AS Level Paper 2, June 2025

Q1(a) UK unemployment climbed to 5.2% from 3.9% as recession hit in 2020: name that type (cyclical / frictional / seasonal / structural).

Q1(b) Using the data given, explain one way rising unemployment could affect the UK government's budget position.

Q2(a) Using a table of average UK house prices for January to March 2023, identify which statement can be deduced from the data.

Q2(b) Explain how people already owning UK homes were likely affected by average prices dropping between January and March 2023.

Q3(a) On the trade cycle diagram, select the point showing a positive output gap.

Q3(b) Explain one difficulty economists face when trying to estimate the output gap for an economy.

Q3(c) State what the trade cycle means (2-mark defined term).

Q4(a) State what an indirect tax is (2-mark defined term).

Q4(b) Label an AD/SRAS diagram showing how lower indirect tax moves equilibrium real output and prices.

Q4(c) Pick the indirect tax from four listed (corporation / income / inheritance / value added).

Q5(a) From the chart of the UK's monthly net trade balance, January-October 2023, covering goods and services, choose the valid conclusion.

Q5(b) Referring to the chart, explain one cause of the UK's trade deficit in goods and services.

Q6(a) Explain what a rate of economic growth measures, using Figure 1.

Q6(b) Using the opening paragraph of Extract A, explain how real incomes and self-reported happiness are likely connected.

Q6(c) Assess how limited GDP is for tracking living standards over the years, using Extract A alongside your wider study.

Q6(d) Using the material given, explain two things the Bank of England's Monetary Policy Committee might weigh before altering the base rate.

Q6(e) Discuss what cutting government spending would do to the UK economy at the macro level; an AD/AS diagram is needed.

Q6(f) Evaluate what may be driving inflation in the UK.

Q6(g) Evaluate whether market-based supply-side measures can raise employment in the UK.