Mock exam AS Level: Economics (7141)
Candidate Name:
………………………………………………………………………………………..
(1 hour 30 minutes)
For Examination [Paper 1]
It is necessary to respond on the answer sheets provided alongside this question paper.
Additionally, you must have a soft pencil (preferably of type B or HB), a clean eraser,
and a dark blue or black pen.
INSTRUCTIONS:
- You must write your name on the answer sheets in the designated spaces.
- Attempt all the questions in both sections using a dark blue or black pen.
- It is important to follow the instructions provided on the answer sheets.
- Do not use correction fluid.
- Avoid writing on any barcodes.
INFORMATION:
- The total number of marks for this paper is 70.
- The number of marks assigned for each question is indicated within brackets [ ].
Section A: Scenario
Nation X has experienced a major policy shift in favour of deregulating several sectors to
improve competition. Over the past year, this has led to falling consumer prices, but
there are growing concerns over job losses in traditional industries. At the same time,
the government is promoting privatisation and shifting resources from public transport to
defence, which has raised debates over allocative efficiency and opportunity cost. GDP
growth has remained steady, but some critics argue the country is becoming more
unequal.
(Q1a) Compare allocative efficiency and productive efficiency in the context of Nation X.
(2 marks)
(Q2a) Explain how the reallocation of government spending from public transport to
defence could affect economic efficiency. (4 marks)
(Q3a) Compare opportunity cost and trade-offs using examples from Nation X. (4 marks)
(Q4a) Describe two limitations of using GDP as a measure of living standards. (4 marks)
Section B: Scenario
In an effort to tackle environmental concerns, Country Y has introduced a carbon tax and
is considering a system of tradeable permits. While the carbon tax has increased
production costs for energy-intensive industries, there are hopes it will encourage
investment in green technology. However, small firms have protested, and there is
pressure to introduce government subsidies for renewable energy producers.
(Q1b) Explain one short-term effect of a carbon tax on producers. (2 marks)
(Q2b) Analyse how a carbon tax could lead to long-term improvements in productive and
dynamic efficiency. (4 marks)
(Q3b) Evaluate the use of government subsidies as an alternative to carbon taxes for
encouraging green energy. (4 marks)
(Q4b) Assess the impact of carbon taxes on inflation and price stability in Country Y. (4
marks)
(Q5b) Analyse the likely challenges firms may face in adapting to an emissions trading
scheme. (6 marks)
Section C
(Q1) Discuss the effectiveness of fiscal policy in achieving economic growth and
reducing unemployment. (10 marks)
(Q2) Evaluate the impact of trade liberalisation on a country's economic development
and income distribution. (10 marks)
(Q3) Evaluate the consequences of contractionary monetary policy on macroeconomic
objectives. (6 marks)
(Q4) Judge the effectiveness of government spending on education and healthcare in
reducing poverty and improving productivity. (10 marks)
