Edexcel A Level Economics A Paper 2: The national and global economy June 2023 question paper 9EC0/02

In September 2022 the Bank of England increased the base interest rate from 1.75% to 2.25%.

(Source: adapted from https://www.bankofengland.co.uk/boeapps/database/Bank-Rate.asp)

Draw an aggregate demand and aggregate supply diagram to illustrate the likely impact of an increase in the UK base interest rate on the average price level and real output.

Which one of the following is the most likely impact of an increase in the base interest rate?

A decrease in the:

UK unemployment rate (%), December 2020 – June 2022

(Source: adapted from https://www.ons.gov.uk/employmentandlabourmarket/ peopleinwork/employmentandemployeetypes/bulletins/employmentintheuk/august2022)

With reference to the chart, which one of the following is true?

The unemployment rate:

December 2021

With reference to the chart on the previous page, explain one likely reason for the change in the UK’s rate of unemployment.

UK real GDP, 2020–2022

*2022 figures are forecast

(Source: adapted from https://www.ons.gov.uk/economy/grossdomesticproductgdp)

Calculate the value of the total forecast GDP in 2022.

Explain one likely cost of UK real GDP falling by 9.9% in 2020.

Which one of the following is most likely to lead to an increase in potential economic growth?

An increase in:

UK consumption, % of GDP, 2004–2021

(Source: adapted from https://data.worldbank.org/indicator/NE.CON.TOTL.ZS?end=2021& locations=GB&start=2002)

Which one of the following is an example of consumption?

With reference to the chart on the previous page, explain the likely effect of a fall in the marginal propensity to consume on the level of real GDP. Refer to the multiplier in your answer.

In 2021, the US total GDP was $23 trillion and national debt was $28.4 trillion.

(Source: adapted from https://data.worldbank.org/indicator/NY.GDP.MKTP.CD?locations=US and https://fiscaldata.treasury.gov/national-debt/)

Calculate the US national debt in 2021 as a percentage of GDP.

Explain the relationship between a fiscal deficit and the national debt.

Which one of the following is the most likely consequence of an increase in the US national debt?

An increase in:

With reference to Extract A, explain what is meant by a ‘regional trade agreement’ (Extract A, line 7).

With reference to Extract A, examine two causes of the high cost of transporting goods between African countries.

Discuss the impact of improved transport links between African countries on economic growth rates.

Assess two likely benefits of debt relief to Angola. Refer to Extract B in your answer.

Discuss market-orientated strategies the Angolan government could use to improve development.

In 2022 the value of UK exports fell by 14% compared with 2020. In contrast, the global average increase in exports was 8.2% over the same time period. The UK’s competitiveness also fell, dropping five places from 18th in 2021 to 23rd in 2022 in the world competitiveness rankings.

(Sources: adapted from https://www.ft.com/content/021c629d-5853-4111-9600-ab5f0eb65a35 and https://www.imd.org/centers/world-competitiveness-center/rankings/ world-competitiveness)

Evaluate macroeconomic policies that could be used to increase international competitiveness in the UK’s export markets.

UK inflation, as measured by the CPI, rose to 10.1% in the 12 months to July 2022, compared to 2.0% in the 12 months to July 2021.

(Source: adapted from https://www.ons.gov.uk/economy/inflationandpriceindices/bulletins/ consumerpriceinflation/july2022)

Evaluate macroeconomic policies, apart from monetary policy, the UK government could use to reduce inflation.

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