11 Practice Questions in style of Edexcel Economics Paper 2

Revising current affairs and doing practice questions are both recommended revision tasks ahead of Edexcel Economics A A Level Paper 2 2024.

Real world examples will help for section C 25 markers. Practice questions will also help with the section B and section A questions.

Here are some of the key topics from the specification. These topics have also appeared in current affairs in the last one to two years before the 2024 exams.

For each area, there’s an idea of a practice question and some current affairs information. There’s also a link to full practice questions, written in the style of Edexcel A, with long or short extracts on each topic.

Link to Paper 1 style practice questions.

Topic	Topic details and practice question ideas	Where to find full practice questions on this topic
1. Labour force participation rate and unemployment.	The UK’s rate of economic inactivity, those not in work nor looking for work, has increased since the Covid-19 pandemic.  A major theme in the Chancellor’s recent budgetary events has been how to bring economic inactivity back down.  So far, the Chancellor has settled on a combination of childcare subsidies, welfare reform and tax incentives. Will that be enough?  Long-term sickness has also been a driver of economic inactivity and may need addressing too. How should the Government address this to raise labour force participation? A number of developing or middle income countries have faced unemployment problems, including South Africa. What are the consequences of unemployment? How should governments reduce the rate of unemployment?	Practice paper 2024 2A question 6. Practice paper 2024 2B question 6. Practice paper 2024 2C question 8.
2. Trading blocs.	The UK has left the EU. The key impact of this decision on trade comes through non-tariff barriers, such as regulation and customs checks.  Meanwhile, the UK has signed new trade deals with Australia and New Zealand and has entered the CPTPP trading agreement. The CPTPP features growing economies such as Vietnam and the group has the potential to grow in the future.  Should the UK enter into trading arrangements and if so, which ones? The eurozone is expanding, with Croatia adopting the euro as its currency in 2023. What’s the impact of this for the Croatian economy and on other eurozone countries?	Practice paper 2024 2A question 6. Practice paper 2023 2B question 6.
3. Fiscal policy	It seems like in every budget event in the UK, there are some changes in taxes.  This includes the decisions on tax rates, such as cutting national insurance rates, raising corporation tax rates or freezing income tax rates.  It also seems that finally, there are attempts to smooth out some of the inefficiencies in the tax system, such as high marginal tax rates for those with children earning £50,000.  Fiscal policy is likely to be a big talking point in the upcoming UK election. Political parties are debating whether fiscal rules should be changed to allow borrowing to invest.  What’s the impact on the UK economy of freezing income tax thresholds? Should UK fiscal policy change?	Practice paper 2024 2A question 6. Practice paper 2024 2B question 6. Practice paper 2023 2A question 6. Practice paper 2023 2C question 7.
4. Economic growth.	The UK economy has faced slow economic growth and essentially a “lost decade” in productivity growth. Rising interest rates and high energy prices have hit growth in the short run, resulting in the UK economy entering a technical recession.  What are the consequences of weak economic growth, both in the UK but also globally? Should governments try to raise the economic growth rate and if so, how? Slow economic growth is not unique to the UK. More recently, Germany has experienced a slowdown in economic growth and so is the broader global economy. Meanwhile the US economy is experiencing higher economic growth than many advanced competitors. What’s driving differences in economic growth rates between countries?	Practice paper 2024 2C question 7.
5. BRICS economies	The rise of the BRICS group of emerging economies has changed the nature of aid. Certain members of the group have also called for reduced reliance on the dollar or even to form their own monetary union.  Meanwhile, global headwinds are putting pressure on developing economies. These global pressures, in addition to big incentives from some governments, are leading multinationals to move their production facilities.  Can aid from the BRICS help developing economies? Are multinationals helping or hindering development?	Practice paper 2024 2B question 6.
6. Financial markets and deregulation.	In 2023 we saw the failure of a small number of banks, including Silicon Valley Bank and Credit Suisse.  Meanwhile, the UK Government has been pushing for deregulation of financial markets. Most recently, this has included giving financial regulators a new “competitiveness” objective, as well as ensuring the financial stability of the UK economy.  Deregulation can reduce costs but it risks a repeat of the 2008 financial crisis. So, is deregulation a good idea?	Practice paper 2024 2A question 6. Practice paper 2024 2A question 8.
7. Bank of England, monetary policy and criticism.	CPI inflation reaching 11.1% in the UK in 2022. Should the Bank of England have done more to prevent high inflation? On the other hand, global energy prices are largely outside of the Bank of England’s control. There has been disinflation but as of March 2024, the UK’s CPI inflation rate remains above its target range. Should the Bank of England act differently in the face of demand-side and supply-side shocks? Several countries across the world have faced high inflation. How have different central banks fared in their efforts to bring down the rate of inflation?	Practice paper 2024 2A question 6. Practice paper 2024 2B question 8. Practice paper 2024 2C question 6.
8. Deglobalisation and protectionism	Protectionist measures have been put in place across the global economy in the last two years. This includes export bans on certain types of rice from India, as well as US subsidies to encourage semiconductor companies to move to the country. Are such measures beneficial for the economy? Who are the winners and losers from protectionism? Global uncertainties and protectionist policies are encouraging “reshoring”. In other words, multinationals are bringing their factories closer to consumers. Who wins and loses from reshoring?	Practice paper 2024 2A question 6. Practice paper 2024 2C question 6.
9. Development barriers and policies – recent trends	While there are lots of barriers to development, here are a few that have made the news: – Primary product dependency for oil and rare metals. For the latter, demand is only likely to increase over time. – Foreign currency gaps as several foreign countries struggle with dollar shortages. – High private and government debt relative to incomes. There are too many development policies to cover here. Yet a few that have made the news include: – Tourism as a development strategy as tourist numbers rebound following previous restrictions. – Microfinance in the age of digital banking and in the face of protests against microfinance loan shark practices. – Aid including from the IMF. Indeed there have been protests related to the conditions attached to the IMF aid. – Encouraging joint ventures with multinational companies and industrialisation, supported by protectionist trade policies. Governments are looking to attract large multinational companies, including companies in the technology supply chain. In addition governments are also working with mining companies to extract raw materials.  Can countries overcome development barriers? What are the most effective development policies – does the answer depend on the country?	Practice paper 2024 2A questions 7,8. Practice paper 2024 2B question 6. Practice paper 2024 2C question 6.
10. Exchange rate fluctuations and the current account	The value of the pound sterling has fallen over time against the US dollar. What are the causes and consequences of this sustained depreciation? In contrast, the US dollar has shown strength. This has consequences for developing countries, who may run out of foreign currency to afford more expensive imports. Debt is also often denominated in US dollars.  How serious are the consequences of US dollar fluctuations for developing economies? Should developing economies look to reduce their reliance on the dollar?  How should governments solve imbalances in the current account?	Practice paper 2024 2B question 6. Practice paper 2024 2C question 6.
11. Poverty, inequality and tradeoffs	Higher inflation has increased the cost of living in developed and many developing economies. What are the causes and consequences of poverty in developing and developed countries? There are concerns about whether robots will increase inequality in incomes. What are the possible tradeoffs between economic growth and reducing inequality? Several other tradeoffs have made the news. This includes tradeoffs between inflation and economic growth and whether government policy can manage these tradeoffs. Can you explain and evaluate tradeoffs between different macroeconomic objectives?	Practice paper 2024 2B question 7. Practice paper 2024 2C question 1. Practice paper 2024 2C question 7.

How to use practice papers and questions

It is important to note that such questions are not “predictions”. You should revise all topics.

Instead, they are opportunities for additional practice for your exam technique and current affairs knowledge.

[Disclaimer: Make sure to revise all macroeconomics parts of the Edexcel Economics A specification ahead of Paper 2. This revision should also cover topics not mentioned above, including but not limited to inflation and the business cycle. Please kindly note I have no affiliation with any exam board.]

Bonus tips for Edexcel Economics A Paper 2 2024

Some bonus tips for Edexcel macroeconomics:

1. Following an increase in investment, government spending or net exports, you can use the multiplier effect to extend analysis or as an extra point. You can also use a higher level diagram to show a double shift in AD to the right. The first shift being the initial increase in investment, government spending or net exports; and the second shift being due to the multiplier effect.
2. You can evaluate the effects of shifts in aggregate demand by using a spare capacity argument.

3. You should know some key macro stats. This includes but is not limited to macro objectives, key economic policies and examples of countries. 

4. Suppose aggregate supply shifts to the right. This increases real GDP, lowers unemployment, reduces inflation and improves the current account by raising export competitiveness. In other words, all four of these key macroeconomic objectives improve. Provided it’s relevant to the question, this is a great way to extend discussion of your AS shifts. In many cases, SRAS and LRAS will shift at the same time, for example because of an increase in the labour supply.

5. Try using a more advanced diagram in your 25 markers where appropriate. This could include shifts in two curves as opposed to one, labelling key areas on a tariff diagram, or showing on the diagram how the economy adjusts from the old to the new equilibrium. Other diagrams could include crowding out and the Laffer curve. Make sure your diagrams are accurately labelled.

6. If you are unsure what to write for 15 and 25 markers, start by thinking which diagram(s) may be relevant to the question. For example, how would aggregate supply and/or aggregate demand be affected? Or would a tariff or currency market diagram be more relevant? Each diagram can be the basis for one or two of your points.

7. Here are some key evaluation points for different topics. You should be able to come up with your own points, including tailoring points to the particular question:

• Rises or falls in tariff rates – evaluate with the price elasticity of demand or the risk of retaliation.
• Depreciation – evaluate with the Marshall Lerner condition or the J curve.
• Aggregate supply shift – evaluate with the proportion of firms or firms’ costs affected. 

More evaluation points are available here.

For more A-Level Economics Edexcel A style resources, click the blue button below: