Wednesday, May 18, 2011

FAQs in Unit 2: Managing the Economy (GCE Edexcel)

(1) How to know which question is suitable for me?

Very simple. As soon as you were told by the invigilators to begin, quickly turn to the pages with questions. Go through ALL those questions and try to get a ‘feel’ which question you are actually more comfortable with. The comfortable factors here may include but not limited to familiarity with definitions and questions, whether some answers or even evaluations pop up in your mind while you are going through and whether the essay is student-friendly or not. Again as I always mention, this will be handy if and only if you have done sufficient read up or revision. If not both questions will appear equally hard

(2) One question has easier short questions but the other has easier 30 marks essay. So how?

This is the most common dilemma. Rest assured you are not the only one. Ok, this is how I decide. I will most probably consider the one with easier short questions. Also I assume that the difficult essay is within your ‘manageable range’. The only thing is that, it may be slightly hard for you to score. Such decision is made because no matter what it is those short questions that made up the bulk of 50 marks. Therefore greater concern will be for those that carry more weights

(3) How long should I spend for short questions?

Probably about 50 minutes and for essay try not to exceed 40 minutes. 35 minutes would be best

(4) Should I start with the 30 marks essay?

Speaking from experience I will not recommend such action unless you have assurance that you are highly comfortable with the essay question and it will DEFINITELY get you at least 25 marks. If not, just follow the usual order. Start from (a)

(5) I want A for this paper. So I must get at least?

Of course to obtain A, 80% will suffice. But you have to consider the overall grade for Economics. Given that Unit 4 is extremely hard for students, I would highly recommend you to get at least 85% not only for Unit 2, but also in Unit 1 and 3. This is to offset the lower grade you might end up with in the last unit

(6) Why is there so little time given in the exam?

Nothing is wrong with the timing in exam. It is all about personal efficiency. Some people can get 4 marks by providing two well elaborated sentences while some may have to write as long as 5 or even 6 sentences just to land up with the same 4 marks. Similarly, some candidates show very little comprehension towards the need of the question. For instance, the question mentions ‘Analyse’ or ‘Outline’, quite a number will end up spending like 15 minutes to provide evaluation points when it is not needed at all

(7) What is the breakdown of marks in each question?

The first step I would take is segregating between the marks for evaluation and the marks for explanation. For instance a 14 marks evaluation question will be divided into two parts, 10 marks and 4 marks. Just to notify, I realised that evaluation marks are always 4 for short questions. The 4 marks can be either one evaluation or two evaluation each carrying 2 marks. Back to our discussion. The remaining 10 marks I will decide based on the acronym ‘RDD’. I will explain based on whether reference is needed, is there a diagram or definition. If you follow this rule strictly, Unit 2 will not be as hard as you think. Similarly if the question is 16 marks, then the breakdown will be 12 marks and 4 marks. The similar steps are repeated

(8) What are the popular definitions?

Speaking from experience, they are GDP related. For instance the one that I encountered are real GDP, GDP at constant prices, GDP at 2004 prices, annual real GDP, annual real GDP growth. Next, is inflation related. You might be asked to define inflation, inflation target and how is inflation calculated. Another is difference between LFS (ILO measure of unemployment) and Claimant Count

(9) Are there questions that tend to repeat in the same way all the time?

Yes. Watch out for questions which require you to provide AD/AS diagram. If it is spending related such as consumption, private investment, public expenditure and net exports, do not forget to include multiplier in your answer and what will happen to both price level and real output. You have to be very sensitive to information. The common ones are increase in fiscal deficit, fall in value of pound, rise in house and share prices, fall in level of interest rates and weak global output growth. All these influence the movement of AD. The ones that can affect AS must be productivity/ efficiency/ cost related such as more regulations onto businesses, increase in oil price and fall in productivity. Also watch out for questions like ‘issues that MPC will consider before arriving at decision to change interest rates’

(10) A lot of stuffs are not covered in class. They seem to be very different from what we learnt

I have to strongly disagree with this. One of the most common problems we as educators face is students do not know how to interpret questions when in fact those questions are repetitive in nature, but phrased differently. Consider:

Example 1

Explain two economic effects of high inflation

Explain two economic effects of having inflation ‘exceeding the targeted range’ (Extract 2, line 8-10)

Explain two economic effects when inflation is higher than expected

(They all are the same)

Example 2

Using AD/AS diagram, discuss the impact onto UK economy following a rise in public spending

Using AD/AS diagram, evaluate the impact onto UK economy following a rise in fiscal deficit

Using AD/AS diagram, examine the impact onto price level and real output following the announcement of ‘government expenditure is larger than expected’ (Extract 1, line 8-10)

(They are all the same)

(11) How many marks for AD/AS diagram?

4 marks all the time. 2 marks for correct direction of the movement of AD/AS and another 2 marks for proper labelling

(12) Which version of AD/AS diagram I should draw? The one with two straight lines crossing one another or the one with a ‘long AS tail’?

Both are correct and will be accepted. Academic wise, I suggest candidates to draw the one with so called ‘long AS tail’. There are two reasons for this. Experience suggests that if a candidate draws the one with two straight lines (AD and AS) intercepting one another, there is a high chance that the candidate will confuse themselves with the normal demand-supply curve in Unit 1, assuming that they ARE THE SAME. Secondly candidates will not be able to distinguish between the part where spare capacity exists with the one when economy reaches or near full employment

(13) I always get confuse between government spending, taxation and investment with the movement of AD and AS

You are right. All these three components will have to be explained correctly as they can affect both AD and AS. If they come under the explanation of demand side policies, make sure you relate it to spending and if they come under supply side policies, make sure your transmission mechanism contains words like efficiency, rise in productivity or reduction in costs. To illustrate, I give a simple example here

The expansionary monetary policy allows firms to get additional finances at cheaper borrowing rate. In theory, this should lead to greater level of investment into the economy. Such injection will cause AD to shift rightward leading to a rise in real output (demand-side explanation)

Government can also consider the reduction of corporate tax. With higher retained profits, firms are more likely to invest, for instance the adoption of high-tech capital equipments. This will help to increase efficiency in factories, allowing for more output to be produced. Economic growth can be achieved (supply-side explanation)

(14) How should I revise in this critical last two days?

Practice according to types of question. This is what I called as specialisation. I do not recommend candidates to go through papers by papers but rather by types of questions. From my observation, there are generally four types of questions. First is definition/ explanation related/ data interpretation or calculation. Second is AD/AS diagram. Third are those which require short explanations and evaluations and last will be the long essay. You don’t really have to read extracts for the first two types. I find that not only your understanding will improve since you go by specialisation, but also finishing those papers at a faster rate

Best of luck

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