Section A
ANSWER ALL QUESTIONS IN THIS SECTION
Answer ALL questions. Write your answers in the spaces provided.
Use the data to support your answers where relevant.
You may annotate and include diagrams in your answers.
1. The data below shows the UK’s GDP per capita using Purchasing Power Parity (PPP).
GDP per
capita at
PPP (£)
(a)
2008
2009
2010
2011
2012
2013
2014
2015
38 164
37 739
35 840
36 240
36 549
36 535
36 908
37 614
Explain what is meant by “Purchasing Power Parity” [2 marks]
_____________________________________________________________________________________________
_____________________________________________________________________________________________
_____________________________________________________________________________________________
_____________________________________________________________________________________________
_____________________________________________________________________________________________
_____________________________________________________________________________________________
_____________________________________________________________________________________________
_____________________________________________________________________________________________
(b)Explain one limitation of using GDP to assess living standards.
[1 mark]
_____________________________________________________________________________________________
_____________________________________________________________________________________________
_____________________________________________________________________________________________
_____________________________________________________________________________________________
_____________________________________________________________________________________________
_____________________________________________________________________________________________
_____________________________________________________________________________________________
Page 2 Edexcel Economics (AS) – Paper 2: Number 1
[1 mark]
(c) Which of the following statements is true?
A
B
C
D
Structural unemployment exists when wages cannot fall to clear the labour market
A person is regarded as under-employed if they have a job in which the required skill levels are lower than their actual skill levels
Demand-deficient unemployment is usually experienced in an economic boom
Frictional unemployment occurs when seasonal workers are in-between jobs
Answer
5. The chart below shows the UK’s saving ratio from 1997 to 2015.
Jobless total
Unemployment and Jo
Number, millions
3.5
3.0
2.5
2.0
1.5
1.0
0.5
0
92 93 94 95 9
Source: ONS
(a)
Savings and Imports are both leakages from the circular flow of income. What is the other leakage?
[1 mark]
Average price level
_____________________________________________________________________________________________
LR
_____________________________________________________________________________________________
P2
_____________________________________________________________________________________________
P
_____________________________________________________________________________________________
(b)
Using the information in the chart provided above, calculate the percentage point change in the UK’s savings
ratio between the Quarter 1 1997 (the starting point of the data) and Quarter 1 2015 (the end point of the data).
[1 mark]
_____________________________________________________________________________________________
_____________________________________________________________________________________________
_____________________________________________________________________________________________
Average price level
_____________________________________________________________________________________________
LRAS
P
SRAS
Edexcel Economics (AS) – Paper 2: Number 1 Page 7
Y2
Y
Extract C
Growth industries
The proposed new apprenticeship standards cover a range of industries, from nuclear energy to fashion, law,
banking and defence. Many of these are the major growth industries in the UK. Figure 2 below shows the UK’s
predicted top growth industries for 2015.
Figure 2 – the UK’s predicted top growth industries 2015
Industry
Predicted annual growth rate
House building
4.8%
Creative industries
10%
Hotels
2.9%
Legal services
4.9%
Agricultural technology
2.4%
Convenience food
6%
Source: https://www.connector.barclays.co.uk/article/6-sectors-set-for-growth-in-2015/26339
Many firms in the UK’s export industries are also pressuring the government to help support apprenticeships. Figure
3 below shows value of trade from some of the UK’s top export industries.
Figure 3 – UK’s major international trade industries
Road Vehicles
Medicine /
Power
generation
equipment
Petroleum
products
Telecoms
equipment
Value of exports
2013
31,471.6
21,222.8
22,156.2
36,023.8
6,802.4
Value of exports
2014
32,149.8
21,148.9
20,750.8
30,322.2
6,387.1
Value of imports
2013
41,575.5
18,422.0
17,553.5
43,447.4
17,792.7
Value of imports
2014
45,789.2
21,200.7
17,144.9
37,758.1
16,710.2
Source: HMRC, Top 30 products quarterly bulletin, 7.8.2015
Edexcel Economics (AS) – Paper 2: Number 1 Page 11