Mark Scheme (Results)

Summer 2024

Pearson Edexcel GCE AS Level

In Economics A (8EC0)
Paper 02 The UK Economy – Performance and
Policies

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General marking guidance
• All candidates must receive the same treatment. Examiners must mark the last
candidate in exactly the same way as they mark the first.
• Mark schemes should be applied positively. Candidates must be rewarded for
what they have shown they can do rather than be penalised for omissions.
• Examiners should mark according to the mark scheme – not according to their
perception of where the grade boundaries may lie.
• All the marks on the mark scheme are designed to be awarded. Examiners
should always award full marks if deserved, i.e. if the answer matches the mark
scheme. Examiners should also be prepared to award zero marks if the
candidate’s response is not worthy of credit according to the mark scheme.
• Where some judgement is required, mark schemes will provide the principles by
which marks will be awarded and exemplification/indicative content will not be
exhaustive.
• When examiners are in doubt regarding the application of the mark scheme to a
candidate’s response, a senior examiner must be consulted before a mark is
given.
• Crossed-out work should be marked unless the candidate has replaced it with
an alternative response.

Summer 2024
Question Paper Log Number 72019
Publications Code 8EC0_02_2406_MS
All the material in this publication is copyright
© Pearson Education Ltd 2024

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Question Answer Mark
Number
1(a) The only correct answer is A

B is not correct because this is when actual economic

growth is less than potential economic growth

C is not correct because this is when actual economic

growth is greater than potential economic growth

D is not correct because this is the increase in productive

capacity of the economy (1)

Question Answer Mark

Number
1(b) Knowledge 1, Application 1, Analysis 1

Knowledge/understanding:
1 mark for identifying one limitation, e.g. does not consider

• exchange rates (1)

• population growth (1)
• presence of informal and unpaid economy (1)
• subsistence, barter and the hidden economy (1)
• income inequality/distribution of income (1)

Application:
1 mark for reference to the information provided for e.g.

• Real GDP increase in developing countries is higher

than developed countries (1) /
• Difference of 2.9 pp in growth rates (1)
• Reference to own example (1)

Analysis:
1 mark for linked development, e.g.

• Exchange rates might not accurately reflect the

differences in purchasing power of currencies (1)
• Population growth accounts for most of the growth
in developing countries (1)
• Presence of informal and unpaid economy will imply
that some output is unrecorded (1)
• Subsistence, barter and the hidden economy will

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 undervalue real output (1)
• In some countries, wealth is concentrated in the
hands of a few high income households (1) (3)

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Question Answer Mark
Number
2(a) Knowledge 1

Knowledge:
1 mark for definition, e.g.
• It is the proportion of extra income that is spent on
consumption (1)
• The additional consumer spending from an increase
in national income (1)
• Change in consumption/change in income (∆C/∆Y) (1)

Question Answer Mark

Number
2(b) Knowledge 2

Knowledge/understanding:
2 marks for, e.g.
• Increase in employment/disposable income (1) so
increases purchasing power/greater affordability (1)
• Lower interest rates (1) so reduces the cost of
borrowing/reward for savings (1)
• Increase in consumer confidence (1) due to greater
job security and raises consumer spending (1)
• Positive wealth effects (1) so increases confidence
and raises consumer spending (1) (2)

Question Answer Mark

Number
2(c) The only correct answer is D

A is not correct because this figure is determined by

(1-0.8)

B is not correct because this figure is determined by

(1x0.8)

C is not correct because this figure is determined by

(1/0.8) (1)

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Question Answer Mark
Number
3(a) The only correct answer is C

A is not correct because between September 2013 and

September 2016, there were over 150 000 more people
entering the UK

B is not correct because immigration to the UK is likely to

affect the country’s long-run AS curve

D is not correct because emigration throughout the given

period has remained relatively stable (1)

Question Answer Mark

Number
3(b) Knowledge 1, Application 1, Analysis 1

Knowledge/understanding:
1 mark for identifying one likely effect, e.g.

• Increase employment (1)

• Increased demand for labour (1)
• Increased supply of labour (1)

Application:
1 mark for reference to the chart, for e.g.

• Immigration to the UK fell after the financial crisis/

EU referendum (1) /
• Immigration increased once the economy started to
recover from the financial crisis (1)
• Emigration increased from 350 000 to 400 000
between September 2016 and September 2019 (1)

Analysis:
1 mark for linked development, e.g.

• Increased size of population (1)

• Increased consumer spending will create more
jobs (1)
• Increased demand for public services (1)
• Immigrants may fill job vacancies that domestic
people are unable to fill (1)

NB Accept references made to either the impact of

immigration or emigration on employment (3)

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Question Answer Mark
Number
4(a) Knowledge 1

Knowledge/understanding:
1 mark for definition, e.g.
• Increase in the capital stock of the economy (1)
• An injection into the circular flow of income (1)
• Spending by firms on capital goods (1) (1)

Question Answer Mark

Number
4(b) Application 2

Application:
2 marks for,
• Correct leftward shift of AD (1)
• Correct new equilibrium point showing lower price
level and lower real output (1)

(2)

Question Answer Mark

Number
4(c) The only correct answer is A

B is not correct because this will reduce cost of production

for firms leading to an increase in investment

C is not correct because this will increase revenues for

firms leading them to increase investment

D is not correct because firms will increase investment as

they expect future demand to rise (1)

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Question Answer Mark
Number
5(a) Knowledge 1

Knowledge/understanding:
1 mark for definition, e.g.
• When government spending is greater than
taxation (1) (1)

Question Answer Mark

Number
5(b) Application 2

Application:

(44.9 / 83.6) x 100 (1)

Answer = 53.71 (also allow 54 / 53.7)

Award 2 marks for correct answer (2)

Question Answer Mark

Number
5(c) The only correct answer is B

A is incorrect as it will increase the budget deficit

C is incorrect as it represents a worsening of the current

account position of the balance of payments

D is incorrect as it represents an improvement of the

current account position of the balance of payments (1)

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Question Answer Mark
Number
6(a) Knowledge 2, Application 2

Knowledge/understanding
2 marks for, e.g.
• The percentage (1) change/increase in the average
price level of an economy (1)

Application
2 marks for data references from Figure 1, e.g.
• The rate of inflation was increasing (1) between
2016 and 2017 (1)
• Between 2016 and 2017, the rate of inflation had
increased by nearly two (1) percentage points (1)
• Disinflation between 2009 and 2010 (1) where the
average price level increased at a slower rate (1)
• Highest rate of inflation was in 2012 (1) at 5% (1)
• Inflation rate was 0% in 2016 (1) (4)

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Question Indicative content Mark
Number
6(b) Knowledge 2, Application 2, Analysis 2

• An increase in real wages will lead to an increase in

consumer expenditure
• Consumption is a component of aggregate demand
• Aggregate demand will increase from AD1 to AD2
• Inflationary pressures will increase from P1 to P2
• Real output will increase from Y1 to Y2
• Consequently, unemployment will decrease
• Figure 1: In 2019, real wage growth increased by 2%

Diagram, e.g.:

NB Candidates must answer with a valid AD/AS

diagram presenting an increase in AD to access
Level 3
(6)

Level Mark Descriptor

0 A completely inaccurate response.
Level 1 1–2 Displays isolated or imprecise knowledge and understanding
of terms, concepts, theories and models.
Use of generic or irrelevant information or examples.
Descriptive approach which has no link between causes and
consequences.
Level 2 3–4 Displays elements of knowledge and understanding of
economic principles, concepts and theories.
Applies economic ideas and relates them to economic
problems in context, although does not focus on the broad
elements of the question.
A narrow response or the answer may lack balance.
Level 3 5–6 Demonstrates accurate knowledge and understanding of the
concepts, principles and models.
Ability to link knowledge and understanding in context using
relevant and focused examples which are fully integrated.
Economic ideas are applied appropriately to the broad
elements of the question.

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Question Indicative content Mark
Number
6(b) Evaluation 4
continued
• Consumption is largest component of aggregate
demand, therefore will have a significant impact
• Significance of the elasticity of the AS curve and
the state of the UK economy
• UK consumers have financed their spending by
borrowing – "Borrowing on credit cards and
personal loans has increased above the levels
seen before 2008”: it creates an unstable and
unbalanced economy
• Depends on other factors in the economy, such
as net trade and investment
• Nominal wage growth may be more significant in
determining impact on consumption: Figure 1 (4)

Level Mark Descriptor

0 No evaluative comments.
Level 1 1–2 Identification of generic evaluative comments without
supporting evidence/ reference to context.
No evidence of a logical chain of reasoning.
Level 2 3–4 Evaluative comments supported by chains of reasoning and
appropriate reference to context. Evaluation is balanced and
considers the broad elements of the question.

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Question Answer Mark
Number
6(c) Knowledge 2, Application 2, Analysis 2

Knowledge/understanding
Identification of two characteristics (2) for, e.g.
• Falling inflation (1)
• Rising unemployment (1)
• Falling profits/investment of firms (1)
• Rising budget deficit/worsening of fiscal position (1)
• Reduction in the base interest rate (1)
• Loss of consumer/business confidence (1)

Application
1 mark for each data reference (1+1), e.g.
• Figure 1: inflation fell by around 3.3 percentage
points between 2009 and 2010 (1)
• Figure 2: UK was in recession between Q2 2008
and Q3 2009 (1)
• Extract A: unemployment rate peaked at 8.5% in
2009 (1)
• Extract A: Bank of England reduced the base interest
rate from 5.25% in February 2008 to 0.5% in March
2009 (1)

Analysis
Linked development (1+1) e.g.
• Falling inflation due to lower consumer confidence
and a reduction in consumer expenditure (1)
• Rising unemployment due to lower demand for
workers caused by falling real output (1)
• Falling profits/investment of firms possibly leading
to high level of business failures (1)
• Rising budget deficit/worsening of the fiscal position
due to a rise in government spending on benefits/a
fall in tax revenues (1)
• Reduction in the base interest rate will encourage
borrowing and consumption/investment (1)

NB Award up to 4 marks for one characteristic

well developed (1kn + 1ap + 2an) (6)

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Question Answer Mark
Number
6(d) Knowledge 1, Application 2, Analysis 2

Knowledge/understanding
1 mark, for e.g.
• Explanation of inflation (1)
• Understanding of exchange rate (1)
• AD shifts outwards / SRAS shifts inwards (1)

Application
2 marks (1+1), for e.g.
• Weaker pound due to lack of confidence as a
result of the UK’s decision to leave the EU (1)
• X-M as a component of AD increases (1)
• Accurately drawn AD/AS diagram (1)
• More injections/less leakages from CFI (1)

Analysis
2 marks for linked development (1+1), e.g.
• Imports become relatively more expensive (1)
• Exports become relatively cheaper (1) (5)

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Question Indicative content Mark
Number
6(e) Knowledge 3, Application 3, Analysis 3

• Economic growth/recession/output gap/spare

capacity – use of Figure 2 OR reference to own
knowledge (e.g. global health crisis): ensure that
AD will grow in line with productive potential
• Forecast rates of inflation/inflation expectations –
use of Figure 1 OR reference to recent inflation
trends
• Level of confidence in the economy: business and
consumer confidence – “the uncertainty around the
UK’s decision to leave the EU”: can indicate turning
points in the business cycle
• Unemployment levels – “UK unemployment rate
peaked at 8.5% in 2009 but has fallen to 4% in
2019, the lowest since the mid-1970s”
• Exchange rate – “the fall in the exchange rate of
the British pound”
• House prices – “collapse of the housing market”:
help decide household wealth, which translates
through to borrowing and spending
• Oil prices and other commodity prices
• Performance in other countries
• Savings / consumer expenditure
• Access to credit / market interest rates

NB: Do not award real wage changes as a factor (9)

Level Mark Descriptor

0 A completely inaccurate response.
Level 1 1–3 Displays isolated or imprecise knowledge and understanding
of terms, concepts, theories and models.
Use of generic or irrelevant information or examples.
Descriptive approach which has no chains of reasoning or
links between causes and consequences.
Level 2 4–6 Displays elements of knowledge and understanding of
economic principles, concepts and theories.
Applies economic ideas and relates them to economic
problems in context, although does not focus on the broad
elements of the question. A narrow response; chains of
reasoning are developed but the answer may lack balance.
Level 3 7–9 Demonstrates accurate knowledge and understanding of the
concepts, principles and models.
Ability to link knowledge and understanding in context using
relevant and focused examples which are fully integrated.
Economic ideas are carefully selected and applied
appropriately to economic issues and problems. The answer
demonstrates logical and coherent chains of reasoning.

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Question Indicative content Mark
Number
6(e) Evaluation 6
continued
• Inaccuracies or inadequacies of data may mean that
the UK’s economic growth may not be low as it has
been estimated
• Reliability of data/uncertainty of forecasting: many
statistics are revised later, such as GDP
• Difficulty of estimating amount of output gap/spare
capacity in the economy
• Lagged effect of many influences on the inflation rate,
e.g. unemployment is a lagging indicator and may be
of little use
• Oil prices and commodity process are very volatile:
increase in price might be temporary – therefore,
problem of using the current inflation rate to guide
monetary policy decisions
• Potential for economic shocks changing the global
economic landscape considerably leading to higher
uncertainty in the world economy
• Lagged effect of monetary policy
• Prioritisation of the relative significance of each factor
• Combination of factors are likely to be considered (6)

Level Mark Descriptor

0 No evaluative comments.
Level 1 1–2 Identification of generic evaluative comments without
supporting evidence/reference to context.
No evidence of a logical chain of reasoning.
Level 2 3–4 Evidence of evaluation of alternative approaches which is
unbalanced.
Evaluative comments with supporting evidence/reference to
context and a partially developed chain of reasoning.
Level 3 5–6 Evaluative comments supported by relevant chain of
reasoning and appropriate reference to context.
Evaluation is balanced and considers the broad elements of
the question.

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Question Indicative content Mark
Number
6(f) Knowledge 4, Application 4, Analysis 6

KAA:
• Understanding of demand side policies as fiscal
policy and monetary policy
• Implicit or explicit identification of the UK’s
macroeconomic objectives
• AD/AS diagram showing shift in the AD curve
consistent with analysis
Explanation and application (including the use of current
data) of how policies might conflict with objectives:

Fiscal policy:
• Increasing government spending, increasing
employment and/or growth. Potential conflict
with inflation and protection of environment
• Reduction in taxation, lowering tax burden so
increasing AD, increasing employment and/or
growth. Potential conflict with income inequality
and a balanced budget

Monetary policy:
• Reduction in interest rates (or an increase in
money supply) increasing employment and
growth. Potential conflict with inflation
• Reduction in interest rates (or an increase in
money supply), weakening exchange rate thus
improving current account position of balance of
payments. Potential conflict with inflation.

Evaluation 6

• If government spending increases on health and

education, AS will increase therefore no inflation
• If increased government spending increases
growth, this should increase tax revenues
• Lower interest rates might lead to increased
investment causing AS to increase, reducing
inflationary pressures
• Tax cuts will be ineffective if used to increase
savings or repay debts
• Cuts in Bank of England’s interest rate will be
ineffective if banks unwilling to lend or if banks
do not reduce interest rates to customers
• Time lag for full effect of these policies (takes
nearly 18 to 24 months)
• Depends on the elasticity of the LRAS curve/
spare capacity (20)

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Knowledge, application and analysis
Level Mark Descriptor
0 A completely inaccurate response.
Level 1 1–3 Displays isolated or imprecise knowledge and understanding
of terms, concepts, theories and models.
Use of generic or irrelevant information or examples.
Descriptive approach which has no chains of reasoning or
links between causes and consequences.
Level 2 4–6 Displays elements of knowledge and understanding of
economic principles, concepts and theories.
Applies economic ideas and relates them to economic
problems in context, although does not focus on the broad
elements of the question.
A narrow response or superficial, two-stage chain of
reasoning only.
Level 3 7–10 Demonstrates accurate knowledge and understanding of the
concepts, principles and models.
Ability to apply economic concepts and relate them directly to
the broad elements of the question with evidence integrated
into the answer.
Analysis is clear and coherent, although it may lack balance.
Chains of reasoning are developed but the answer may lack
balance.
Level 4 11–14 Demonstrates precise knowledge and understanding of the
concepts, principles and models.
Ability to link knowledge and understanding in context using
appropriate examples. Analysis is relevant and focused with
evidence fully and reliably integrated.
Economic ideas are carefully selected and applied
appropriately to economic issues and problems. The answer
demonstrates logical and coherent chains of reasoning.

Evaluation
Level Mark Descriptor
0 No evaluative comments.
Level 1 1–2 Identification of generic evaluative comments without
supporting evidence/reference to context.
No evidence of a logical chain of reasoning.
Level 2 3–4 Evidence of evaluation of alternative approaches which is
unbalanced leading to unsubstantiated judgements.
Evaluative comments with supporting evidence/reference to
context and a partially developed chain of reasoning.
Level 3 5–6 Evaluative comments supported by relevant reasoning and
appropriate reference to context.
Evaluation is balanced and considers the broad elements of
the question, leading to a substantiated judgement.

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Question Indicative content Mark
Number
6(g) Knowledge 4, Application 4, Analysis 6,

KAA:
• Definition of an expansionary monetary policy
• Understanding of the role of the MPC of the BoE

MPC has been successful:

• Significantly reducing base interest rate by 4.75%

points and increasing QE by “£375 billion” has led
to a rise in real GDP – use of Figure 2: “preventing
the recession, from the Global Financial Crisis,
turning into another Great Depression”
• Inflation has been under control and mostly within
the target rate of inflation – use of Figure 1
• Increase in AD has led to falling unemployment –
UK unemployment has “fallen to 4% in 2019, the
lowest since the mid-1970s”
• Lower interest rates reduce hot money flows, thus
leading to weaker currency – “fall in the exchange
rate of the British pound”: an improvement in the
current account of the BoP as net exports rise
• Rising real incomes/standard of living since 2014
– use of Figure 1: “Households with mortgages
benefitted from the low interest rate, enabling
them to keep consuming”

Evaluation 6

MPC has not been successful:

• Increase in real GDP since the crisis has only been

modest – use of Figure 2: between 2010 and 2018
it has been less than 1% annual growth
• Inflation has been out of tolerance – use of Figure
1 OR own knowledge of recent inflation trends:
perhaps indicating these are mostly affected by
cost-push factors not under MPC’s control
• Real incomes falling for much of the period between
2008 and 2014 – use of Figure 1: reduces standard
of living and quality of life
• Could lead to rise in income inequality – “the lower
interest rates have led to a rise in household debts”
• There is no evidence that QE has worked in the UK
– “They drafted the use of a new idea: quantitative
easing” – and they had additional rounds of asset
purchases to increase money supply, e.g. “further
expanded it QE programme by £60 billion” in 2016

N.B. Candidates can argue why the MPC has not been (20)
successful as analysis and the opposite as evaluation

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Knowledge, application and analysis
Level Mark Descriptor
0 A completely inaccurate response.
Level 1 1–3 Displays isolated or imprecise knowledge and understanding
of terms, concepts, theories and models.
Use of generic or irrelevant information or examples.
Descriptive approach which has no chains of reasoning or
links between causes and consequences.
Level 2 4–6 Displays elements of knowledge and understanding of
economic principles, concepts and theories.
Applies economic ideas and relates them to economic
problems in context, although does not focus on the broad
elements of the question.
A narrow response or superficial, two stage chains of
reasoning only.
Level 3 7–10 Demonstrates accurate knowledge and understanding of the
concepts, principles and models.
Ability to apply economic concepts and relate them directly to
the broad elements of the question with evidence integrated
into the answer.
Analysis is clear and coherent, although it may lack balance.
Chains of reasoning are developed but the answer may lack
balance.
Level 4 11–14 Demonstrates precise knowledge and understanding of the
concepts, principles and models.
Ability to link knowledge and understanding in context using
appropriate examples. Analysis is relevant and focused with
evidence fully and reliably integrated.
Economic ideas are carefully selected and applied
appropriately to economic issues and problems. The answer
demonstrates logical and coherent chains of reasoning.

Evaluation
Level Mark Descriptor
0 No evaluative comments.
Level 1 1–2 Identification of generic evaluative comments without
supporting evidence/reference to context.
No evidence of a logical chain of reasoning.
Level 2 3–4 Evidence of evaluation of alternative approaches which is
unbalanced leading to unsubstantiated judgements.
Evaluative comments with supporting evidence/reference to
context and a partially developed chain of reasoning.
Level 3 5–6 Evaluative comments supported by relevant reasoning and
appropriate reference to context.
Evaluation is balanced and considers the broad elements of
the question, leading to a substantiated judgement.

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