Chapter 5: Firms, Costs, Revenues, Objectives and Labour Markets

A-level EconomicsAQA / OCR / Pearson Edexcel / WJEC Eduqas12 topicsHigher

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Edexcel A-level Economics Macroeconomic Objectives and Policies - Authored Long Answer Questions

Examiner-style long-answer practice with automatic marking, improvement advice and ProofCoach tracking.

4 questions47 marks70.5 min

standard / hard / synoptic

4 markscalculatestandardEdexcel

E26: Evidence for Macroeconomic Objectives and Policies

Evidence measure with unit	2020 value	2024 value	Context or unit
UK CPI inflation and Bank Rate percentage data	100.0	108.5	index or percentage as stated
UK CPI inflation and Bank of England Bank Rate from 2010 to 2020	baseline	changed	UK or global context
fiscal and monetary policy choices creating trade-offs between growth, inflation, unemployment and the budget balance	lower impact	higher impact	directional evidence

E26A Calculate or define the key economic measure in Macroeconomic Objectives and Policies, using the data evidence provided for UK CPI inflation and Bank of England Bank Rate from 2010 to 2020.

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9 marksanalysehardEdexcel

Contractionary monetary policy: Bank Rate rise reduces inflation

Raising the Bank Rate reduces consumption and investment, shifting AD left from AD1 to AD2. The price level falls from P1 to P2 and real output contracts from Y1 to Y2.

E26B Using Figure 1 and your knowledge, analyse the economic effects shown by the diagram below in relation to UK CPI inflation and Bank of England Bank Rate from 2010 to 2020. In your answer, identify the model, curve labels, any shift shown and the likely impact.

Label the horizontal axis and vertical axis precisely with units.
Label the relevant curves and show the direction of shift.
Label the new equilibrium point and explain the change.

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9 marksexplainstandardEdexcel

E26: Evidence for Macroeconomic Objectives and Policies

Evidence measure with unit	2020 value	2024 value	Context or unit
UK CPI inflation and Bank Rate percentage data	100.0	108.5	index or percentage as stated
UK CPI inflation and Bank of England Bank Rate from 2010 to 2020	baseline	changed	UK or global context
fiscal and monetary policy choices creating trade-offs between growth, inflation, unemployment and the budget balance	lower impact	higher impact	directional evidence

E26C Explain how fiscal and monetary policy choices creating trade-offs between growth, inflation, unemployment and the budget balance could affect economic agents in the UK economy or global economy.

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25 marksevaluatesynopticEdexcel

E26: Evidence for Macroeconomic Objectives and Policies

Evidence measure with unit	2020 value	2024 value	Context or unit
UK CPI inflation and Bank Rate percentage data	100.0	108.5	index or percentage as stated
UK CPI inflation and Bank of England Bank Rate from 2010 to 2020	baseline	changed	UK or global context
fiscal and monetary policy choices creating trade-offs between growth, inflation, unemployment and the budget balance	lower impact	higher impact	directional evidence

E26D Evaluate the extent to which fiscal and monetary policy choices creating trade-offs between growth, inflation, unemployment and the budget balance is likely to improve economic performance, using UK CPI inflation and Bank Rate percentage data and your wider economic knowledge.

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4. Market Failure and Government Intervention

6. Market Structures, Competition and Regulation

Key learning objectives

Understand the key principles behind Firms, Costs, Revenues, Objectives and Labour Markets.
Apply these ideas to exam-style questions.
Recall the essential definitions and key terms.