Optional25 marks
ContextJapan’s budget deficit for 2017/18 is expected to be 4.6% of GDP. Its national debt is forecast to increase to above 250% of GDP by 2019.
Evaluate the impact of a large fiscal deficit and national debt on a country’s economy.
Specification point 4.5.3 · Theme 4
Public sector finances
Role of the state in the macroeconomy · A global perspective
Questions tagged to this specification point
15 questions
Essay questions
Long-form evaluation and discussion
Optional25 marks
Case study · The UK economy
With reference to the information provided and your own knowledge, evaluate the microeconomic and macroeconomic effects of a government policy of cutting public expenditure rather than raising taxes as a means of reducing a fiscal deficit.
Data-response questions
Questions built around exam extracts
10 marks
Case study · The German economy
With reference to the information provided and your own knowledge, assess the likely macroeconomic effects of the German government’s budget deficit.
10 marks
Case study · The UK economy
Assess whether a fiscal deficit and national debt should be a cause for concern for the UK government.
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5 marks
Case study · The German economy
Explain one reason why a country such as Germany wants to avoid an increase in the national debt relative to GDP (Figure 2).
8 marks
Case study · The UK economy
With reference to Figures 4 and 5 and your own knowledge, examine the relationship between the national debt as a proportion of GDP and the fiscal deficit.
Short-answer questions
Focused calculations, explanations and diagrams
2 marks
ContextChart: UK real GDP percentage growth, quarter 1 2022 to quarter 1 2023.
Explain one likely disadvantage of a decline in GDP on government.
2 marks
ContextIn 2021, the US total GDP was $23 trillion and national debt was $28.4 trillion. and …
Calculate the US national debt in 2021 as a percentage of GDP.
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2 marks
ContextIn 2021, the US total GDP was $23 trillion and national debt was $28.4 trillion. and …
Explain the relationship between a fiscal deficit and the national debt.
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4 marks
ContextThe trade cycle Real GDP Positive output gap Trend GDP Z Actual GDP Time …
With reference to the graph, explain the difference between automatic stabilisers and discretionary fiscal policy.
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2 marks
ContextAfter the Global Financial Crisis of 2008, the US President introduced expansionary fiscal policies of $800 billion. The International Monetary Fund estimated that the multiplier at the time was approximately 1.5.
Explain the impact of annual fiscal deficits on the US national debt.
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2 marks
ContextThe UK has experienced a budget deficit since 2001. The government aimed to reach a budget surplus by 2019, but in 2016 this target was abandoned.
Explain one likely reason why the 2019 budget surplus target was abandoned.
2 marks
ContextThe UK has experienced a budget deficit since 2001. The government aimed to reach a budget surplus by 2019, but in 2016 this target was abandoned.
Explain the likely impact of abandoning the budget surplus target on the UK national debt.
Multiple-choice questions
Quick checks of economic understanding
A-level Paper 2, June 2023, Q5(c)Multiple choice
1 mark
ContextIn 2021, the US total GDP was $23 trillion and national debt was $28.4 trillion. and …
Which one of the following is the most likely consequence of an increase in the US national debt?
Acrowding out
Binequality
Cpoverty
Dunemployment
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A-level Paper 2, June 2018, Q4(c)Multiple choice
1 mark
ContextThe UK has experienced a budget deficit since 2001. The government aimed to reach a budget surplus by 2019, but in 2016 this target was abandoned.
If a government takes decisions to target a budget surplus, this is an example of:
Acontractionary monetary policy
Bdiscretionary fiscal policy
Cexpansionary fiscal policy
Dexpansionary monetary policy
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