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A-LevelAQA
Economics
Exam Questions
Economics as a social scienceNewPositive vs normative statementsNewValue judgements in economic decision-makingNewPurpose of economic activity: meeting needs and wantsNewThree basic economic questions: what, how, for whomNewFactors of production: land, labour, capital, enterpriseNewScarcity, choice and opportunity costNewProduction possibility frontiers: trade-offs and opportunity costNewProductive efficiency vs allocative efficiency on a PPFNewPPF shifts: growth and changes in resources/technologyNewUnemployment of resources on a PPFNew
Rational decision-making and economic incentivesNewTotal utility and marginal utilityNewDiminishing marginal utilityNewUtility maximisation (marginal analysis)NewImportance of thinking at the marginNewWhy information matters for consumer decisionsNewAsymmetric information: what it is and why it mattersNewHow imperfect information can cause market failureNewBounded rationality and bounded self-controlNewBehavioural biases: rules of thumb and anchoringNewBehavioural biases: availability and social normsNewAltruism and perceptions of fairnessNewChoice architecture and framingNewNudges: how they work and why they’re usedNewDefault, restricted and mandated choicesNew
Demand curves: price and quantity demandedNewShifts in demand: causes and examplesNewPrice elasticity of demand: calculation and interpretationNewIncome elasticity of demand: normal vs inferior goodsNewCross elasticity of demand: substitutes vs complementsNewElasticity and total revenue (total expenditure)NewFactors affecting elasticities of demandNewSupply curves: price and quantity suppliedNewShifts in supply: causes and examplesNewPrice elasticity of supply: calculation and interpretationNewFactors affecting price elasticity of supplyNewMarket equilibrium: where demand meets supplyNewDisequilibrium: excess demand and excess supplyNewHow price changes restore equilibriumNewInterrelated markets: joint and derived demandNewInterrelated markets: joint supply and composite demandNewTracing knock-on effects across related marketsNew
Turning inputs into outputs: what production meansNewProductivity and labour productivityNewSpecialisation and division of labour: why they raise outputNewExchange and money as a medium of exchangeNewShort run vs long run in production decisionsNewMarginal, average and total returnsNewThe law of diminishing returnsNewReturns to scale: increasing, constant, decreasingNewFixed costs vs variable costsNewTotal, average and marginal costsNewWhy cost curves have their shapesNewHow factor prices and productivity shift costsNewInternal economies of scale: types and examplesNewExternal economies of scale: types and examplesNewDiseconomies of scale: why they happenNewMinimum efficient scale and industry implicationsNewTotal, average and marginal revenueNewAverage revenue as the firm’s demand curveNewProfit: normal vs abnormal (supernormal)NewThe role of profit in a market economyNewInvention vs innovationNewHow technological change affects costs and marketsNewCreative destruction linked to technological changeNew
Market structure spectrum: perfect competition to monopolyNewMarket classification: firms, differentiation, entry/exitNewFirm objectives: profit maximisation and alternativesNewProfit-maximising rule: MC = MRNewDivorce of ownership from control: why it happensNewSatisficing: what it is and why firms might do itNewPerfect competition: key assumptionsNewPerfect competition short run vs long run outcomesNewPrice takers and the industry supply storyNewPerfect competition as a yardstick for efficiencyNewMonopolistic competition: characteristicsNewMonopolistic competition short run vs long run diagramsNewNon-price competition in monopolistic competitionNewOligopoly: characteristics and why markets differNewOligopoly conduct vs structure definitionsNewConcentration ratios: calculation and interpretationNewCollusive vs non-collusive oligopolyNewCooperation vs collusionNewKinked demand curve as interdependence illustrationNewBarriers to entry and strategic behaviour in oligopolyNewMonopoly: diagrammatic model and outcomesNewMonopoly power: sources (barriers, branding, differentiation)NewPros and cons of monopolyNewPrice discrimination: conditions neededNewPrice discrimination: welfare effects on consumers/producersNewCompetition benefits in short run vs long runNewCreative destruction as a competition processNewContestable markets: sunk costs and hit-and-run entryNewStatic efficiency vs dynamic efficiencyNewProductive vs allocative efficiency conditionsNewConsumer and producer surplus (diagram skills)NewDeadweight and welfare loss (e.g., monopoly)New
Derived demand: labour demand depends on product demandNewMarginal productivity theory of labour demandNewShifts in labour demand: causes and examplesNewElasticity of demand for labour: determinantsNewMonetary and non-monetary factors affecting labour supplyNewShifts in labour supply: causes and examplesNewWage determination in competitive labour markets (diagrams)NewRelative wages: role of market forcesNewWhy real-world labour markets are imperfectNewMonopsony: effects on wages and employmentNewTrade unions: sources of bargaining powerNewTrade unions in competitive vs monopsony markets (diagrams)NewNational Minimum Wage: labour market effectsNewNMW pros and cons (workers, firms, economy)NewWage discrimination: conditions neededNewDiscrimination by gender, ethnicity and other factorsNewEvaluating discrimination: efficiency and equityNew
Income vs wealth: clear distinctionNewWhy distributions differ: skills, inheritance and marketsNewEquality vs equity: fairness as a value judgementNewLorenz curves: interpretationNewGini coefficient: interpretation (no calculation)NewBenefits and costs of greater equalityNewBenefits and costs of greater inequalityNewAbsolute vs relative povertyNewCauses of poverty: individual, structural, regionalNewConsequences of poverty: economic and socialNewPolicies to reduce poverty: transfers and welfare supportNewPolicies to reduce poverty: minimum wage and in-work benefitsNewPolicies to influence distribution: tax and public spendingNewEvaluating redistribution: efficiency–equity trade-offsNew
Prices as signals, incentives and rationing devicesNewStrengths and weaknesses of the price mechanismNewExtending markets into new areas: pros and consNewMarket failure: misallocation of resourcesNewComplete vs partial market failureNewPublic goods: non-rivalry and non-excludabilityNewQuasi-public goods and technology impactsNewFree-rider problem and missing marketsNewTragedy of the commons and environmental failureNewExternalities: private vs social costs/benefitsNewNegative externalities: over-production (diagram analysis)NewPositive externalities: under-production (diagram analysis)NewProperty rights and externalitiesNewMerit goods: why they’re under-consumedNewDemerit goods: why they’re over-consumedNewImperfect information as a source of market failureNewMonopoly power and resource misallocationNewFactor immobility and persistent market failureNewCompetition policy: aims and broad toolsNewCosts and benefits of competition policyNewPublic ownership: arguments for and againstNewPrivatisation: arguments for and againstNewRegulation vs deregulation and regulatory captureNewIntervention tools: taxes, subsidies, price controlsNewIntervention tools: state provision and regulationNewIntervention tools: property rights and permitsNewGovernment failure: how intervention can worsen outcomesNewUnintended consequences and administrative costsNew
Macroeconomic objectives: growth, inflation, unemployment, current accountNewWhy policy objectives can conflict (short run)NewHow objectives change over time: priorities and trade-offsNewCore indicators: real GDP and real GDP per capitaNewInflation indicators: CPI and RPI usesNewUnemployment measures: what they show and missNewProductivity measures and why they matterNewCurrent account data: deficits and surplusesNewIndex numbers: base year and weightsNewReading and interpreting index data in contextNewUsing GDP to assess living standardsNewLimits of GDP comparisons across time/countriesNewPPP exchange rates and why they’re usedNew
What national income measures and why it mattersNewNominal vs real variables and adjustmentNewCircular flow model: households, firms, government, overseasNewIncome = output = expenditure identityNewEquilibrium income vs full employment incomeNewInjections vs withdrawals: what counts as eachNewHow injections/withdrawals change national incomeNewAggregate demand: what it is and why it slopes downNewShifts in AD: key causes and examplesNewSRAS shifts: costs and productivityNewLRAS: fundamentals and why it differsNewUnderlying growth as a rightward shift of LRASNewMacroeconomic equilibrium on AD/AS diagramsNewDeterminants of C, I and GNewDeterminants of X and M (including exchange rates)NewSaving vs investment: key distinctionNewAccelerator process: conceptualNewMultiplier: why spending changes amplifyNewMPC and the multiplierNewCalculating the multiplier from MPCNewKeynesian AS curve: implications and useNewInstitutional factors affecting AS: banking and financeNew
Short-run vs long-run economic growthNewDemand-side vs supply-side drivers of growthNewCosts and benefits of growth: people, economy, environmentNewSustainable growth: meaning and importanceNewEconomic cycle: phases and identificationNewPositive vs negative output gaps and implicationsNewShocks and instability: demand vs supply shocksNewCredit growth, debt and financial fragilityNewAsset price bubbles and destabilising speculationNewAnimal spirits and herding: confidence effectsNewUnemployment: different causes behind one rateNewCyclical unemployment and output gap linkNewSupply-side unemployment and LRAS implicationsNewInflation, deflation and disinflation: distinctionsNewDemand-pull vs cost-push inflationNewFisher equation MV = PQ and Quantity TheoryNewExpectations and inflation dynamicsNewConsequences of inflation: micro and macroNewConsequences of deflation: micro and macroNewPhillips curve: short runNewLong-run Phillips curve: vertical/L-shaped ideaNewPolicy conflicts: inflation, unemployment, growth trade-offsNewReconciling objectives: AD/AS policy evaluationNew
Money: functions and characteristicsNewNarrow vs broad money: definitions and usesNewMoney, capital and foreign exchange marketsNewWhy financial markets matter for the real economyNewDebt vs equity finance for firmsNewBonds: coupon, maturity and yieldsNewBond prices and interest rates: inverse relationshipNewCommercial vs investment banks: differencesNewCommercial bank balance sheets: assets, liabilities, capitalNewBank objectives: liquidity, profitability, securityNewCredit creation by banks: conceptual modelNewCentral bank functions: Bank of England focusNewMonetary policy aims and current objectivesNewMPC: role and bank rate decisionsNewMPC factors when setting bank rateNewTransmission mechanism: rates to spending/inflationNewExchange rates and monetary policy effects on ADNewHow the BoE influences money supply growthNewQE, Funding for Lending and forward guidanceNewWhy banks fail: maturity mismatch and liquidityNewLiquidity and capital ratios: interpretationNewMoral hazard in financial systemsNewSystemic risk and real-economy spilloversNewUK regulation: BoE, PRA, FPC, FCA rolesNew
Fiscal policy: spending, taxation and budget balanceNewFiscal policy’s macro and micro rolesNewUsing fiscal policy to shift ADNewUsing fiscal policy to affect ASNewPublic expenditure: types and why it changesNewWhy governments levy taxes: revenue and redistributionNewDirect vs indirect taxesNewProgressive, proportional and regressive taxesNewPrinciples of taxation: equity and efficiencyNewUK taxes: examples and relative meritsNewBudget balance vs national debt linkNewCyclical vs structural deficits and surplusesNewEffects of deficits and surpluses on performanceNewWhy national debt size matters (and when)NewOffice for Budget Responsibility: roleNewEvaluating austerity vs stimulus in contextNewSupply-side policies vs supply-side improvementsNewHow incentives raise potential outputNewSupply-side effects on unemployment and inflationNewSupply-side effects on current account performanceNewFree-market supply-side: tax cuts, privatisation, deregulationNewInterventionist supply-side: education, industrial policy, R&DNewMicro side-effects of supply-side policyNewLimits, trade-offs and time lags of supply-side approachesNew
Globalisation drivers: technology, trade, capital flowsNewGlobalisation characteristics in modern economiesNewEffects of globalisation on developed economiesNewEffects of globalisation on developing economiesNewMultinational corporations: roles, benefits and risksNewAbsolute vs comparative advantageNewComparative advantage: simple numerical exampleNewGains from trade: specialisation, scale, competitionNewCosts of trade: adjustment, inequality, strategyNewWhy trade patterns change over time (UK focus)NewProtectionism: tariffs, quotas and subsidiesNewTariffs: effects on price, output and welfare (diagrams)NewWhy countries use protectionism and consequencesNewCustoms unions: key featuresNewSingle European Market: key characteristicsNewWTO: role in trade rules and disputesNewBalance of payments: current, capital, financial accountsNewCurrent account: goods, services, primary, secondary incomeNewDeficit vs surplus: interpretationNewCurrent account determinants: productivity, prices, exchange rateNewInvestment flows: FDI vs portfolio investmentNewPolicies to correct imbalances: switching vs reducingNewExternal-balance policy trade-offs with other objectivesNewFloating exchange rates: supply, demand, determinantsNewGovernment intervention in FX markets: how and whyNewFixed vs floating exchange rates: pros and consNewCurrency unions (eurozone): benefits and costsNewEconomic growth vs economic developmentNewLess-developed economies: characteristicsNewDevelopment indicators: HDI and beyondNewGrowth and development factors: investment and human capitalNewBarriers to development: institutions, infrastructure, rightsNewDevelopment policies: market vs interventionist strategiesNewAid and trade: roles, limits and evaluationNew
Linking micro and macro: markets into AD/AS outcomesNewChoosing the right model and stating assumptionsNewUsing extracts/data to build a chain of reasoningNewEvaluation: short vs long run, stakeholders, efficiency vs equityNewBalanced conclusions with judgement and conditionsNewCase study skills: evidence selection and precise theory useNewMCQ skills: isolate concepts and eliminate distractorsNewDiagrams in context: accurate labels and narrativesNewSynoptic contexts: environment, inequality, housing, labourNewSynoptic contexts: instability, global shocks, trade policyNew
Ratios and fractions in economic dataNewPercentages and percentage change: real vs nominalNewMean, median and quantilesNewChoosing the right graph for dataNewInterpreting line, bar, pie and scatter chartsNewIndex numbers: base years and weightsNewCosts, revenues and profits calculationsNewElasticity calculations and interpretationNewConverting money to real termsNewInterpreting mixed written, numerical and graphical evidenceNew
