal private benefit is greater than their marginal social benefit.
2. BThey are likely to be provided by the market.
3. CThey can only be supplied by the government.
4. DThey have the characteristics of non-excludability and non-rivalry.

TopicMarket failure and government interventionMerit & demerit goods

1. A4%
2. B10%
3. C14%
4. D40%

TopicFiscal policy and supply-side policiesFiscal policy & public finances

1. Aachieve both productive and allocative efficiency.
2. Bbenefit from improved economies of scale in the production of both goods.
3. Cincrease its underlying trend rate of growth.
4. Dobtain more consumer goods and capital goods at zero opportunity cost.

TopicEconomic methodology and the economic problemPPB / PPC

1. Adecline in labour productivity.
2. Bfall in the size of the labour force.
3. Cnegative demand-side shock to the economy.
4. Dsupply-side improvement.

TopicHow the macroeconomy works (AD/AS)Aggregate supplyProductivity & efficiency

1. AOGME2
2. BOHLE2
3. COHNME2
4. DOJKE2

TopicMarket failure and government interventionIndirect taxes & subsidiesDemand & supply

1. AFirms in an oligopolistic market may limit price competition.
2. BMarket failures can only be corrected by using regulations.
3. CMonopolistically competitive firms earn abnormal profits in the long run.
4. DPublic goods are excludable and rival.

TopicMarket failure and government interventionGovernment intervention (micro)

1. ADecrease Fall Rise
2. BIncrease Fall Rise
3. CDecrease Rise Fall
4. DIncrease Rise Fall

TopicFinancial markets and monetary policyMoney & bankingMonetary policy & interest rates

1. A+0.5
2. B–0.5
3. C+2.0
4. D–2.0

TopicPrice determination in a competitive marketCross elasticity

1. Ahigh inflation leads to high unemployment.
2. Bthere is an inversely proportional relationship between unemployment and inflation.
3. Cthe trade-off for reducing inflation from 7% to 3% is a 4% increase in unemployment.
4. Dthe trade-off for reducing unemployment from 7% to 4% is 3% inflation.

TopicEconomic performanceUnemploymentInflation & deflation

1. AAll consumer behaviour is based on rational utility-maximising decisions.
2. BAn individual’s economic decisions may be biased.
3. CPrice changes cannot explain how competitive markets achieve equilibrium.
4. DThe behaviour of firms is based on their desire to maximise profit.

TopicIndividual economic decision makingBehavioural economics

1. AHigher Unchanged
2. BHigher Higher
3. CUnchanged Unchanged
4. DLower Higher

TopicPrice determination in a competitive marketDemand & supplyIncome elasticity

1. Agovernment’s budget deficit.
2. Blevel of interest rates.
3. Csize of the labour force.
4. Dvolume of exports.

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

1. Agovernment expenditure equals taxation.
2. Bthe budget surplus equals the balance of payments deficit.
3. Cthe government has a budget deficit.
4. Dthe government has a budget surplus.

TopicHow the macroeconomy works (AD/AS)Circular flowAggregate demandTrade & comparative advantage

1. A5 workers
2. B6 workers
3. C7 workers
4. D8 workers

TopicProduction, costs and revenueCosts & economies of scale

1. AEFGH
2. BJFGK
3. CPWPTGK
4. DQ2FGQ3

TopicThe international economyProtectionism & trading blocs

1. ADecrease Decrease
2. BIncrease Decrease
3. CDecrease Increase
4. DIncrease Increase

TopicIndividual economic decision makingUtility

1. Ahave a low ratio of capital to their total assets.
2. Bhave followed Prudential Regulation Authority (PRA) guidance to reduce the amount they lend to high-risk borrowers.
3. Chave the option to use the Bank of England as the lender of last resort.
4. Dhold a high proportion of liquid assets on their balance sheets.

TopicFinancial markets and monetary policyMoney & banking

1. AA large increase in the availability of renewable energy within the economy
2. BAn increase in employment and a depreciation of the exchange rate
3. CAn increase in the natural rate of unemployment and the level of money wage rates
4. DA supply-side shock to the economy which increases the rate of inflation

TopicHow the macroeconomy works (AD/AS)Aggregate supply

1. AThe Australian Dollar has appreciated by 24% against the US Dollar.
2. BThe Brazilian Real has been devalued by 32% against the US Dollar.
3. CThe Chinese Yuan has depreciated the most against the US Dollar.
4. DThe Danish Krone has the closest purchasing power parity to the US Dollar.

TopicThe international economyExchange rates

1. Aability to set its own prices will increase.
2. Blong-run average cost curve will become ‘U’ shaped.
3. Cincreasing profitability will attract many new entrants.
4. Dtotal cost of production will decrease.

TopicProduction, costs and revenueCosts & economies of scaleMonopoly & market power

1. AOE
2. BOF
3. COG
4. DOH

TopicMarket structuresPerfect competition

1. AAn increase in government subsidies for buyers of electric cars
2. BA shift in the burden of taxation from direct to indirect taxes
3. CSetting a price floor for basic foods
4. DThe introduction of a price ceiling for household energy

TopicDistribution of income and wealthInequality & poverty

1. AGDP growing faster than the deficit on the current account.
2. Bthe deficit on trade in goods increasing by more than the surplus on trade in services.
3. Cthe deterioration in the primary income balance.
4. Dthe growth in the deficit on the secondary income balance.

TopicThe international economyBalance of payments

1. AA reduction in protectionism
2. BGreater synchronisation of economic cycles between countries
3. CHigher levels of labour migration
4. DThe growth of employment in emerging market economies

TopicMarket structuresContestability & barriersGlobalisation

1. Acreate upward pressure on the exchange rate.
2. Bincrease bond prices.
3. Cmake business loans more affordable.
4. Dreduce the cost of servicing the national debt.

TopicFinancial markets and monetary policyMonetary policy & interest ratesAggregate demand

1. AThe price elasticity of supply in the industry
2. BThe profitability of the 10 largest firms in the industry
3. CThe three firm concentration ratio
4. DThe value of the Gini coefficient

TopicMarket structuresOligopoly

1. AA fall in the demand for unskilled workers
2. BA fall in the size of the labour force
3. CAn increase in the demand for skilled workers
4. DAn increase in the proportion of the labour force with a degree

TopicThe labour marketLabour demand & supply

1. Aemploys workers up to the point where the marginal revenue product of labour is equal to the wage rate.
2. Bis a monopoly supplier of labour.
3. Cequates the marginal revenue product of labour with its marginal cost not the wage rate.
4. Drestricts output to raise the price of the product sold.

TopicThe labour marketTrade unions & monopsonyLabour demand & supply

1. AA fall in income tax receipts in the downturn of the economic cycle
2. BA rise in government spending on unemployment-related benefits during a recession
3. CA rise in healthcare expenditure and state pension provision due to an ageing population
4. DA rise in spending on imports during an economic recovery

TopicFiscal policy and supply-side policiesFiscal policy & public financesEconomic growth & cycle

1. Adeflation and a recession.
2. Bdisinflation when in recession.
3. Cdisinflation when recovering from recession.
4. Drising inflation when recovering from recession.

TopicEconomic performanceInflation & deflationEconomic growth & cyclePrice indices & inflation measurement