AS: Where do I get the marks?

The following is only for rough guidance for 2015 exam  - remember mark schemes can change each year as questions change; don't over obsess about where the marks can be picked up just get on with answering the questions as best as you can. All the information here is based on the Mark Scheme from 2014.

6EC01

Multiple Choice - make sure you choose an option, many student forget to. Then to pick up the three use standard methods - define, annotate the diagram, draw a diagram, fill in empty boxes requiring simple calculations, use Knock Outs without repeating the key and remember to say the letter you are saying is wrong. "The foundation of this paper is an understanding of the price mechanism model and its limitations. Any suitable opportunity to apply the model should be taken. In order to maximise candidate performance it is possible to achieve the full 3 explanation marks even when an incorrect option is selected." http://qualifications.pearson.com/content/dam/pdf/A%20Level/Economics/2013/Exam%20materials/Examiner-report-Unit-1-(6EC01)-June-2014.pdf

Data Response
Always try to define - even when no marks awarded it usually helps to ensure you are answering the question.
If it asks for a diagram there are usually 4 marks for an accurate diagram - otherwise try to use a diagram when possible for 2 marks.

Penny marks - remember 6EC01 paper so your are likely to be awarded with 1 mark e.g 4 marks = 1+1+1+1. Outline/Explain two reasons 6 marks =  (1+1+1) + (1+1+1)

There are 16 evaluation out of 48 marks so spot where and remember how to evaluate.

If 5-8 marks evaluate one point
If 10 marks - evaluate two points
If 12 marks worth evaluating three points.
If 14 marks and a diagram request - evaluate three points.
If 14 marks and no reference to diagram - evaluate four points.

Assess (5/6 marks) = 2+2+2e (1e id evaluative point +1e explain it and link back to question)
Assess using a diagram (8 marks) = 4+2 +2e
Examine using a diagram (10 marks) = 4+2 +2e + 2e (be critical of your diagram - time, price-elasticities, what else might change)
Discuss (12 marks) - 2+2e  2+2e   2+2e
To what extent, using a diagram (14 marks) - 4 diagram     + 2+2e    +2+2e     2+2e
(or just 2e if time smart)
Discuss (14 marks) = 2+2e    +2+2e    +2+2e    +2 = 14 marks          
(If time worth adding another evaluative point  relating to the last issue you identified +2e)




6EC02

Explain 4 marks - define/explain 2 marks and use data 2 marks
Explain 6 marks - explain 2, explain more/use diagram 2, use data 2.
Explain TWO reasons/benefits..8 marks - id one issue 2 + explain it +2; id 2+ explain using data +2.

Assess impact 12 marks - bonus marks - define 2 marks, diagram 2 marks, 2 m use data, otherwise:
Id 1st impact 2m explain it 2m and evaluate it 2e
Id 2nd impact 2m explain it 2m and evaluate it 2e


PLAN to do the following but also allow yourself thinking time - how are you going to say the following in a logical and clear manner that avoids repetition, going off topic.

30 mark essay plan
introduction paragraph - 6 marks - definitions, use data, draw a diagram (2+2+2)

1st point paragraph - Id. point to be made (2 marks) + explain point using data (2 marks) = 2+2 =4

Evaluate paragraph - evaluate 1st point two times ensuring you link back to the question, if stuck use WEESTEPS or evaluate data - 2e+2e = 4e

2nd point paragraph - Identify point to be made (2 marks) + explain point (2 marks) = 2+2 =4

Evaluate paragraph - evaluate 2nd point two times ensuring you link back to the question, if stuck use WEESTEPS - 2e+2e = 4e

3rd point paragraph - Identify point to be made (2 marks) + explain point (2 marks) = 2+2 =4

Evaluate paragraph - evaluate 3rd point two times ensuring you link back to the question, if stuck use WEESTEPS - 2e+2e = 4e

AS - some quick tricky questions.

6EC02 - Macro-Economics
Negative output gap?

1. Impact of higher inflation on real incomes?
2. Assess the costs and benefits of a trade in goods deficit?
3. Recovery is?
4. Why unemployment has not risen?
5. Why is the housing market a problem for geographical mobility in the UK (or EU - A2 students)?
6. What is GDP at constant prices?
7. What problems are there measuring GDP?
8. Negative Output Gap?
9. Discuss impact of Housing recovery?

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1. Impact of higher inflation on real incomes? Inflation indicates teh cost of living so real incomes would fall since real incomes are nominal incomes (wages/benefits) minus the rate of inflation. There would be a fall in real income if household earnings are fixed (pay freeze, 0% increase in benefits). However real incomes will stay stay constant if nominal earnings (wages/benefits) are index linked i.e. increase in line with inflation e.g pensions rise 2% because CPI is 2%.
2. Assess the costs and benefits of a trade in goods deficit? Costs would be recession and unemployment resulting from less export earnings and a negative multiplier effect causing UK firms to make workers redundant as there is less Aggregate Demand. Benefits could be that it indicates high Standards of Living in the UK - we can afford imports. Another benefit might be lower demand pull inflation as AD is shifting in so many firms across the UK may not incerase prices by as much as they were in the face of falling export orders.. Overall a large and sustained trade deficit though will see the costs far outweighing the benefits as the UK develops an inability to even cope with a rise in export demand as its manufacturing base is permanently weakened.
3. Technically a recovery is one positive quarter of Real GDP (rise of 0.1% over 3 months) after a recession. Recently the UK has recovered its pre recession level of Real GDP and rate of unemployment - however a genuine full recovery would see the UK back on track with where its potential growth would have been if we had not had a recession.
4. Unemployment has not risen as there is a time lag between a fall in AD and the final decision to let go of experienced staff - plus face the future cost of recruiting and training new staff. Secondly in this recession firms have been able to reduce the hours staff work, extreme version is zero hour contracts and thereby a criticism of the accuracy of unemployment data. Thirdly loose monetary policy and helped firms cope with servicing debts and possibly maintained business confidence, now strong signs of recovery (+3%) growth.
5. Cost of living (housing and renting) is too high for labour to relocate.
6. Economics Help provides a helpful definition of GDP at constant prices:                           Current Prices and Constant Prices  Current Prices measures GDP using the current price level. Therefore, when making comparisons it shows nominal changes in GDP.                           Constant prices tries to remove the effect of inflation. It adjusts GDP for changes in inflation. Therefore, using constant prices to measure changes in output enables real changes in GDP to be measured. http://www.economicshelp.org/blog/glossary/current-prices-constant-prices/
7. Problems measuring GDP can be summarised as: unpaid work ignored (carers); illegal activities; problems recording data especially in developing countries with remote areas. Good revision link: http://beta.tutor2u.net/economics/reference/national-income-and-the-standard-of-living-revision-presentation Plus standard issues Real GDP per capita' HDI, happiness indicator, inequality.
8. Negative output gap? Actual growth less than trend growth, illustrate via economic cycle, ppf, AS/AD
9. Rise in House prices - boost confidence, positive wealth effect, multiplier effect - however - slow recovery, banking failure, pay freezes - impact on growth and inflation as AD rises

Understanding the WTO - the Basics

To what extent do trading blocs contradict the Most Favoured Nation clause of the WTO?

Click here to understand this basic principle of the WTO:

https://www.wto.org/english/thewto_e/whatis_e/tif_e/fact2_e.htm

Key point:

1. Most-favoured-nation (MFN): treating other people equally      Under the WTO agreements, countries cannot normally discriminate between their trading partners. Grant someone a special favour (such as a lower customs duty rate for one of their products) and you have to do the same for all other WTO members.

This principle is known as most-favoured-nation (MFN) treatment

Key evaluation point:

Some exceptions are allowed. For example, countries can set up a free trade agreement that applies only to goods traded within the group —   discriminating against goods from outside. Or they can give developing countries special access to their markets. Or a country can raise barriers against products that are considered to be traded unfairly from specific countries. And in services, countries are allowed, in limited circumstances, to discriminate. But the agreements only permit these exceptions under strict conditions. In general, MFN means that every time a country lowers a trade barrier or opens up a market, it has to do so for the same goods or services from all its trading partners — whether rich or poor, weak or strong.

Explain likely impact on income distribution of inflation falling “below the 2% target” (Extract 3, lines 5–6).

If Inflation rate slows down from +2% to +1% then effect on income distribution widens (2) as real value of savings and borrowings eroded at a slower rate (2) so higher income households will find their savings have higher purchasing power in the future whereas low income households will not find inflation eroding the real value of the money they owe.


If  the UK experiences a sustained period of deflation then inequality may widen further. When households borrow money "we expect inflation to rescue us from our debt" (Marryn Somerset Webb, FT - Deflation isn't such a bonus afterall). The house your parents bought for £90,000 may today be worth £400,000 after two decades of inflation. £90,000 debt seemed very large to them initially - now imagine yourself buying a house for £500,000 and the economy experiencing two decades of deflation.

Lower inflation may though mean lower interest rates resulting in a narrowing of inequality -see earlier posting.

Lower inflation may also mean less fiscal drag as tax bands do not rise with inflation so tax revenue does not rise without the state raising tax rates. The Government might need to make benefit cuts or increase tax on high income erarners so impact on inequality is exogenous here.

AS: Banking Failure

Despite the base rate of interest falling from 5% to 0.5% and staying low for the last 4-5 years high street banks have not passed on these falls in the rate of interest e.g. household loans at 10 % or business loans or credit card charges at 20%. To overcome this and force the banks to lower interest charges the Bank of England has increased the quantity of money supplied in the economy, known as Quantitative Easing (QE). So far £375 billion has been pumped into the economy to encourage credit easing.

Assess the impact of low interest rates on the distribution of income.

Winners are borrowers as they have less interest to pay. Borrowers are likely to be low income households on low incomes struggling to survive – however high income households may also borrow money e.g. mortgages to buy houses in London and the South East.

Savers  are losers e.g. rich pensioners – however low income household in temporary work may also be saving as they fear their ability to survive if they become unemployed.

So overall income inequality may be reduced.

A2: Understanding the different types of trading blocs

Essentially you will be aware of the EU - but how does it compare to NAFTA or the ASEAN trading bloc. The former may be moving closer to the EU model but there is also a possibility of the EU trading bloc moving back towards being just a Free Trade Area. Couple of useful artices here;

http://www.tutor2u.net/economics/revision-notes/a2-macro-trade-agreements.html

http://people.stern.nyu.edu/rlevich/f1999/Chap-11.pdf

A2: Limits to Growth and Development

A couple of good articles gere - the first one provides good real world country examples wheras the second one acts more as a revision check -e.g the foreign currency gap which may mean that an LEDC earns insufficient US dollars from their exports of primary commodities to afford imports of manufactured items plus servicing debts which they have to pay in US dollars. A weakening of their currency against the US dollar will further worsen this situation.

click on link and scroll down to article
http://www.tutor2u.net/economics/revision-notes/a2-macro-economic-growth-constraints.html

https://edecon.wordpress.com/2011/06/19/limits-to-growth-and-development/

A2: De-Globalisation

You are expected to be aware of modern examples of protectionism - restricting global trade in goods and services - to help with this the following is an excellent BBC article but please do email me any more recent examples and I will post up to share and credit you, email tgray@cherwell.oxon.sch.uk :

http://www.bbc.co.uk/news/business-18104024

This rise in protectionism is one feature of de-blobalisation along with:

Growing financial/capital controls putting a stop to global financial markets:

http://www.bbc.co.uk/blogs/legacy/today/evandavis/2009/01/the_threat_of_deglobalisation.html

And Immigration controls - free movement of labour:

http://www.economist.com/topics/immigration