WJEC · Macroeconomics · Measuring economic performance
WJEC Economics past paper questions: Measuring economic performance
Every WJEC question on Measuring economic performance from 2016 to 2025: 14 essays, 24 data response questions, 7 short answer questions and 9 multiple choice questions. It covers Macroeconomic objectives and policy, Economic growth and the economic cycle, Demand, supply and elasticity, International trade and exchange rates and The labour market. Each question links to its paper, mark scheme and examiner report.
SubtopicsMacroeconomic objectives and policy 8Economic growth and the economic cycle 5Demand, supply and elasticity 4International trade and exchange rates 4The labour market 3Aggregate demand 3Government intervention in markets 2Market structures 2Public finances and the role of the state 1The financial sector 1Growth and development 1
Essay questions on measuring economic performance
To what extent is inflation more harmful than deflation for an economy?
Examiner insight
- What to cover
- Set out the costs of inflation (erosion of real income and savings, uncertainty, loss of competitiveness, menu costs) and the costs of deflation (delayed spending, a downward spiral, the rising real value of debt, ineffective monetary policy at the zero bound), each linked to specific stakeholders.
- Watch out
- Treating the costs of inflation and then the costs of deflation as two separate blocks blocked top band AO4, because the question is comparative. An imbalanced answer was capped at Band 2.
Explain the possible supply-side causes of unemployment.
Examiner insight
- What to cover
- Cover supply side causes only: structural change and occupational or geographical immobility, skills mismatch, frictional and search unemployment, benefit replacement rates and the unemployment trap, and real wage or minimum wage effects. Link each cause to why the person cannot find work.
- Watch out
- Do not drift into demand side causes. A common error was naming the national minimum wage and then analysing it from the demand for labour side. Every cause must be tied to why it makes finding a job harder, or the AO3 marks go.
Assess the policies that could be used to tackle deflation. Use relevant diagrams in your answer.
Examiner insight
- What to cover
- Deflation is a falling price level, not slowing inflation. Assess the policies that raise the price level: expansionary monetary policy including lower rates, QE and forward guidance, expansionary fiscal policy, and exchange rate depreciation.
- Watch out
- Saying a tax cut worsens the fiscal deficit is credited as AO4 but is weak, because it does not say why the policy may fail to end deflation. And do not confuse deflation with disinflation.
Explain the ways in which living standards can be measured in economies at different stages of development.
Examiner insight
- What to cover
- Describe the measures (GDP or GNI per capita at PPP, HDI, and wider indicators such as literacy, life expectancy, the Multidimensional Poverty Index), then explain how appropriate each one is for economies at different stages of development.
- Watch out
- Saying that LEDCs score near 0 and MEDCs near 1 on the HDI is AO1 only. The AO3 marks come from relevance, for example why repatriation of profits by multinationals makes national income a poor guide to living standards in an LEDC. Link measures to countries you have studied.
Explain the problems that might arise when measuring the rate of unemployment in an economy.
Examiner insight
- What to cover
- Cover problems with both measures, the Labour Force Survey and the Claimant Count. Survey sampling error and response rates, the definition of actively seeking work, people outside the benefit rules, hidden unemployment and underemployment.
- Watch out
- For the top AO3 band, every problem must be tied back to whether the recorded rate is too high or too low. Many answers stopped at naming the problem. Be careful not to mix up the economically inactive with the unemployed.
Discuss the possible causes of unemployment in Wales.
Examiner insight
- What to cover
- Take the types of unemployment and attach each to Wales: structural in the former coal and steel areas, cyclical from the covid recession, seasonal in the tourist towns, frictional and regional immobility.
- Watch out
- As in Q3b, generic theory without Welsh examples was limited to Band 2 no matter how well written.
Explain the difference between GDP and GNP, and the significance of purchasing power parity adjustments for measuring living standards.
Examiner insight
- What to cover
- Define GDP as output within a country's borders and GNP as GDP plus net factor income from abroad, then explain the difference with examples: MEDCs often have GNP above GDP because their firms own assets overseas, while LEDCs often have GNP below GDP because foreign owned firms repatriate profits. Then explain PPP adjustment and why it matters for living standards.
- Watch out
- Very few candidates earned AO3 marks because they defined the two terms but never explained the difference in the MEDC and LEDC cases. PPP is best explained with contrasting price levels, for example Norway against India.
Explain how inflation is calculated using a weighted price index.
Examiner insight
- What to cover
- Take the whole process: the Living Costs and Food Survey or Family Expenditure Survey identifies spending patterns, a representative basket is built, prices are collected each month, each item is weighted by its share of spending, and the weighted prices are compared with the base year to give the index.
- Watch out
- Naming CPI and RPI and defining inflation is AO1 only. The AO3 marks come from explaining how the data becomes a weighted index, ideally with numbers.
Discuss the view that inflation is always costly and never beneficial.
Examiner insight
- What to cover
- Give the costs of inflation (erosion of real incomes and savings, menu and shoe leather costs, uncertainty for investment, loss of competitiveness) and the benefits (erosion of real debt, a buffer against deflation, an easier real wage adjustment).
- Watch out
- Do not drift into how contractionary monetary policy would reduce inflation, which is a different question. And do not claim inflation causes an appreciation. Higher domestic prices cut demand for exports, which tends to cause a depreciation.
Explain, using an AD/AS diagram, how quantitative easing should lead to an increase in both economic growth and inflation rates.
Examiner insight
- What to cover
- Get the mechanism exactly right. The central bank, not the government, buys government and corporate bonds from financial institutions. That injects liquidity, raises bond prices and so lowers yields and interest rates, lifts asset prices and wealth, and encourages lending and spending, so AD rises.
- Watch out
- Weak answers said the government buys the bonds, or jumped from more money supply straight to higher AD. QE works in the domestic money market: it does not automatically put more currency on the foreign exchange market, so do not claim an automatic depreciation. Any depreciation comes indirectly through lower rates and weaker capital inflows.
Evaluate the view that deflation is always undesirable for an economy.
Examiner insight
- What to cover
- Three strong lines: deflation makes households and firms delay spending, which creates a downward spiral in growth and prices; deflation raises the real value of debt; and falling prices can make exports more competitive.
- Watch out
- Deflation is a falling price level, not a recession. Candidates who confused the two scored very few marks. The difference between a mid and a top answer was the depth of each point and the terminology, not the number of points.
Discuss the extent to which governments in LEDCs should use protectionist policies to increase living standards.
Examiner insight
- What to cover
- Use several protectionist tools, not just tariffs: quotas, exchange rate manipulation, subsidies and non tariff barriers such as bureaucracy. Apply each to LEDC conditions, including infant industries, primary product dependency and the need for imported food and medicine.
- Watch out
- Answers that only analysed a tariff diagram, with little connection to living standards, scored under 10 out of 20. Do not assert that LEDC governments are corrupt: examiners found the claim unjustified and irrelevant, and weaker institutions are not the same as deliberate corruption.
Using an appropriate diagram, explain why Keynesian economists believe that government intervention is often essential for decreasing cyclical unemployment.
Examiner insight
- What to cover
- The question is why intervention is essential, not just how. Explain the Keynesian view that the economy is not self correcting: sticky wages from contracts, unions and minimum wages mean SRAS does not shift back, so a negative output gap persists and only a boost to AD closes it.
- Watch out
- Cyclical unemployment is caused by a lack of demand. Do not write about seasonal or structural unemployment. Link sticky wages to the failure to self correct, otherwise the knowledge earns nothing.
Assess the extent to which a fall in unemployment is always desirable.
Examiner insight
- What to cover
- Give the benefits of falling unemployment (output, incomes, tax revenue, lower benefit spending, social effects) and the costs (wage and demand pull inflationary pressure, skill shortages, a possible current account effect through higher imports).
- Watch out
- Do not confuse a budget deficit with a current account deficit, and do not assume higher tax revenue automatically means higher government spending. Both errors appeared across the paper.
Data response questions on measuring economic performance
With reference to the data, discuss the extent to which the changes to the UK's base interest rate have been effective in controlling the UK's inflation rate over the period shown.
Using the data in Figure 2, calculate a price index for Germany in March 2023, taking March 2022 as the base period. You are advised to show your working.
Assess whether Germany is likely to experience a wage-price spiral.
Examiner insight
- What to cover
- Define the wage price spiral: higher prices lead to wage demands, higher wage costs raise prices again. Test it against the German data on inflation, wage settlements, union power and expectations, drawing on more than one figure.
- Watch out
- This question is reversible, so a strong one sided answer can still reach Band 2 for AO4. But a two sided answer with a weighted judgement is what reaches the top band.
Describe what happened to the average price level in the UK economy from December 2017 to September 2020.
Case study: A NEW COAL MINE IN THE UK
With reference to the data and Chart 1, discuss the possible effects of the new coal mine on the steel market in the UK.
Examiner insight
- What to cover
- Find more than one effect on the steel market. Cheaper domestic coking coal lowers steel production costs and so the price of steel, but also consider output and employment in steel, import substitution and competitiveness, and security of supply. Use the data and Chart 1.
- Watch out
- Answers that only discussed the price of steel were capped at Band 2 for AO3. Find a second effect.
Calculate the real price of a school uniform in 2020. You are advised to show your working.
Assess whether the UK Government should intervene in the school uniform market.
Examiner insight
- What to cover
- Build both sides. For intervention: school uniform is close to a necessity with inelastic demand, exclusive supplier contracts give local monopoly power, and the cost hits low income families, an equity argument. Against: the market is contestable, and intervention has costs.
- Watch out
- Marks were lost by under developing each side or giving a one sided answer. Use the case study data on both sides.
Define the term "inflationary expectations".
Case study: SIN CITY
(i) Using the data, calculate Philadelphia's GDP per capita. Give your answer to the nearest whole number. (ii) With reference to the data, outline why entertainment could be considered an inferior good.
Evaluate the effectiveness of measuring UK unemployment using the Labour Force Survey method.
With reference to the data, explain one possible supply side approach that could increase employment in the UK.
To what extent does the data provide evidence to support the quantity theory of money?
With reference to the data, calculate the rate of economic inactivity in both England and Wales.
With reference to the data, discuss the view that the UK is an optimal currency area.
Define 'GDP per capita at PPP'.
With reference to the data, evaluate the link between aid (as represented by total aid inflow) and GDP per capita at PPP.
Case study: HAS BRAZIL'S BUBBLE BURST?
Using an AD/AS diagram, explain why inflation in Brazil is so high.
With reference to the data, discuss the likely reasons for the patterns shown.
Calculate the index number for house prices in Wales in 2015. Show your workings.
With reference to the data, discuss the consequences of house-price bubbles for the Welsh economy.
To what extent is the eurozone an example of an Optimal Currency Area? Refer to the data provided in your answer.
Case study: ALL THAT IS GOLD DOES NOT GLITTER
(i) Using the year 2000 as a base year, calculate the gold price index at its peak. (ii) Using Figure 2, calculate both the mean and median gold supply per year during the 5 year period 2010-2014. (iii) Using diagrams, evaluate the extent to which an increase in the demand for a product always leads to a corresponding increase in price and quantity.
Examiner insight
- What to cover
- Parts (i) and (ii) are calculations: an index with 2000 as base, and the mean and median of five values. Show the workings. Part (iii) needs diagrams of a demand increase and then the cases where price or quantity does not rise with it.
- Watch out
- Evaluation using merely elastic or inelastic PES was not credited. It must be the perfectly elastic or perfectly inelastic case. Many candidates could not calculate a median from five values.
Using the figures above, calculate: (i) New Jersey's GDP per person in 2014; (ii) the percentage of New Jersey's GDP that came from tourism.
Using a diagram, and with reference to the data, explain why holiday accommodation prices have increased between 2014 and 2015.
Short answer questions on measuring economic performance
With reference to the case study, discuss whether living standards in Ghana are likely to be improved by Ghana's decision to go to the IMF for financial support.
Examiner insight
- What to cover
- Keep living standards at the centre. Link the IMF package to the development indicators in the table: debt relief freeing spending on health and education, stabilisation of the cedi and inflation, restored access to finance.
- Watch out
- Describing the data on both sides is not analysis. Every argument must be tied to a living standards measure such as HDI or income, or it cannot reach the top band.
Using the data, discuss the view that demand-pull factors were the main cause of inflation in this economy during the period shown.
Examiner insight
- What to cover
- Pinpoint key features of the data rather than describing it date by date. Test demand pull causes against cost push causes for this economy, matching the movements in the price level with the movements in output, wages and input costs shown.
- Watch out
- The data refers to an economy, not the UK. Do not import UK knowledge. And do not use micro demand and supply diagrams or label AD and AS axes price and quantity. Examiners saw a lot of that confusion.
With reference to Figure 3, and taking 2014 as the base year, calculate an index number to represent: (i) the price of neodymium in 2022, (ii) the price of terbium in 2022.
With reference to the data, evaluate the view that the increasingly digital global economy will raise living standards in LEDCs.
Examiner insight
- What to cover
- Link the specific examples in the case study to living standards in developing countries: mobile banking and financial inclusion, access to market prices for farmers, online education and health information, remote work and exports of services.
- Watch out
- Do not just repeat the examples from the case study. Each one needs your own analysis and a link to a living standards measure. Part (a) rewarded development indicators chosen in the light of the digital economy, not generic ones.
Calculate GDP per capita in Tianjin as a proportion of GDP per capita in China as a whole.
Calculate GDP per capita in Gansu as a proportion of GDP per capita in China as a whole.
Assess two reasons why GDP per capita is not always a good measure of living standards in an economy.
Multiple choice questions
- AS Unit 1, June 2025, Q11
The chart below shows the unemployment rate for Greece between October 2021 and October 2023. 14% Unemployment rate 13% 12% 11% 10% 9% Ju O Ja Ap Ju O Ja Ap O ct ct ct l2 n l2 n r2 r2 Month Which of the following statements can be…
- AS Unit 1, June 2025, Q13
The Laffer curve shows the relationship between which two variables?
- AS Unit 1, June 2024, Q6
The table below shows the annual percentage change in UK real gross domestic product (GDP) from 2017 to 2021. 2017 2018 2019 2020 2021 Annual percentage 2.4 1.7 1.6 −11.0 7.6 change in real GDP From the data it can be concluded that, in…
- AS Unit 1, June 2024, Q12
The chart below shows index data on the average price of a house in Wales, from 2003 to 2022 (2015 = 100). Index number (2015 = 100) 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 From…
- AS Unit 1, June 2023, Q10
The table below shows the annual percentage increase in the UK National Living Wage (NLW) rate for workers aged 25 and over. It also shows the annual inflation rate, from April 2019 to April 2021. Percentage increase in the UK NLW Annual…
- AS Unit 1, June 2018, Q8
The graph below shows the inflation rate in France between 2011 and 2016. FRANCE INFLATION RATE 3 3 2.5 2.5 inflation rate (%) inflation rate (%) 2 2 1.5 1.5 1 1 0.5 0.5 0 0 – 0.5 – 0.5 2011 2012 2013 2014 2015 2016 Which of the following…
- AS Unit 1, June 2017, Q13
Using the data below, which of the following countries has the largest GDP per person? Country GDP Population
- AS Unit 1, June 2016, Q8
Nationwide House Price index. Index (Q1) Quarter 1993=100 Q1 2014 355.3 Q2 2014 372.1 Q3 2014 376.7 Q4 2014 377.0 Q1 2015 376.2 Q2 2015 387.5 It can be concluded from the table above that:
- AS Unit 1, June 2016, Q13
Which of the following will be most likely to result from an increase in labour productivity in an economy:
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.