AQA A Level Economics Paper 3: Economic principles and issues November 2021 question paper 7136/3

The average university graduate can expect to earn more over their working life than the average school leaver.

This is most likely to be explained by

Which one of the following statements regarding supply-side policies is correct?

Supply-side policies

Figure 1 shows the marginal private benefit and marginal social benefit (MPB and MSB) curves and the marginal private cost and marginal social cost (MPC and MSC) curves in the market for a good.

The diagram represents a good with

Which one of the following changes in macroeconomic performance is most likely to involve a trade-off, at least in the short-run, between the objectives of government

Table 1 contains data for GDP per capita and the Human Development Index (HDI) for four countries in a given year.

Which one of the following statements is most consistent with the data?

Figure 2 shows the production possibility curve for an economy producing capital and consumer goods.

The opportunity cost of increasing the output of capital goods from G₁ to G₂ is shown by

Table 2 contains a simple balance sheet for a bank.

From the balance sheet it can be concluded that this bank is

The free-rider problem in economics means that government intervention is necessary to prevent market failure in the supply of

Figure 3 shows the demand curve (Demand) and the supply curve (Supply) for bus travel within a city. The initial market equilibrium price is P.

To reduce pollution, the city council pays bus companies to provide bus travel free of charge. As a result of this policy, consumer surplus will increase by the area

At the end of the previous financial year, a country had a national debt of £20 000 billion. The government’s planned expenditure for the current year exceeds its projected income by £100 billion.

All other things being equal, which one of the following is most likely to enable the government to complete its planned expenditure and reduce the national debt?

Increasing its

A person is considering buying a used motorbike from a dealer on the internet. The motorbike is described as being in perfect condition and is being offered at a correspondingly high price.

In this situation, asymmetric information is most likely to lead the person to

Figure 4 shows two aggregate demand (AD₁ and AD₂) curves and two long-run aggregate supply (LRAS₁ and LRAS₂) curves for an economy.

All other things being equal, which one of the following is the most likely explanation for the movement of the economy from E₁ to E₂?

A feature of the UK government’s workplace pension scheme is that employers are required to enrol their employees in the scheme unless the employees make a conscious decision to opt out and join another scheme.

An individual choosing to remain in their workplace pension scheme is an example of a

The Bank of England’s Monetary Policy Committee increases Bank Rate to reduce the risk of an increase in inflationary pressure in the economy. All other things being equal, which one of the following is most likely to result from the policy change?

An increase in the national minimum wage may be used to make the distribution of income more equal. Such a policy is most likely to be effective when the elasticity of demand for

Figure 5 shows the demand (D) curve and the average and marginal cost (AC and MC) curves for a firm operating in a perfectly competitive market for eggs.

The firm is in equilibrium at the initial market price of £1.25 for a box of 6 eggs. If the market price increases to £1.50 for a box of eggs the firm will

Table 3 contains labour market data, in millions, for the UK in 2019.

Which one of the following, calculated in accordance with international guidelines, represents the UK’s unemployment rate in 2019?

Figure 6 represents the market for sugar in a country. It shows the demand (D) curve and two supply (S₁ and S₂) curves in the market for sugar before and after the imposition of an indirect tax on sugar.

According to Figure 6, which one of the following combinations: A, B, C, or D, is correct?

According to the accelerator process, a slowdown in the rate of growth of national income will lead to a fall in the

A monopolistically competitive firm’s demand curve for good X has a price elasticity of demand of minus 1.0 throughout its entire range. All other things being equal, which one of the following is most likely to result in an increase in the firm’s profits?

Figure 7 shows the average and marginal revenue (AR and MR) curves and the average and marginal cost (AC and MC) curves for a firm. The firm is in equilibrium producing an output of Qe.

From the diagram it can be inferred that the

Which one of the following combinations of possible shocks: A, B, C, or D, is most likely to move an economy from a negative output gap to a positive output gap?

An unexpected increase in

All other things being equal, which one of the following is the most likely consequence of technological innovation in the production process by the firms within an industry?

Figure 8 shows two demand (D₁ and D₂) curves and two supply (S₁ and S₂) curves in the market for tea.

Tea and coffee are substitutes. All other things being equal, which one of the following is the most likely explanation of the move from E₁ to E₂ in the market for tea?

In 2019, an economy operating at full capacity on its long-run aggregate supply curve grew at its trend growth rate of 5% per annum. It had a national income of £200 billion. In 2020, the economy experienced 2% actual growth.

It follows that in 2020 there was

The money market is the financial market in which

Figure 9 shows two labour supply (S₁ and S₂) curves for workers qualified to the level necessary to be employed in a particular industry.

All other things being equal, the shift of the supply of labour curve from S₁ to S₂ is most likely to be explained by a reduction in

The index of real GDP for an economy was 100 in 2017, its base year, and 105 in 2020. In 2017, real GDP was £500 billion. The monetary value of real GDP for this economy in 2020 must therefore have been

Which one of the following is an expenditure switching policy that would help to reduce a deficit on the balance of payments on current account?

An increase in

Figure 10 shows two aggregate demand (AD₁ and AD₂) curves and two short-run aggregate supply (SRAS₁ and SRAS₂) curves for an economy.

All other things being equal, which one of the following is the most likely explanation for the movement of the economy from E₁ to E₂?

Turn over for Section B

The UK government has set a target to reduce net greenhouse gas (GHG) emissions to zero by 2050.

To what extent, if at all, do the data suggest that to achieve its net-zero emissions target, the government should focus on reducing GHG emissions from the transport sector? You must use the data in Extract C to support your assessment.

Explain why, without government intervention, markets are likely to allocate too few resources to dealing with the problem of climate change.

After considering Extract E, and the original evidence in Extracts A, B, C and D, which policies, if any, would you recommend that the UK government should introduce to ensure that it achieves its zero-emissions target by 2050. Justify your recommendation.