Edexcel A Level Economics A
Edexcel A Level Economics A 2.6 Macroeconomic Objectives and Policies Exam Questions
Free Edexcel A Level Economics A exam questions on 2.6 Macroeconomic Objectives and Policies, with mark schemes. Covers demand-side and supply-side policies and conflicts between objectives.
2.6 Macroeconomic Objectives and Policies exam questions
1 question pack of real past exam questions with its mark scheme. Answer every question without notes, then mark your answers line by line against the mark scheme.
StemUp mark scheme flashcards
Edexcel A Level Economics A 9EC0 Flashcards (Anki & Quizlet)
Every answer is written in mark scheme wording, so you learn exactly what examiners give marks for. Use them on Anki or Quizlet, then test yourself with the questions on this page.
£15.99View flashcards
About Edexcel A Level Economics A 2.6 Macroeconomic Objectives and Policies
2.6 brings Theme 2 together. Essay questions here ask you to evaluate fiscal, monetary and supply-side policies and the trade-offs between objectives.
What you need to know
- Objectives Economic growth, low unemployment, low and stable inflation, balance of payments equilibrium, a balanced government budget, protecting the environment and greater income equality.
- Demand-side policies Monetary policy (Bank Rate, quantitative easing, set by the Monetary Policy Committee) and fiscal policy (government spending and taxation, direct and indirect taxes, budget deficits).
- Supply-side policies Market-based, such as tax cuts and deregulation, and interventionist, such as education and infrastructure spending. Know their strengths and weaknesses.
- Conflicts and trade-offs For example growth versus inflation, unemployment versus inflation (short run Phillips curve) and growth versus the environment.
Common mistakes in 2.6 Macroeconomic Objectives and Policies
- Saying the government sets interest rates. In the UK the Bank of England's Monetary Policy Committee does.
- Confusing the budget deficit with the national debt.
- Calling all supply-side policies government spending; many are market-based.
- Not evaluating time lags, which are a key weakness of many policies.
Try three 2.6 Macroeconomic Objectives and Policies exam-style questions
1. Explain how an increase in Bank Rate is likely to reduce inflation. (4 marks)
Show the mark scheme answer
Borrowing becomes more expensive and saving more attractive (1), so consumption and investment fall (1). AD shifts left (1), reducing demand-pull pressure on the price level (1).
2. Explain one possible conflict between macroeconomic objectives. (3 marks)
Show the mark scheme answer
Policies to boost growth raise AD (1), which may reduce unemployment but cause demand-pull inflation (1), so low unemployment and low inflation conflict in the short run (1).
3. Give two examples of market-based supply-side policies. (2 marks)
Show the mark scheme answer
Any two from: cutting income or corporation tax, reducing trade union power, deregulation, privatisation, reducing benefits to increase incentives to work (1 each).
2.6 Macroeconomic Objectives and Policies FAQs
What does Edexcel A Level Economics 2.6 cover?
Macroeconomic objectives, demand-side policies, supply-side policies and conflicts between objectives and policies.
Who sets UK interest rates?
The Bank of England's Monetary Policy Committee, which targets 2 percent CPI inflation.
How should I evaluate supply-side policies?
Consider time lags, cost to the government, effects on inequality and whether market-based or interventionist approaches suit the problem.
Revise this topic with flashcards: Edexcel A Level Economics A 9EC0 Flashcards, with mark scheme answers for Anki and Quizlet.
