The National Economy in a Global Context · 7135/2

AQA AS Paper 2, June 2019

All 12 written questions and 20 multiple choice questions from AQA AS Paper 2 (June 2019), The National Economy in a Global Context. Case studies: Artificial intelligence and UK exports. 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

Artificial intelligence

Extracts: Industry employment and the potential for automation, · Artificial intelligence: a cause for concern · Seizing the opportunities

Q25Explain10 marks
Extract C (lines 10–11) states: ‘It has announced increased government spending on technological education and training.’
Explain how an increase in government spending could affect the national debt.

TopicFiscal policy and supply-side policiesFiscal policy & public finances

Examiner insight

What to cover
More government spending raises the budget deficit, so the national debt increases.
Watch out
Separate deficit and debt clearly.
Question paper p.16Mark scheme p.11Insert p.1Open in the tool
Q26Evaluate25 marks
Extract B (lines 9–11) states: ‘Inevitably, some types of employment, industries and regions are likely to be affected more than others, and consequently we might expect to see a sharp rise in structural unemployment.’
Use the extracts and your knowledge of economics to evaluate different policies that a government could use to try to prevent a rise in structural unemployment.

TopicEconomic performanceUnemployment

Examiner insight

What to cover
Policies: training, regional policy, benefits, and investment in new industries.
Diagram
LRAS shifting right.
Evaluation
Judge by cost and effectiveness.
Watch out
Use the extracts.
Question paper p.18Mark scheme p.12Insert p.1Open in the tool

Context 2

UK exports

Extracts: Total UK exports and imports with selected non-EU · A world of opportunities · But are the benefits likely to be sustained?

Q31Explain10 marks
Extract F (lines 8–10) states: ‘Hopefully, firms will feel encouraged by the increases in demand and output, and, according to the accelerator process, this should have positive effects on investment.’
Explain how the accelerator process is likely to affect economic growth.

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

Examiner insight

What to cover
Rising output raises investment through the accelerator, so AD and growth rise.
Watch out
Explain the accelerator clearly.
Question paper p.26Mark scheme p.18Insert p.1Open in the toolPractise the AD/AS diagramPractise the multiplier diagram
Q32Discuss25 marks
Extract E (lines 17–19) states: ‘...it is important that the increase in exports seen towards the end of 2017 is sustained. It is needed to reduce the trade deficit and have other positive impacts on the economy.’
Use the extracts and your knowledge of economics to discuss the significance of an increase in exports for the performance of the UK economy.

TopicThe international economyTrade & comparative advantage

Examiner insight

What to cover
Higher exports raise AD, growth and jobs, and improve the trade balance.
Diagram
AD/AS diagram.
Evaluation
Consider imports and exchange rates. Judge using the data.
Watch out
Use the extracts.
Question paper p.28Mark scheme p.19Insert p.1Open in the tool
Q31 mark
Which one of the following is a true statement about the Labour Force Survey (LFS) measure of unemployment? The LFS measure of unemployment includes
  1. Apart-time workers who would like to work full-time.
  2. Bpeople who are claiming unemployment benefits.
  3. Cpeople who would like a job but who are not currently looking for one.
  4. Dstudents at university searching for a job starting after they have graduated.
Show the answer

The answer is B.

TopicEconomic performanceUnemployment

Question paper p.3Mark scheme p.3Open in the tool
Q41 mark
The table shows income and expenditure on goods and services for four workers for the tax year ending April 2018.
Income Expenditure Worker £ £ Alice 56 000 27 000 Jennie 17 000 19 000 Meshaal 45 000 35 000 Thavid 100 000 21 000 The government has set a proportional income tax rate of 25% and a tax on all expenditure of 15%. Which one of the following statements is true?
During the tax year ending April 2018 the
  1. Aburden of total tax, measured as a percentage of income, was highest for Jennie.
  2. Bgap in income between Meshaal and Thavid remained the same before and after paying income tax.
  3. Ctax on expenditure was not regressive as all four workers faced the same rate of tax.
  4. Dworker who made the greatest contribution to government tax revenue was Alice.
Show the answer

The answer is A.

TopicFiscal policy and supply-side policiesFiscal policy & public financesInequality & poverty

Question paper p.3Mark scheme p.3Open in the tool
Q51 mark
The government of an economy implements an expansionary fiscal policy, increasing government spending and cutting taxes. In the short run, such a policy is likely to result in a conflict between which of the following macroeconomic objectives?
  1. AIncreasing economic growth and reducing unemployment.
  2. BPreventing deflation and reducing the surplus on the current account of the balance of payments.
  3. CPreventing deflation and reducing unemployment.
  4. DReducing the deficit on the current account of the balance of payments and increasing economic growth.
Show the answer

The answer is D.

TopicEconomic performanceMacro objectives & conflictsFiscal policy & public finances

Question paper p.4Mark scheme p.3Open in the tool
Q61 mark
The diagram below shows the multiplier effect of an increase in investment that at first causes aggregate demand (AD) to shift from AD0 to AD1 and subsequently to AD2.
Which one of the following shows the size of the multiplier effect that has occurred?
  1. AY0 Y1 divided by Y0 Y2
  2. BY0 Y2 divided by Y0 Y1
  3. CY0 Y2 divided by Y1 Y2
  4. DY1 Y2 divided by Y0 Y1
Show the answer

The answer is B.

TopicHow the macroeconomy works (AD/AS)Aggregate demand

Question paper p.4Mark scheme p.3Open in the toolPractise the multiplier diagramPractise the AD/AS diagram
Q71 mark
Many firms use profits to finance their capital investment instead of borrowing from banks.
For these firms, higher interest rates are most likely to
  1. Acause them to change the type of investment made with more investment in buildings.
  2. Bcause them to reduce their investment as they can now earn more interest from saving their profits.
  3. Chave no impact on the amount of investment undertaken as they pay no interest.
  4. Dresult in more investment as they can earn more interest on money deposited in banks.
Show the answer

The answer is B.

TopicHow the macroeconomy works (AD/AS)Aggregate demandMonetary policy & interest rates

Question paper p.5Mark scheme p.3Open in the tool
Q81 mark
There is a large depreciation in an economy’s exchange rate but the value of its exports does not increase. The most likely reason for the absence of an increase in the value of exports is that
  1. Aconsumer confidence in the economy has fallen.
  2. Bother countries are in recession.
  3. Cthe government has implemented contractionary fiscal policy.
  4. Dthere is an increase in unemployment in the economy.
Show the answer

The answer is B.

TopicThe international economyExchange ratesTrade & comparative advantage

Question paper p.5Mark scheme p.3Open in the tool
Q91 mark
The table below shows a selection of items from a country’s balance of payments on current account.
£ billion Balance of trade in goods –124 Primary income balance +40 Secondary income balance –13 If the country has a current account deficit of £84 billion, its balance of trade in services has a
  1. Adeficit of £13 billion.
  2. Bdeficit of £40 billion.
  3. Csurplus of £13 billion.
  4. Dsurplus of £40 billion.
Show the answer

The answer is C.

TopicThe international economyBalance of payments

Question paper p.6Mark scheme p.3Open in the tool
Q101 mark
Which one of the following statements about supply-side policies and supply-side improvements is true?
  1. ASupply-side improvements do not affect the balance of payments on current account
  2. BSupply-side improvements often originate in the private sector
  3. CSupply-side policies have no impact on the budget balance
  4. DSupply-side policies work by leaving incentives unchanged
Show the answer

The answer is B.

TopicFiscal policy and supply-side policiesSupply-side policies

Question paper p.6Mark scheme p.3Open in the tool
Q121 mark
In the diagram below, as a result of the government implementing a new industrial policy, the long-run aggregate supply curve shifts from LRAS1 to LRAS2 The shift in LRAS suggests that the industrial policy is most likely to have
  1. Acaused firms to be more innovative.
  2. Bcreated a positive output gap.
  3. Creduced employment and inflation.
  4. Dreduced imports and exports.
Show the answer

The answer is A.

TopicFiscal policy and supply-side policiesSupply-side policiesAggregate supply

Question paper p.7Mark scheme p.3Open in the toolPractise the AD/AS diagram
Q131 mark
An economy is in macroeconomic equilibrium with total expenditure and total income each equal to £407 billion. This means that the current value of total output will be
  1. A£407 billion plus the annual rate of economic growth.
  2. B£814 billion after adjusting for the multiplier effect.
  3. Cthe same as total expenditure and total income.
  4. Dthe same as total income after adjusting for inflation.
Show the answer

The answer is C.

TopicHow the macroeconomy works (AD/AS)Circular flow

Question paper p.8Mark scheme p.3Open in the tool
Q141 mark
A government wanting to reduce unemployment in the short run, through the use of fiscal policy, is most likely to
  1. Aattempt to increase the size of its budget surplus.
  2. Breduce indirect taxes on consumption.
  3. Creduce interest rates to stimulate investment.
  4. Dtake measures to reduce the size of its budget deficit.
Show the answer

The answer is B.

TopicFiscal policy and supply-side policiesFiscal policy & public financesUnemployment

Question paper p.8Mark scheme p.3Open in the tool
Q151 mark
World oil prices rise by 30%. On an AD/AS diagram the main effects are shown by a shift left in
  1. Aboth the aggregate demand curve and the short-run aggregate supply curve.
  2. Bthe aggregate demand curve as consumers face higher prices for petrol.
  3. Cthe long-run aggregate supply curve as firms reduce their investment in renewable energy.
  4. Dthe short-run aggregate supply curve as firms face higher costs.
Show the answer

The answer is D.

TopicHow the macroeconomy works (AD/AS)Aggregate supply

Question paper p.8Mark scheme p.3Open in the toolPractise the AD/AS diagram
Q161 mark
The Monetary Policy Committee of the Bank of England has to assess inflationary pressures when deciding on the level of Bank Rate. Which one of the following pieces of information is most likely to persuade the Committee to raise Bank Rate?
  1. AA fall in the number of job vacancies advertised
  2. BGDP growth at below the trend rate in the previous two quarters
  3. CStatistics showing an increase in bank lending to households
  4. DSurveys showing that many firms have spare capacity
Show the answer

The answer is C.

TopicFinancial markets and monetary policyMonetary policy & interest ratesInflation & deflation

Question paper p.9Mark scheme p.3Open in the tool
Q171 mark
The diagram below shows the aggregate demand curves (AD) and short-run aggregate supply curves (SRAS) for an economy.
Which one of the following combinations of events is most likely to have caused the shift from AD1 to AD2 and the shift from SRAS1 to SRAS2?
  1. AA fall in commodity prices and a fall in savings
  2. BA fall in money wages and an increase in imports
  3. CAn increase in the budget deficit and a fall in productivity
  4. DAn increase in VAT and an increase in income tax
Show the answer

The answer is D.

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

Question paper p.9Mark scheme p.3Open in the toolPractise the AD/AS diagram
Q181 mark
An economy has a deficit on the current account of the balance of payments. Which one of the following sets of circumstances is most likely to lead to a reduction in the economy’s current account deficit?
Inflation in other Domestic Output gap countries productivity
  1. ANegative Falling Falling
  2. BNegative Rising Rising
  3. CPositive Falling Rising
  4. DPositive Rising Falling
Show the answer

The answer is B.

TopicThe international economyBalance of payments

Question paper p.10Mark scheme p.3Open in the tool
Q191 mark
Which one of the following sets of circumstances is most likely, other things remaining the same, to lead to demand-pull and cost-push inflation in an economy?
  1. AA depreciation in the exchange rate, and a reduction in the government’s budget surplus
  2. BLabour productivity growth in the economy accelerates, and interest rates fall
  3. CThe minimum wage is increased, and business confidence in the economy falls
  4. DWorld demand for commodities increases, and the economy’s trade surplus becomes smaller
Show the answer

The answer is A.

TopicEconomic performanceInflation & deflation

Question paper p.10Mark scheme p.3Open in the tool
Q201 mark
The diagram below shows the aggregate demand curve (AD), short-run aggregate supply curve (SRAS), and long-run aggregate supply curve (LRAS) for an economy.
The current level of real GDP is Y. Which one of the following policies is most likely, in the short run, to bring the economy closer to its normal capacity level of output?
  1. AAn increase in the target rate of inflation
  2. BHigher government spending on vocational education
  3. CLower rates of tax on manufacturing businesses
  4. DNew schemes to encourage more household saving
Show the answer

The answer is D.

TopicEconomic performanceEconomic growth & cycleAggregate demand

Question paper p.11Mark scheme p.3Open 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.