WJEC · Macroeconomics · Aggregate demand

WJEC Economics past paper questions: Aggregate demand

Every WJEC question on Aggregate demand from 2016 to 2025: 19 data response questions, 4 short answer questions and 10 multiple choice questions. It covers International trade and exchange rates, Macroeconomic objectives and policy, National income and the circular flow, Market failure and Demand, supply and elasticity. Each question links to its paper, mark scheme and examiner report.

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SubtopicsInternational trade and exchange rates 12Macroeconomic objectives and policy 4National income and the circular flow 3Market failure 3Demand, supply and elasticity 3Aggregate supply 2The labour market 2The economic problem and resource allocation 1Public finances and the role of the state 1Government intervention in markets 1Economic growth and the economic cycle 1Business growth and objectives 1

Data response questions on aggregate demand

AS Unit 2, June 2024, Q2(e)Evaluate12 marks

Case study: A NEW COAL MINE IN THE UK

Evaluate the view that the new coal mine will 'add £1.5 billion to UK GDP... over the first ten years of the mine's operation' (lines 27 and 28). Illustrate your answer with an aggregate demand and aggregate supply (AD/AS) diagram.

Examiner insight

What to cover
Give more than two reasons why GDP could rise: the investment itself, employment and incomes, the multiplier, lower steel costs, import substitution and tax revenue. Use the data figures.
Watch out
Micro labels on a macro diagram were the commonest diagram error, and a lack of evaluation was the commonest overall weakness.
Question paper p.5Mark scheme p.18Examiner report p.11Open in the toolDraw it: AD/AS diagram
AS Unit 2, June 2022, Q2(c)10 marks

Case study: INTERESTING INTEREST RATES

To what extent will increasing the bank rate affect the levels of consumption and investment in the UK?

Examiner insight

What to cover
Go past the first step. A higher bank rate raises the cost of borrowing and the reward for saving, so consumption and investment fall. For Band 3 add a second link: lower house prices and the negative wealth effect, or weaker consumption cutting expected returns and business confidence, so investment falls further.
Watch out
The question says in the UK, so use the data on the extra mortgage cost or the extra return on saving. Purely theoretical answers lost the application marks. Hot money inflows are portfolio investment, not FDI. And do not turn this into whether bank rate is the most important factor, which was not asked.
Question paper p.5Mark scheme p.14Examiner report p.9Open in the toolPractise the AD/AS diagram
AS Unit 2, June 2019, Q1(d)10 marks

Case study: A BRIDGE TOO FAR!

Consider whether the use of road tolls or investment into public transport would be more effective at reducing traffic congestion in the UK.

Examiner insight

What to cover
The command word consider requires evaluation. Take road tolls and investment in public transport in turn, showing how each cuts congestion: tolls internalise the external cost and price drivers off the road, better public transport shifts demand to a substitute.
Watch out
Answers must consider the pros and cons of both policies. AO2 marks came from real UK thinking, such as commuting patterns or the quality of public transport, even though the data gave little to work with.
Question paper p.3Mark scheme p.7Examiner report p.6Open in the toolPractise the negative externality diagram
AS Unit 2, June 2019, Q1(e)12 marks

Case study: A BRIDGE TOO FAR!

(i) Using the data, calculate the typical cost of a motorist driving from Bristol to Cardiff in 2017. Give your answer to 2 decimal places. (ii) To what extent will the removal of tolls on the Severn Crossings affect the level of consumption and private investment in Wales?

Examiner insight

What to cover
Part (i) is a calculation to two decimal places, so show the workings. Part (ii) must separate consumption from private investment. Lower travel costs raise disposable income and commuting, which lifts consumption, and improve access to markets and labour, which can attract investment into south Wales.
Watch out
Too many candidates lumped consumption and investment together. Treat them as two separate flows and evaluate the effect on each.
Question paper p.3Mark scheme p.9Examiner report p.6Open in the toolPractise the AD/AS diagram
AS Unit 2, June 2018, Q2(c)10 marks

Case study: HAS BRAZIL'S BUBBLE BURST?

To what extent can the use of supply-side policies increase the level of investment in Brazil?

Examiner insight

What to cover
Say clearly what a supply side policy is and what it is designed to do, then apply specific ones to investment in Brazil using the data hooks: infrastructure, education and skills, tax incentives, deregulation, privatisation.
Watch out
Supply side policies are a perennial weak spot. Many candidates could not articulate what an SSP is before trying to apply it. Get the definition and mechanism right first.
Question paper p.5Mark scheme p.14Examiner report p.7Open in the toolPractise the AD/AS diagram
AS Unit 2, June 2018, Q2(d)Discuss10 marks

Case study: HAS BRAZIL'S BUBBLE BURST?

Discuss whether the policies of increased taxes on petrol and lowering state pensions are likely to be beneficial for the Brazilian economy.

Examiner insight

What to cover
Take the two policies separately. A petrol tax raises revenue and cuts emissions but raises transport costs and prices. Lower state pensions cut the deficit but reduce the incomes and spending of pensioners. Link each to a named macro objective.
Watch out
Be careful with real values. Examiners said repeatedly that candidates confuse billions and millions and have no feel for the size of a GDP or a budget.
Question paper p.5Mark scheme p.16Examiner report p.7Open in the tool
AS Unit 1, June 2017, Q17(b)8 marks
Using an appropriate diagram, discuss the extent to which public health campaigns alone can solve the market failure problem associated with alcohol consumption.

Examiner insight

What to cover
Show alcohol as a demerit good with external costs, then explain how an awareness campaign works: better information shifts demand left towards the social optimum. Use the campaign described in the stem, not policies in general.
Watch out
The single biggest mark loser was evaluating other policies instead of the awareness campaign named in the question. Those answers could not reach the top AO4 band.
Question paper p.13Mark scheme p.7Examiner report p.4Open in the toolDraw it: negative externality diagram
AS Unit 1, June 2017, Q19Discuss8 marks
Discuss how the introduction of the National Living Wage is likely to affect investment within the Welsh economy.

Examiner insight

What to cover
Take the National Living Wage as a cost shock to Welsh firms and trace two or three routes to investment: lower retained profit, substitution of capital for labour, higher consumer spending raising expected demand and the accelerator.
Watch out
Most candidates made one or two points in context but did not develop them. Depth, not breadth, is what reaches the top AO3 and AO4 bands here.
Question paper p.17Mark schemeExaminer report p.5Open in the tool
AS Unit 2, June 2016, Q2(e)Evaluate10 marks

Case study: WALES BOTTOM OF THE UK'S WEALTH TABLE

Evaluate the Welsh government's claim that its long-term economic plan has been a success.

Examiner insight

What to cover
Take the positive Welsh data and link it to the specific long term plan set out at lines 19 to 21. Explain the mechanism by which the plan would produce that outcome, rather than just noting that the numbers improved.
Watch out
Marks at the top end depended entirely on explaining the link between the plan and the data. Listing good figures was not enough.
Question paper p.8Mark scheme p.15Examiner report p.7Open in the tool

Short answer questions on aggregate demand

A-level Unit 3, June 2019, Q810 marks
Using a cost and revenue diagram, evaluate the likely impact of ICT investment on a small firm's costs. (lines 10-14)

Examiner insight

What to cover
Answer about costs, not about the firm in general. ICT investment raises fixed costs in the short run but lowers variable costs per unit, improves productivity and can bring the firm down its average cost curve or shift AC down. Use the case study lines 10 to 14.
Watch out
Many candidates discussed the impact of ICT investment on a small firm rather than on its costs, and some had clearly not read the case study.
Question paper p.14Mark scheme p.11Examiner report p.11Open in the toolDraw it: cost curves diagram
A-level Unit 3, June 2019, Q9Evaluate10 marks
Evaluate the likely impact of ICT investment on the Welsh labour market.

Examiner insight

What to cover
Keep to the labour market. ICT raises labour productivity and the demand for skilled workers while substituting for routine jobs, so wages and employment move differently across skill groups in Wales. Use the case study data.
Watch out
As in Q8, many wrote about the Welsh economy instead of the Welsh labour market. The data offered plenty to apply and AO2 marks are available on every question on this paper.
Question paper p.16Mark scheme p.13Examiner report p.11Open in the tool

Multiple choice questions

  1. AS Unit 1, June 2025, Q8

    In the circular flow of income model, what are the three injections?

  2. AS Unit 1, June 2025, Q9

    Consider the following statements. Statement A Government spending on routine maintenance and day-to-day operations is called capital expenditure. Statement B Indirect taxes are taxes levied on individuals or firms, and the burden cannot…

  3. AS Unit 1, June 2022, Q8

    The following data relate to the country of Comena. $ bn Government expenditure on goods and services 6.2 Imports of goods and services 14.5 Investment expenditure 13.3 Exports of goods and services 14.7 Consumer expenditure 26.3 Wages and…

  4. AS Unit 1, June 2018, Q3

    Recent research into the banking system in Ghana found that many poor people, whose needs for basic survival are great and who are less able to make long-term plans, tend not to save any excess earnings and instead take out more loans that…

  5. AS Unit 1, June 2018, Q4

    A government invests £240m into building a new hospital. That figure is matched by private sector investment in other infrastructure projects. Consumption, on the other hand, falls by £135m and the trade balance worsens by £60m. Assuming…

  6. AS Unit 1, June 2017, Q2

    Which of the following is a withdrawal from the circular flow of income of an economy?

  7. AS Unit 1, June 2017, Q3

    The largest component part of aggregate demand in the UK is:

  8. AS Unit 1, June 2017, Q6

    Which of the following is an example of investment in the economic sense?

  9. AS Unit 1, June 2017, Q7

    An increase in the level of investment in an economy will not lead to:

  10. AS Unit 1, June 2016, Q2

    In the circular flow of income model, GDP would be most likely to increase if there was:

Question text is quoted from the question papers, © WJEC CBAC Ltd, 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.