Edexcel A-Level Economics Past Paper Questions on The Multiplier

What is the Edexcel A-Level Economics test?

The Edexcel A-Level Economics test is an economics-focused qualification offered to British students in their final two years of secondary school study. A-levels are typically taken as courses intended to lead to University or other further education. A-level economics students will often go on to study economics or a similar subject at University. The Edexcel A-Level Economics test is offered by Pearson Edexcel. The main alternative to Edexcel is the AQA A-Level Economics course. Edexcel is a privately-owned British education and exams body founded in 1996. Edexcel has been owned by Pearson plc. since 2005. Edexcel produces qualifications and tests for the British education system and is the UK’s largest entity offering educational qualifications.

Where did we get these Edexcel Economics A-Level Past Paper The Multiplier Questions?

We found these Edexcel Economics A-Level Past Paper the multiplier questions by going through past Edexcel A-Level Economics papers according to the current specification. We picked out the multiplier questions and put them together in this list so that you can go through them without having to search through the different Edexcel A-Level Economics papers currently online.

What is Keynesianism?

Keynesianism is the economic theory first articulated by John Maynard Keynes that government intervention can and should be used to manage aggregate demand and thus levels of economic growth. In simplified terms, Keynesian economists believe that government spending and loose monetary policy can be used to stimulate aggregate demand and growth. The Keynesian approach is often contrasted with Laissez-Faire economic theory, which posits that government intervention cannot stimulate meaningful economic growth and that the government ought to intervene in the economy as little as possible. Lazaie-Faire economists generally believe that excessive government spending and loose monetary policy does not translate to increases in a country’s productive capacity (i.e. the building of new factories or improvements in education levels) but rather leads to inflation.

What is The Multiplier?

The multiplier is the effect of increasing one economic factor on other related economic factors. For example, an increase in government spending will also increase consumption and private investment, which results in an increase in GDP greater than the amount of money initially spent by the government. This effect is called “the multiplier” because it multiplies the efforts of government spending. The specific idea that government spending translates to proportionate increases in economic consumption is a core idea of Keynesian economics.

Question 1: Edexcel A-Level Economics 9EC0 November 2021 Paper 2

After the Global Financial Crisis of 2008, the US President introduced expansionary fiscal policies of $800 billion. The International Monetary Fund estimated that the multiplier at the time was approximately 1.5.

(a) Which one of the following is a withdrawal from the circular flow of income? (1 points)

A Exports

B Government spending

C Investment

D Taxation

(b) Calculate the total final increase in US aggregate demand as a result of the President’s ‘expansionary fiscal policies’, assuming no other changes. (2 points)

(c) Explain the impact of annual fiscal deficits on the US national debt. (2 points)

Question 2: Edexcel A-Level Economics 9EC0 June 2017 Paper 2

The table below shows the marginal propensity to save data for an economy.

(a) Explain one possible reason for the changes in the marginal propensity to save as shown in the table.

(b) Explain the likely effect of a fall in the marginal propensity to save on the value of the multiplier if other things remain equal.

An economy has a marginal propensity to save of 0.1, a marginal propensity to tax of 0.2 and marginal propensity to import of 0.1.

(c) Which one of the following is the correct size of the multiplier? (1 point)

A 0.4

B 0.6

C 1.7

D 2.5

D 2.5