CAIE A-Level Economics 10.2 Macroeconomic Problem Interrelationships Question Bank

CAIE A-Level Economics 10.2 Macroeconomic Problem Interrelationships Question Bank
Cambridge International AS & A Level Economics 9708 syllabus for exams in 2026, 2027 and 20282026–2028

Practise tracing links among inflation, unemployment, growth, currency values and current-account balances and evaluating whether objectives conflict or reinforce one another in…

Exam points

  • trace inflation through competitiveness, exchange rates and the current-account balance
  • link growth to employment, imports, inflation and government finances using causal chains
  • evaluate the more serious problem by cause, duration, stakeholders and available policy

Covered syllabus points

10.2.1—Internal and external money value10.2.2—Balance of payments and inflation10.2.3—Growth and inflation10.2.4—Growth and balance of payments10.2.5—Inflation and unemployment

Question 20

[Maximum number: 1]

High economic growth is often accompanied by a worsening of the current account of the balance of payments.

Which reason for this trend is not valid?

A

Economic growth raises domestic consumption, leaving very little to sell to overseas consumers.

B

Economic growth raises domestic output, leading to lower prices and more price-competitive goods both at home and abroad.

C

Economic growth raises incomes and leads to rising demand for foreign goods.

D

Economic growth results in rising requirements of inputs from other countries.

Question 21

[Maximum number: 1]

What does the Phillips curve show?

A

the relationship between economic growth and employment

B

the relationship between inequality and income per capita

C

the relationship between inflation and unemployment

D

the relationship between prices and national income

Question 23

[Maximum number: 1]

The inflation rate in a country increased.
Which effect would this most likely have on the country's balance of payments?

A

an improvement in the current account balance

B

an increase in price competitiveness

C

an increase in export revenue

D

an increase in import expenditure

Question 24

[Maximum number: 1]

An economy imports a large proportion of its raw materials. Its exchange rate depreciates.

What is the impact on the external and internal value of money?

external value

of money

internal value

of money

rises

rises

rises

falls

falls

rises

falls

falls

Question 24

[Maximum number: 1]

Which macroeconomic policy aims are most likely to complement one another?

A

high growth and low inflation

B

high growth and low unemployment

C

low inflation and low unemployment

D

low unemployment and a balance of trade surplus