Section A
Q11 mark
1 Which one of the following aggregate demand and aggregate supply diagrams below illustrates an economy experiencing potential economic growth? A B Average LRAS Average price SRAS price level level PL2 PL2 PL1 PL1 AD2 AD2 AD1 AD1 0 Y1 Real output 0 Y1 Y2 Real output C D Average LRAS1 LRAS2 Average SRAS2 price price level SRAS1 level PL2 PL1 PL1 PL2 AD AD 0 Y1 Y2 Real output 0 Y2 Y1 Real output
Show the answer
The answer is C. Open the question paper to read the options.
TopicAggregate supply
Q21 mark
Which one of the following was the most likely effect of the changes shown in South Korea?
- AThe real incomes of households were likely to fall
- BCost-push inflation was likely to occur
- CConsumer prices were likely to fall
- DIts central bank was likely to raise the base rate of interest
Show the answer
The answer is C.
TopicMacroeconomic objectives and policy conflicts
Q31 mark
3 Which one of the following is most likely to cause a deterioration in a developed country's trade balance?
- AAn increase in the non-price competitiveness of the country's products
- BA fall in the real incomes of the country's citizens
- CA fall in the non-price competitiveness of a major trading partner's products
- DAn increase in the country's exchange rate against other currencies
Show the answer
The answer is D.
TopicMeasures of economic performance
Q41 mark
4 The chart shows Portugal's household savings ratio by quarter, Q1 2014-Q2 2019. 8.5 7.5 % 6.5 5.5 2014 2015 2016 2017 2018 2019 According to the long-term trend in the chart, ceteris paribus, which one of the following is most likely to have risen in Portugal?
- AConsumption
- BExports
- CUnemployment
- DWithdrawals
Show the answer
The answer is A.
TopicNational income, the circular flow and the multiplier
Q51 mark
5 Which one of the following statements about the Keynesian long-run aggregate supply (LRAS) curve is correct?
- AThe curve is perfectly inelastic at the full employment level of real output
- BThe curve is relatively elastic at the full employment level of real output
- CThe curve is relatively inelastic at high levels of spare capacity
- DThe curve is perfectly inelastic at high levels of spare capacity
Show the answer
The answer is A.
TopicAggregate supply
Q61 mark
Which one of the following can be concluded from the data?
- AThe economy has a government budget surplus
- BThere is a net withdrawal out of the economy
- CThe economy has a balance of trade surplus
- DThere is a net injection into the economy
Show the answer
The answer is B.
TopicNational income, the circular flow and the multiplier
Section B
Q7Explain4 marks
With reference to the chart, explain the difference between positive economic growth rates and negative economic growth rates.
Mark splitKnowledge 2Application 2
TopicEconomic growth
Q8Draw4 marks
Draw a LRAS and AD diagram to show the possible impact of this change in productivity on the average price level and real output level in Brazil.
Mark splitKnowledge 1Application 3
TopicAggregate demand
Q9Calculate4 marks
Using 2018 as the base year, calculate an index number for personal disposable income in 2014. Show your workings.
Mark splitKnowledge 1Application 3
TopicMeasures of economic performance
Q10Explain4 marks
Explain one role of a central bank.
Mark splitKnowledge 1Application 1Analysis 2
TopicFiscal, monetary and supply-side policy
Q11Explain4 marks
With reference to the chart, explain one reason why it might be difficult to measure the size of an economy's output gap.
Mark splitKnowledge 1Application 1Analysis 2
TopicEconomic growth
Section C
Case study
The economy of the Philippines
Extracts: Figure 1: Standard of living indicators for the Philippine economy, selected years · Figure 1: data from The World Bank · Extract A: adapted from: 'Philippines: High impact projects and critical reforms key to regaining higher growth', World
In the extracts: PPP Purchasing Power Parity, Doing Business Law', Philippines, GDP, GNI, Bank, Ease, Economic, Standard, Supply-side
Q12(a)Define2 marks
Define the term 'Purchasing Power Parity (PPP)', (Figure 1).
Mark splitKnowledge 2
TopicMeasures of economic performance
Q12(b)Explain4 marks
With reference to Figure 1, explain the difference between GDP per capita and GNI per capita.
Mark splitKnowledge 2Application 2
TopicMeasures of economic performance
Q12(c)Analyse6 marks
With reference to Figure 1, analyse two limitations of using GNI per capita PPP data to compare living standards in the Philippines between 2000 and 2018.
Mark splitKnowledge 2Application 2Analysis 2
TopicMeasures of economic performance
Q12(d)Examine8 marks
With reference to Extract A, examine two reasons why the Philippine economy was forecast to grow from 2019 to 2021.
Mark splitKnowledge 2Application 2Analysis 2Evaluation 2
TopicMeasures of economic performance
Q12(e)Discuss14 marks
Discuss how supply-side policies might 'help the Philippines to achieve economic growth' (Extract A, lines 12-13). Illustrate your answer with an appropriate diagram(s).
Mark splitEvaluation 6
TopicMeasures of economic performance
Section D
Q13OptionalEvaluate20 marks
Evaluate the view that achieving a government's macroeconomic objectives is likely to result in an increase in national happiness.
Mark splitEvaluation 8
TopicMacroeconomic objectives and policy conflicts
Q14OptionalEvaluate20 marks
Evaluate the view that falling global oil prices will always benefit a country's macroeconomy.
Mark splitEvaluation 8
TopicAggregate demand
