AQA A Level Economics Paper 3: Economic principles and issues June 2018 question paper 7136/3

Which one of the following applies to merit goods?

At the start of the financial year, an economy’s national debt stands at £1000 billion. Over the course of the year, the government plans to spend an extra £100 billion and borrow an extra £40 billion.

If the government achieves its spending and borrowing targets, by the end of the financial year the national debt will have increased by

The diagram below shows the production possibility frontier for an economy that produces consumer goods and capital goods. The economy is initially operating at point X within its frontier.

If the economy now moves from point X to point Y on its frontier it will

All other things being equal, an increase in the ratio of capital to labour resulting from an increase in investment is most likely to lead to a

The diagram below shows the demand curve (D) and two supply curves (S₁ and S₂) in the market for renewable energy.

The renewable energy market is initially in equilibrium at a price of OH. The government then introduces a subsidy for renewable energy.

After the introduction of the subsidy, the total amount of money received by the producers from both consumers and the government is

Which one of the following provides a reason for government intervention in a market?

In recent years, several central banks around the world have implemented a policy of quantitative easing (QE). All other things being equal, which one of the following combinations A, B, C or D, is most likely to be the result of this policy?

The price of good Y, a substitute for good X, rises from 75p to £1. As a result, the quantity of demand for good X rises from 3 million units to 5 million units per month.

What is the value of the cross elasticity of demand for good X with respect to good Y?

The short-run Phillips curve below illustrates the relationship between unemployment and inflation in an economy.

The Phillips curve shows that in this economy

Which one of the following is most likely to be associated with behavioural economic

At the initial market equilibrium, the income elasticity of demand for fresh chickens is +1.5, and the price elasticity of supply is +1.0. Then there is a 5% increase in consumers’ income.

Which one of the following combinations, A, B, C or D, is most likely to show the changes in the market equilibrium price and quantity?

The diagram below shows two aggregate demand (AD) curves and the short-run aggregate supply (SRAS) curve for an economy.

All other things being equal, the change in real national output from Y₁ to Y₂ is most likely to have been caused by an increase in the

An economy is in a state of macroeconomic equilibrium. The levels of investment, savings, exports and imports are shown below.

It can be inferred from the data in the table above that

The table below shows how a firm’s total and average product change, in the short run, with different inputs of labour.

Diminishing marginal returns to labour set in when the firm employs

The diagram below shows the market demand curve (D), the market supply curve (S) for solar panels produced in a country, and the world market supply curve (S_W) for solar

To protect domestic producers of solar panels the country introduces a tariff on imports. The imposition of the tariff increases the price of solar panels from the world market price

Following the imposition of the tariff, the amount of tariff revenue collected by the government is shown by the area

A person eats six biscuits a day to maximise their total utility from the consumption of biscuits.

The price of biscuits increases by 50%, leading to a change in the individual’s daily consumption of biscuits.

Which one of the following combinations, A, B, C or D, shows the most likely changes in the individual’s total utility and marginal utility?

A large, unexpected decline in house prices could lead to a systemic crisis in the financial system.

This is most likely to happen if, following the fall in house prices, commercial banks and

The diagram below shows two long-run aggregate supply (LRAS) and two short-run aggregate supply (SRAS) curves for an economy.

All other things being equal, which one of the following is most likely to explain the movement to the right of both the short-run and long-run aggregate supply curves?

A firm benefits from significant and persistent economies of scale as it increases output. Which one of the following is the most likely consequence as it grows in size?

The firm’s

The diagram below shows a firm operating in perfect competition in the short run.

Which quantity, OE, OF, OG or OH, indicates the output where profits are maximised?

Which one of the following policies is most likely to have an immediate effect in helping to reduce the amount of poverty in the UK?

The table below shows selected components of the UK balance of payments on current account as a percentage of GDP between 2011 and 2014.

It can be concluded from the data that between 2011 and 2014 the main reason for the rise in the current account deficit as a percentage of GDP was

Globalisation can make some product markets more contestable.

Which one of the following characteristics of globalisation is the most likely explanation for such an increase in contestability?

The diagram below shows two aggregate demand (AD) curves, two short-run aggregate supply (SRAS) curves, and the long-run aggregate supply (LRAS) curve for an economy.

The increase in the price level from P₁ to P₂ raises the rate of inflation above the target rate set by the government. In an attempt to bring inflation back to its target rate, the central bank announces a change in interest rates. Other things being equal, this is most

Which one of the following is most likely to measure the degree of competition in an

The diagram below shows the demand and supply curves for skilled labour (D_s and S_s) and unskilled labour (D_u and S_u) and the wage differential (W_s–W_u) between the two types of labour.

All other things being equal, which one of the following is most likely to cause a decrease in the wage differential?

In a labour market dominated by a monopsonist, wages and employment are usually lower than in a competitive labour market. This is because a monopsonist

Which one of the following is most likely to cause an increase in the structural budget

The table below shows indices for real GDP and consumer prices in an economy over six quarters.

During these six quarters the economy experienced

Turn over Section B

To what extent, if at all, do the data suggest that the reliance on fossil fuels to produce energy is falling? You must use the data in Extract C to support your assessment.

Explain how a sustained low world market price for oil would be likely to affect the economic development of a less economically developed oil-producing country such as Nigeria or Venezuela.

After considering Extract E, and the original evidence in Extracts A, B, C and D, would you recommend to the members of OPEC that they continue to restrict the supply of oil to try to raise the world market price of oil? Justify your recommendation.