Paper 2: The National and Global Economy · 9EC0/02
Edexcel A A-level Paper 2, June 2025
All 14 written questions and 5 multiple choice questions from Edexcel A A-level Paper 2 (June 2025), The National and Global Economy. Case studies: The German economy. 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)
With reference to the table above, which one of the following is correct?
- AAverage incomes are lower in Morocco than in Pakistan
- BE conomic development, as measured by the HDI, is higher in Morocco
- CL ife expectancy in Morocco is 68.3 years
- DTotal output in Morocco is higher than in Pakistan
Show the answer
The answer is B.
Q1(b)
With reference to the data provided, explain one limitation of using GDP to compare living standards between countries.
Mark splitKnowledge 2Application 1Analysis 1
Q2(a)
With reference to the chart above, which one of the following is correct?
- AThe current account was in surplus during the entire period shown
- BThe deficit on the current account was smallest in 2021
- CThe UK Government’s fiscal deficit was largest in 2016
- DThe value of exports was greater than the value of imports in 2012
Show the answer
The answer is B.
TopicInternational economicsRole of the state in the macroeconomy
Q2(b)
With reference to the chart on the previous page, explain one likely reason for the change in the UK current account deficit from 2016 to 2021.
Mark splitKnowledge 2Application 1Analysis 1
TopicMeasures of economic performanceInternational economics
Q3(a)
With reference to the chart above, which one of the following is correct?
- AThe UK economy grew the fastest in quarter 3 2022
- BThe UK was in recession in quarter 2 2022
- CTotal UK real GDP was larger in quarter 4 2022 than in quarter 1 2022
- DTotal UK real GDP was the same in quarter 4 2022 as in quarter 1 2023
Show the answer
The answer is C.
TopicMeasures of economic performanceEconomic growth
Q3(b)
Explain one likely disadvantage of a decline in GDP on: workers government.
Q4(a)
Explain what is meant by ‘terms of trade’.
Mark splitKnowledge 2
Q4(b)
Which one of the following is the percentage change in China’s terms of trade between 2012 and 2020, to the nearest whole number?
- A12%
- B13%
- C15%
- D92%
Show the answer
The answer is C.
Q4(c)
Explain the likely impact of the change in China’s terms of trade from 2012 to 2020 on China’s current account. Assume that demand for China’s exports and imports is price elastic.
Mark splitKnowledge 1Analysis 1
Q5(a)
The total UK labour force in January 2022 was 34.5 million. With reference to the information above, calculate the total number of inactive people in the UK labour force in January 2022.
Mark splitApplication 2
Q5(b)
Explain one likely reason for the high levels of inactivity in the UK labour force.
Mark splitKnowledge 1Analysis 1
Q5(c)
Which one of the following would be the most likely result of an increase in the rate of employment?
- ADeflation
- BImprovement in living standards
- CIncrease in absolute poverty
- DRecession
Show the answer
The answer is B.
TopicMeasures of economic performanceEconomic growthPoverty and inequality
Section B
Case study
The German economy
Extracts: A: The opportunities and challenges facing the German economy · B: US technology firm Intel invests in German semiconductor factories
In the extracts: German, Germany, Intel, USA, GDP, The-German-economy-and-the-dollar-euro-exchange-rate, Infrastructure, Corporation, Business, Eurozone
Q6(a)
With reference to Figure 1, explain the distinction between direct and indirect taxation.
Mark splitKnowledge 2Application 2Analysis 1
Examiner insight
- What to cover
- A direct tax is paid straight to government on income, profit or wealth, such as German income tax. An indirect tax is levied on spending and the burden can be passed to consumers, such as VAT. Use Figure 1.
- Watch out
- Defining the two by who collects the tax rather than by whether the burden can be passed on.
Q6(b)
With reference to Extract A, examine two factors influencing the short‐run aggregate supply of the German economy.
Mark splitKnowledge 2Application 2Analysis 2Evaluation 2
TopicAggregate supply
Examiner insight
- What to cover
- Pick two short run cost factors from Extract A, such as energy prices and wage costs, or import prices and business taxes. Show how each changes German firms costs and shifts SRAS.
- Diagram
- AD/AS diagram with SRAS shifting left; label the higher price level and lower real output.
- Evaluation
- Depends on the size and persistence of each cost change, and on whether firms absorb it in profit margins. Fixed energy contracts can delay the effect.
- Watch out
- Giving long run factors such as education or technology, which shift LRAS rather than SRAS.
Q6(c)
With reference to the information provided and your own knowledge, assess the likely macroeconomic effects of the German government’s budget deficit.
Mark splitKnowledge 2Application 2Analysis 2Evaluation 4
TopicMacroeconomic objectives and policy
Examiner insight
- What to cover
- Deficit spending raises AD and the multiplier lifts output and employment in Germany. Set that against a rising debt stock, higher interest payments, possible crowding out and inflation if capacity is tight.
- Diagram
- AD/AS diagram with AD shifting right; label the price level, real output and any inflationary gap.
- Evaluation
- Weigh the deficit size relative to German GDP, spare capacity, whether borrowing funds investment, and the constitutional debt brake and EU fiscal rules. Reach an overall judgement.
- Watch out
- Assuming a deficit is automatically harmful without checking German spare capacity and low borrowing costs.
Q6(d)
With reference to Extract B, discuss the impact of the planned investment by Intel in a new semiconductor factory on Germany’s aggregate demand. Use an aggregate demand and aggregate supply diagram in your answer.
Mark splitKnowledge 2Application 2Analysis 4Evaluation 4
TopicAggregate demandAggregate supply
Examiner insight
- What to cover
- Investment is a component of AD, so the Intel semiconductor plant shifts AD right. The multiplier raises income, consumption and employment further, with construction and supply chain firms gaining first.
- Diagram
- AD/AS diagram with AD shifting right; label the initial and the multiplied shift, the higher price level and higher real output.
- Evaluation
- Weigh the investment size relative to German GDP, the subsidy cost and opportunity cost, leakages from imported equipment, and time lags. Note the later LRAS gain. Conclude.
- Watch out
- Analysing only the supply side effect when the question asks specifically about aggregate demand.
Q6(e)
Discuss supply‐side policies the German government could use ‘to improve its economic performance’ (Extract A, line 6).
Mark splitKnowledge 3Application 3Analysis 3Evaluation 6
Examiner insight
- What to cover
- Suggest infrastructure and skills investment, lower business taxes and less red tape, immigration to ease labour shortages, and energy market reform. Show each raising productivity and shifting German LRAS right.
- Diagram
- AD/AS diagram with LRAS shifting right; label higher real output and a lower price level.
- Evaluation
- Weigh cost, opportunity cost, long time lags and the debt brake limiting spending. Depends on whether German weakness is a supply or a demand problem. Reach a judgement.
- Watch out
- Ignoring Extract A, so the answer could be about any country rather than Germany.
Section C
Q7
In January 2023 the UK prime minister, Rishi Sunak, promised to halve inflation by the end of the year. In July 2023 the Bank of England governor, Andrew Bailey, said: “It is crucial that we... return inflation to its 2% target and provide the environment of price stability in which the UK economy can thrive. This is the best contribution monetary policy can make to the prosperity of the United Kingdom.” (Source adapted from: https://www.theguardian.com/politics/2023/jan/04/ sunak‐vows‐to‐be‐steady‐hand‐on‐tiller‐but‐are‐his‐pledges‐all‐sleight‐of‐hand and https://www.theguardian.com/business/2023/jul/10/ inflation‐bank‐of‐england‐boss‐andrew‐bailey‐speech) Evaluate the possible conflicts between macroeconomic objectives when seeking to control inflation.
Mark splitKnowledge 4Application 4Analysis 8Evaluation 9
TopicMacroeconomic objectives and policy
Examiner insight
- What to cover
- Show that tighter policy to cut inflation shifts AD left, so growth and employment fall. Add the Phillips curve trade-off, a stronger pound worsening the current account, and unequal effects on borrowers.
- Diagram
- Short run Phillips curve showing the inflation and unemployment trade-off, or AD/AS with AD shifting left; label both axes.
- Evaluation
- Weigh the fact that cost push inflation worsens the trade-off, that low inflation supports long run growth and investment, and that the long run Phillips curve may be vertical. Judge.
- Watch out
- Listing the macroeconomic objectives without showing the mechanism that makes controlling inflation conflict with them.
Q8
In Sudan, public services such as healthcare are struggling to keep running. Power outages, blocking of internet access, and fuel shortages, will mean hospitals struggle to operate. Many of the hospitals in the capital city, Khartoum, have reported shortages of doctors, blood, transfusion equipment, medical supplies, and other skilled workers and commodities. (Source adapted from: https://www.thelancet.com/journals/lancet/article/ PIIS0140‐6736(23)00858‐9/fulltext) Evaluate the possible factors influencing the level of economic development in a developing country of your choice.
Mark splitKnowledge 4Application 4Analysis 8Evaluation 9
TopicEmerging and developing economies
Examiner insight
- What to cover
- Cover factors such as conflict and weak institutions, a savings gap and low investment, poor health and education, failing infrastructure, commodity dependence and debt. Apply them to a named country such as Sudan.
- Diagram
- Production possibility frontier shifting inward, or LRAS shifting left, to show productive capacity lost through conflict and infrastructure failure.
- Evaluation
- Weigh which factor is the binding constraint, and whether development means more than GDP by using HDI. Consider time period and the direction of causation. Conclude.
- Watch out
- Writing only about GDP growth and never addressing development indicators such as health, education and living standards.
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.