Edexcel A-Level Economics – Macro Questions with Correct Answers 2025

Edexcel A-Level Economics – Macro
Questions with Correct Answers 2025
MacroeconomicEobjectivesEofEgovernmentE-ECORRECTEANSWERE--EEconomicEgrowth

-ELowEinflationE(2%)

-EFullEemployment,ElowEunemployment

-EBalanceEofEpayments

-EFairEdistributionEofEincome



Non-coreEgovernmentEobjectivesE-ECORRECTEANSWERE--EEnvironmentalEsustainability

-EProductivityEgrowth

...



CircularEflowEofEincomeEdiagramE-ECORRECTEANSWERE-



LeakagesEinEtheEcircularEflowE-ECORRECTEANSWERE-
LeakedEfromEfactorEincomesEthatEfirmsEgiveEtoEhouseholds.

-ES:Esavings

-ET:Etaxes

-EM:Eimports



InjectionsEinEtheEcircularEflowE-ECORRECTEANSWERE-
InjectedEintoEconsumerEexpenditureEthatEhouseholdsEgiveEtoEfirms.

-EG:EgovEspending

-EI:Einvestment

-EX:Eexports



MethodsEofEmeasuringEGDPE-ECORRECTEANSWERE--EOutputEmethodE(g+s)

-EIncomeE(factorEincomes)

-EExpenditureE(consumerEexpenditure)

,Therefore,EGDPE=EoutputE=EincomeE=Eexpenditure.



BaseEyearEindexEnumberE=E-ECORRECTEANSWERE-100



IndexEnumberEcalculationE-ECORRECTEANSWERE-(RawEnumberE/EbaseEyearErawEnumber)E*E100



%EchangeEcalculationE-ECORRECTEANSWERE-(newE-Eold/old)*E100



(change/original)E*E100



MeasuresEofEeconomicEgrowthE-ECORRECTEANSWERE--EGDPE(=EincomeE=EexpenditureE=Eoutput)

-EGDPEperEcapita

-EGNI

-EPPP



GDPE-ECORRECTEANSWERE-GrossEDomesticEProductE-
EtheEtotalEmarketEvalueEofEallEfinalEgoodsEandEservicesEproducedEannuallyEinEanEeconomy.




GDPEperEcapitaE=E-ECORRECTEANSWERE-GDP/population



GNIE-ECORRECTEANSWERE-GrossEnationalEincomeE=EGDPE+EnetEfactorEincomeEfromEabroad.



TheEtotalEvalueEofEgoodsEandEservicesEproducedEwithinEaEcountryEtogetherEwithEtheEbalanceEofEincomeEan
dEpaymentsEfromEorEtoEotherEcountries.



E.g:EremittancesEareEincluded...



EconomicEgrowthE-ECORRECTEANSWERE-
TheEincreaseEinEtheEpotentialElevelEofErealEoutputEtheEeconomyEcanEproduceEoverEaEperiodEofEtime.E

, TheEexpansionEinEtheEproductiveEcapabilityEofEanEeconomyE(increasedEproductionEinEg+s).



AggregateEdemandEequationE-ECORRECTEANSWERE-ADE=ECE+EIE+EGE+E(X-M)



=EConsumptionE+EInvestmentsE+EGovEexpenditureE+E(ExportsE-EImports)



PPFE(ProductionEPossibilitiesEFrontier)E-ECORRECTEANSWERE-
AEgraphEthatEshowsEtheEmaxEcombosEofEoutputEthatEtheEeconomyEcanEpossiblyEproduceEgivenEtheEavailabl
eEfactorsEofEproductionE(inputs)EinEaEgivenEtimeEperiodEatEtheElowestEcost.



Short-runEeconomicEgrowthE-ECORRECTEANSWERE-IncreaseEinEactualEGDP,EincreaseEinEAD.



Short-runEeconomicEgrowthEPPFEgraphE-ECORRECTEANSWERE-



Short-runEeconomicEgrowthES+DEgraphE-ECORRECTEANSWERE-



FactorsEofESREeconomicEgrowthE-ECORRECTEANSWERE-AsESREeconomicEgrowthEisEdueEtoEinEincreaseEinEAD.



AndEADE=ECE+EIE+EGE+E(XE-EM)



IncreaseEinECE/EIE/EGE/EXE=EincreaseEinEADE=ESREeconomicEgrowth.



ExplainEhowEtheseEfactorsEaffectEeconomicEgrowth:

-ELowerEinterestErates

-EWeakerEexchangeEratesE-ECORRECTEANSWERE-LowerEinterestErates:

=ElessEsavingE(lessErewardEforEsaving)E=EmoreEdisposableEincomeE=EmoreEspendingE=ECEincreaseE=EADEincrea
sesE(shiftsEright)E=ESREecoEgrowth.



WeakerEexchangeErates: