Revision/Discussion Thread Edexcel Economics Unit 2 Friday 25th of May 2012

Is very hard. What you can do is, do at least 4 past papers (4 questions), find out what you don't understand from those 4 papers. Revise that. Then read through all the examiner reports and memorise facts that you don't feel confidence about. If you still have some time, pick on your weaknesses. If you are bad at 30 markers, do as many of that as possible.

you can easily get an A in this unit with not much revision, as long as you can wrap your head around main concepts and ideas. can follow a case study, you should be fine.

Definition of the current account of balance of payments?

Current account of the balance of payments — a record of a country’s trade of exports, imports, investment income and current transfers with the rest of the world.

Yeah, that's what I was going to say

Does anyone think we should go over the formulas for certain things because in the past, question like that have come up?

Formulas? I done all the past papers and i never seen one question that require formulas. The one that require some maths was about exchange rate.

Yeah, that's pretty much what I meant. Sorry I didn't make that clear. What do you think the main things we need to know are?

Also, I have a quick question - with Monetary policies, I know you have the use of Interest Rates, but what else qualifies in this sections?

It's annoying because I find that some policies work for both AS and AD.

Ermm, make sure you are very confident with policies and objectives. Like how they help reach economic growths and conflicts between them. They could be the 30 marks question.

Quantitative easing is another thing that monetary policies controls. However, in AS Unit 2, you only need to know about the interest rate. You need to understand the role of MPC and how different factors influence the decisions made on interest rate. You need to know the magnitude of the effects of the policies.

Yes, the one I can think of is tax. Tax is fiscal policy but it can also be supply side policies. You might not agree to this but my thinking is that income tax will affect the demand side more and corporation tax, the supply side more. Obviously, two types of tax overlaps demand and supply side.
Which other policies did you find that work for both AS and AD?

I know i'm asking alot of questions but sorry.

How do you measure cpi again?

I will bare that in mind and make sure that I know the policies well. I think for some reason I found that Interest Rates slightly worked for both. It might just be me but if the base rate decreases, then the demand for mortgages etc will rise and thus consumption may increase due to the cheaper value of loans. Also AS may increase due to the fact that it will simply cost less to borrow money and therefore higher levels of investment and so causing a possible increase in production and increase the LRAS maybe.


Bit of a mouthful but do you think that would work, because it seems to make sense to me.

What you saying is right. But thats the knock-on effects on interest rates. Interest rates mainly influence the consumption level. And if consumption level increases, it will have a knock-on effect of increase in AS as firms will produced more to meet the increased demand. What you say is right but interest rate will always affect the demand side. Affecting the demand side will have effect on the supply side. So the primary effect of interest rate will be on the demand side.
Yeah cost of borrowing is less. So, increase levels of investment. Interest rates affect investments. But then investments affect productive capacity in the long run. Interest rate itself doesn't affect productive capacity.

So CPI is the Consumer Price Index which shows the level of inflation.

This is measured by doing two surveys:

The first survey is done to find out the 'basket of goods' which is 650 commonly used goods.

The second part of this is to find all the prices to these goods and have a base year price, with an index of 100, and then the prices every year after and then show the level of inflation.

Make sure you remember that the CPI is measured in INDEX weighting. Does that help?

Ah that makes sense, so it's mainly just a knock on effect which causes AS to increase also. I'll bare that in mind.

Also, with the Distribution of Income, what sort of things do you actually look at, because in textbooks there is no explicit stuff for it. Like i know that taxing and welfare helps to balance out the distribution of income but what else effects it or improves it?

Sorry for all the Q's

anyone got a plan for answering 30 markers?