AS & A Level / Economics / National income and aggregate demand Question practice
National income and aggregate demand About this practice Original, unofficial practice. Evaluative marking points are indicative: credit equivalent justified arguments, one point per distinct criterion, without double counting.
Accept equivalent valid methods and supported interpretations that address the task. Award each mark once; matching the model wording is not required.
Economics National income and aggregate demand
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1 Explain why buying a newly produced domestic machine enters GDP but buying an existing company's shares does not itself enter current GDP. Easy 2 marks No calculator + 2 Fictional economy: C = 500, I = 120, G = 180, exports = 90 and imports = 110, all in million currency units. Calculate GDP by expenditure and the trade balance. Easy 3 marks Calculator + 3 Fictional economy: nominal GDP rises from 900 to 990 while the GDP deflator rises from 100 to 110. Calculate real GDP in both years and real growth; explain what nominal growth alone misses. Medium 4 marks Calculator + 4 Fictional simplified economy: marginal propensities to save, tax and import, each measured against additional national income (not disposable income), are 0.20, 0.10 and 0.10. Assume fixed prices and spare capacity. Calculate the multiplier and the final income change from an autonomous investment increase of 30 million; state one limitation. Medium 4 marks Calculator + 5 Fictional case: Tavi's GDP per person rises after a mining boom, but profits largely go abroad and water quality worsens. Evaluate GDP per person as a measure of improved living standards. Hard 4 marks No calculator + 6 Fictional case: Hela has idle factories but shortages of trained engineers. Evaluate whether an aggregate-demand stimulus alone can close its output gap without inflation. Hard 4 marks No calculator + Self-assessed Not marked yet
Set total 21
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Original questions, not official past papers. Marking guidance is indicative, not an official answer key. Check your exam-board specification.
