Macroeconomics Paper 1 questions essay plans
(2013-2019 past papers)
* Definitions of key terms & details of real life examples are on quizlet & google sheets
* Questions that can be responded in the same way or just phrased differently are placed together
Key
Past paper reference code
Question
gov = government
SR = short run
LR = long run
+ Pros / For
- Cons / Against / Counter argument
Compiled by @oatsnwaffles
, 2.1 the level of overall economic activity
N19/3/ECONO/HP1/ENG/TZ0/XX
3(a) Explain the impact that a cut in taxation and an increase in government spending might have on the
circular flow of income. [10]
Define Gov spending, taxation, circular flow of income, expansionary fiscal policy
Example HK 2020 expansionary fiscal policy
Explain ● Increase in gov spending is a direct injection into the circular flow of income
○ increase in disposable household income
● Cut in taxation
○ Increase in disposable household income
Diagram ● Circular flow of income expands
because injections increase & leakages
reduced
Conclusion A cut in taxation & an increase in gov spending will cause the circular flow of income to
expand as they represent injections into the circular flow.
N19/3/ECONO/HP1/ENG/TZ0/XX
3(b) Discuss whether the real gross national income (GNI) per capita of a country is a good indicator of its
standard of living. [15]
Define GNI per capita
Example Norway: rank 1 (HDI) but has a lower GNI per capita than Singapore (GNI per capita ranked
3 & HDI 9)
Explain ● average income earned by a citizen of the country
● higher average income leading to higher consumption, greater tax revenue for public
services, less poverty
Evaluation - does not take into account of income distribution, black markets, quality of healthcare,
education
- lack of info about the composition of output, measurement problems & non-income
factors (leisure time, quality of environment) affecting the well-being of the population
Conclusion Income is a means to human development, not its end. The HDI would be a better indicator of
+ living standards of a country as it is a composite indicator that comprises three indices: life
Judgement expectancy, education, and income index. GNI per capita is used alongside. Nonetheless, a
combination of indicators should be used to show the living standards of a country as each of
the indicators have their own strengths & limitations .
M19/3/ECONO/HP1/ENG/TZ2/XX
4(a) Explain the various phases of the business cycle. [10]
Define Business cycle
Example 2008 financial crisis
Compiled by @oatsnwaffles
(2013-2019 past papers)
* Definitions of key terms & details of real life examples are on quizlet & google sheets
* Questions that can be responded in the same way or just phrased differently are placed together
Key
Past paper reference code
Question
gov = government
SR = short run
LR = long run
+ Pros / For
- Cons / Against / Counter argument
Compiled by @oatsnwaffles
, 2.1 the level of overall economic activity
N19/3/ECONO/HP1/ENG/TZ0/XX
3(a) Explain the impact that a cut in taxation and an increase in government spending might have on the
circular flow of income. [10]
Define Gov spending, taxation, circular flow of income, expansionary fiscal policy
Example HK 2020 expansionary fiscal policy
Explain ● Increase in gov spending is a direct injection into the circular flow of income
○ increase in disposable household income
● Cut in taxation
○ Increase in disposable household income
Diagram ● Circular flow of income expands
because injections increase & leakages
reduced
Conclusion A cut in taxation & an increase in gov spending will cause the circular flow of income to
expand as they represent injections into the circular flow.
N19/3/ECONO/HP1/ENG/TZ0/XX
3(b) Discuss whether the real gross national income (GNI) per capita of a country is a good indicator of its
standard of living. [15]
Define GNI per capita
Example Norway: rank 1 (HDI) but has a lower GNI per capita than Singapore (GNI per capita ranked
3 & HDI 9)
Explain ● average income earned by a citizen of the country
● higher average income leading to higher consumption, greater tax revenue for public
services, less poverty
Evaluation - does not take into account of income distribution, black markets, quality of healthcare,
education
- lack of info about the composition of output, measurement problems & non-income
factors (leisure time, quality of environment) affecting the well-being of the population
Conclusion Income is a means to human development, not its end. The HDI would be a better indicator of
+ living standards of a country as it is a composite indicator that comprises three indices: life
Judgement expectancy, education, and income index. GNI per capita is used alongside. Nonetheless, a
combination of indicators should be used to show the living standards of a country as each of
the indicators have their own strengths & limitations .
M19/3/ECONO/HP1/ENG/TZ2/XX
4(a) Explain the various phases of the business cycle. [10]
Define Business cycle
Example 2008 financial crisis
Compiled by @oatsnwaffles
