AS Level Paper 2, June 2016

Q1(a) State what is meant by national income (2-mark definition).

Q1(b) Pick, from four listed flows, the one counting as an injection to the circular flow of income (taxes / imports / investment / saving).

Q1(c) Give the meaning of the circular flow of income (2 marks).

Q2(a) Explain what purchasing power parities mean (2-mark definition).

Q2(b) Given UK GDP per capita at PPPs of $38 500 and a population of 64 million in 2013, identify the UK's total GDP.

Q2(c) On the supplied AD/AS diagram, mark where actual economic growth would show.

Q3(a) State the meaning of the claimant count measure (2 marks).

Q3(b) Using UK claimant count data, calculate the percentage change from August 2014 to February 2015.

Q3(c) Choose which of four listed changes would most plausibly lower the claimant count (bigger benefit payment / mandatory weekly interview / larger workforce / employment falling).

Q4(a) From a UK balance of trade chart spanning January 2013–January 2015, select the statement the data support.

Q4(b) Give and explain one plausible cause of the smaller total UK trade deficit recorded in January 2015.

Q5(a) With the UK marginal propensity to consume at 0.5, work out how much national income rises from a £15 billion road-building programme.

Q5(b) Identify which of four listed changes would most likely shift the aggregate supply curve rightward (falling real output / higher price level / lower price level / rising productivity).

Q6(a) Using Figure 1, set out what real income means.

Q6(b) Assess how UK consumers are affected when real incomes fall.

Q6(c) Drawing on Extract A, explain what a stronger pound would probably do to aggregate demand.

Q6(d) Using the data supplied, give two plausible explanations for the UK inflation rate's decline.

Q6(e) Using Extracts A and B plus your own knowledge, discuss how far deflation risk ought to worry the Monetary Policy Committee.

Q6(f) Evaluate how well the Monetary Policy Committee has kept UK inflation under control since 2011.

Q6(g) Evaluate the demand-side measures used in response to the 2008 Global Financial Crisis.