The National Economy in a Global Context · 7135/2

AQA AS Paper 2, Specimen

All 12 written questions and 20 multiple choice questions from AQA AS Paper 2 (Specimen), The National Economy in a Global Context. Case studies: UK economic recovery and UK employment and unemployment. 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 paper Mark scheme Insert

Context 1

UK economic recovery

Extracts: Contribution to output as a proportion of GDP, and · The road to recovery: industry, investment and exports? · Is a consumption-led recovery desirable?

Q21Define3 marks

Define ‘inflation’ (Extract C, line 19).

TopicEconomic performanceInflation & deflation

Question paper p.11 Mark scheme p.6 Insert p.1 Open in the tool

Q22Calculate4 marks

In 2013, the average house price in the UK was £193 000. Using Extract C calculate the predicted average house price for 2014.

TopicMeasuring macroeconomic performancePrice indices & inflation measurement

Question paper p.12 Mark scheme p.7 Insert p.1 Open in the tool

Q23Identify4 marks

Using Extract A, identify two significant features of the data, showing contribution to output and the construction industry breakdown for October 2013.

TopicMeasuring macroeconomic performanceGDP & national income

Question paper p.12 Mark scheme p.8 Insert p.1 Open in the tool

Q24Draw4 marks

With reference to Extract B (lines 7–14), draw an AD/AS diagram to illustrate the likely impact of a weaker pound on the price level and national output.

TopicThe international economyExchange ratesAggregate demand

Question paper p.13 Mark scheme p.9 Insert p.1 Open in the tool Draw it: AD/AS diagram

Q25Explain10 marks

Extract B (lines 15–17) states ‘some economists argue that there is still a long way to go to improve the external performance of the economy. Improvements in productivity are absolutely vital’.
Explain how improvements in productivity can affect the UK’s trade balance.

TopicThe international economyTrade & comparative advantage

Examiner insight

What to cover: Higher productivity lowers unit costs and prices, so UK goods become more competitive. Exports rise and imports fall, improving the trade balance.
Watch out: Link productivity to competitiveness.

Question paper p.13 Mark scheme p.10 Insert p.1 Open in the tool

Q26Assess25 marks

Extract B (lines 4–5) states, ‘Yet there is so much more to an economy than this: the UK economy is open to a range of injections and withdrawals’.
Using the data in the extracts and your economic knowledge, assess the possible effects on UK macroeconomic performance if exports grow more quickly than imports.

TopicEconomic performanceMacro objectives & conflictsTrade & comparative advantage

Examiner insight

What to cover: Exports growing faster than imports raise AD, growth and employment, and improve the current account.
Diagram: AD/AS diagram with AD shifting right.
Evaluation: Consider inflation, the exchange rate and dependence on world demand. Judge using the data.
Watch out: Use the extracts.

Question paper p.15 Mark scheme p.11 Insert p.1 Open in the tool Draw it: AD/AS diagram Or: multiplier diagram

Context 2

UK employment and unemployment

Extracts: People in employment and people claiming Jobseeker’s · Good news…and not such good news · All change at the Bank of England

Q27Define3 marks

Define ‘multiplier effect’ (Extract E, line 10).

TopicHow the macroeconomy works (AD/AS)Aggregate demand

Question paper p.19 Mark scheme p.12 Insert p.1 Open in the tool

Q28Calculate4 marks

Using Extract D, calculate, to two decimal places, the percentage of people in employment who work part-time.

TopicEconomic performanceUnemployment

Question paper p.19 Mark scheme p.13 Insert p.1 Open in the tool

Q29Identify4 marks

Using Extract D, identify two significant points of comparison between male and female Job Seeker’s Allowance (JSA) claimants in September 2013.

TopicEconomic performanceUnemployment

Question paper p.20 Mark scheme p.14 Insert p.1 Open in the tool

Q30Draw4 marks

Using Extract F, draw an AD/AS diagram to illustrate the likely short-run effects of a rise in confidence on the price level and national output.

TopicHow the macroeconomy works (AD/AS)Aggregate demand

Question paper p.21 Mark scheme p.15 Insert p.1 Open in the tool Draw it: AD/AS diagram

Q31Explain10 marks

Extract F (line 7–8) states that ‘This is a move away from the more familiar role of interest rates, which has been to control inflation.’
Explain how monetary policy can be used to control inflation.

TopicEconomic performanceInflation & deflationMonetary policy & interest rates

Examiner insight

What to cover: Higher interest rates reduce borrowing and spending and strengthen the pound, so AD falls and inflation falls.
Diagram: AD/AS diagram with AD shifting left.
Watch out: Explain the transmission mechanism.

Question paper p.22 Mark scheme p.16 Insert p.1 Open in the tool Practise the AD/AS diagram

Q32Evaluate25 marks

Extract E (lines 11–12) states that ‘the unemployment rate as measured by the Labour Force Survey remains stubbornly high at 7.7%.’
Using the data in the extracts and your economic knowledge, evaluate different policies that could be used to reduce the rate of unemployment in the UK.

TopicEconomic performanceUnemployment

Examiner insight

What to cover: Demand-side policies reduce cyclical unemployment; supply-side policies reduce structural and frictional unemployment.
Diagram: AD/AS diagram.
Evaluation: Judge by type of unemployment, cost and time lags.
Watch out: Use the extracts.

Question paper p.24 Mark scheme p.17 Insert p.1 Open in the tool

Q11 mark

Fiscal policy involves the use of

Ainterest rates.
Bdirect and indirect taxes.
Cthe money supply.
Dexchange rates.

Show the answer

The answer is B.

TopicFiscal policy and supply-side policiesFiscal policy & public finances

Question paper p.2 Mark scheme p.4 Open in the tool

Q21 mark

The diagram below shows two production possibility frontiers for an economy.
The economy is initially producing at point X on production possibility frontier EE.
The outward movement of the production possibility frontier from EE to FF, with increased production of both types of good at point Y, is most likely to be the result of

Aa decrease in unemployment in the economy.
Bthe implementation of supply-side policies.
Can increase in the rate of inflation.
Dthe elimination of a negative output gap.

Show the answer

The answer is B.

TopicEconomic performanceEconomic growth & cyclePPB / PPC

Question paper p.2 Mark scheme p.4 Open in the tool Practise the PPF diagram

Q31 mark

Which one of the following combinations is correct regarding the rate of inflation and the responsibilities of the UK Government and Monetary Policy Committee (MPC) of the Bank of England?
Inflation target set by Interest rate set by

AGovernment Government
BGovernment MPC
CMPC MPC
DMPC Government

Show the answer

The answer is B.

TopicEconomic performanceInflation & deflationMonetary policy & interest rates

Question paper p.3 Mark scheme p.4 Open in the tool

Q41 mark

Which one of the following is most likely to cause demand-pull inflation?

AAn increase in indirect taxation.
BAn increase in productivity.
CA decrease in interest rates.
DA rise in oil prices.

Show the answer

The answer is C.

TopicEconomic performanceInflation & deflation

Question paper p.3 Mark scheme p.4 Open in the tool

Q51 mark

The diagram below shows two aggregate demand (AD) curves and the short-run aggregate supply (SRAS) curve for an economy.
All other things being equal, a fall in the price level from P 1 to P 2 could be explained by a fall in

Aimports.
Binterest rates.
Clabour productivity.
Dgovernment spending.

Show the answer

The answer is D.

TopicHow the macroeconomy works (AD/AS)Aggregate demandAggregate supplyInflation & deflation

Question paper p.3 Mark scheme p.4 Open in the tool Practise the AD/AS diagram

Q61 mark

Which one of the following would be regarded as a supply-side shock for the UK economy?

AAn economic downturn in the US economy affecting UK exports.
BA rise in interest rates discouraging borrowing.
CRising oil and gas prices increasing the costs of UK firms.
DA rise in tax rates imposed on household incomes.

Show the answer

The answer is C.

TopicHow the macroeconomy works (AD/AS)Aggregate supply

Question paper p.4 Mark scheme p.4 Open in the tool

Q71 mark

The diagram below shows the aggregate demand (AD), short-run aggregate supply (SRAS) and long-run aggregate supply (LRAS) curves for an economy. The economy’s initial equilibrium is at point E.
Which one of the following developments affecting the economy is most likely to account for the movement of macroeconomic equilibrium from E to F?

AAn increase in labour productivity and wage rates.
BA decrease in the underlying trend rate of growth and an increase in world commodity prices.
CA decrease in government expenditure and an increase in indirect taxation.
DA fall in productivity and an increase in world commodity prices.

Show the answer

The answer is D.

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

Question paper p.4 Mark scheme p.4 Open in the tool Practise the AD/AS diagram

Q81 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?

AIncreased investment and increased saving.
BMore government spending on training and a higher exchange rate.
CDecreased benefit payments and a lower budget deficit.
DLower taxation on businesses and lower interest rates.

Show the answer

The answer is D.

TopicFiscal policy and supply-side policiesSupply-side policiesUnemployment

Question paper p.5 Mark scheme p.4 Open in the tool

Q91 mark

The diagram below shows the actual level of real GDP and the trend level of real GDP over time for an economy.
Between the points P and Q, which one of the following is most likely to be correct?

AThe actual rate of economic growth is rising while the level of unemployment is falling.
BThe actual rate of economic growth is negative while the rate of inflation is falling.
CThe trend rate of economic growth is rising while the balance of payments on current account is deteriorating.
DThe trend rate of economic growth and the output gap are both positive.

Show the answer

The answer is A.

TopicEconomic performanceEconomic growth & cycle

Question paper p.5 Mark scheme p.4 Open in the tool Practise the economic cycle diagram

Q101 mark

Structural unemployment is most likely to be caused by

Aa change in the pattern of demand.
Ba fall in the exchange rate.
Ca fall in unemployment benefits.
Dan increase in interest rates.

Show the answer

The answer is A.

TopicEconomic performanceUnemployment

Question paper p.6 Mark scheme p.4 Open in the tool

Q111 mark

The table below shows the Consumer Price Index (CPI) of a country over a period of time.
Year CPI 2009 2010 100 2011 110 2012 120 2013 125 Which one of the following can be deduced from the data?

AThe inflation rate was the same in 2011 and 2012.
BThere was deflation in 2009.
CThe average price level increased each year.
DThe inflation rate was highest in 2013.

Show the answer

The answer is C.

TopicMeasuring macroeconomic performancePrice indices & inflation measurement

Question paper p.6 Mark scheme p.4 Open in the tool

Q121 mark

All other things being equal, a rise in a country’s exchange rate is most likely to

Areduce unemployment and increase economic growth.
Breduce inflation and reduce a deficit on the current account of the balance of payments.
Creduce a positive output gap and reduce inflation.
Dincrease a negative output gap and reduce a deficit on the current account of the balance of payments.

Show the answer

The answer is C.

TopicThe international economyExchange rates

Question paper p.6 Mark scheme p.4 Open in the tool

Q131 mark

The diagram below shows an economy’s aggregate demand (AD) and long run aggregate supply (LRAS) curves. OY 1 is the initial equilibrium level of real output.
Which one of the following combination of events is likely to lead to a new equilibrium level of output of OY 2 ?
Event 1 Event 2 A fall in the quantity An increase in

Aand productivity of imports relative labour in the economy to exports Increased government An increase in
Bspending on the cost of education and training consumer credit A decline in factor A fall in the
Cmobility in the exchange rate economy Greater use of new A rise in indirect
Dtechnology across the taxes economy

Show the answer

The answer is A.

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

Question paper p.7 Mark scheme p.4 Open in the tool Practise the AD/AS diagram

Q141 mark

The accelerator principle illustrates the relationship between investment and the rate of change of

Aunemployment.
Bprices.
Cgovernment spending.
Dnational income.

Show the answer

The answer is D.

TopicHow the macroeconomy works (AD/AS)Aggregate demand

Question paper p.7 Mark scheme p.4 Open in the tool

Q151 mark

The diagrams below show aggregate demand (AD) and short-run aggregate supply (SRAS) curves for the UK. All other things being equal, which one of the diagrams, A, B, C or D, shows the most likely effects of an increase in government spending financed by an increase in indirect tax?

A(see diagram in paper)
B(see diagram in paper)
C(see diagram in paper)
D(see diagram in paper)

Show the answer

The answer is A.

TopicHow the macroeconomy works (AD/AS)Aggregate demandAggregate supplyFiscal policy & public finances

Question paper p.8 Mark scheme p.4 Open in the tool Practise the AD/AS diagram

Q161 mark

Which one of the following is most likely to lead to a supply-side improvement in an economy? An increase in

Ainnovation by firms.
Bthe availability of imports.
Cgovernment spending on welfare benefits. .
Dcompany taxation to reduce the government’s budget deficit.

Show the answer

The answer is A.

TopicFiscal policy and supply-side policiesSupply-side policies

Question paper p.9 Mark scheme p.4 Open in the tool

Q171 mark

The table below shows values (£billion) for components of aggregate demand (AD) in an economy:
Components of AD (£billion) Consumption 500 Investment Government spending 250 Exports ?
Imports Aggregate demand 825 What is the value of exports in £ billion?

A25
B75
C100
D125

Show the answer

The answer is B.

TopicHow the macroeconomy works (AD/AS)Aggregate demand

Question paper p.9 Mark scheme p.4 Open in the tool

Q181 mark

Which one of the following is an example of expansionary monetary policy?
An increase in

Ainterest rates.
Bthe money supply.
Cthe exchange rate.
Dgovernment expenditure.

Show the answer

The answer is B.

TopicFinancial markets and monetary policyMonetary policy & interest rates

Question paper p.9 Mark scheme p.4 Open in the tool

Q191 mark

Which one of the following is most likely to result from a growing negative output gap?

AAn increase in the rate of investment.
BA fall in business confidence.
CA rise in interest rates.
DA fall in government spending on welfare benefits.

Show the answer

The answer is B.

TopicEconomic performanceEconomic growth & cycle

Question paper p.10 Mark scheme p.4 Open in the tool

Q201 mark

All other things being equal, which one of the following is most likely to increase the current account deficit on the balance of payments?

AA decrease in the rate of inflation.
BAn increase in productivity.
CAn increase in the exchange rate.
DA decrease in the level of consumption.

Show the answer

The answer is C.

TopicThe international economyBalance of payments

Question paper p.10 Mark scheme p.4 Open in the tool

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.

UK economic recovery

Examiner insight

Examiner insight

UK employment and unemployment

Examiner insight

Examiner insight

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