Cambridge International (CAIE) · 10 Government macroeconomic intervention (A Level) · 10.3 Effectiveness of policy options to meet all macroeconomic objectives

Cambridge International (CAIE) Economics past paper questions: Effectiveness of policy options to meet all macroeconomic objectives

Every Cambridge International (CAIE) question on Effectiveness of policy options to meet all macroeconomic objectives from 2023 to 2025: 4 essays, 3 data response questions and 25 multiple choice questions. It covers 9.3 Employment and unemployment, 11.2 Exchange rates, 9.1 The circular flow of income, 9.2 Economic growth and sustainability and 10.1 Government macroeconomic policy objectives. Each question links to its paper, mark scheme and examiner report.

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Subtopics9.3 Employment and unemployment 711.2 Exchange rates 29.1 The circular flow of income 19.2 Economic growth and sustainability 110.1 Government macroeconomic policy objectives 18.2 Equity and policies towards income and wealth redistribution 18.3 Labour market forces and government intervention 1

Essay questions on effectiveness of policy options to meet all macroeconomic objectives

A-level Paper 4, June 2024, Q4OptionalEvaluate20 marks
In 2022, many countries experienced a high rate of inflation caused by disruptions to the supply of goods and services arising from the Covid-19 pandemic and the conflict between Russia and Ukraine. In one country, the government cut taxes and the central bank raised interest rates. Evaluate the likely impact of these policies on that government’s ability to control inflation.

Data response questions on effectiveness of policy options to meet all macroeconomic objectives

Multiple choice questions

  1. A-level Paper 3, November 2025, Q15

    In which situation is expansionary fiscal policy least likely to be effective?

  2. A-level Paper 3, November 2025, Q21

    Which combination shows the most likely outcome if a government increases the level of direct taxation?

  3. A-level Paper 3, June 2025, Q17

    Which combination of income tax and government benefit payment systems will produce automatic stabilisation?

  4. A-level Paper 3, June 2025, Q19

    The diagram outlines the monetary transmission mechanism following quantitative easing. Key words have been omitted from the process. Which words complete gaps 1, 2 and 3?

  5. A-level Paper 3, June 2025, Q22

    A government sets a target for the annual rate of inflation to be no more than 3%. Which circumstances would make it difficult to achieve the target?

  6. A-level Paper 3, June 2025, Q24

    What is the most likely consequence when there is an increase in the national debt?

  7. A-level Paper 3, March 2025, Q21

    Which policy may increase economic growth without causing inflation?

  8. A-level Paper 3, March 2025, Q24

    In an economy with unemployed resources the marginal propensity to consume is 0.2. The government increases its budget deficit and finances it by selling bonds to the non-bank private sector. What is the likely consequence of this?

  9. A-level Paper 3, November 2024, Q20

    A country experiences an increase in unemployment due to deficiency of aggregate demand. What will be the effect of this on tax revenue and government expenditure, assuming that tax rates and rates of unemployment benefit remain unchanged?

  10. A-level Paper 3, November 2024, Q22

    Which argument for lowering income tax rates is always valid?

  11. A-level Paper 3, June 2024, Q20

    The diagrams show the performance of an economy using different measures.

  12. A-level Paper 3, June 2024, Q22

    Which combination of policies would be most likely to bring a country out of recession?

  13. A-level Paper 3, June 2024, Q24

    A government uses monetary policy and fiscal policy to solve a problem of deflation. Which policy combination is likely to be the most successful?

  14. A-level Paper 3, March 2024, Q20

    What is likely to be the most effective policy to reduce inflation caused by a rapid rise in import prices?

  15. A-level Paper 3, March 2024, Q22

    A government increases its budget deficit to spend money on infrastructure development. It finances this by printing money. How is this policy likely to affect the government’s main macroeconomic policy objectives?

  16. A-level Paper 3, March 2024, Q23

    The government increases interest rates in order to reduce the rate of inflation. What will also result from this action?

  17. A-level Paper 3, March 2024, Q24

    The diagram shows the relationship between the income tax rate and tax revenue. Which statement is correct?

  18. A-level Paper 3, March 2024, Q26

    A country imports most of the raw materials used as factor inputs. Which policy is most likely to control cost-push inflation?

  19. A-level Paper 3, November 2023, Q16

    Which government policy is most likely to improve occupational mobility?

  20. A-level Paper 3, November 2023, Q20

    What is likely to be the effect of an increase in the budget deficit?

  21. A-level Paper 3, November 2023, Q23

    Which policy measure to encourage economic growth might be based on the concept of the Laffer curve?

  22. A-level Paper 3, June 2023, Q23

    Increased borrowing by the government results in higher interest charges and this leads to less private investment expenditure. Of what is this an example?

  23. A-level Paper 3, March 2023, Q17

    Which combination of circumstances is most likely to lead to an increase in a country’s budget deficit?

  24. A-level Paper 3, March 2023, Q22

    Which government aim is least likely to be achieved using macroeconomic monetary policy measures?

  25. A-level Paper 3, March 2023, Q23

    A government adopts an expansionary fiscal policy to increase the economic growth rate. Which other main macroeconomic aims is this policy most likely to help?

Question text is quoted from the question papers, © Cambridge University Press & Assessment (UCLES), 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.