A Level Paper 2, Nov 2021

Q1(a) Identify the item that leaks out of the circular flow of income (options: exports / state spending / investment / taxation).

Q1(b) Work out the eventual rise in US aggregate demand generated by an $800 billion fiscal stimulus when the multiplier is put at roughly 1.5.

Q1(c) Explain how year-after-year fiscal deficits feed through into the size of the US national debt.

Q2(a) Pick the diagram that shows higher net exports under the Keynesian long-run aggregate supply curve.

Q2(b) Explain where real output ends up in the long run when aggregate demand rises, working on a classical long-run aggregate supply curve.

Q2(c) Explain how a drop in average house prices would be expected to feed through to aggregate demand.

Q3(a) Using a chart of the sterling–dollar exchange rate, identify the overall change from 1 January 2018 to 1 January 2019. (appreciation / depreciation / devaluation / revaluation)

Q3(b) Explain what the pound's movement shown in the graph would do to the current account of the UK balance of payments.

Q4(a) Explain one likely impact on UK aggregate supply of the High Speed 2 rail link (context: a £56bn project connecting London to Manchester and Leeds, cutting journey times by up to 50%).

Q4(b) Classify public outlays devoted to the High Speed 2 rail link (automatic stabilisers / capital spending / current spending / transfers).

Q5(a) Using a graph of German and French GDP at purchasing power parities (2010–2017), identify which statement may be deduced.

Q5(b) Calculate by what percentage Germany's nominal GDP moved between 2016 and 2017.

Q5(c) Set out a single reason for making use of Purchasing Power Parities.

Q6(a) Drawing on Figures 1 and 2, calculate how far total aid funding to Rwanda moved from 2011 to 2012.

Q6(b) Examine two gains Rwanda's economy might draw from its expanding population, using the material supplied.

Q6(c) Assess how Rwanda's economy was probably affected by the shift in aid receipts over 2017 to 2018, using the data given.

Q6(d) Discuss, supported by a suitable diagram, how a raised tariff on second-hand clothing imports hits Rwandan shoppers and clothing producers.

Q6(e) Discuss what measures beyond import tariffs Rwanda's government might adopt to build up its manufacturing sector.

Q7 Evaluate how well quantitative easing performs in a deep recession, set against the ECB's March 2020 plan to buy up to €750bn of assets.

Q8 Evaluate the conflicts that environmental protection can create with other macroeconomic objectives, given forecasts that 2.5°C of warming trims global GDP per capita by 15% before 2100.