Edexcel a level economics a question pape r 3 june 2023

Pearson Edexcel Level 3 GCE Monday 5 June 2023 Morning (Time: 2 hours) Paper reference 9EC0/03 Total Marks Economics A Advanced PAPER 3: Microeconomics and Macroeconomics You do not need any other materials. Instructions • Use black ink or ball-point pen. • Fill in the boxes at the top of this page with your name, centre number and candidate number. • There are two sections in this question paper. • In Section A, answer all questions 1(a) to 1(c) and one question from 1(d) or 1(e). • In Section B, answer all questions 2(a) to 2(c) and one question from 2(d) or 2(e). • Answer the questions in the spaces provided – there may be more space than you need. Information • The total mark for this paper is 100. • The marks for each question are shown in brackets – use this as a guide as to how much time to spend on each question. • Calculators may be used. Advice • Read each question carefully before you start to answer it. • Check your answers if you have time at the end.*P72982A0236* DO NOT WRITE IN THIS AREA DO NOT WRITE IN THIS AREA DO NOT WRITE IN THIS AREA 2  SECTION A Read Figures 1 and 2 and the following extracts (A and B) before answering Question 1. Answer ALL Questions 1(a) to 1(c), and EITHER Question 1(d) OR 1(e). Write your answers in the spaces provided. You are advised to spend 1 hour on this section. Question 1 The UK economy Figure 1: UK gas prices in pence per therm, August 2002 to August 2022 Aug 2002 Aug 2012 Aug 2022 600 500 400 300 200 100 0 Pence per therm Figure 2: UK inflation, CPI, August 2002 to August 2022 Aug 2002 Aug 2012 Aug 2022 10 8 6 4 2 0 –2 (%) 9.9 *P72982A0336* Turn over 3 DO NOT WRITE IN THIS AREA DO NOT WRITE IN THIS AREA DO NOT WRITE IN THIS AREA Extract A Fiscal policy changes in the UK, Autumn 2022 After many changes in policy, people earning above £150 000 will now no longer benefit from the tax cut in the September 2022 mini-budget, which proposed the removal of the 45% tax band. The proposed change in the main 20% standard rate of income tax moving to 19% has been postponed. In April 2022, a 1.25% rise in national insurance contributions was implemented, labelled as a health and social care levy. It was cancelled in Autumn 2022. Britain’s poorest households would have lost £7.56 a year from the national insurance rise. The richest 10% of households, earning an average of £108 000, would have lost £1 800. Another measure in the Truss Government’s £30 billion tax cut proposals that would have benefitted the rich, was the removal of the 2023 planned rise in corporation tax from 19% to 25%. The former chancellor wanted to cut the tax to 15% but this was the wrong time to do this. The former chancellor also removed the 2014 cap on bankers’ bonuses, clearly an unfair decision at the time when public sector workers were told to accept pay caps to keep inflation under control. The reflationary fiscal policy triggered warnings that the Monetary Policy Committee of the Bank of England would raise interest rates further – having already raised them from 0.1% in 2021 to 2.25% in September 2022. This meant an end to the fiscal rules set by the government in the recent past: debt to be falling as a share of national income by 2024 and no borrowing for day-to-day spending. (Source: adapted from ‘Tax cuts benefit high income earners the most’ R Merrick The Independent: 19 September 2022 and FT Source: adapted from Sebastian Payne and Chris Giles in London 29 August 2022) Extract B Inequality to rise in the UK The rising cost of living is expected to affect low-income families the most. Inflation in Autumn 2022 is expected to hit 14% for families in the poorest tenth of the income distribution, compared with 8% for families in the richest tenth, driven in large part by rising energy costs and food prices. Around half of the food consumed in the UK is imported, and the 20% fall in the value of the pound in 2022 has affected lower income groups more because food is a higher proportion of their spending. The government’s decision to freeze benefits, rather than allowing them to rise in line with current inflation, means that the support provided is a real terms cut for families currently receiving high levels of benefits. A two-year freeze on energy price caps will now only last until April 2023, which would have kept the average energy bill at £2 500 rather than £3 500. (Source: adapted from IFS Report: Living standards, poverty and inequality in the UK: July 2022 and 64c-e1c59172daa7?shareType=nongift) 5 10 15 20 5 10*P72982A0436* DO NOT WRI