AQA A Level Economics Paper 2: National and international economy June 2018 question paper 7136/2

Using the data in Extract A (Figure 1), calculate the change in the effective exchange rate index, as a percentage, between November 2015 (point A) and November 2016 (point B). Give your answer to two decimal places.

Extract B describes the trade figures as ‘disappointing’.

Explain how the data in Extract A (Figure 2) show that the UK’s trade performance has been ‘disappointing’ given the fall in the value of the pound since November 2015.

Extract C (lines 8–9) states ‘Trade deficits and surpluses may be self-correcting in a floating exchange rate system.’

With the help of a diagram showing the supply of and demand for a currency, explain how a floating exchange rate may help to correct a trade surplus.

Extract B (lines 19–21) states ‘Although some argue that a current account deficit is not a problem, others point to the worryingly large and persistent nature of the deficit.’

Using the data in the extracts and your knowledge of economics, assess the impact of a persistent current account deficit on the macroeconomic performance of the UK economy.

Do not answer Context 2 if you have answered Context 1.

Using the data in Extract D (Figure 4), calculate the average amount saved per household in 2016 if average household income was £26 300. Give your answer to the nearest pound.

Explain how the data in Extract D (Figures 3 and 4) show that consumer confidence may have risen since 2014.

Extract E (lines 16–17) states ‘However, some argue that trying to maintain stable prices and low unemployment could create trade-offs.’

With the help of a diagram, explain why a trade-off between price stability and low unemployment might occur.

Extract F (lines 10–12) states ‘The Austrian economist, Friedrich Hayek, highlighted artificially low interest rates and excessive credit creation as being the main causes of cyclical instability.’

Using the data in the extracts and your knowledge of economics, evaluate the view that maintaining low interest rates for a sustained period of time may be damaging to the UK’s macroeconomic stability.

Explain the main barriers that LEDCs face when attempting to achieve stable, long-term economic growth.

Evaluate the view that MNCs play a positive role in the development of LEDCs.

Explain how fiscal policy can be used to try to improve the supply side of an economy.

Evaluate whether achieving a budget surplus is a desirable objective of economic policy.

Explain the causes of cyclical and structural unemployment.

Assess the view that falling unemployment will inevitably lead to an improvement in the standard of living for people in the UK.