Exam (elaborations)
2021 macroeconomics paper 2
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- AQA
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A-levelECONOMICS
Paper 2 National and International Economy
Time allowed: 2 hours
Materials
For this paper you must have:
• an AQA 12-page Answer Book
• a calculator.
Instructions
• Use black ink or black ball-point pen. Pencil should only be used for drawing.
• Write the information required on the front cover of your Answer Book.
The Paper Reference is 7136/2.
• In Section A, answer EITHER Context 1 OR Context 2.
• In Section B, answer ONE essay.
Information
• The marks for questions are shown in brackets.
• The maximum mark for this paper is 80.
• There are 40 marks for Section A and 40 marks for Section B.
Advice
• You are advised to spend 1 hour on Section A and 1 hour on Section B.
IB/M/Jun21/E8 7136/2
, 2
Section A
Answer EITHER Context 1 OR Context 2.
EITHER
Context 1 Total for this context: 40 marks
National debt and government spending
Study Extracts A, B and C and then answer all parts of Context 1 which follow.
Extract A
Figure 1: Annual average yields on long-term Figure 2: Selected statistics for Greece
bonds, Greece and the UK, selected and the UK, 2012
years, 2007 to 2019
Greece UK
GDP ($bn) 245.7 2662.1
GDP per capita ($) 22 242 41 791
National debt ($bn) 391 2243
Population (millions) 11.1 63.7
Source: Official statistics, 2020 Source: ONS, Eurostat, World Bank 2020
Extract B: Government debt: a Greek tragedy
In 2018, after years of tough government spending cuts (austerity), the Greek government 1
emerged from its third and final international financial rescue package, although economists
warned that the country still had a “long way to go”. The European Union (EU), the European
Central Bank (ECB) and the International Monetary Fund (IMF) have loaned Greece a total of
€289bn (£240bn) since 2010. 5
The EU and IMF insisted that, in return for help, economic reforms were necessary to reduce
Greece’s structural budget deficit. For many Greeks, especially the young, the years of
economic hardship were severe. Higher taxes and reduced salaries and pensions led to riots
on the streets. The government spending cuts also severely damaged private-sector jobs.
In 2012–13, the unemployment rate peaked at 27.5%, but for those under 25 it was 58%. 10
Eight years after austerity began, GDP was 25% below its 2010 level.
How did Greece find itself in this position in the first place? In 2007–08, the global financial
crisis caused a worldwide recession. Many countries had huge government debts, but Greece
was the worst affected with an unsustainable budget deficit following years of high government
spending. In 2010, the country revealed the size of its huge budget deficit which led bond yields 15
to soar and to a sovereign debt crisis. International lenders labelled Greek debt as ‘junk’ and the
Greek Government was unable to borrow on financial markets. Greece was forced to ask for
financial help.
But what now? In 2019, the Greek economy grew by 1.9%. It had a budget surplus (excluding
interest payments on its debt) and the unemployment rate had fallen below 20%. However, the 20
pandemic has harmed the Greek economy and the Greek government’s budget is again in
deficit.
Source: News reports, 2020
IB/M/Jun21/7136/2
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