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A-level
ECONOMICS
Paper 3 Economic Principles and Issues
Time allowed: 2 hours
Materials
For Examiner’s Use
For this paper you must have:
• the insert Section Mark
• a calculator.
A
Instructions B
• Answer all questions. TOTAL
• Use black ink or black ball-point pen. Pencil should only be used for
drawing.
• Fill in the boxes at the top of this page.
• You will need to refer to the insert provided to answer Section B.
• You must answer the questions in the spaces provided. Do not write
outside the box around each page or on blank pages.
• If you need extra space for your answer(s), use the lined pages at the end of
this book. Write the question number against your answer(s).
• Do all rough work in this answer book. Cross through any work that you
do not want to be marked.
Information
• The maximum mark for this paper is 80.
• The marks for questions are shown in brackets.
• No deductions will be made for wrong answers.
*JUN217136301*
IB/M/Jun21/E8 7136/3
, 2
Do not write
outside the
Section A box
Answer all questions in this section.
Only one answer per question is allowed.
For each question completely fill in the circle alongside the appropriate answer.
CORRECT METHOD WRONG METHODS
If you want to change your answer you must cross out your original answer as shown.
If you wish to return to an answer previously crossed out, ring the answer you now wish to select
as shown.
0 1 The average university graduate can expect to earn more over their working life than the
average school leaver.
This is most likely to be explained by
A discrimination in the labour markets for non-graduates.
B the higher marginal revenue productivity of graduates.
C the higher price elasticity of demand for graduates.
D the relatively low elasticity of supply of non-graduates.
[1 mark]
0 2 Which one of the following statements regarding supply-side policies is correct?
Supply-side policies
A can have microeconomic as well as macroeconomic effects
on the economy.
B can increase the potential output of an economy but not its
trend rate of growth.
C cannot be used to correct market failures and improve the
operation of markets.
D do not affect competitiveness or the current account of the
balance of payments.
[1 mark]
*02*
IB/M/Jun21/7136/3
, 3
Do not write
outside the
0 3 Figure 1 shows the marginal private benefit and marginal social benefit (MPB and MSB) box
curves and the marginal private cost and marginal social cost (MPC and MSC) curves in
the market for a good.
Figure 1
The diagram represents a good with
A negative externalities in production and consumption.
B negative externalities in production and positive externalities in
consumption.
C positive externalities in production and consumption.
D positive externalities in production and negative externalities in
consumption.
[1 mark]
Turn over for the next question
Turn over ►
*03*
IB/M/Jun21/7136/3
, 4
Do not write
outside the
0 4 Which one of the following changes in macroeconomic performance is most likely to box
involve a trade-off, at least in the short-run, between the objectives of government
macroeconomic policy?
A Economic growth increases and the deficit on the balance of
payments on current account is eliminated
B Inflation declines to match its target rate and the government’s
budget position moves into balance
C The distribution of income becomes more equal as economic
growth increases
D The government’s budget deficit increases as the rate of
unemployment is reduced
[1 mark]
0 5 Table 1 contains data for GDP per capita and the Human Development Index (HDI) for four
countries in a given year.
Table 1
GDP per capita
HDI
($)
Country 1 32 860 0.45
Country 2 29 440 0.77
Country 3 23 230 0.51
Country 4 22 650 0.92
Which one of the following statements is most consistent with the data?
A Country 1 has the highest living standards of the four countries
B Country 2 has a higher rate of growth than countries 3 and 4
C Country 3 is the least developed of the four countries
D Country 4 has the highest life expectancy and literacy rates
[1 mark]
*04*
IB/M/Jun21/7136/3
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