Paper 2: The National and Global Economy · 9EC0/02
Edexcel A A-level Paper 2, June 2023
All 14 written questions and 5 multiple choice questions from Edexcel A A-level Paper 2 (June 2023), The National and Global Economy. Case studies: Trade and development in Africa. Each question shows its marks and topic, with an examiner insight on 7, and opens the question paper and mark scheme at the right page.
Section A
Q1(a)
Draw an aggregate demand and aggregate supply diagram to illustrate the likely impact of an increase in the UK base interest rate on the average price level and real output.
Mark splitKnowledge 2Application 2
TopicAggregate demandAggregate supplyMacroeconomic objectives and policy
Q1(b)
Which one of the following is the most likely impact of an increase in the base interest rate?
- Adecrease in the:
- Bmarginal propensity to save
- Crate of cyclical unemployment
- Dvalue of the pound against the dollar
Show the answer
The answer is A.
TopicAggregate demandMacroeconomic objectives and policy
Q2(a)
With reference to the chart, which one of the following is true?
- Afell by 1.4% between December 2020 and April 2022
- Bf ell by one percentage point between February 2021 and
- Cwas highest in March 2022 and lowest in December 2020
- Dwill continue to rise but at a slower rate
Show the answer
The answer is B.
Q2(b)
With reference to the chart on the previous page, explain one likely reason for the change in the UK’s rate of unemployment.
Mark splitKnowledge 2Application 1Analysis 1
Q3(a)
Calculate the value of the total forecast GDP in 2022.
Mark splitApplication 2
Q3(b)
Explain one likely cost of UK real GDP falling by 9.9% in 2020.
Mark splitKnowledge 1Analysis 1
Q3(c)
Which one of the following is most likely to lead to an increase in potential economic growth?
- Aconsumption
- Bcosts of raw materials and energy
- Cincome tax
- Dtechnological advances
Show the answer
The answer is D.
TopicAggregate demandEconomic growth
Q4(a)
Which one of the following is an example of consumption?
- AConstruction of a new cycle lane
- BExpansion of Heathrow Airport
- CNew school buildings
- DPurchase of new clothes
Show the answer
The answer is D.
TopicAggregate demand
Q4(b)
With reference to the chart on the previous page, explain the likely effect of a fall in the marginal propensity to consume on the level of real GDP. Refer to the multiplier in your answer.
Mark splitApplication 3Analysis 1
TopicAggregate demandMeasures of economic performance
Q5(a)
Calculate the US national debt in 2021 as a percentage of GDP.
Mark splitApplication 2
Q5(b)
Explain the relationship between a fiscal deficit and the national debt.
Mark splitKnowledge 2
Q5(c)
Which one of the following is the most likely consequence of an increase in the US national debt?
- Acrowding out
- Binequality
- Cpoverty
- Dunemployment
Show the answer
The answer is A.
TopicRole of the state in the macroeconomyPoverty and inequality
Section B
Case study
Trade and development in Africa
In the extracts: African, Angola, IMF, GDP, AfCFTA, Europe, China, Asia, Europe and Latin America, America Africa Latin
Q6(a)
With reference to Extract A, explain what is meant by a ‘regional trade agreement’ (Extract A, line 7).
Mark splitKnowledge 2Application 2Analysis 1
TopicAggregate demandInternational economics
Examiner insight
- What to cover
- Define a regional trade agreement as a deal between countries in one region to reduce or remove tariffs and other barriers on trade with each other. Use the African agreement named in Extract A.
- Watch out
- Confusing a regional trade agreement with a customs union or common market by adding a common external tariff or free movement of labour.
Q6(b)
With reference to Extract A, examine two causes of the high cost of transporting goods between African countries.
Mark splitKnowledge 2Application 2Analysis 2Evaluation 2
TopicAggregate demandInternational economics
Examiner insight
- What to cover
- Pick two causes from Extract A, such as poor road and rail infrastructure, and border delays, customs paperwork and corruption. Link each to higher unit transport costs and longer journey times.
- Evaluation
- Depends on the size of each cost and the distance goods travel. Infrastructure takes years to build, so border reform may cut costs faster and more cheaply.
- Watch out
- Describing African poverty in general instead of naming specific causes of transport costs from the extract.
Q6(c)
Discuss the impact of improved transport links between African countries on economic growth rates.
Mark splitKnowledge 2Application 2Analysis 4Evaluation 4
TopicEconomic growth
Examiner insight
- What to cover
- Lower transport costs cut firms costs and widen the market, so intra-African trade, investment and productivity rise. Construction spending raises AD now and better capital raises LRAS later.
- Diagram
- AD/AS diagram with AD and LRAS both shifting right; label real output and the price level.
- Evaluation
- Weigh the construction cost and opportunity cost, added debt, long time lags and poor maintenance or corruption. Depends on complementary reforms such as border simplification. Conclude.
- Watch out
- Assuming better roads automatically raise growth, without explaining the cost and market size mechanism.
Q6(d)
Assess two likely benefits of debt relief to Angola. Refer to Extract B in your answer.
Mark splitKnowledge 2Application 2Analysis 2Evaluation 4
TopicEmerging and developing economies
Examiner insight
- What to cover
- Debt relief frees Angolan government revenue from interest payments for health, education and infrastructure, raising human capital and capacity. It also eases the current account and improves the credit rating, attracting investment.
- Diagram
- AD/AS diagram showing AD and LRAS shifting right as freed revenue is spent.
- Evaluation
- Weigh moral hazard, corruption and the risk funds are wasted or debt rebuilt. Depends on the size of relief relative to Angolan GDP and on governance quality. Judge each benefit.
- Watch out
- Writing about aid rather than debt relief, or developing only one benefit when two are required.
Q6(e)
Discuss market-orientated strategies the Angolan government could use to improve development.
Mark splitKnowledge 3Application 3Analysis 3Evaluation 6
TopicAggregate demandInternational economics
Examiner insight
- What to cover
- Suggest trade liberalisation, privatisation, deregulation, removing subsidies, a floating exchange rate and promoting foreign direct investment. Explain how competition and stronger incentives raise efficiency, investment and incomes in Angola.
- Diagram
- LRAS shifting right, or a production possibility frontier shifting outward, to show rising productive capacity.
- Evaluation
- Weigh market failure, rising inequality, lost government revenue and weak institutions, against interventionist alternatives. Depends on Angolan oil dependency and governance. Conclude which strategy works best.
- Watch out
- Offering interventionist strategies such as protectionism or state ownership, which the command excludes.
Section C
Q7
In 2022 the value of UK exports fell by 14% compared with 2020. In contrast, the global average increase in exports was 8.2% over the same time period. The UK’s competitiveness also fell, dropping five places from 18th in 2021 to 23rd in 2022 in the world competitiveness rankings. (Sources: adapted from https://www.ft.com/content/021c629d-5853-4111-9600- ab5f0eb65a35 and https://www.imd.org/centers/world-competitiveness-center/rankings/ world-competitiveness) Evaluate macroeconomic policies that could be used to increase international competitiveness in the UK’s export markets.
Mark splitKnowledge 4Application 4Analysis 8Evaluation 9
Examiner insight
- What to cover
- Cover supply side policies raising productivity through skills, infrastructure and investment incentives, plus looser monetary policy or a weaker pound cutting relative export prices. Link each to unit labour costs and export volumes.
- Diagram
- AD/AS diagram with LRAS shifting right, or a foreign exchange diagram showing sterling depreciating; label price and quantity.
- Evaluation
- Weigh cost, opportunity cost, long supply side time lags and imported inflation from depreciation. Depends on the Marshall Lerner condition and export elasticities. Give a supported final judgement.
- Watch out
- Confusing a fall in the exchange rate, which is a price effect, with a genuine gain in non-price competitiveness.
Q8
UK inflation, as measured by the CPI, rose to 10.1% in the 12 months to July 2022, compared to 2.0% in the 12 months to July 2021. (Source: adapted from https://www.ons.gov.uk/economy/inflationandpriceindices/bulletins/ consumerpriceinflation/july2022) Evaluate macroeconomic policies, apart from monetary policy, the UK government could use to reduce inflation.
Mark splitKnowledge 4Application 4Analysis 8Evaluation 9
TopicMeasures of economic performanceMacroeconomic objectives and policy
Examiner insight
- What to cover
- Use contractionary fiscal policy, with higher taxes and lower spending shifting AD left, and supply side policies raising LRAS and productivity to cut unit costs. Note that 2022 inflation was largely cost push.
- Diagram
- AD/AS diagram with AD shifting left along an upward sloping SRAS, or SRAS shifting right; label the price level and real output.
- Evaluation
- Weigh lost output and higher unemployment, time lags and political cost, and the fact that cutting AD does not fix an energy supply shock. Depends on the cause of inflation. Conclude.
- Watch out
- Discussing interest rates and the Bank of England, when the question explicitly excludes monetary policy.
Question text is quoted from the question papers, © Pearson Edexcel, 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.