AS LEVEL ECONOMICS A: THE UK
ECONOMY: PERFORMANCE AND POLICIES
ACTUAL EXAM PAPER 2026 QUESTIONS
WITH ANSWERS GRADED A+
◍ What is the measure of economic growth commonly used?.
Answer: Real Gross Domestic Product (GDP)
◍ What is the difference between real and nominal GDP?.
Answer: Real GDP is adjusted for inflation, while nominal GDP is not.
◍ What does per capita GDP represent?.
Answer: It represents the average economic output per person.
◍ What is Gross National Income (GNI)?.
Answer: GNI measures the total income earned by a nation's residents and
businesses, including any income earned abroad.
◍ Macroeconomics.
Answer: The study of the interrelationships between economic variables at
an aggregate level
◍ What are Purchasing Power Parities (PPPs)?.
Answer: PPPs are economic measures that compare different countries'
currencies through a 'basket of goods' approach.
◍ What are some limitations of using GDP to compare living standards?.
Answer: Limitations include not accounting for national happiness,
economic wellbeing, and the relationship between real incomes and
subjective happiness.
◍ Nominal value.
, Answer: The value of an economic variable based on current prices, taking
no account of changing prices through time
◍ How is GDP calculated?.
Answer: GDP can be calculated using three methods: Output, Expenditure
(Aggregate Demand), and National Income.
◍ What does the circular flow diagram illustrate?.
Answer: It illustrates the flow of income and expenditure in an economy,
showing that output, expenditure, and income should equal each other.
◍ What is value added in economic terms?.
Answer: Value added is the increase in market value of goods or services
during each stage of production.
◍ What are lower value added industries?.
Answer: Industries such as mass produced textiles, industrial farming, and
contract cleaning services.
◍ What are higher value added industries?.
Answer: Industries such as information technology, renewable energy, and
biotechnology.
◍ What percentage of UK GDP did manufacturing contribute in 2020?.
Answer: Manufacturing contributed 10 percent of UK GDP.
◍ What is de-industrialisation?.
Answer: De-industrialisation refers to the decline of manufacturing
industries in a country.
◍ Which countries have a higher percentage of GDP from manufacturing
compared to the UK?.
Answer: Countries such as China, South Korea, Mexico, and Germany.
◍ What is the industrial sector composed of?.
Answer: The industrial sector includes manufacturing and construction.
◍ What are the components of Aggregate Demand (AD)?.
Answer: AD = C + I + G + (X - M), where C is consumption, I is
, investment, G is government spending, X is exports, and M is imports.
◍ What is the significance of measuring economic growth?.
Answer: It helps assess the performance of an economy and informs policy
decisions.
◍ What is the impact of the coronavirus pandemic on the economy?.
Answer: The pandemic has had significant macroeconomic effects,
influencing economic policies and trends.
◍ What is the relationship between real incomes and subjective happiness?.
Answer: Higher real incomes do not always correlate with increased
subjective happiness.
◍ Real value.
Answer: The value of an economic variable, taking account of changing
prices through time
◍ What is the importance of government spending in GDP?.
Answer: Government spending is a crucial component of Aggregate
Demand and influences economic growth.
◍ What does the term 'output gaps' refer to?.
Answer: Output gaps refer to the difference between actual output and
potential output in an economy.
◍ What is the trade (business) cycle?.
Answer: The trade cycle refers to the fluctuations in economic activity over
time, including periods of expansion and contraction.
◍ What are injections in the context of national income?.
Answer: Injections are additions to the economy, such as investment,
government spending, and exports.
◍ What are withdrawals in the context of national income?.
Answer: Withdrawals are leakages from the economy, including savings,
taxes, and imports.
◍ What is the Multiplier effect?.
, Answer: The Multiplier effect refers to the proportional amount of increase
in final income that results from an injection of spending.
◍ Index number.
Answer: A device for comparing the value of a variable in one period or
location with a base observation (e.g. the consumer price index measures the
average level of prices relative to a base period)
◍ What are demand-side policies?.
Answer: Demand-side policies are economic strategies aimed at increasing
demand for goods and services to stimulate economic growth.
◍ What are supply-side policies?.
Answer: Supply-side policies are strategies aimed at increasing the
productive capacity of the economy.
◍ What is the significance of comparing growth rates between countries?.
Answer: It helps to understand relative economic performance and living
standards across different nations.
◍ What sectors make up the industrial sector?.
Answer: Manufacturing and construction.
◍ What is the tertiary sector?.
Answer: The sector that includes services such as accountancy, health and
social care, hospitality, education, and tourism.
◍ What percentage of the UK economic output did service industries account
for in early 2021?.
Answer: 80% of total UK economic output (Gross Value Added).
◍ How many jobs were in the UK construction industry in 2018?.
Answer: 2.4 million jobs.
◍ What was the contribution of construction to the UK economy in 2017?.
Answer: £113 billion worth of output, 6% of the total.
◍ What was the impact of the pandemic on construction output in 2020?.
Answer: A drop in production of more than 40 percent.
ECONOMY: PERFORMANCE AND POLICIES
ACTUAL EXAM PAPER 2026 QUESTIONS
WITH ANSWERS GRADED A+
◍ What is the measure of economic growth commonly used?.
Answer: Real Gross Domestic Product (GDP)
◍ What is the difference between real and nominal GDP?.
Answer: Real GDP is adjusted for inflation, while nominal GDP is not.
◍ What does per capita GDP represent?.
Answer: It represents the average economic output per person.
◍ What is Gross National Income (GNI)?.
Answer: GNI measures the total income earned by a nation's residents and
businesses, including any income earned abroad.
◍ Macroeconomics.
Answer: The study of the interrelationships between economic variables at
an aggregate level
◍ What are Purchasing Power Parities (PPPs)?.
Answer: PPPs are economic measures that compare different countries'
currencies through a 'basket of goods' approach.
◍ What are some limitations of using GDP to compare living standards?.
Answer: Limitations include not accounting for national happiness,
economic wellbeing, and the relationship between real incomes and
subjective happiness.
◍ Nominal value.
, Answer: The value of an economic variable based on current prices, taking
no account of changing prices through time
◍ How is GDP calculated?.
Answer: GDP can be calculated using three methods: Output, Expenditure
(Aggregate Demand), and National Income.
◍ What does the circular flow diagram illustrate?.
Answer: It illustrates the flow of income and expenditure in an economy,
showing that output, expenditure, and income should equal each other.
◍ What is value added in economic terms?.
Answer: Value added is the increase in market value of goods or services
during each stage of production.
◍ What are lower value added industries?.
Answer: Industries such as mass produced textiles, industrial farming, and
contract cleaning services.
◍ What are higher value added industries?.
Answer: Industries such as information technology, renewable energy, and
biotechnology.
◍ What percentage of UK GDP did manufacturing contribute in 2020?.
Answer: Manufacturing contributed 10 percent of UK GDP.
◍ What is de-industrialisation?.
Answer: De-industrialisation refers to the decline of manufacturing
industries in a country.
◍ Which countries have a higher percentage of GDP from manufacturing
compared to the UK?.
Answer: Countries such as China, South Korea, Mexico, and Germany.
◍ What is the industrial sector composed of?.
Answer: The industrial sector includes manufacturing and construction.
◍ What are the components of Aggregate Demand (AD)?.
Answer: AD = C + I + G + (X - M), where C is consumption, I is
, investment, G is government spending, X is exports, and M is imports.
◍ What is the significance of measuring economic growth?.
Answer: It helps assess the performance of an economy and informs policy
decisions.
◍ What is the impact of the coronavirus pandemic on the economy?.
Answer: The pandemic has had significant macroeconomic effects,
influencing economic policies and trends.
◍ What is the relationship between real incomes and subjective happiness?.
Answer: Higher real incomes do not always correlate with increased
subjective happiness.
◍ Real value.
Answer: The value of an economic variable, taking account of changing
prices through time
◍ What is the importance of government spending in GDP?.
Answer: Government spending is a crucial component of Aggregate
Demand and influences economic growth.
◍ What does the term 'output gaps' refer to?.
Answer: Output gaps refer to the difference between actual output and
potential output in an economy.
◍ What is the trade (business) cycle?.
Answer: The trade cycle refers to the fluctuations in economic activity over
time, including periods of expansion and contraction.
◍ What are injections in the context of national income?.
Answer: Injections are additions to the economy, such as investment,
government spending, and exports.
◍ What are withdrawals in the context of national income?.
Answer: Withdrawals are leakages from the economy, including savings,
taxes, and imports.
◍ What is the Multiplier effect?.
, Answer: The Multiplier effect refers to the proportional amount of increase
in final income that results from an injection of spending.
◍ Index number.
Answer: A device for comparing the value of a variable in one period or
location with a base observation (e.g. the consumer price index measures the
average level of prices relative to a base period)
◍ What are demand-side policies?.
Answer: Demand-side policies are economic strategies aimed at increasing
demand for goods and services to stimulate economic growth.
◍ What are supply-side policies?.
Answer: Supply-side policies are strategies aimed at increasing the
productive capacity of the economy.
◍ What is the significance of comparing growth rates between countries?.
Answer: It helps to understand relative economic performance and living
standards across different nations.
◍ What sectors make up the industrial sector?.
Answer: Manufacturing and construction.
◍ What is the tertiary sector?.
Answer: The sector that includes services such as accountancy, health and
social care, hospitality, education, and tourism.
◍ What percentage of the UK economic output did service industries account
for in early 2021?.
Answer: 80% of total UK economic output (Gross Value Added).
◍ How many jobs were in the UK construction industry in 2018?.
Answer: 2.4 million jobs.
◍ What was the contribution of construction to the UK economy in 2017?.
Answer: £113 billion worth of output, 6% of the total.
◍ What was the impact of the pandemic on construction output in 2020?.
Answer: A drop in production of more than 40 percent.
