The National Economy in a Global Context · 7135/2

AQA AS Paper 2, June 2016

All 12 written questions and 20 multiple choice questions from AQA AS Paper 2 (June 2016), The National Economy in a Global Context. Case studies: Falling world commodity prices give the UK economy a boost and How has immigration affected the performance of the UK…. Each question shows its marks and topic, with an examiner insight on 4, and opens the question paper and mark scheme at the right page.

Question paperMark schemeInsert

Context 1

Falling world commodity prices give the UK economy a boost

Extracts: Indices of world energy and world food prices, 2010 = 100 · UK inflation at zero percent · Low commodity prices are good for us… or are they?

Q25Explain10 marks
Extract B (lines 6 to 8) states ‘The weakness in global energy prices and food prices combined with the recent appreciation in the pound sterling exchange rate help to explain the recent fall in inflation in the UK.’
Explain why a rise in the pound sterling exchange rate is likely to affect the rate of inflation in the UK.

TopicEconomic performanceInflation & deflationExchange rates

Examiner insight

What to cover
A stronger pound makes imports cheaper, so costs and prices fall and inflation falls.
Watch out
Explain lower import prices.
Question paper p.14Mark scheme p.11Insert p.1Open in the toolPractise the AD/AS diagram
Q26Assess25 marks
Extract C (lines 4 to 7) states ‘Lower commodity prices have also been good for most businesses... However, not everyone benefits.’
Use the data in the extracts and your knowledge of economics to assess the likely impact of the fall in world commodity prices on the performance of the UK economy.

TopicEconomic performanceMacro objectives & conflictsInflation & deflation

Examiner insight

What to cover
Lower commodity prices reduce costs and raise real incomes.
Diagram
SRAS shifting right.
Evaluation
Exporters and producers of commodities lose; deflation risk. Judge using the data.
Watch out
Use the extracts.
Question paper p.16Mark scheme p.12Insert p.1Open in the tool

Context 2

How has immigration affected the performance of the UK economy?

Extracts: Changes in the UK population in thousands, 2007 to 2013 · Has immigration from the EU reduced the UK budget · Is immigration good for the UK economy?

Q31Explain10 marks
Extract E (lines 1 to 3) states ‘European migrants who arrived in the UK since 2000 have made a net contribution of more than £20bn to UK public finances.’
Explain how immigration from the rest of Europe affects the UK government’s budget deficit.

TopicFiscal policy and supply-side policiesFiscal policy & public finances

Examiner insight

What to cover
EU migrants pay income tax and VAT and use public services. The net effect on the deficit depends on both.
Watch out
Explain both sides.
Question paper p.24Mark scheme p.18Insert p.1Open in the tool
Q32Discuss25 marks
Extract F (lines 1 to 2) states ‘Immigration is very important for the UK economy; it is estimated that foreign-born people comprise around 15% of the UK labour force.’
Use the data in the extracts and your economic knowledge to discuss the ways in which immigration affects the performance of the UK economy.

TopicEconomic performanceMacro objectives & conflictsAggregate supply

Examiner insight

What to cover
Immigration raises labour supply and growth.
Diagram
LRAS shifting right.
Evaluation
Consider wages, public services and housing. Judge using the data.
Watch out
Use the extracts.
Question paper p.26Mark scheme p.19Insert p.1Open in the tool
Q41 mark
A country has a slow rate of growth of productivity and rising cyclical unemployment. All other things being equal, which measures are most likely to increase the rate of growth of productivity and reduce cyclical unemployment?
  1. AIncreased investment and increased saving
  2. BMore government spending on training and a higher exchange rate
  3. CDecreased benefit payments and a lower budget deficit
  4. DLower taxation on firms and lower interest rates
Show the answer

The answer is D.

TopicEconomic performanceUnemployment

Question paper p.4Mark scheme p.4Open in the tool
Q51 mark
The diagram below shows two aggregate demand curves (AD) and the short-run aggregate supply curve (SRAS) for an economy.
All other things being equal, which one of the following is the most likely cause of the movement of the economy from equilibrium at Y1 to equilibrium at Y2?
  1. AA decrease in imports
  2. BAn increase in savings
  3. CA decrease in the money supply
  4. DAn increase in productivity
Show the answer

The answer is A.

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

Question paper p.4Mark scheme p.4Open in the toolPractise the AD/AS diagram
Q61 mark
The table below shows how the index of GDP and the index of population changed in an economy between 2011 and 2015.
GDP Population (2013 = 100) (2013 = 100) 2011 92 2012 96 2013 100 100 2014 101 102 2015 103 103 Which one of the following can be inferred from the data?
  1. APopulation was higher than GDP in 2011
  2. BBetween 2011 and 2013, GDP grew by 8% whereas population grew by 3%
  3. CThere was no growth in GDP per capita between 2013 and 2015
  4. DMoney GDP increased by more than real GDP between 2011 and 2015
Show the answer

The answer is C.

TopicMeasuring macroeconomic performanceGDP & national income

Question paper p.5Mark scheme p.4Open in the tool
Q71 mark
As a consequence of a severe global recession, an economy has experienced a demand-side shock and is now growing below its trend rate.
All other things being equal, which one of the following combinations, A, B, C or D, is now most likely to exist in this economy?
Rate of Rate of unemployment % inflation %
  1. AFalling Increasing
  2. BFalling Falling
  3. CIncreasing Falling
  4. DIncreasing Increasing
Show the answer

The answer is C.

TopicEconomic performanceEconomic growth & cycleUnemploymentInflation & deflation

Question paper p.5Mark scheme p.4Open in the tool
Q81 mark
In which one of the following situations could the UK be said to be experiencing a negative output gap?
  1. AOutput per worker is lower in the UK than in the USA
  2. BReal GDP in the UK is less than the economy’s productive potential
  3. CUK firms do not have sufficient productive capacity to satisfy customer demand
  4. DThe skills possessed by UK workers do not match those which are required by UK employers
Show the answer

The answer is B.

TopicEconomic performanceEconomic growth & cycle

Question paper p.6Mark scheme p.4Open in the tool
Q91 mark
Structural unemployment is most likely to occur because of
  1. Alabour being temporarily unemployed when moving between jobs.
  2. Bfluctuations in the level of aggregate demand.
  3. Cthe seasonal nature of certain occupations.
  4. Dlong-term changes in the pattern of demand for the products of particular industries.
Show the answer

The answer is D.

TopicEconomic performanceUnemployment

Question paper p.6Mark scheme p.4Open in the tool
Q101 mark
An economy is in macroeconomic equilibrium, producing at its normal capacity level of output. Without long-run economic growth, a persistent increase in aggregate demand is likely to lead to an increase in the level of
  1. Areal GDP.
  2. Bemployment.
  3. Cproductivity.
  4. Dprices.
Show the answer

The answer is D.

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

Question paper p.6Mark scheme p.4Open in the tool
Q111 mark
Which one of the following combinations, A, B, C or D, is most likely to occur in the recovery phase of the economic cycle?
Growth of Inflation Unemployment Investment GDP rate
  1. ADecrease Increase Increase Decrease
  2. BIncrease Decrease Decrease Increase
  3. CIncrease Increase Decrease Increase
  4. DIncrease Decrease Increase Decrease
Show the answer

The answer is C.

TopicEconomic performanceEconomic growth & cycle

Question paper p.7Mark scheme p.4Open in the tool
Q121 mark
The table below shows different sets of changes taking place in an economy.
All other things being equal, which one of the following combinations, A, B, C or D, is most likely to have the effect of shifting the short-run aggregate supply curve for the economy to the left?
Exchange Taxes on rate business profits
  1. AFalling Rising
  2. BRising Falling
  3. CFalling Falling
  4. DRising Rising
Show the answer

The answer is A.

TopicHow the macroeconomy works (AD/AS)Aggregate supply

Question paper p.7Mark scheme p.4Open in the tool
Q131 mark
The current account of the balance of payments is in surplus. However, there are deficits on the balance of trade in goods and the balance of trade in services.
It can be concluded that
  1. Athe trade figures must be inaccurate.
  2. Bthe primary income (income flows) balance must be positive.
  3. Cthe combined primary and secondary income (income flows and transfers) balance must be positive.
  4. Dthe value of services exported must exceed the value of goods imported.
Show the answer

The answer is C.

TopicThe international economyBalance of payments

Question paper p.7Mark scheme p.4Open in the tool
Q151 mark
All other things being equal, an increase in the exchange rate of the pound against other currencies due to a rise in interest rates is most likely to cause an increase in the UK’s
  1. Asurplus on the current account of the balance of payments.
  2. Bprice of imported goods.
  3. Clevel of unemployment.
  4. Drate of economic growth.
Show the answer

The answer is C.

TopicFinancial markets and monetary policyMonetary policy & interest ratesExchange rates

Question paper p.8Mark scheme p.4Open in the tool
Q171 mark
The table below shows the annual percentage change in real GDP for an economy between 2013 and 2016. The long-run trend rate of growth for this economy is estimated to be 2.8%.
Year Change in real GDP (%) 2013 2.4 2014 3.5 2015 2.8 2016 3.9 Which one of the following statements is most likely to be correct?
  1. AIn 2013, the economy’s negative output gap increased.
  2. BIn 2014, the amount of spare capacity in the economy increased.
  3. CIn 2015, the amount of spare capacity in the economy decreased.
  4. DIn 2016, the economy’s positive output gap decreased.
Show the answer

The answer is A.

TopicMeasuring macroeconomic performanceGDP & national incomeEconomic growth & cycle

Question paper p.9Mark scheme p.4Open in the tool
Q181 mark
Which one of the following statements relating to the use of supply-side policy is correct?
  1. ASupply-side improvements in the economy can only be brought about by government policy.
  2. BSupply-side policies are intended to increase the long-run trend rate of economic growth.
  3. CSupply-side policies are designed to reduce the size of a negative output gap.
  4. DSupply-side policies ensure increased capacity utilisation in the economy.
Show the answer

The answer is B.

TopicFiscal policy and supply-side policiesSupply-side policies

Question paper p.9Mark scheme p.4Open in the tool
Q201 mark
The diagram below shows two aggregate demand curves (AD) and two long-run aggregate supply curves (LRAS) for an economy. The economy’s initial equilibrium point is at E1.
All other things being equal, which one of the following combinations of macroeconomic policies, A, B, C or D, is most likely to have moved the economy to its new equilibrium point at E2?
Monetary policy Fiscal policy Increase in Value Added
  1. AIncrease in interest rates Tax (VAT) Reduction in interest
  2. BReduction in direct taxes rates Reduction in Value
  3. CIncrease in interest rates Added Tax (VAT) Reduction in interest
  4. DIncrease in direct taxes rates
Show the answer

The answer is B.

TopicHow the macroeconomy works (AD/AS)Aggregate demandMonetary policy & interest ratesFiscal policy & public finances

Question paper p.10Mark scheme p.4Open in the toolPractise the AD/AS diagram

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.