IGCSE Economics (9–1) 0987 · Topic 4

Government and the macroeconomy: past paper questions

195 real questionsasked in 10 of the last 10 exam series2020–2025usually: Analyse, Discuss, Explain, Identify, Calculate

Real questions on government and the macroeconomy

The newest 20 of 74 written questions, plus 121 multiple-choice. Open one to see it on the real paper.

0987/22 · October/November 2025 · Q3d[8]
Discuss whether or not perfume should be taxed at a higher rate than food.
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0987/22 · October/November 2025 · Q4a[2]
Identify two policy measures a central bank could use to maintain price stability.
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0987/22 · October/November 2025 · Q4b[4]
Explain two benefits to an economy of full employment.
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0987/22 · October/November 2025 · Q4c[6]
Analyse how an increase in government spending on building houses could reduce unemployment.
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0987/22 · October/November 2025 · Q5b[4]
Explain two differences between monetary policy and supply-side policy.
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0987/21 · May/June 2025 · Q1a[1]
Calculate the value of Gabon’s oil production as a percentage of Gabon’s GDP.
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0987/21 · May/June 2025 · Q1g[6]
Discuss whether or not a government should pay private sector firms to give work experience to unemployed young people.
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0987/21 · May/June 2025 · Q4a[2]
Identify two macroeconomic aims of government that may conflict.
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0987/21 · May/June 2025 · Q4c[6]
Analyse how a cut in the corporation (corporate income) tax rate can increase economic growth.
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0987/21 · May/June 2025 · Q4d[8]
Discuss whether or not a decrease in government spending will reduce inflation.
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0987/22 · October/November 2024 · Q1a[1]
Calculate the percentage of the Jordanian labour force employed in the secondary sector.
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0987/22 · May/June 2024 · Q1b[2]
Identify two qualities of a good tax that the Tunisian government aimed to achieve.
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0987/22 · May/June 2024 · Q1d[4]
Explain two ways the Tunisian government tried to reduce frictional unemployment.
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0987/22 · May/June 2024 · Q1e[4]
Analyse the relationship between the change in Tunisia’s average wage and inflation rate.
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0987/22 · May/June 2024 · Q3d[8]
Discuss whether or not an economy with a high inflation rate will have a low economic growth rate.
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0987/22 · May/June 2024 · Q4a[2]
Identify two reasons why tax revenue is likely to fall during a recession.
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0987/22 · May/June 2024 · Q5d[8]
Discuss whether or not an increase in government spending on housing would benefit an economy.
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0987/22 · October/November 2023 · Q2b[4]
Explain two reasons why a low inflation rate may increase a country’s economic growth rate.
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0987/22 · October/November 2023 · Q3b[4]
Explain two types of unemployment.
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0987/22 · October/November 2023 · Q3c[6]
Analyse how supply-side policy measures could reduce unemployment.
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What examiners said

As in some previous sessions, several candidates showed a confusion between a low inflation rate and a fall in prices. These candidates tended to run into difficulties. There were, however, some strong answers which examined, most commonly, the possible effects on international competitiveness and the willingness to invest.
— Examiner report, October/November 2023, 0987/22 Q2(b) (Cambridge)

This was extremely well answered. Most candidates showed a strong awareness of different types of unemployment. There were only a small proportion who either confused the different types or who seemed to be unaware of the different types. The most common confusion shown was that cyclical unemployment is caused by a fall in demand for one product rather than a fall in total demand.
— Examiner report, October/November 2023, 0987/22 Q3(b) (Cambridge)

A few candidates showed confusion over the meaning of supply-side policy measures. However, most candidates did analyse some relevant policy measures. These candidates tended to be strongest on education, training, lower personal income tax and subsidies where some good analytical links were provided.
— Examiner report, October/November 2023, 0987/22 Q3(c) (Cambridge)

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In the syllabus

1 The role of government

the role of government Locally, nationally and internationally.

2 0455.4.2.1 — the macroeconomic aims of government Economic growth, full employment/low unemployment, stable prices/low inflation, balance of payments sta

the macroeconomic aims of government Economic growth, full employment/low unemployment, stable prices/low inflation, balance of payments stability, redistribution of income. Reasons behind the choice of aims and the criteria that governments set for each aim.
possible conflicts between macroeconomic Possible conflicts between aims: full employment aims versus stable prices; economic growth versus balance of payments stability; and full employment versus balance of payments stability.

3 0455.4.2.2 — possible conflicts between macroeconomic Possible conflicts between aims: full employment aims versus stable prices; economic growth versus

possible conflicts between macroeconomic Possible conflicts between aims: full employment aims versus stable prices; economic growth versus balance of payments stability; and full employment versus balance of payments stability.

4 0455.4.3.1 — definition of the government budget.

definition of the government budget.
reasons for government spending The main areas of government spending and the reasons for and effects of spending in these areas.
reasons for taxation Taxation as the main source of government revenue and the reasons for levying taxation.
classification of taxes Examples of the different classifications of tax; progressive, regressive, proportional; and direct, indirect.
principles of taxation The qualities of a good tax.
impact of taxation The impact of taxation on consumers, producers, government and economy as a whole. Continued.
definition of fiscal policy.
fiscal policy measures The tax and spending changes, in the form of fiscal policy, that cause budget balance or imbalance. Including calculations of the size of a budget deficit or surplus.
effects of fiscal policy on government How fiscal policy measures may enable the macroeconomic aims government to achieve its macroeconomic aims. Note: aggregate demand and aggregate supply are not required.

5 0455.4.3.2 — reasons for government spending The main areas of government spending and the reasons for and effects of spending in these areas.

reasons for government spending The main areas of government spending and the reasons for and effects of spending in these areas.

6 0455.4.3.3 — reasons for taxation Taxation as the main source of government revenue and the reasons for levying taxation.

reasons for taxation Taxation as the main source of government revenue and the reasons for levying taxation.

7 0455.4.3.4 — classification of taxes Examples of the different classifications of tax; progressive, regressive, proportional; and direct, indirect.

classification of taxes Examples of the different classifications of tax; progressive, regressive, proportional; and direct, indirect.

8 0455.4.3.5 — principles of taxation The qualities of a good tax.

principles of taxation The qualities of a good tax.

9 0455.4.3.6 — impact of taxation The impact of taxation on consumers, producers, government and economy as a whole. Continued.

impact of taxation The impact of taxation on consumers, producers, government and economy as a whole. Continued.

10 0455.4.3.7 — definition of fiscal policy.

definition of fiscal policy.

11 0455.4.3.8 — fiscal policy measures The tax and spending changes, in the form of fiscal policy, that cause budget balance or imbalance. Including calcula

fiscal policy measures The tax and spending changes, in the form of fiscal policy, that cause budget balance or imbalance. Including calculations of the size of a budget deficit or surplus.

12 0455.4.3.9 — effects of fiscal policy on government How fiscal policy measures may enable the macroeconomic aims government to achieve its macroeconomic

effects of fiscal policy on government How fiscal policy measures may enable the macroeconomic aims government to achieve its macroeconomic aims. Note: aggregate demand and aggregate supply are not required.

13 0455.4.4.1 — definition of money supply and monetary policy.

definition of money supply and monetary policy.
monetary policy measures Changes in interest rates, money supply and foreign exchange rates.
effects of monetary policy on government How monetary policy measures may enable the macroeconomic aims government to achieve its macroeconomic aims.

14 0455.4.4.2 — monetary policy measures Changes in interest rates, money supply and foreign exchange rates.

monetary policy measures Changes in interest rates, money supply and foreign exchange rates.

15 0455.4.4.3 — effects of monetary policy on government How monetary policy measures may enable the macroeconomic aims government to achieve its macroecono

effects of monetary policy on government How monetary policy measures may enable the macroeconomic aims government to achieve its macroeconomic aims.

16 0455.4.5.1 — definition of supply-side policy.

definition of supply-side policy.
supply-side policy measures Possible supply-side policy measures include education and training, labour market reforms, lower direct taxes, deregulation, improving incentives to work and invest, and privatisation.
effects of supply-side policy measures on How supply-side policy measures may enable the government macroeconomic aims government to achieve its macroeconomic aims.

17 0455.4.5.2 — supply-side policy measures Possible supply-side policy measures include education and training, labour market reforms, lower direct taxes,

supply-side policy measures Possible supply-side policy measures include education and training, labour market reforms, lower direct taxes, deregulation, improving incentives to work and invest, and privatisation.

18 0455.4.5.3 — effects of supply-side policy measures on How supply-side policy measures may enable the government macroeconomic aims government to achieve

effects of supply-side policy measures on How supply-side policy measures may enable the government macroeconomic aims government to achieve its macroeconomic aims.

19 0455.4.6.1 — definition of economic growth.

definition of economic growth.
measurement of economic growth Real Gross Domestic Product (GDP) and how it can be used to measure economic growth. GDP per head (capita).
causes and consequences of recession Meaning of recession and how a recession moves the economy within its PPC.
causes of economic growth How changes in total demand may increase the utilisation of resources and GDP – resulting in a movement from inside toward the PPC. How economic growth shifts the economy’s PPC to the right and is caused by changes in investment, technology, and the quantity and quality of the factors of production.
consequences of economic growth The costs and benefits of economic growth in the context of different economies.
policies to promote economic growth The range of policies available to promote economic growth and how effective they might be.

20 0455.4.6.2 — measurement of economic growth Real Gross Domestic Product (GDP) and how it can be used to measure economic growth. GDP per head (capita).

measurement of economic growth Real Gross Domestic Product (GDP) and how it can be used to measure economic growth. GDP per head (capita).

21 0455.4.6.3 — causes and consequences of recession Meaning of recession and how a recession moves the economy within its PPC.

causes and consequences of recession Meaning of recession and how a recession moves the economy within its PPC.

22 0455.4.6.4 — causes of economic growth How changes in total demand may increase the utilisation of resources and GDP – resulting in a movement from insid

causes of economic growth How changes in total demand may increase the utilisation of resources and GDP – resulting in a movement from inside toward the PPC. How economic growth shifts the economy’s PPC to the right and is caused by changes in investment, technology, and the quantity and quality of the factors of production.

23 0455.4.6.5 — consequences of economic growth The costs and benefits of economic growth in the context of different economies.

consequences of economic growth The costs and benefits of economic growth in the context of different economies.

24 0455.4.6.6 — policies to promote economic growth The range of policies available to promote economic growth and how effective they might be.

policies to promote economic growth The range of policies available to promote economic growth and how effective they might be.

25 0455.4.7.1 — definition of employment, unemployment and full employment.

definition of employment, unemployment and full employment.
changing patterns and level of employment The nature and causes of changes in the pattern of employment, for example increase in proportion of workers employed in the tertiary sector and formal economy as an economy develops; a greater proportion of women in the labour force due to changes in social attitudes; decline in the proportion employed in the public sector as a country moves towards a market economy.
measurement of unemployment How unemployment is measured – claimant count and labour force survey – and the formula for the unemployment rate.
causes/types of unemployment Frictional, structural and cyclical unemployment.
consequences of unemployment The consequences of unemployment for the individual, firms and the economy as a whole.
policies to reduce unemployment The range of policies available to reduce unemployment and how effective they might be.

26 0455.4.7.2 — changing patterns and level of employment The nature and causes of changes in the pattern of employment, for example increase in proportion

changing patterns and level of employment The nature and causes of changes in the pattern of employment, for example increase in proportion of workers employed in the tertiary sector and formal economy as an economy develops; a greater proportion of women in the labour force due to changes in social attitudes; decline in the proportion employed in the public sector as a country moves towards a market economy.

27 0455.4.7.3 — measurement of unemployment How unemployment is measured – claimant count and labour force survey – and the formula for the unemployment rat

measurement of unemployment How unemployment is measured – claimant count and labour force survey – and the formula for the unemployment rate.

28 0455.4.7.4 — causes/types of unemployment Frictional, structural and cyclical unemployment.

causes/types of unemployment Frictional, structural and cyclical unemployment.

29 0455.4.7.5 — consequences of unemployment The consequences of unemployment for the individual, firms and the economy as a whole.

consequences of unemployment The consequences of unemployment for the individual, firms and the economy as a whole.

30 0455.4.7.6 — policies to reduce unemployment The range of policies available to reduce unemployment and how effective they might be.

policies to reduce unemployment The range of policies available to reduce unemployment and how effective they might be.

31 0455.4.8.1 — definition of inflation and deflation.

definition of inflation and deflation.
measurement of inflation and deflation Measurement of inflation and deflation using the Consumer Prices Index (CPI).
causes of inflation and deflation Causes of inflation: demand-pull and cost-push. Causes of deflation: demand-side and supply-side.
consequences of inflation and deflation The consequences of inflation and deflation for consumers, workers, savers, lenders, firms and the economy as a whole.
policies to control inflation and deflation The range of policies available to control inflation and deflation and how effective they might be.

32 0455.4.8.2 — measurement of inflation and deflation Measurement of inflation and deflation using the Consumer Prices Index (CPI).

measurement of inflation and deflation Measurement of inflation and deflation using the Consumer Prices Index (CPI).

33 0455.4.8.3 — causes of inflation and deflation Causes of inflation: demand-pull and cost-push. Causes of deflation: demand-side and supply-side.

causes of inflation and deflation Causes of inflation: demand-pull and cost-push. Causes of deflation: demand-side and supply-side.

34 0455.4.8.4 — consequences of inflation and deflation The consequences of inflation and deflation for consumers, workers, savers, lenders, firms and the e

consequences of inflation and deflation The consequences of inflation and deflation for consumers, workers, savers, lenders, firms and the economy as a whole.

35 0455.4.8.5 — policies to control inflation and deflation The range of policies available to control inflation and deflation and how effective they might

policies to control inflation and deflation The range of policies available to control inflation and deflation and how effective they might be.

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