Monday, September 29, 2008

Preparing Yourself For Unit 3: Managing The Economy

Popular questions being tested in Unit 3-Edexcel

Popular definitions:

(1) Real GDP/ annual real GDP growth
(2) Productivity
(3) LFS measure of unemployment/ claimant count measure of unemployment
(4) Injections/ withdrawals
(5) Fiscal/ monetary/ supply side policies

Popular short questions:

(1) Graph or data interpretation. Most of the time is always ‘increasing but at a slower rate’ e.g. the average earnings for year 2004 is growing albeit at a slower rate

(2) Drawing AD-AS diagram, then explain the impact of changes in injections/ withdrawals towards price level & real GDP

(3) Factors that could cause UK to loose its pricing competitiveness. Here we often say fall in productivity, increase in sterling, domestic inflation, bad management, growing attractiveness of Asian economies etc

(4) Impact of fall in productivity towards BOP. Here students have to explain that fall in productivity, causing the goods produced to be more expensive, exports will fall then worsening of the existing deficit

Popular form of essays:

(1) Effectiveness of fiscal/ monetary/ supply side policy in countering inflation & raising real GDP. Normally the comparison is often between fiscal and monetary policy

(2) How fiscal/ monetary/ supply side policies can help to achieve UK macroeconomic objectives. It is important for students to know all that 4 objectives: high but sustainable growth, low inflation, low unemployment & BOP in equilibrium

How to know when do we need to evaluate?

Normally if the questions contain any of these key words,

(1) Why might…..
(2) Evaluate…..
(3) Discuss…..
(4) Assess…..
(5) To what extent…..
(6) Examine…..

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