Practise 92 real questions on The macroeconomy from 2021 to 2026. See the answer and explanation as soon as you answer.
The macroeconomy is one of the 11 main topics in our A Level Economics (Cambridge (CAIE) 9708) question bank, and about 10% of its real questions come from it. Tayyari Karo has 92 real questions on this topic from 2021 to 2026, from Paper 1, Paper 2, Paper 3, Paper 4; 59 are multiple choice and marked instantly, and the rest are structured questions with a model answer. By difficulty: 50 medium, 25 hard, 17 easy.
Work through the questions below, then open the explanation for each one. Redo the ones you missed a few days later.
These are real past-paper questions. Think of your answer first, then open the explanation.
Which adjustments are needed to change Gross Domestic Product (GDP) at basic prices to GDP at market prices? (indirect taxes / subsidies)
Answer: B. add / subtract
GDP at market prices = GDP at basic prices + indirect taxes - subsidies.
Which statement correctly describes an increase in real GDP?
Answer: B. Nominal GDP rising faster than the rate of inflation.
Real GDP = nominal GDP adjusted for inflation; real GDP rises only when nominal GDP grows faster than the rate of inflation.
A country's net national income (NNI) is less than its gross national income (GNI). What does this mean?
Answer: D. there has been a net depreciation in the value of the country's fixed capital assets
NNI = GNI − depreciation (capital consumption). NNI being less than GNI simply reflects the deduction of depreciation of the capital stock.
What is not included in the measurement of national income?
Answer: A. benefits paid to the unemployed
National income measures the value of newly produced goods and services (factor incomes earned from current production). Unemployment benefits are a transfer payment — money redistributed rather than earned from producing output — so they are excluded, unlike dividends, retained profits and rent, which are all factor incomes.
Over a period of a year, the annual rate of inflation becomes negative. Which statement must be correct?
Answer: A. The cost of living has fallen.
Negative inflation (deflation) means the general price level is falling, so the cost of living — the average price of the basket of goods and services — has fallen. The purchasing power of money rises (not falls) with deflation, the CPI falls (not rises), and living standards depend on much more than prices alone.
Assuming the demand for oil is price-inelastic, what will be the effect on demand-pull inflation and on cost-push inflation in an oil-importing country of an increase in the world price of oil?
Answer: C. reduce demand-pull inflation, increase cost-push inflation
Because demand for oil is price-inelastic, a higher oil price raises total spending on oil, leaving less income for other goods and reducing demand-pull inflationary pressure elsewhere, while the higher oil price raises firms' costs directly, increasing cost-push inflationary pressure.
Japan inflation case study (see Question 1). (d) Assess whether low interest rates alone are likely to lead to an increase in aggregate demand in Japan. [6]
Up to 4 marks for explanation/analysis: how low interest rates raise AD (cheaper borrowing encourages consumers and firms to borrow and spend; disposable income rises) - up to 3 marks; other factors that could raise AD, such as consumer confidence, levels of debt, government spending, net exports and the broader economic environment - up to 3 marks. Up to 2 marks for evaluation: relevant evaluation of the different factors (1) to reach a conclusion on whether low interest rates alone are likely to raise AD in Japan (1); reserve 1 mark for a valid conclusion.
Low rates make borrowing cheaper and boost consumption and investment, but AD also depends on confidence, debt, government spending and net exports, so low rates alone are unlikely to be sufficient.
Explain how the circular flow of income in an economy changes when that economy moves from a closed to an open economy, and consider what determines the extent of the change.
AO1 (max 3): the circular flow of income is the way income flows around an economy from firms to households and back to firms in a continuous process; payments are made to factors of production as income, profit and rent; these payments are then spent on goods and services. AO2 (max 3): in a closed economy, injections are Investment (I) and Government spending (G), and withdrawals/leakages are Savings (S) and Taxes (T); in an open economy, spending on exports (X) is added to injections, and spending on imports (M) is added to withdrawals/leakages (max 2 marks if only a closed or only an open economy is considered, with no evaluation marks available). …
The full model answer is in the app.
| Session | Paper 1 | Paper 2 | Paper 3 | Paper 4 |
|---|---|---|---|---|
| May/June 2026 | 5 | 4 | – | – |
| May/June 2025 | 6 | 3 | – | – |
| October/November 2025 | 5 | 2 | – | – |
| May/June 2024 | 5 | – | – | – |
| October/November 2024 | 5 | 4 | – | – |
| May/June 2023 | 5 | 5 | – | – |
| October/November 2023 | 9 | 3 | 6 | 2 |
| May/June 2022 | 2 | 4 | – | – |
| October/November 2022 | 3 | – | – | – |
| May/June 2021 | 4 | 1 | – | – |
| October/November 2021 | 4 | 5 | – | – |
92 real A Level Economics (9708) questions on The macroeconomy from 2021 to 2026, from Paper 1, Paper 2, Paper 3, Paper 4. Each one shows the year, session and paper it came from.
Yes. Every question shows the correct answer and a short explanation the moment you answer.
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