Section A — Stimulus material: The pound and UK trade
Figure 1: The pound's value against the US dollar fell from $1.40 in mid-2021 to $1.22 in mid-2023. UK goods exports grew slowly while import prices rose.
Extract 1: In theory a depreciation should improve the current account by making exports cheaper and imports dearer. However, many UK exports are services and high-value manufactured goods whose demand depends more on quality than price. In the short run, contracts are fixed and volumes adjust slowly, so the deficit can first get worse (the J-curve).
Extract 2: The depreciation added to UK inflation by raising the price of imported food, energy and components. The Bank of England had to consider this when setting interest rates. Meanwhile, new trade barriers with the EU have increased costs for some exporters.
From Paper 2: Macroeconomics
1(d)8 marks
Using an AD/AS diagram, analyse how a depreciation can increase inflation.
From Paper 2: Macroeconomics
325 marks
Section B
Evaluate the view that an increase in government spending will always increase real output.
From Paper 3: Themes in economics
191 mark
Which is a component of aggregate demand?
From Paper 3: Themes in economics
201 mark
A rise in productivity is likely to shift:
Score 0 / 35 · 0 of 4 marked
This paper is written by Plasmo in the style of the OCR A-Level Economics exam. It is not a past paper and is not produced or endorsed by the exam board.