Government and the Macroeconomy · 2 question types
Past paper frequency (2018 to 2024)
This topic accounts for approximately 6% of your exam marks.
New emphasis in the 2027 syllabus; economic growth and recession are now a distinct topic, including causes and consequences of recession. Guidance based on specimen materials.
A recession is a period of falling , usually defined as two consecutive quarters (six months) of negative growth. It is the opposite of economic growth.
Mirror the causes of growth. A recession can be caused by:
A recession harms several groups at once:
Explain two disadvantages of a recession (4 marks)
What comes up: a 4-mark question asking for two consequences (disadvantages) of a recession, each identified and explained.
Write: chain two of the following, each as identification (1) plus explanation (1). (1) Lower output / GDP (1) which lowers living standards and raises poverty (1). (2) Higher unemployment (1) which raises the cost of unemployment benefits for the government (1). (3) Lower investment (1) caused by a fall in business confidence (1). (4) Lower tax revenue (1) which can push the government into a budget deficit (1).
Watch out: make sure each point goes two steps. "Higher unemployment" on its own is one mark; you need the consequence (lost benefits, lower incomes) for the second.
In a deep recession these effects feed on each other: lower demand causes job losses, the newly unemployed spend less, demand falls further, and more jobs are lost. This downward spiral is what makes a serious recession hard to escape without policy action.