Edexcel A · Theme 2: The UK economy, performance and policies · 2.5 Economic growth
Edexcel A Economics past paper questions: Economic growth
Every Edexcel A question on Economic growth from 2017 to 2025: 9 essays, 9 data response questions, 4 short answer questions and 7 multiple choice questions. It covers Macroeconomic objectives and policy, Measures of economic performance, International economics and Aggregate demand. Each question links to its paper, mark scheme and examiner report.
SubtopicsMacroeconomic objectives and policy 8Measures of economic performance 4International economics 3Aggregate demand 1
Essay questions on economic growth
Case study: UK investment and productivity
Evaluate the fiscal policies the UK Government could use if it believes that ‘the UK economy is likely to experience another recession’ (Extract A, lines 27–28).
Examiner insight
- What to cover
- Use expansionary fiscal policy: cut income tax or VAT and raise spending on infrastructure and benefits. Show C and G rising, AD shifting right and the multiplier closing the output gap.
- Watch out
- The question fixes fiscal policy, so do not build the answer around interest rates or supply-side reform.
Case study: The German economy
Evaluate the microeconomic and macroeconomic factors which are likely to determine the rate of economic growth in Germany relative to other developed economies.
Examiner insight
- What to cover
- Cover both sides. Micro: investment in capital, innovation, labour market flexibility, the strength of the Mittelstand. Macro: export demand, the euro exchange rate, demographics, fiscal stance and productivity growth.
- Watch out
- Describing Germany's economy rather than explaining what determines its relative growth rate.
In 2018, the United States Government cut the corporation tax rate (tax on company profits) from 35% to 21%. Income tax rates for US citizens were also reduced: for example, the top rate of income tax was cut from 39.6% to 37%. (Source adapted from: https://www.nytimes.com/) Evaluate the likely impact of cutting tax rates as a policy to increase economic growth.
Examiner insight
- What to cover
- Show the demand side first: lower income tax raises disposable income and consumption, lower corporation tax raises retained profit and investment, with a multiplier effect. Then add supply side incentives to work and invest.
- Watch out
- Asserting that the Laffer curve proves tax cuts raise revenue, without saying this depends on the starting tax rate.
Case study: UK government budget and household consumption
Evaluate supply-side policies that could be used to increase the UK’s rate of economic growth.
Examiner insight
- What to cover
- Choose market-based and interventionist policies such as tax cuts, deregulation, infrastructure spending and training. Show each raising productivity and the quantity or quality of factors, shifting LRAS right.
- Watch out
- Demand-side policies do not answer this question; effects must work through LRAS and productivity.
Case study: UK inflation and economic growth
Evaluate the potential conflicts between the objective of economic growth and two other UK macroeconomic objectives.
Examiner insight
- What to cover
- Choose exactly two other objectives, such as low inflation and a current account balance. Show growth raising AD toward capacity, creating demand-pull inflation and higher import spending.
- Watch out
- Two other objectives must be covered and the conflict shown, not each objective described in turn.
The British pound fell by over 10% to a 30-year low against the US dollar after the UK voted to leave the European Union. To what extent will this depreciation impact on future economic growth in the UK?
Examiner insight
- What to cover
- Explain the chain: a weaker pound makes UK exports cheaper abroad and imports dearer, so net exports rise, AD shifts right and real GDP grows, with a multiplier effect on jobs and incomes.
- Watch out
- Assuming exports automatically rise without testing the Marshall Lerner condition or the import cost effect.
Case study: Copper prices, US dollars per tonne, 2007–2015
With reference to the information provided and your own knowledge, evaluate the microeconomic and macroeconomic effects of policies that could be used to stimulate economic growth and development in Chile.
Examiner insight
- What to cover
- Cover both sides as Paper 3 requires. Micro: education, infrastructure and diversification cut firms costs and change specific Chilean markets. Macro: AD and LRAS shift right, raising growth, employment and living standards.
- Watch out
- Answering only at macro level and losing the microeconomic half that the Paper 3 question demands.
Case study: UK economic recovery
Evaluate the benefits of economic growth to the UK given that ‘a number of concerns remain’ in the UK economy (Extract A, line 7).
Examiner insight
- What to cover
- Explain how growth raises real incomes, employment, profits and tax revenue, using the UK recovery in Extract A. Show AD or LRAS rising and the multiplier spreading the gain.
- Watch out
- Do not simply list benefits; the remaining UK concerns in Extract A must drive the judgement.
Case study: UK economic recovery
Evaluate the view that another recession is ‘inevitable’ in the UK (Extract A, line 24).
Examiner insight
- What to cover
- Define recession as two consecutive quarters of falling real GDP. Explain triggers from Extract A such as weak confidence, falling investment, external shocks and the business cycle lowering AD.
- Watch out
- Judge whether a recession is inevitable rather than just listing possible causes of one.
Data response questions on economic growth
With reference to Figure 1, explain the term ‘rate of economic growth’.
Case study: The UK Economy
Discuss supply-side policies the UK government could introduce to stimulate economic growth.
Examiner insight
- What to cover
- Choose market based policies such as tax cuts and deregulation, and interventionist ones such as education, training and infrastructure. Show each raising UK productivity and shifting LRAS right, so output grows without inflation.
- Watch out
- Offering demand side measures such as interest rate cuts and labelling them supply side policies.
Case study: UK monetary policy since the Global Financial Crisis of 2008
With reference to the information provided, explain two characteristics of a recession.
Examiner insight
- What to cover
- Give two developed characteristics using the data, such as two consecutive quarters of falling real GDP, rising cyclical unemployment, falling investment and confidence, or a negative output gap.
- Watch out
- The fall must be in real GDP, and the two characteristics must be genuinely different.
Case study: Trade and development in Africa
Discuss the impact of improved transport links between African countries on economic growth rates.
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.
- Watch out
- Assuming better roads automatically raise growth, without explaining the cost and market size mechanism.
Case study: UK investment and productivity
With reference to the information provided, discuss the likely impact of a recession on the UK economy.
Examiner insight
- What to cover
- Falling AD in a recession lowers real GDP, raises cyclical unemployment and cuts investment, while tax revenue falls and benefit spending rises. Use the figures provided.
- Watch out
- Not every effect is negative, so a one sided list of costs cannot reach the top level.
Case study: The German economy
Examine two likely effects of the forecast change in the rate of unemployment between 2019 to 2020, on firms in Germany. Refer to Figure 4 in your answer.
Examiner insight
- What to cover
- Give two effects and develop each. Rising unemployment cuts consumer incomes and so demand for firms' output, but it also widens the pool of available labour and eases wage pressure on costs.
- Watch out
- Writing about effects on workers or on the government. The question asks about effects on firms.
Case study: UK inflation and economic growth
With reference to the first paragraph of Extract A and Figure 1, explain how the change in the exchange rate of the pound has ‘contributed to rising inflation’ (Extract A, line 4).
Case study: UK inflation and economic growth
With reference to Extract A, explain two likely economic effects of the higher rate of UK inflation.
Examiner insight
- What to cover
- Give two developed effects using Extract A, such as falling real incomes cutting consumption, lost export competitiveness, or higher costs and uncertainty reducing investment.
- Watch out
- Two distinct effects are needed, each traced through a chain; one effect written twice scores half.
Case study: The Eurozone economy
Discuss ‘looser fiscal policy’ and ‘supply-side reforms’ (Extract A, lines 20 and 21) that may be used by governments of Eurozone countries to increase economic growth.
Examiner insight
- What to cover
- Explain looser fiscal policy raising AD through higher spending or tax cuts, with a multiplier effect. Then explain supply side reforms, such as labour market deregulation and training, shifting LRAS right and raising capacity.
- Watch out
- Treating supply side reforms as extra government spending, so the LRAS curve is never shifted.
Short answer questions on economic growth
With reference to the information above, explain one possible effect of the increase in the rate of unemployment on the UK government budget.
With reference to the chart, explain one likely benefit of economic growth to firms.
Define the term ‘recession’.
Explain one characteristic of a recession.
Multiple choice questions
- AS Paper 2, June 2025, Q1(a)
Which one of the following best describes this cause of unemployment?
- A-level Paper 2, June 2024, Q4(a)
Which one point on the trade cycle diagram above illustrates a boom?
- A-level Paper 2, June 2024, Q5(b)
Which one of the following is likely to give the US a comparative advantage in steel production? An increase in:
- AS Paper 2, June 2023, Q5(a)
Which one of the following can be deduced from the chart?
- A-level Paper 2, June 2022, Q3(b)
Which one of the following would be most likely to result from lower base interest rates?
- AS Paper 2, June 2022, Q1(a)
Which one of the following is the most likely effect of this quantitative easing?
- A-level Paper 2, June 2018, Q1(a)
Which one of the following is most likely to decrease as a result of CETA?
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.