Distinguish between regressive and progressive taxes and explain whether you would use an income tax or a specific indirect tax to make post-tax incomes more equal. [8]

Explain how economists use the concept of elasticity to distinguish between inferior goods and necessary goods when consumer incomes change.

Explain why indifference curves are usually drawn convex to the origin, are downward sloping and do not cross each other. [12]

Consider, for an inferior good, the relationship between indifference curves, budget lines, price changes and demand curves. [13]

In 2016, the Indonesian government increased its spending on healthcare and education and considered raising the school leaving age. The government also planned to increase taxation. Such a move might conflict with its aim of reducing unemployment at a time when a number of countries were at risk of entering a recession

Analyse, using a production possibility curve (PPC) diagram, the effects of high unemployment in a country. [6]

Discuss whether increased government spending on a country’s infrastructure will always lead to a rise in the rate of inflation. Use aggregate demand and aggregate supply analysis to support your answer. [12]

UK students often take jobs during their holidays and some save part of their income to pay their tuition fees. UK graduates earn, on average, £8500 a year more than non-graduates. Economics graduates had the second highest average earnings of all UK graduates in 2016. The top 10% of economics graduates earned £115 000 a year.

Analyse why economics graduates are well-paid.[6]

In 2016, the Indonesian government increased its spending on healthcare and education and considered raising the school leaving age. The government also planned to increase taxation. Such a move might conflict with its aim of reducing unemployment at a time when a number of countries were at risk of entering a recession

Discuss whether or not a government should raise the school leaving age. [8]

In February 2016, share prices on stock exchanges fell throughout the world. There were a number of reasons for this; including concerns about the slowdown in world growth, the possibility of deflation and unemployment, and fears that some commercial banks could go out of business

Discuss whether or not government policy measures to reduce unemployment will cause inflation.

Explain how the rate of deflation is measured and the impact of a period of deflation on an economy.