OxfordAQA International GCSE Economics: Money and the financial sector (9214) – Practice Questions

These are original questions written for Marlbridge, for revision and practice on this content. They are not reproduced past-paper questions, and they do not replicate the exam’s exact structure, question count or mark tariffs – examination boards hold copyright in their own papers. Use these alongside the official past papers from your board or school.

These questions cover sections 3.2.5.1 (the role of money) and 3.2.5.2 (the role and importance of the financial sector) of the OxfordAQA International GCSE Economics specification (9214), first teaching September 2023, first examined May/June 2025. All countries, firms and figures are invented. Revise first with the study guide and revision notes. See also the course hub, the checklist, the fiscal and monetary policy practice and the free diagnostics.

Questions

1. Name the function of money shown in each case. (a) A tenant agrees in January to pay February’s rent at the end of February. [1] (b) A shopkeeper marks every item with a price in the local currency. [1] (c) A worker pays a bus fare with a travel card. [1] (d) A farmer puts the harvest income into a bank account to spend next year. [1]

2. Country B’s money (illustrative, bn units): banknotes and coins 15, current account balances 45, savings deposits 90. (a) Calculate the broad total. [1] (b) Calculate banknotes and coins as a percentage of the total. [2] (c) Explain why money is defined as more than banknotes and coins. [2]

3. In a barter economy there are 6 goods. (a) Calculate the number of exchange rates needed, and the number of prices if money is used. [2] (b) Explain which function of money this shows and why it helps traders. [2]

4. A household in Country C holds 2,400 units. Prices rise 6% over the year. (a) Calculate the spending power of 2,400 units held as cash, in today’s prices, to 2 decimal places. [2] (b) The household instead saves at 4% interest. Calculate the balance after one year and its value in today’s prices, to 2 decimal places. [2] (c) State what this shows about money as a store of value. [1]

5. Explain two roles of a central bank. [4]

6. A household in Country D has a variable-rate loan of 90,000 units at 7%. The central bank raises its rate by 1 percentage point and the bank passes on the full rise. (a) Work out how much more interest the household pays over a year, and the monthly equivalent. [2] (b) Explain how the rise could affect spending in the economy. [4]

7. A commercial bank in Country E holds deposits of 600 mn units, pays savers 1.5%, and has lent 450 mn at 5%. (a) Calculate the gross interest margin. [3] (b) Explain how the bank serves both savers and borrowers. [4]

8. A bank in Country F has loans of 400 mn units, own funds of 20 mn and deposits of 300 mn, of which 36 mn is held in cash. (a) 6% of the loans are not repaid. Calculate the loss and say whether own funds cover it. [3] (b) 20% of depositors withdraw at once. Calculate the cash shortfall. [2] (c) Explain how the central bank could help to protect the stability of the system. [3]

9. An insurance company in Country G has 2,000 policyholders paying 45 units a year each. On average 1 in 40 makes a claim of 1,500 units. (a) Calculate premiums, expected claims and the amount left. [3] (b) Explain how insurers and other institutions help households and firms. [3]

10. A firm in Country H wants to borrow 200,000 units to build a workshop. Its bank charges 6%. The central bank then cuts its rate and the bank lowers the loan rate to 5%. Evaluate whether the cut will lead the firm to invest. [8]

11. Evaluate whether commercial banks are more important than the central bank for the success of Country J’s economy. [8]

Answers

1. (a) Means of deferred payment. [1] (b) Unit of account. [1] (c) Medium of exchange. [1] (d) Store of value. [1] Examiner insight: Match the function to what the money is doing in the sentence; a price tag measures value and is not itself the payment.

2. (a) 15 + 45 + 90 = 150 bn units [1]. [1] (b) 15 ÷ 150 × 100 [1] = 10% [1]. [2] (c) Balances in current and savings accounts are accepted for payment or can be turned into spending money [1]. Most payments are made by card or transfer, so notes and coins alone would leave out 90% of the money [1]. [2] Examiner insight: Support the definition with the figures from the table; a bare statement that money is “more than cash” tends to gain less than one that uses the data.

3. (a) Barter: 6 × 5 ÷ 2 [1] = 15 exchange rates. Money: 6 prices [1]. [2] (b) Unit of account [1]. Every good is priced in one unit, so traders compare goods easily and need only 6 prices instead of 15 rates [1]. [2] Examiner insight: Name the function and then say what it changes; naming alone is a recall point only.

4. (a) 2,400 ÷ 1.06 [1] = 2,264.15 units [1]. [2] (b) Balance = 2,400 × 1.04 = 2,496 units [1]. In today’s prices 2,496 ÷ 1.06 = 2,354.72 units [1]. [2] (c) When prices rise, cash loses spending power, and the interest earned only partly makes up the loss [1]. [1] Examiner insight: Divide by 1.06 for the real value; subtracting 6% of the balance, or comparing 2,496 with 2,400, does not allow for prices.

5. Influencing interest rates: the central bank sets a policy rate that guides the rates banks charge and pay [1], so it can make borrowing dearer or cheaper and change spending and investment [1]. Ensuring stability: it supervises banks and can lend to one that is short of cash [1], which protects deposits and confidence so that lending can continue [1]. [4] Examiner insight: Each role needs a development to reach full credit; naming a role alone leaves the explanation incomplete.

6. (a) 90,000 × 0.07 = 6,300 and 90,000 × 0.08 = 7,200, so extra = 900 units a year [1], which is 900 ÷ 12 = 75 units a month [1]. [2] (b) Higher interest makes loans dearer, so borrowers have less income left after repayments [1]. Consumers cut spending on credit-financed goods [1]. Saving becomes more attractive, which also reduces spending [1]. Firms find investment more costly and may postpone it, so aggregate demand falls [1]. [4] Examiner insight: Link the cost of the loan to behaviour and then to aggregate demand; stopping at “people have less money” leaves the chain unfinished.

7. (a) Interest received = 450 × 0.05 = 22.5 mn [1]. Interest paid = 600 × 0.015 = 9 mn [1]. Margin = 22.5 − 9 = 13.5 mn units [1]. [3] (b) Savers get a safe place to keep money [1] and earn interest on deposits [1]. Borrowers get loans for homes or business without having saved the full amount [1]. The bank pools many savers’ deposits to lend, and earns from the gap between the rates [1]. [4] Examiner insight: Use the interest figures from part (a) in part (b); work out interest received on the amount lent and interest paid on all deposits, then subtract; do not apply either rate to the wrong amount.

8. (a) Loss = 400 × 0.06 = 24 mn units [1]. Own funds are 20 mn [1], so they fall short by 4 mn and do not cover the loss [1]. [3] (b) Withdrawals = 300 × 0.20 = 60 mn [1]. Shortfall = 60 − 36 = 24 mn units [1]. [2] (c) It could set rules that require banks to hold more own funds and cash [1]. It could lend to the bank so that withdrawals can be paid [1]. This stops a loss of confidence from spreading to other banks [1]. [3] Examiner insight: A bank run is about liquidity (cash) and a loan loss is about solvency (own funds); keeping the two apart makes each answer more precise.

9. (a) Premiums = 2,000 × 45 = 90,000 [1]. Claims = 2,000 ÷ 40 = 50, and 50 × 1,500 = 75,000 [1]. Left = 15,000 units for costs and profit [1]. [3] (b) Insurance pools small payments from many, so each household or firm pays a known amount rather than risk a large loss [1]. This lets them buy homes or start businesses with less fear [1]. Other institutions such as pension funds or stock markets move savings to those who can use them, for example by letting firms sell shares to raise funds [1]. [3] Examiner insight: Name a specific institution and say what it does; general statements that “it helps people” are too vague to develop.

10. Interest at 6% = 200,000 × 0.06 = 12,000 a year; at 5% = 10,000, so the saving is 2,000 a year [1]. Lower borrowing costs raise the expected profit from the workshop, so more projects now earn more than they cost [1]. The firm may borrow and invest, adding to capacity and demand for builders and equipment [1]. However, a 1 point cut only saves 2,000 a year [1]. If demand for the firm’s products is weak or the owner is pessimistic, a lower rate may not persuade the firm to invest [1]. The bank may also refuse the loan if it judges the firm risky [1]. Judgement: the cut helps most for firms with sound projects and stable demand; it is not enough alone when confidence is low [1]. The effect also builds up over time, as the firm decides and builds [1]. [8] Examiner insight: Use the data (a 2,000 saving on a 200,000 loan) to judge size; arguments that restate “lower rates encourage investment” without testing it stay at assertion.

11. For commercial banks: they take deposits and lend to firms and households, turning saving into investment [1]. Without loans, a bakery cannot buy an oven or a family a home, so output and jobs grow more slowly [1]. They provide accounts and payment services used by everyone [1]. For the central bank: it influences interest rates, which affect borrowing across the whole economy [1]. It supports stability, and a failure of the banking system would stop lending and cause a fall in output [1]. Commercial banks depend on the central bank’s rules and support in a crisis [1]. Judgement: in normal times commercial banks fund growth day to day, but they rely on a stable system that only the central bank can protect, so both are needed; the central bank matters more when stability is at risk [1]. The answer depends on whether the economy is stable or in difficulty [1]. [8] Examiner insight: A judgement that says when each institution matters more, and why, is more convincing than “both are important” with no reason.

Where marks are usually lost

• Defining money as banknotes and coins only.
• Naming a function but not applying it to the scenario.
• Dividing by the wrong number when finding a real value.
• Mixing up the central bank and a commercial bank.
• Forgetting to link a change in interest rates to spending and then aggregate demand.
• Confusing a loan loss with a shortage of cash.
• Treating deposits as the bank’s own money.
• Giving a one-sided answer to an evaluate question without a judgement.

Next steps

• Check recall with the revision notes.
• Re-read the study guide.
• Go to the course hub and the checklist.
• Take one of the free 10-minute diagnostics.
• Book a free trial class.

Official syllabus

OxfordAQA International GCSE Economics (9214), specification version 1.0, for exams May/June 2025 onwards, published by OxfordAQA. Sections 3.2.5.1 and 3.2.5.2.