Unit 2: Macroeconomic performance and policy · WEC12/01

Edexcel International AS Unit 2, January 2025

All 12 written questions and 6 multiple choice questions from Edexcel International AS Unit 2 (January 2025), Macroeconomic performance and policy. Case studies: The Japanese economy. Each question shows its marks and topic, and opens the question paper and mark scheme at the right page.

Question paper Mark scheme Examiner report

Section A

Q11 mark

1 Which one of the following statements about the classical long-run aggregate supply (LRAS) curve is correct?

AIt is perfectly inelastic when there is a high level of spare capacity
BIt is relatively elastic at the full employment level of real output
CIt is relatively inelastic at high levels of spare capacity
DIt is perfectly inelastic at the full employment level of real output

Show the answer

The answer is D.

TopicAggregate supply

Question paper p.2 Mark scheme p.3 Examiner report p.6 Open in the tool

Q21 mark

This policy is an example of which one of the following?

AFree market supply-side policy
BInterventionist supply-side policy
CReflationary fiscal policy
DDeflationary fiscal policy

Show the answer

The answer is A.

TopicFiscal, monetary and supply-side policy

Question paper p.2 Mark scheme p.3 Examiner report p.6 Open in the tool

Q31 mark

Which one of the following is the percentage change in the unemployment rate for Turkey between January 2022 and January 2023?

A-1.4
B-12.5
C-14.3
D-21.0

Show the answer

The answer is B.

TopicMeasures of economic performance

Question paper p.2 Mark scheme p.3 Examiner report p.6 Open in the tool

Q41 mark

With reference to the diagram, which one of the following is most likely to be associated with a movement from point Y to point Z?

AA decrease in government tax revenue
BAn increase in profits for firms
CAn increase in the rate of unemployment
DA decrease in business confidence

Show the answer

The answer is B.

TopicEconomic growth

Question paper p.3 Mark scheme p.3 Examiner report p.6 Open in the tool Practise the economic cycle diagram

Q51 mark

Which one of the following is most likely to have caused this increase in investment?

AAn increase in the availability of credit
BAn increase in the rate of tax on company profits
CAn increase in the base rate of interest
DAn increase in commodity prices

Show the answer

The answer is A.

TopicAggregate demand

Question paper p.3 Mark scheme p.3 Examiner report p.6 Open in the tool

Q61 mark

Which one of the following can be deduced from the chart?

AThe rate of inflation was highest in July 2023
BThe average price level was highest in November 2022
CThere was deflation between April 2020 and July 2020
DThere was disinflation between June 2021 and June 2022

Show the answer

The answer is C.

TopicMacroeconomic objectives and policy conflicts

Question paper p.4 Mark scheme p.4 Examiner report p.6 Open in the tool

Section B

Q7Explain4 marks

With reference to this information, explain one cost of economic growth.

Mark splitKnowledge 1Application 1Analysis 2

TopicEconomic growth

Question paper p.6 Mark scheme p.4 Examiner report p.7 Open in the tool

Q8Draw4 marks

Draw a SRAS and AD diagram to show the effect of this increase in the price of coal on the price level and real output for Japan.

Mark splitKnowledge 1Application 3

TopicAggregate demand

Question paper p.7 Mark scheme p.5 Examiner report p.7 Open in the tool Draw it: AD/AS diagram

Q9Calculate4 marks

With reference to the table, calculate the value of the multiplier for this economy. Show your workings.

Mark splitKnowledge 1Application 3

TopicNational income, the circular flow and the multiplier

Question paper p.8 Mark scheme p.6 Examiner report p.7 Open in the tool

Q10Explain4 marks

With reference to the chart, explain the term 'quantitative easing'.

Mark splitKnowledge 2Application 2

TopicFiscal, monetary and supply-side policy

Question paper p.9 Mark scheme p.7 Examiner report p.7 Open in the tool

Q11Explain4 marks

With reference to Kuwait, explain one likely impact of lower real incomes on subjective happiness.

Mark splitKnowledge 1Application 1Analysis 2

TopicAggregate demand

Question paper p.10 Mark scheme p.8 Examiner report p.7 Open in the tool

Section C

Case study

The Japanese economy

Extracts: Figure 1: Base interest rate, January 2004 to December 2023 · Extract A: Economic growth · Extract B: Monetary policy · Figure 1: adapted from https://tradingeconomics.com/japan/interest-rate · Extract A: adapted from FT, https://www.ft.com/content/7b384d9c-ae10-4baf-bc85-34ba8ff5b15c · Extract B: adapted from FT, https://www.ft.com/content/9d27719e-2802-413a-b6b7-ba8644de6d8f; https://www.ft.com/

In the extracts: Gross Domestic Product, Japan's, GDP, BoJ's, Japanese, They, Bank, Base, China, Economic

Q12(a)Define2 marks

Define the term 'recession'.

Mark splitKnowledge 2

TopicMeasures of economic performance

Question paper p.12 Mark scheme p.9 Examiner report p.8 Open in the tool

Q12(b)Explain4 marks

With reference to the third paragraph of Extract A, explain the term 'exchange rate'.

Mark splitKnowledge 2Application 2

TopicMeasures of economic performance

Question paper p.12 Mark scheme p.9 Examiner report p.8 Open in the tool

Q12(c)Analyse6 marks

Analyse one likely effect of the 'increase in the number of overseas visitors' (Extract A, lines 8 and 9) on Japan's circular flow of income. Illustrate your answer with a circular flow diagram.

Mark splitKnowledge 2Application 2Analysis 2

TopicMeasures of economic performance

Question paper p.12 Mark scheme p.10 Examiner report p.8 Open in the tool

Q12(d)Examine8 marks

With reference to Extract A, examine the likely impact on Japan's real output of the fall in domestic consumption.

Mark splitKnowledge 2Application 2Analysis 2Evaluation 2

TopicMeasures of economic performance

Question paper p.12 Mark scheme p.11 Examiner report p.8 Open in the tool Practise the AD/AS diagram

Q12(e)Discuss14 marks

With reference to the information provided and your own knowledge, discuss factors that the BoJ might consider when setting the base interest rate.

Mark splitEvaluation 6

TopicFiscal, monetary and supply-side policy

Question paper p.12 Mark scheme p.12 Examiner report p.9 Open in the tool Practise the AD/AS diagram

Section D

Q13OptionalEvaluate20 marks

Evaluate the likely benefits of an increase in government expenditure on infrastructure. Refer to a country of your choice in your answer.

Mark splitEvaluation 8

Question paper p.22 Mark scheme p.14 Examiner report p.4 Open in the tool

Q14OptionalEvaluate20 marks

Evaluate the likely benefits of an increase in the productivity rate. Refer to a country of your choice in your answer.

Mark splitEvaluation 8

Question paper p.22 Mark scheme p.16 Examiner report p.10 Open in the tool

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.

Section A

Section B

Section C

The Japanese economy

Section D

Other years of Edexcel International AS Unit 2

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