Market failure

At what point is a government's success in securing economic growth most likely to clash with its aim of cutting a balance of payments surplus?

Feb/March 2016

Which macroeconomic policy aims are most likely to support each other?

Feb/March 2018

Suppose an economy introduces expansionary monetary policy in order to raise employment. One outcome of this policy is that the consumer price index increases at an accelerating rate. Which curve could show this?

Feb/March 2019

‘Keynesian policies used to solve unemployment will not succeed because they will conflict with the achievement of other key macroeconomic aims.’ Assess the accuracy of this statement.

Feb/March 2019

The table presents key macroeconomic indicators for four countries in 2018. What conclusions can be drawn from it?

Feb/March 2022

Evaluate the claim.

Feb/March 2023

An economy records an unemployment rate of 8%, which is 2% higher than in the previous year. At the same time, the current account deficit increased from 3% of GDP to 4% of GDP. What would be most likely to lower both unemployment and the current account deficit?

Feb/March 2024

The diagram illustrates the link between the rate at which wages rise and the unemployment rate. Which change would be expected to make the curve in the diagram move downwards and to the left?

May/June 2010

The table presents inflation rates, unemployment rates and changes in money wage rates for a number of countries in 2008 and 2009. What conclusion can be drawn from the table?

May/June 2011

The table gives inflation rates, unemployment rates and changes in money wage rates between 2008 and 2009 for several countries. What conclusion can be drawn from the table?

May/June 2011

The table presents some indicators of macro-economic performance in the US economy across five decades. During which decades did the US government record an overall rise in performance without any trade-off among separate policy goals?

May/June 2011

The diagram illustrates the link between the rate of inflation and the rate of unemployment. What would make the curve FG shift to JK?

May/June 2011

The table presents several indicators of macro-economic performance in the US economy over five decades. Between which decades did the US government record an overall improvement in performance with no trade-off between separate policy goals?

May/June 2011

The table presents several measures of macro-economic performance in the US economy across five decades. Between which decades did the US government record an overall improvement in performance without any trade-off between individual policy aims?

May/June 2011

The diagram illustrates the link between the inflation rate and the unemployment rate. What would make the curve FG move to JK?

May/June 2011

Explain how the impact of the Keynesian multiplier process would alter if a free-market closed economy became a mixed economy with foreign trade.

May/June 2011

A country saw unemployment drop sharply, yet its inflation rate stayed low. What might account for this?

May/June 2012

A country saw unemployment drop sharply, yet its inflation rate stayed low. What might account for this?

May/June 2012

Which policy, introduced by a government with the aim of lowering the inflation rate, could result in a larger deficit on the balance of payments?

May/June 2013

Define the components of aggregate demand and, using a diagram, explain how a rise in spending in an economy could lead to inflation.

May/June 2013

Explain how a profit-maximising firm chooses how much labour to employ.

May/June 2014

The table presents indicators of a country’s economic performance across a two-year period. What is consistent with the information above?

May/June 2015

The diagram illustrates the link between the inflation rate and the unemployment rate. What would make the curve FG move to JK?

May/June 2015

The table shows the inflation and unemployment rates for several countries in 2008 and 2011. Which country or countries had a trade-off between their inflation and unemployment rates?

May/June 2015

The table shows an economy’s unemployment rate and inflation rate over a five-year period. Which change from one year to the next matched the Phillips curve analysis?

May/June 2016

At what point would an economic recession cause a government’s budget deficit to increase?

May/June 2016

Think about whether economic growth will always lead to inflation.

May/June 2016

Governments may pursue several macroeconomic aims besides economic growth. Explain the other main macroeconomic aims that a government might have apart from economic growth.

May/June 2017

The table presents the yearly inflation rate (consumer prices) and the yearly unemployment rate for five countries in a recent year. What conclusion may be drawn about the connection between inflation and unemployment?

May/June 2018

Explain the quantity theory of money. Consider how relevant it is to economic policies that could be used to control inflation.

May/June 2018

The table shows the inflation and unemployment rates for various countries in 2008 and 2011. Which country or countries showed a trade-off between their inflation and unemployment rates?

May/June 2019

The table shows the inflation and unemployment rates for various countries in 2008 and 2011. For which country or countries was there a trade-off between inflation and unemployment rates?

May/June 2019

A country saw a large decrease in unemployment, yet its inflation rate stayed low. What might account for this?

May/June 2020

Which statement explains what the Phillips curve illustrates?

May/June 2020

Discuss the ways in which these policies may create conflicts for a government as it attempts to achieve its macroeconomic aims.

May/June 2020

A country uses a fixed exchange rate system, yet it is now facing high unemployment and a deficit on the current account of its balance of payments. Which pair of policies would be most likely to improve both unemployment and the current account of the balance of payments?

May/June 2021

A country imports more oil than it exports. During the year, world oil prices have increased. If every other factor stays unchanged, what effect is this likely to have on inflation, the trade balance and unemployment in this country?

May/June 2023

A rise in a government’s budget surplus will raise unemployment in the short run, but it will make it easier to manage a balance of payments deficit on the current account in the long run. Evaluate this statement.

May/June 2023

The diagram shows the short-run Phillips curves SRPC1 and SRPC2 together with the long-run Phillips curve for an economy, in which NRU is the natural rate of unemployment. At the start, the economy is in equilibrium with no inflation. When the government uses a fiscal stimulus to cut unemployment, monetarists predict that there will be a sequence of movements before long-run equilibrium is restored. Which set of movements shows this prediction?

May/June 2024

The table indicates the relationship between inflation and unemployment in Germany from 2019 to 2022. Some theories suggest that inflation rates are lowest when the unemployment rate is low. Which year goes against this expectation the most?

May/June 2024

The diagram shows the short-run Phillips curves SRPC1 and SRPC2 together with the long-run Phillips curve for an economy, in which NRU is the natural rate of unemployment. At the outset, the economy is in equilibrium with zero inflation. If the government then uses fiscal stimulus to cut unemployment, monetarists say that a sequence of shifts will occur before long-run equilibrium is regained. Which set of movements matches this prediction?

May/June 2024

A government has set a target of lowering the inflation rate. Why may it be unwilling to increase interest rates in order to meet this target?

May/June 2025

An economy is operating at its natural rate of unemployment. In which circumstances would a rise in government spending intended to reduce unemployment be most likely to clash with a government’s aim of keeping inflation low?

May/June 2025

What is the most probable effect when the national debt rises?

May/June 2025

If an economy is operating at its natural rate of unemployment, in what situation would a rise in government spending intended to cut unemployment be most likely to clash with the government’s aim of keeping inflation low?

May/June 2025

Explain how cost-push inflation is different from demand-pull inflation.

Oct/Nov 2006

Government economic policy ought to be directed at citizens' needs – employment, health, education and a good environment. It should not focus on the balance of payments or gross domestic product. Discuss whether there is any truth in this statement.

Oct/Nov 2006

Analyse the reasons the aims of government policy may clash with one another and discuss which of the aims should be given priority.

Oct/Nov 2007

Explain what you regard as three economic issues in the country where you live and analyse which is the most significant.

Oct/Nov 2010

Although the government is running a budget deficit, why might the country’s money supply stay the same?

Oct/Nov 2011

The diagram illustrates an economy’s short-run Phillips curve (SRPC). What is taken to stay unchanged when this curve is drawn?

Oct/Nov 2011

Explain the main macroeconomic aims a government might have and analyse which would be the most important for your country.

Oct/Nov 2011

An unexpected increase in the price of imported oil made the annual rate of inflation over a particular period higher than forecast. What could be a probable consequence of this?

Oct/Nov 2012

In monetarist theory, which policy objectives are at odds in the short run, but not in the long run?

Oct/Nov 2012

Explain, with the help of a diagram, how an expenditure dampening policy in an economy would change aggregate demand, prices and output in that economy.

Oct/Nov 2013

Within the diagram, curve X1 represents the economy’s starting trade-off between inflation and unemployment. What might lead the curve to move to X2?

Oct/Nov 2013

Explain why some government economic policies can be in conflict and discuss which ones should take priority.

Oct/Nov 2013

An economy is experiencing a high inflation rate and a balance of payments deficit. Which policy change would help reduce the balance of payments deficit without worsening inflation?

Oct/Nov 2014

The table presents macro indicators for the US economy by decade (real GDP growth, inflation, unemployment). Between which decades did the US government secure an overall rise in performance with no sacrifice among the separate policy goals?

Oct/Nov 2014

Explain, using a diagram, the meaning of equilibrium national income, and illustrate how this equilibrium alters when aggregate demand rises.

Oct/Nov 2016

To raise the level of employment during the boom phase of the trade cycle, a government adopts an expansionary economic policy. What accounts for the economy overheating as a result?

Oct/Nov 2016

Explain three major government macroeconomic policy aims and describe why trying to achieve them simultaneously may lead to conflict.

Oct/Nov 2016

Explain the causes of unemployment and consider which type of unemployment is the most serious in the country where you live.

Oct/Nov 2016

Explain what is meant by saying that Turkey and South Africa hoped a rise in interest rates would ‘strengthen’ their country’s currency.

Oct/Nov 2016

Consider which causes of unemployment are most likely to matter most.

Oct/Nov 2017

The table presents unemployment and inflation rates for four countries in 2010 and 2014. Which countries displayed a standard Phillips curve?

Oct/Nov 2018

The table sets out pairs of possible government aims. In which pair is achieving aim 1 likely to align with achieving aim 2?

Oct/Nov 2018

A decrease in domestic investment results in higher unemployment. Which other problem could also be seen at the same time?

Oct/Nov 2019

Imagine a country where inflation is far under the target level, unemployment is high and the balance of payments is in a large deficit. What would an economic adviser to the government be most likely to suggest?

Oct/Nov 2020

The table shows an economy’s unemployment rate and inflation rate over a five-year period. Which year-to-year change was consistent with Phillips curve analysis?

Oct/Nov 2021

Explain what is meant by infrastructure and consider the view that greater investment in infrastructure will encourage rises in both actual and potential economic growth.

Oct/Nov 2021

Which government measure would conflict with the named economic target?

Oct/Nov 2022

An economy introduces an expansionary monetary policy in order to increase employment. As a consequence of this policy, the consumer price index starts to rise more quickly over time. Which curve might show this?

Oct/Nov 2022

A government chooses to raise direct taxation. Which combination would best describe the effect of this policy on unemployment, economic growth and the balance of payments?

Oct/Nov 2022

Explain how a change in the internal value of a country’s currency may influence the external value of that currency.

Oct/Nov 2022

A government’s choice to replace a fixed exchange rate with a free market floating exchange rate will solve unemployment in the short run but will lead to higher inflation in the long run. Evaluate this statement.

Oct/Nov 2022

The table presents unemployment and inflation rate data for four countries in 2010 and 2014. Which countries showed a typical Phillips curve?

Oct/Nov 2023

What does the vertical axis of the Phillips curve represent?

Oct/Nov 2023

The table presents the percentage of the labour force that is unemployed and the inflation rate in a country across a five-year period. Which statement about how the Phillips curve theory applies to this country is most strongly supported by the data?

Oct/Nov 2024

What is one possible advantage of privatising a country’s railway services?

Oct/Nov 2025

Market failure causes climate change and an inefficient allocation of resources. The only route to a solution is for governments to intervene so that resource allocation improves. Assess the extent to which you agree with this statement.

Oct/Nov 2025

Traffic congestion is one reason for allocative inefficiency.

Oct/Nov 2025