Specification point 2.4.4 · Theme 2
National income · The UK economy – performance and policies
Questions tagged to this specification point
19 questions
Long-form evaluation and discussion
Evaluate the likely economic effects of this planned increase in government expenditure.
Questions built around exam extracts
Case study · The German economy
With reference to Extract B, discuss the impact of the planned investment by Intel in a new semiconductor factory on Germany’s aggregate demand. Use an aggregate demand and aggregate supply diagram in your answer.
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Case study · UK living standards and supply-side policies
Discuss the likely macroeconomic effects of a decrease in government expenditure on the UK economy. Use an aggregate demand and aggregate supply diagram to support your answer.
Diagram needed. Open the original question paper for the diagram
Case study · The UK economy
Explain two factors that might cause a rise in the value of the multiplier.
Focused calculations, explanations and diagrams
With reference to the data, explain one likely effect of the fall in investment in 2020.
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In July 2020 a survey estimated that the marginal propensity to consume in the UK was 0.1. Calculate the total increase in aggregate demand from an increase in government spending of £60 million.
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Define the term ‘marginal propensity to consume’.
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.
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Using the information above, calculate the total reduction in the UK’s GDP from a fall in government spending of £20 million.
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Calculate the total final increase in US aggregate demand as a result of the President’s ‘expansionary fiscal policies’, assuming no other changes.
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Using the example above, explain how the multiplier process leads to an increase in aggregate demand.
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Calculate the value of the multiplier based on the data given. You are advised to show your working.
Explain one possible reason for the changes in the marginal propensity to save as shown in the table.
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Explain the likely effect of a fall in the marginal propensity to save on the value of the multiplier if other things remain equal.
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Using the information above, calculate the total increase in national income, resulting from the £15 billion investment.
Quick checks of economic understanding
Using the above data, which one of the following represents the value of the multiplier?
If the value of the multiplier is 1.8, which one of the following will be the total increase in GDP from the redevelopment, assuming other things are equal?
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Which one of the following is a likely cause of a decrease in the value of the UK’s multiplier?
Which one of the following is the correct size of the multiplier?
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