A-level
ECONOMICS ACTUAL 2025 PAPER MERGED
WITH MARK SCHEME
Paper 2 National and International Economy
Monday 19 May 2025 Afternoon Time allowed: 2 hours
Materials
For this paper you must have:
• an AQA 12-page answer book
• a calculator.
Instructions
• Use black ink or black ball-point pen. Pencil should only be used for drawing.
• Write the information required on the front cover of your answer book.
The Paper Reference is 7136/2.
• In Section A, answer EITHER Context 1 OR Context 2.
• In Section B, answer ONE essay.
Information
• The marks for questions are shown in brackets.
• The maximum mark for this paper is 80.
• There are 40 marks for Section A and 40 marks for Section B.
Advice
• You are advised to spend 1 hour on Section A and 1 hour on Section B.
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, 2
IB/M/Jun25/G4002/V6 7136/2
Section A
Answer EITHER Context 1 OR Context 2.
EITHER
Context 1 The value of the Norwegian krone and its effects Total for this context: 40 marks
on Norway’s economy
Study Extracts A, B and C, and then answer all parts of Context 1 which follow.
Extract A:
Figure 1: Norwegian krone (NOK) to Singapore Figure 2: Macroeconomic performance
dollar (SGD) exchange rate, indicators for Germany, Norway
January 2020 to December 2023 and Singapore, average rates
between 2020 and 2023
Source: Investing.com, 2024 Source: World Bank, 2024
Extract B: Norway’s currency, the krone, has depreciated
The value of the Norwegian currency, the krone, has depreciated. Over the past 10 years, the
krone has fallen by over 20% against the euro and the US dollar. Although a fall in the value of the
krone may help some macroeconomic objectives, it can make others harder to achieve.
Inflation has decreased since its peak of 7.5% in October 2022. However, the depreciating krone
means that it will take longer for inflation to reach its target rate as imported goods become more 5
expensive. Some analysts hope that, before long, the currency will start to appreciate which
could help Norway reduce inflation.
Norway’s average CPI inflation rate for 2023 was 5.5%, with nominal wage growth of 5.1%. Thus,
real wage growth was negative, reducing average living standards. Norway’s economy is heavily
reliant on the export of oil, which makes the krone sensitive to changes in oil prices. Sales of oil
and gas helped Norway record a current account surplus of 17.5% of GDP in 2023. 10
for more: tyrionpapers.com
IB/M/Jun25/7136/2
, 3
Some economists argue that in a small open economy like Norway’s, managing the exchange rate,
by intervening in currency markets, is the best way to achieve economic and price stability. They
believe that, over the medium-term, there is a stable and predictable link between the exchange
rate and inflation. However, targeting the exchange rate means the central bank gives up control
of interest rates. 15
Source: News reports, 2024
Extract C: Singapore’s managed exchange rate
An economy that has seen considerable success by intervening in the foreign exchange
market to manage its currency is Singapore. Rather than focusing on using interest rates, the
Monetary Authority of Singapore (MAS) manages the country’s exchange rate. Singapore
does not peg its currency directly to another, such as the US dollar. Instead, the Singapore
dollar (SGD) is allowed to fluctuate, within a band, against a trade-weighted basket of 5
currencies.
This approach has several benefits for Singapore’s economy. A managed floating exchange
rate provides Singapore’s government with the flexibility to respond to economic shocks and
maintain stability. It allows the exchange rate to adjust gradually, reducing the risk of volatile
currency movements. Also, by managing the SGD against a basket of currencies, Singapore’s
government can ensure that its economy remains competitive in international trade. 10
A stable economy and exchange rate is attractive to foreign investors, leading to large inflows of
foreign direct investment (FDI). It is also crucial for Singapore’s role as a global financial
centre. However, by targeting the exchange rate, the ability to use other tools of
macroeconomic policy is limited. 15
Source: News reports, 2024
Using the data in Extract A (Figure 1), calculate how the value of the Norwegian
0 1 krone has changed compared to the Singapore dollar between 26 October 2021
and 29 May 2023.
Give your answer as a percentage and to one decimal place.
[2 marks]
0 2 Explain how the data in Extract A (Figure 2) show that Singapore may have
benefitted from managing its exchange rate compared to Germany and Norway.
[4 marks]
0 3
Extract B (lines 6–7) states: ‘Some analysts hope that, before long, the currency will start
to appreciate which could help Norway reduce inflation.’
With the help of a suitable diagram, explain how an appreciation of the krone could help
Norway reduce inflation.
[9 marks]
0 4
Extract C (lines 1–2) states: ‘An economy that has seen considerable success by
intervening in the foreign exchange market to manage its currency is Singapore.’
for more: tyrionpapers.com
, 4
Using the data in the extracts and your knowledge of economics, assess the view that an
economy is likely to perform better with a managed exchange rate rather than a freely
floating exchange rate.
[25 marks]
IB/M/Jun25/7136/2 Turn over ►
Do not answer Context 2 if you have answered Context 1.
OR
Context 2 The emergence of BRICS+ Total for this context: 40 marks
Study Extracts D, E and F, and then answer all parts of Context 2 which follow.
Extract D:
Figure 3: Development indicators of selected BRICS+ and G7 economies, 2001 and 2023
Note: *GDP at current prices, using purchasing power parity exchange rates Source: Official statistics, 2024
some figures are estimated
Extract E: BRICS+
The term ‘BRIC’ was first used by Jim O'Neill, an economist at Goldman Sachs, in a 2001
paper titled ‘Building Better Global Economic BRICs’. The paper identified Brazil, Russia, India
for more: tyrionpapers.com
IB/M/Jun25/7136/2
ECONOMICS ACTUAL 2025 PAPER MERGED
WITH MARK SCHEME
Paper 2 National and International Economy
Monday 19 May 2025 Afternoon Time allowed: 2 hours
Materials
For this paper you must have:
• an AQA 12-page answer book
• a calculator.
Instructions
• Use black ink or black ball-point pen. Pencil should only be used for drawing.
• Write the information required on the front cover of your answer book.
The Paper Reference is 7136/2.
• In Section A, answer EITHER Context 1 OR Context 2.
• In Section B, answer ONE essay.
Information
• The marks for questions are shown in brackets.
• The maximum mark for this paper is 80.
• There are 40 marks for Section A and 40 marks for Section B.
Advice
• You are advised to spend 1 hour on Section A and 1 hour on Section B.
for more: tyrionpapers.com
, 2
IB/M/Jun25/G4002/V6 7136/2
Section A
Answer EITHER Context 1 OR Context 2.
EITHER
Context 1 The value of the Norwegian krone and its effects Total for this context: 40 marks
on Norway’s economy
Study Extracts A, B and C, and then answer all parts of Context 1 which follow.
Extract A:
Figure 1: Norwegian krone (NOK) to Singapore Figure 2: Macroeconomic performance
dollar (SGD) exchange rate, indicators for Germany, Norway
January 2020 to December 2023 and Singapore, average rates
between 2020 and 2023
Source: Investing.com, 2024 Source: World Bank, 2024
Extract B: Norway’s currency, the krone, has depreciated
The value of the Norwegian currency, the krone, has depreciated. Over the past 10 years, the
krone has fallen by over 20% against the euro and the US dollar. Although a fall in the value of the
krone may help some macroeconomic objectives, it can make others harder to achieve.
Inflation has decreased since its peak of 7.5% in October 2022. However, the depreciating krone
means that it will take longer for inflation to reach its target rate as imported goods become more 5
expensive. Some analysts hope that, before long, the currency will start to appreciate which
could help Norway reduce inflation.
Norway’s average CPI inflation rate for 2023 was 5.5%, with nominal wage growth of 5.1%. Thus,
real wage growth was negative, reducing average living standards. Norway’s economy is heavily
reliant on the export of oil, which makes the krone sensitive to changes in oil prices. Sales of oil
and gas helped Norway record a current account surplus of 17.5% of GDP in 2023. 10
for more: tyrionpapers.com
IB/M/Jun25/7136/2
, 3
Some economists argue that in a small open economy like Norway’s, managing the exchange rate,
by intervening in currency markets, is the best way to achieve economic and price stability. They
believe that, over the medium-term, there is a stable and predictable link between the exchange
rate and inflation. However, targeting the exchange rate means the central bank gives up control
of interest rates. 15
Source: News reports, 2024
Extract C: Singapore’s managed exchange rate
An economy that has seen considerable success by intervening in the foreign exchange
market to manage its currency is Singapore. Rather than focusing on using interest rates, the
Monetary Authority of Singapore (MAS) manages the country’s exchange rate. Singapore
does not peg its currency directly to another, such as the US dollar. Instead, the Singapore
dollar (SGD) is allowed to fluctuate, within a band, against a trade-weighted basket of 5
currencies.
This approach has several benefits for Singapore’s economy. A managed floating exchange
rate provides Singapore’s government with the flexibility to respond to economic shocks and
maintain stability. It allows the exchange rate to adjust gradually, reducing the risk of volatile
currency movements. Also, by managing the SGD against a basket of currencies, Singapore’s
government can ensure that its economy remains competitive in international trade. 10
A stable economy and exchange rate is attractive to foreign investors, leading to large inflows of
foreign direct investment (FDI). It is also crucial for Singapore’s role as a global financial
centre. However, by targeting the exchange rate, the ability to use other tools of
macroeconomic policy is limited. 15
Source: News reports, 2024
Using the data in Extract A (Figure 1), calculate how the value of the Norwegian
0 1 krone has changed compared to the Singapore dollar between 26 October 2021
and 29 May 2023.
Give your answer as a percentage and to one decimal place.
[2 marks]
0 2 Explain how the data in Extract A (Figure 2) show that Singapore may have
benefitted from managing its exchange rate compared to Germany and Norway.
[4 marks]
0 3
Extract B (lines 6–7) states: ‘Some analysts hope that, before long, the currency will start
to appreciate which could help Norway reduce inflation.’
With the help of a suitable diagram, explain how an appreciation of the krone could help
Norway reduce inflation.
[9 marks]
0 4
Extract C (lines 1–2) states: ‘An economy that has seen considerable success by
intervening in the foreign exchange market to manage its currency is Singapore.’
for more: tyrionpapers.com
, 4
Using the data in the extracts and your knowledge of economics, assess the view that an
economy is likely to perform better with a managed exchange rate rather than a freely
floating exchange rate.
[25 marks]
IB/M/Jun25/7136/2 Turn over ►
Do not answer Context 2 if you have answered Context 1.
OR
Context 2 The emergence of BRICS+ Total for this context: 40 marks
Study Extracts D, E and F, and then answer all parts of Context 2 which follow.
Extract D:
Figure 3: Development indicators of selected BRICS+ and G7 economies, 2001 and 2023
Note: *GDP at current prices, using purchasing power parity exchange rates Source: Official statistics, 2024
some figures are estimated
Extract E: BRICS+
The term ‘BRIC’ was first used by Jim O'Neill, an economist at Goldman Sachs, in a 2001
paper titled ‘Building Better Global Economic BRICs’. The paper identified Brazil, Russia, India
for more: tyrionpapers.com
IB/M/Jun25/7136/2
