WJEC · Macroeconomics · Economic growth and the economic cycle
WJEC Economics past paper questions: Economic growth and the economic cycle
Every WJEC question on Economic growth and the economic cycle from 2016 to 2025: 6 essays, 4 data response questions and 1 short answer question. It covers Macroeconomic objectives and policy, Market failure, Measuring economic performance and The economic problem and resource allocation. Each question links to its paper, mark scheme and examiner report.
SubtopicsMacroeconomic objectives and policy 1Market failure 1Measuring economic performance 1The economic problem and resource allocation 1
Essay questions on economic growth and the economic cycle
Assess the likely impact of UK economic growth on the Welsh economy.
Examiner insight
- What to cover
- Take the standard effects of UK growth, then make each one Welsh. For example, growth elsewhere in the UK raising tourism in towns such as Porthcawl, demand for Welsh exports and inputs, migration and wages, and public spending through the block grant.
- Watch out
- Linking to Wales is the difference between Band 2 and Band 3. Generic, well written theory was capped at Band 2. The specification requires a Welsh context and it can appear in any unit.
Using a production possibility frontier (PPF) diagram, explain the possible causes of actual growth and potential growth in an economy.
Examiner insight
- What to cover
- Cover both types of growth. Actual growth is a move from inside the PPF towards it, caused by rising demand and better use of existing resources. Potential growth is an outward shift, caused by more or better factors of production. Pick a small number of causes and analyse them.
- Watch out
- A noticeable number covered only one of the two types, and others used the wrong diagram. Long lists of causes earn less than two or three developed ones.
Evaluate the extent to which economic growth always leads to conflicts with other policy objectives.
Examiner insight
- What to cover
- Set out the conflicts (demand pull inflation, a widening trade deficit, environmental damage, inequality) and the non conflicts (falling unemployment, higher tax revenue funding public services).
- Watch out
- Many candidates assumed both sides of the argument would earn AO4 marks. It does not. Also stay on growth rather than drifting into how inflation could be reduced.
"Recession can sometimes generate benefits for an economy." Discuss the extent to which governments should pursue contractionary fiscal policies.
Examiner insight
- What to cover
- Keep contractionary fiscal policy at the centre. Analyse what higher tax and lower spending do to AD, the deficit, inflation and confidence, and discuss the possible benefits of the resulting slowdown, such as lower inflation, a smaller current account deficit and the shake out of inefficient firms.
- Watch out
- A good proportion wrote about the benefits of a recession without linking to contractionary fiscal policy, and others quietly switched to expansionary policy. Answer the question set.
Explain, using a diagram, how increased factor market flexibility can lead to economic growth.
Examiner insight
- What to cover
- Take factor markets broadly, not just labour: land, capital and enterprise as well. Flexibility means resources move quickly to their most productive use, through mobility, flexible contracts, easier planning rules and access to finance. Show that raising productive capacity.
- Watch out
- Flexibility does not mean more workers. That was the most common error. Cover factor markets, not the labour market alone.
"Economic growth is always beneficial for an economy." Discuss.
Examiner insight
- What to cover
- Set out the benefits of growth (higher incomes, employment, tax revenue and public services) and the costs (inflationary pressure, inequality, environmental damage, resource depletion, current account effects).
- Watch out
- Answers that stayed with simple AD and AS, demand pull inflation and falling unemployment could not reach the top bands. Attack the word always.
Data response questions on economic growth and the economic cycle
Using an AD/AS diagram, explain how contractionary fiscal policy can lead to a fall in economic growth.
To what extent do you agree with the statement: low economic growth and consumer spending are the biggest factors affecting wages in the UK.
Examiner insight
- What to cover
- Define economic growth properly, then analyse the wage effect: growth raises derived demand for labour and cuts slack in the labour market, so wages rise. Do the same for consumer spending, then weigh other factors such as productivity, migration, union power, the minimum wage and inflation.
- Watch out
- Very few reached full marks. Two causes: shaky command of the term economic growth, and no real evaluation for the four AO4 marks.
Case study: Education, Education, Education or Inflation, Inflation, Inflation
To what extent do you agree with the MPC's assessment in early 2015 that "it can simultaneously return inflation to its target level and support economic growth without any fear of conflict between the policy objectives"? (Extract A)
Examiner insight
- What to cover
- Use Extract A, the Bank of England letter. Explain the standard conflict between low inflation and growth, then explain why it did not apply in early 2015: AD was still weak and the low inflation was cost push, driven by falling oil and food prices, not demand.
- Watch out
- Most candidates linked low interest rates to inflation but never returned to Extract A. Without the cost push point the nuance of the Bank's decision is missed.
Case study: WALES BOTTOM OF THE UK'S WEALTH TABLE
Discuss whether a policy of borrowing heavily to invest in capital projects is always likely to benefit employment levels and economic growth.
Examiner insight
- What to cover
- No application marks, so argue in theory. Pick two macroeconomic objectives and show how borrowing to fund capital projects helps and hinders each: the multiplier and growth, jobs in construction, crowding out, debt interest, inflation.
- Watch out
- Full marks required two separate objectives, each with both sides. The best answers took the objectives one at a time.
Short answer questions on economic growth and the economic cycle
Outline, using an AD/AS diagram, how a stronger yen could have contributed to falling economic growth rates in Japan.
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.