Pearson Edexcel A Level · Economics A (9EC0)

Macroeconomic policies in a global context: Practice Questions

5 multiple-choice questions marked as you go, and 3 written questions with worked solutions. All on Macroeconomic policies in a global context.

8 questions18 marksFree, no account

Question 1

1 mark

Which of the following is a specific measure a government might take to control the operations of transnational companies (TNCs) regarding the regulation of transfer pricing?

Question 2

1 mark

How might the inability to control external shocks limit the effectiveness of a government's attempt to reduce its national debt through fiscal consolidation?

Question 3

1 mark

A government decides to implement a significant increase in the top rate of income tax from 45% to 60%. According to the Laffer Curve, what is the most likely impact on tax revenue if the country was already positioned beyond the revenue-maximizing point?

Question 4

1 mark

A developing nation faces a persistent fiscal deficit and high levels of national debt. If the government implements 'austerity measures' (cutting public spending) to reduce the debt-to-GDP ratio, why might this policy fail to achieve its objective in the short run?

Question 5

1 mark

To increase international competitiveness, a government decides to use supply-side policies rather than a competitive devaluation of its currency. Which of the following is an interventionist supply-side measure aimed at this goal?

Question 6

4 marks

Using an AD/AS framework, explain how a government might use supply-side policies to reduce a persistent fiscal deficit in the long run.

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Question 7

6 marks

Evaluate the impact of transfer pricing regulation on a country's tax revenue and its overall international competitiveness in a globalised economy.

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Question 8

3 marks

Explain how a significant increase in interest rates in major global economies could act as an external shock, affecting the ability of a developing nation to manage its national debt.

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