: Pearson Edexcel past-paper questions pack

Public expenditure, taxation and public sector finances

Past-paper questions pack

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Questions are numbered; the mark schemes (the answer key) follow on separate pages so the question pages can be handed out alone. www.economicsaleveltutor.com

Pearson Edexcel AS and A-level Economics past-paper questions since 2016 · 26 parts · mark schemes follow the questions · www.economicsaleveltutor.com · Questions and mark schemes © Pearson Edexcel

1. June 2025 · Paper 2 · Q6(a) · 5 marks · AO1=2,AO2=2,AO3=1

(a) With reference to Figure 1, explain the distinction between direct and indirect taxation. (5)

2. June 2025 · Paper 2 · Q6(c) · 10 marks · AO1=2,AO2=2,AO3=2,AO4=4

(c) With reference to the information provided and your own knowledge, assess the likely macroeconomic effects of the German government’s budget deficit. (10)

3. June 2024 · Paper 2 · Q6(a) · 5 marks · AO1=2,AO2=2,AO3=1

(a) With reference to Figure 4 and your own knowledge, explain the distinction between a progressive and a regressive tax. (5)

4. June 2024 · Paper 2 · Q6(b) · 8 marks · AO1=2,AO2=2,AO3=2,AO4=2

(b) With reference to Figure 4 and Extract A, examine the likely impact of the ‘freeze in income tax thresholds’ (Extract A line 1) on aggregate demand. (8)

5. June 2024 · Paper 2 · Q6(c) · 10 marks · AO1=2,AO2=2,AO3=2,AO4=4

(c) Assess whether a fiscal deficit and national debt should be a cause for concern for the UK government. (10)

6. June 2023 · Paper 2 · Q5(a) · 2 marks · AO2=2

(a) Calculate the US national debt in 2021 as a percentage of GDP. (2)

7. June 2023 · Paper 2 · Q5(b) · 2 marks · AO1=2

(b) Explain the relationship between a fiscal deficit and the national debt. (2)

8. June 2023 · Paper 2 · Q5(c) · 1 marks ·

(c) Which one of the following is the most likely consequence of an increase in the US national debt? (1) An increase in: A crowding out B inequality C poverty D unemployment

9. June 2023 · Paper 3 · Q1(e) · 25 marks · AO1=4,AO2=4,AO3=8,AO4=9

(e) Evaluate the likely microeconomic and macroeconomic effects of tax cuts in the UK. (25)

10. June 2022 · Paper 2 · Q4(b) · 4 marks · AO1=3,AO2=1

(b) With reference to the graph, explain the difference between automatic stabilisers and discretionary fiscal policy. (4)

11. June 2022 · Paper 2 · Q6(d) · 12 marks · AO1=2,AO2=2,AO3=4,AO4=4

(d) With reference to Extract C and your own knowledge, discuss methods the UK government could use to increase tax revenue. (12)

12. November 2021 · Paper 2 · Q1(c) · 2 marks · AO1=1,AO3=1

(c) Explain the impact of annual fiscal deficits on the US national debt. (2)

13. November 2021 · Paper 2 · Q4(b) · 1 marks ·

(b) Government spending on the High Speed 2 rail link is an example of which of the following? (1) A Automatic stabilisers B Capital expenditure C Current expenditure D Transfer payments

14. November 2021 · Paper 3 · Q2(a) · 5 marks · AO1=2,AO2=2,AO3=1

(a) Explain one reason why a country such as Germany wants to avoid an increase in the national debt relative to GDP (Figure 2). (5)

15. November 2021 · Paper 3 · Q2(e) · 25 marks · AO1=4,AO2=4,AO3=8,AO4=9

(e) Evaluate the microeconomic and macroeconomic impacts of ‘a much more expansionary fiscal policy’ (Extract C line 23) on the German economy. (25)

16. October 2020 · Paper 2 · Q7 · 25 marks · AO1=4,AO2=4,AO3=8,AO4=9

7 In 2018, the United States Government cut the corporation tax rate (tax on company profits) from 35% to 21%. Income tax rates for US citizens were also reduced: for example, the top rate of income tax was cut from 39.6% to 37%. (Source adapted from: https://www.nytimes.com/) Evaluate the likely impact of cutting tax rates as a policy to increase economic growth.

17. June 2019 · Paper 2 · Q4(b) · 2 marks · AO2=2

(b) If a company makes £500 000 pre-tax profit in 2020, calculate how much corporation tax it will pay. Assume that the government cuts the rate of corporation tax as planned. (2)

18. June 2019 · Paper 2 · Q4(c) · 2 marks · AO1=1,AO3=1

(c) Explain one possible reason why the revenue from corporation tax could increase if the government cuts the rate of tax. (2)

19. June 2019 · Paper 2 · Q5(c) · 1 marks ·

(c) Which one of the following would be most likely to reduce a country’s Gini coefficient? An increase in: (1) A import tariffs B progressive taxes C regressive taxes D value added tax

20. June 2019 · Paper 2 · Q8 · 25 marks · AO1=4,AO2=4,AO3=8,AO4=9

8 Japan’s budget deficit for 2017/18 is expected to be 4.6% of GDP. Its national debt is forecast to increase to above 250% of GDP by 2019. Evaluate the impact of a large fiscal deficit and national debt on a country’s economy.

21. June 2019 · Paper 3 · Q1(e) · 25 marks · AO1=4,AO2=4,AO3=8,AO4=9

(e) Evaluate the likely microeconomic and macroeconomic effects of imposing a tax on HFSS foods. (25)

22. June 2018 · Paper 2 · Q4(a) · 2 marks · AO1=1,AO3=1

(a) Explain one likely reason why the 2019 budget surplus target was abandoned. (2)

23. June 2018 · Paper 2 · Q4(b) · 2 marks · AO1=1,AO3=1

(b) Explain the likely impact of abandoning the budget surplus target on the UK national debt. (2)

24. June 2018 · Paper 2 · Q4(c) · 1 marks ·

(c) If a government takes decisions to target a budget surplus, this is an example of: (1) A contractionary monetary policy B discretionary fiscal policy C expansionary fiscal policy D expansionary monetary policy

25. June 2017 · Paper 3 · Q2(b) · 8 marks · AO1=2,AO2=2,AO3=2,AO4=2

(b) With reference to Figures 4 and 5 and your own knowledge, examine the relationship between the national debt as a proportion of GDP and the fiscal deficit. (8)

26. June 2017 · Paper 3 · Q2(e) · 25 marks · AO1=4,AO2=4,AO3=8,AO4=9

(e) With reference to the information provided and your own knowledge, evaluate the microeconomic and macroeconomic effects of a government policy of cutting public expenditure rather than raising taxes as a means of reducing a fiscal deficit. (25)

Mark schemes

1. June 2025 · Paper 2 · Q6(a)

2. June 2025 · Paper 2 · Q6(c)

3. June 2024 · Paper 2 · Q6(a)

4. June 2024 · Paper 2 · Q6(b)

5. June 2024 · Paper 2 · Q6(c)

6. June 2023 · Paper 2 · Q5(a)

7. June 2023 · Paper 2 · Q5(b)

8. June 2023 · Paper 2 · Q5(c)

9. June 2023 · Paper 3 · Q1(e)

10. June 2022 · Paper 2 · Q4(b)

11. June 2022 · Paper 2 · Q6(d)

12. November 2021 · Paper 2 · Q1(c)

13. November 2021 · Paper 2 · Q4(b)

14. November 2021 · Paper 3 · Q2(a)

15. November 2021 · Paper 3 · Q2(e)

16. October 2020 · Paper 2 · Q7

17. June 2019 · Paper 2 · Q4(b)

18. June 2019 · Paper 2 · Q4(c)

19. June 2019 · Paper 2 · Q5(c)

20. June 2019 · Paper 2 · Q8

21. June 2019 · Paper 3 · Q1(e)

22. June 2018 · Paper 2 · Q4(a)

23. June 2018 · Paper 2 · Q4(b)

24. June 2018 · Paper 2 · Q4(c)

25. June 2017 · Paper 3 · Q2(b)

26. June 2017 · Paper 3 · Q2(e)