Examination Strategies for Section B of Unit 4; The Global Economy (coming soon 20th May 2013)

1.  How does Section B of Unit 4: The Global Economy look like?

As usual, just like Unit 1 and 3, you will have to choose one of the two data response questions. Each of them has a fixed mark distribution. Question (a) 5 marks, (b) 8 marks, (c) 10 marks, (d) 12 marks and finally (e) 15 marks

2.  How to answer each question?

Question (a) is meant to be ‘simple’. Please make sure that you have learnt all the key terms/ definitions. 3 marks will be allocated for the correctly-defined term and 2 marks for two data references. Sometimes the 3 marks will be shared between two definitions. For example, in June 2012, Question 4(a) was asking for the definitions of both absolute and relative poverty. In some cases, you may be asked to explain a phrase. In this case, only one reference is needed and it carries equally 2 marks

Question (b) onwards maybe a little bit more complicated. Anyway I am going to simplify it here. Please provide 2 key points WITH reference and analysis. So technically, 4 marks for each. I hate to say about this, but I realise that there are irregularities here. Sometimes, 2 marks are given for ONE data reference but sometimes 2 marks will require TWO data reference. In such circumstance, giving two is the safest

Question (c) onwards will require evaluations. Here the KAA is 6 marks and evaluation 4 marks. Give 2 key points WITH reference and short analysis for each. Evaluations can be (2+2) or (1+3) marks. Again, i have simplified some irregularities here

Question (d) is 12 marks and so the breakdown will be KAA 7 marks and evaluation 5 marks. Provide 2 key points WITH reference and short analysis for each. Technically, the combination is 3 marks and 4 marks. Evaluations will be (3+2) marks

Question (e) is 15 marks and the breakdown is KAA 9 marks while evaluation is 6 marks. Provide 3 key points WITH data reference and short analysis for each. You may also provide 2 key points actually which in this case will become (4+5) marks. Evaluations will be (3+3), (4+2) or (2+2+2) marks. My advice is, go for the third one. Get yourself an ‘insurance’ here

3.  Can you forecast what the extracts are going to be?

To be very frank, it is rather hard to predict for macroeconomics papers (Unit 2 and 4) than microeconomics (Unit 1 and 3). As all of you aware, macro is rather unique. Every topic seems to be inter-related. For example, unemployment can be combined with an inflation extract; unemployment can also be combined with topics like recession, current account and more. There is no sure-fire way for me to know the exact possible combinations

However, from the past papers experience, they do have a tendency to focus on certain topics. So, for paper 4, please go and strengthen your knowledge on big topics like floating and fixed exchange rate, reasons for current account deficit, is current account deficit harmful and factors that can affect competitiveness.

The other popular question will be the notorious combination of budget deficit and national debt. Please go and familiarise issues like reasons for increasing budget deficit in the past few years, impacts of higher national debt, impacts if national debt is immediately reduced, why eurozone will have great difficulty to exit the recession and other related topics.

 Another popular topic will be on developing economies. They usually link developing economies with inequality and topics like FDI, debt cancellation, financial aid/ loans, infrastructure aid, focus on primary/ secondary sector and EOI. So, go and prepare on issues like the pros and cons of FDI, pros and cons of debt cancellation, how does financial/ infrastructure aid promotes growth and development, problems with over-dependency on primary sector and the good and bad of export-oriented growth

4.  How much time should be allocated?

Nothing less than 55 minutes. Be careful as most candidates would have used up most of the time on Section A

Examination Strategies for Unit 4: Global Economy (Section A)

1. What are the hottest topics that we should prepare for Section A (20 marks and 30 marks essays)?

Take out a piece of paper and brainstorm for all the possible points as well as evaluations for the topics listed below. Some harder topics may require extra efforts e.g. consulting your lecturer or internet research. Nonetheless, if you strictly follow this list, I promise that your revision time can be cut short by as much 50%. Achieve more by doing less since you already knew areas that are heavily tested

(A) World trade

a.  Reasons for globalisation

b.  Costs and benefits of globalisation

c.  Economic effects of the increase in numbers and size of trading blocs

d.  Reasons for protectionism

e.  Economic effects of protectionism

f.   Reasons for widening current account deficit

g.  Is large current account deficit a cause of concern?

h.  Measures to reduce current account deficit

i.  Factors that can affect the international competitiveness of UK goods and services

j.  Policies to increase the international competitiveness of UK goods and services

k. Economic effects of an increase/ decrease in the price of non-renewable resources

(B) Growth and development and poverty

1.  Strategies to promote growth and development

2.  Reasons for the rise in absolute poverty in Sub Saharan African economies

3.  Reasons for widening income inequality in any country of your choice

4.  Problems with over dependency on primary sectors/ FDIs/ international aid

(C) Public finances and eurozone economies

1.  Costs and benefits of adopting the single currency

2.  Reasons for slower economic recovery: eurozone economies vs. non-eurozone economies (UK, Sweden etc)

3.  Reasons for the high budget deficit and national debt in a country of your choice

4.  Economic effects of high budget deficit/ national debt

5.  Economic effects if drastic measures are undertaken to reduce the budget deficit/ national debt

2. How much time is recommended for Section A?

Although the suggested time by Edexcel is 1 hour, most candidates take longer than that. Ideally, it shouldn’t be more than 1 hour 10 minutes. If yet to finish, move on. Section B is equally important too. They carry another 50% weightage for the entire paper

3. How many points and evaluations we need to give?

As for question (a) (20 marks), you are required to give 3 points and 2 evaluations while for question (b) (30 marks), you have to provide 4 points with 3 evaluations

4. How long is each paragraph?

Let’s do the math. We have in total of 12 paragraphs (5 and 7) and we are told that Section A requires 1 hour and so technically, each paragraph is about 5 minutes. Very good candidates can write up to 100 words while average candidates typically 70-80 words. In fact how long or how short is not much of an issue itself. The most important question is how sufficient? Is the transmission mechanism complete? Is your explanation clear? Do you insert diagram to make your answer presentable? How well you use economics jargon (Golden Rule, Sustainable Investment Rule, paradox of thrift etc) in your writing?

5. Do we provide an evaluative point soon after each analysis?

This is a matter of preference. There is no right or wrong. You can provide an evaluation after each analysis or write out all the analysis followed by all evaluations towards the end. However, there is a good and bad for these two writing styles. If you provide an evaluation soon after each analysis, chances are the flows of your essay will look so much better but it may take you quite a while to think of a proper evaluation. There is a possibility that you may use up too much time and hence unable to finish the essay. Candidates who took way longer than 1 hour usually use such approach

On the other hand, candidates who write evaluations towards the end after all the analysis may not have written an essay with good flows but they stand a higher chance to score higher. They are also more likely to be able to complete the essays within an hour. Also, it is worth to note that KAA marks are easier to pick up and this second candidate would have earned all while the first candidate is still struggling with first/ second evaluation before moving on next analysis

I will blog about Section B as well the list of definitions for Econs 4. Stay tune.

Strategies for the Long Essays in Unit 2: Managing the Economy

Generally, there are three types of long essays (30m) for Unit 2: Managing the Economy:

a)      Many to one. Students will be tested on their ability to use macroeconomic policies to solve a specific economic problem. For instance the usage of demand side policies or/ and supply side policies to reduce unemployment etc

b)      One to many. Students will be required to know how does one specific policy (rise in government spending, lower income tax etc)/ macroeconomic problem (rising unemployment, weaker pound etc) may affect the UK’s macroeconomic objectives

c)       Many to many. Finally, students may be asked to use suitable economic macroeconomic policies to overcome the problems mentioned in last few paragraphs of the Extract or how does a set of macroeconomic policies can affect the UK’s macroeconomic objectives

Quick review:

June 2009 Q1 (the very first Unit 2 examination, after the new GCE specification in 2008)

(d) Evaluate the use of supply side policies to achieve economic growth (30m) (many to one)

June 2009 Q2

(d) To what extent do demand-side policies lead to conflicts between macroeconomic objectives? (30m) (many to many)

June 2010 Q1 (initially, Unit 2 was meant to be an annual paper offered only during the summer)

(d) Evaluate the likely effects of a recession (negative economic growth) on the UK economy (30m) (one to many)

June 2010 Q2

(d) Evaluate three ways in which economic policy can be used to ‘stimulate UK economic growth’ (Extract 1, lines 4 to 5) (30m) (many to one)

January 2011 Q1

(d) Assess the effectiveness of supply-side measures that the government could use to deal with the problems outlined in paragraphs 3, 4 and 5 of Extract 1 (30m) (many to many)

January 2011 Q2

Evaluate the likely effects on the UK’s current account of the balance of payments of changes in consumption, investment and the exchange rate of the pound sterling (£), as shown in Figures 1 and 2 (30m) (many to one)

June 2011 Q1

(d) Discuss the fiscal and supply side policies the UK Government could pursue to reduce the rate of unemployment. Refer to Extract 2 and Figure 3 in your answer (30m) (many to one)

June 2011 Q2 (this question is almost similar to June 2009 Q2, except that the transmission mechanisms do not start from macroeconomic policies)

(c) To what extent might rapid economic growth conflict with at least two other macroeconomic objectives? (30m) (one to many)

January 2012 Q1

(c) Assess the likely impact of UK government labour market policies on any three macroeconomic objectives. Refer to the information provided and to your own knowledge (30m) (many to many)

January 2012 Q2

(c) With reference to Extract 2, evaluate the likely impact of higher inflation on three macroeconomic objectives (30m) (one to many)

June 2012 Q1 (exactly the same question with June 2011, Q1)

(c) Evaluate macroeconomic policies which may be used to reduce the level of unemployment in UK (30m) (many to one)

June 2012 Q2

(c) Evaluate the benefits of economic growth for the UK (30m) (one to many BUT must be ‘good’ macroeconomic objectives)

Last minute tips/ preparations:

a)     There will only be 7 questions. The component marks are 4-8-12 for (a), 6-8-12 for (b) and 30m for (c)

b)    Short evaluation questions normally carry 12m, where 4m are meant for evaluation(s). Candidates may provide one evaluation as 4m or two evaluations that are less elaborated as 2m each

c)     The format for long essays will always be 6-12-12. The introduction carries 6m where 2m are meant for definition while 4m diagram. A correct shift of AD/ AS (1m), axes, line and equilibrium labeled (3m). Edexcel appears to be very generous with the definition for macroeconomic objectives. Any three macroeconomic objectives mentioned will earn you 6m, 2m each

d)    Don’t forget to provide reference. Each reference is 2m and there are four or five questions that may require you to provide reference. Easily, you could have scored 10m in hand. It may be data reference or an evidence quoted from the Extract

e)     Usually each set of question will have 8m allocated for diagram. The first 4m are meant for short AD/AS diagram-based question while the other 4m for the last long essay question

f)     Since January 2012 examinations, Edexcel provides 2m FOR EACH POINT IDENTIFIED (previously was 1m each). It is meant to help average students to lift their scores. Expect 12m from here

g)    Easily and effortlessly, each student can easily get 30m FOR FREE, provided if you remember to insert all reference (10m), correctly draw the AD/AS diagram with proper label (8m) and identification of points (12m). The challenge is, can you remember all the skills/ techniques taught under the exam stress and after ‘mental dehydration’?

h)     Please allocate 35-40 minutes for 30m essay. Nothing less than that

k) There are actually 7 macroeconomic objectives, not 6 as mentioned in most textbooks, The new 7th objective is to reduce budget deficit/ national debt

i)      When the question say ‘effects onto the UK economy’ under the 30m essay, don’t be panic, It is the same if the instruction is ‘effects onto any 3 macroeconomic objective’ 

l) There are new changes for the evaluations under 30m essay. Instead of (6m+6m) and (4m+4m+4m), now it has (2m+4m+6m)

j)      Please practice and perfect your transmission mechanism. I am very sure the MANY-1, 1-MANY and MANY-MANY long essay will appear in your examination

This few can be a good practice before your actual examinations tomorrow:

a) Evaluate the effects of falling pound onto the UK economy (30m) (1-many, think of macroeconomic objectives)

b) Evaluate the effects of falling house prices onto any three macroeconomic objectives (30m) (1-many)

c) Evaluate at least two macroeconomic policies to increase growth within the UK economy (30m) (many-1)

d) Evaluate the effects of expansionary monetary and fiscal policy onto any three macroeconomic objectives (30m) (many-many)

Best of luck!!! Cheers

The 10 Most Possible Questions for Data Response Unit 3: Business Economics and Economics Efficiency

Some important facts of Unit 3: Business Economics and Economics Efficiency:

a)     Used to be known as Unit 4: Industrial Economics. The previous specification received numerous complaints. There were 10 MCQs, each with 5 options and also a data response question which carries 40 marks. The problem is more questions but lesser time. Just 1 hour 15 minutes

b)      New specification/ syllabus started in 2008 but the very first assessment commenced from January 2010. Is now known as Unit 3: Business Economics and Economics Efficiency. MCQs are cut short to just 8, each with 5 options to choose from. Data response questions carry a grand total of 40 marks just like before. The difference is, they are presented in a much organised way. Only 4 questions, (a) to (d) and the marks are (4), (8), (12) and (16). Lesser questions but more time. 1h 30 minutes

c)       MCQs under the new specification are increasingly challenging. Very application based these days. It is no longer predictable like in the past (HOWEVER there are few popular ones)

d)      A total of 10 marks can be expected, just from definition alone. Diagram whether by annotation or self-drawn can attract up to 12 marks. Assuming that all 8 options are correct, candidates can easily secure 30/32 marks. Bear in mind that this is yet to include written explanation as well as elimination of incorrect answers. The point is that, if candidates master certain skills attaining at least 27 marks is not a daunting task

e)      Be careful of several topics. They appeared with the highest frequencies e.g. shut down point for a perfect market/ imperfect market firm, role of Competition Commission, Game Theory to illustrate the outcome of collusive behavior and also price war, Private Finance Initiative/ Public Private Partnership, theory of cost and revenue as well as productive and allocative efficient

f)       Perfect market and monopolistic competition WILL NEVER be tested in Section B of data response. There is nothing to ask from these two overly simplified business models. Besides, it is quite difficult to find articles that support very small scale businesses

g)      Evaluation starts from question (b) onwards and they carry the same weight as KAA. A total of 18 marks are expected just for evaluations

h)      Candidates are advised to spend only about 55 minutes in this section. Ideally 60 minutes.

Some of the most popular data response questions:

11. Briefly explain the form of integration described in lines 25-26 (4m). Identify e.g. vertical integration (1m), define vertical integration (1m), identify whether is backward or forward vertical by referring to Extract (2m)

22. What does the information provided suggest is the market structure of the industry? (4m) Explain your answer (4m). Identify oligopoly (1m), explain any one characteristic/ define (1m), evidence e.g. calculation of concentration ratio (2m). IN CASE, if you say monopoly (1m), define (1m), provide evidence from Extract (2m)

33. With reference to Extract 1, explain what is meant by patents/ anti-competitive behavior/ ECONOMIC TERMS/ KEYWORDS (4m). Define/ explain with your own words (2m), evidence from extract (2m)

44. Examine the likely reasons why Tesco made a loss. Use an appropriate cost and revenue diagram to support your answer (8m). Diagram (2m) where correct shift (1m) and area of profits/ loss clearly identified (1m). Reason but must relate to AC and MC/ AR and MR (2m). Evaluations can be (4+0), (2+2) and(3+1)

55. Assess why Thorntons is likely to sell its chocolates at a higher price in its retail shops than through its website (8m). Explanations can be (4+0), (2+2), (3+1). Evaluations can be (4+0), (2+2), (3+1). Some standard answers will be, higher cost in one while lower cost in the other and price discrimination

66. Assess the effectiveness of Competition Commission in regulating industries such as the banking industry (8m). Define Competition Commission (1m), leaving KAA with only (3m). If not, we adopt (4+0), (2+2), (3+1). The same goes for evaluations. Standard approach will be, AGREE under the KAA. Bad publicity acts as deterrent, loss of valuable human capital due to imprisonment, fine up to 10% of total revenue is a reminded to other firms and able to force firms to sell assets even if there is no merger. Standard evaluation e.g. asymmetric information, takes up to 3 years to investigate and disrupt operations, decisions can be challenged in High Court and rules are superseded by European Commission

77. Discuss the benefits of horizontal merger/ vertical/ conglomerate merger (12m). Define horizontal merger (1m) which means remaining KAA (5m). If not, adopt (3+3), (2+2+2) and (1+2+3). Standard answers are to reap greater EOS, more budget to do research, leveraging on each other’s strength, lesser competition and so less wastages on adverts etc. Standard evaluations are DEOS, clash of corporate culture, lack of competition and do not do research etc

88. Assess the case for increased competition within an industry (12m). Explain the meaning of increased competition (1m) leaving KAA only (5m). If not can also use (3+3), (2+2+2) and (1+2+3). Have many possible answers. Best is to segregate them through impact onto consumers, producers, government and nation. Answers like lower price and higher consumer surplus, better products as a result of greater R&D, greater productive efficiency as a result of fierce competition which has reduced TR etc. Standard evaluations would be e.g. no longer enjoy EOS, pass on the higher price, more ‘misleading’ advertisements which will cause greater asymmetric information, lower profits and cannot conduct R&D. Break down is (3+3), (2+2+2) and (1+2+3)

99. To what extent is the airline/ newspaper/ car industry contestable? (12m). Define contestability (1m) leaving KAA marks for only (5m). If not (3+3), (2+2+2) and (1+2+3). Always follow the traditional path by saying that oligopoly industry is not contestable at all e.g. high start-up costs, major expenditure on advertisements, significant EOS by existing rivals and limit pricing by large firms. Evaluations can be (3+3), (2+2+2) and (1+2+3) where we argue for CONTESTABLE

110.Assess the pricing and non pricing strategy that could be adopted to increase sales/ market share/ profits (16m). To increase sales or market share, candidates cannot use profit maximisation and also cost-plus pricing. However, if the question is on how to increase profits than these two points are valid. Some standard answers are like predatory pricing, limit pricing, sales maximisation, revenue maximisation, buy one free one, collusion, advertisement, celebrity endorsement, enlarge range of products, improve quality, mergers and acquisitions, loyalty schemes, coupons and others. Standard evaluations are like predatory pricing is illegal and can attract fines, limit pricing better and not so obvious, most likely to collude than compete through price war and others. Breakdown is 8m for KAA and 8m for evaluations. Combinations are (4+4), (3+3+2), (2+2+2+2) or (4+2+1+1)