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1.1 Economic methodology and the economic problem

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Question 58

Four economists discuss the macroeconomic challenges facing a country:

  • Economist W: "A 2% increase in the policy interest rate will cause unemployment to rise by 0.5% over the next fiscal year."
  • Economist X: "The government should increase marginal income tax rates on high earners to fund public services."
  • Economist Y: "The current rate of inflation is 8.4%, which is the highest rate recorded in the last twelve years."
  • Economist Z: "Tackling inflation is far more important than preventing a decline in economic growth."

Which of the following options correctly classifies these statements?

A

Positive: W and Y; Normative: X and Z

B

Positive: Y only; Normative: W, X, and Z

C

Positive: W, Y, and Z; Normative: X only

D

Positive: X and Z; Normative: W and Y

Markscheme

1.1 Economic methodology and the economic problem Questions

  1. A Level
  2. /Economics
  3. /1.1 Economic methodology and the economic problem

123 exam-style questions on AQA A Level Economics 1.1 Economic methodology and the economic problem, covering 1.1.1 Economic methodology, 1.1.2 The nature and purpose of economic activity, 1.1.3 Economic resources, 1.1.4 Scarcity, choice and the allocation of resources, and 1.1.5 Production possibility diagrams. Each one has a worked solution and a mark scheme showing where the marks go.

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