AQA A2 Economics Unit 4 - June 20th

PLEASE HELP ME

What type of businesses in the UK are of strategic importance to the country???

oops wrong thread loll

The UK has a comparative advantage in financial services and pharmaceutical products.

'To what extent has the UK's comparative advantage in financial services lead to an overexposure of the UK economy to global economic shocks'

Ooh that'd be a good question.. so essentially talking about the pros and cons of increased trade/globalisation?

Yes has led to overexposure: e.g. banks, US financial crisis - affected UK due to banks' over reliance on each other.
- Increase in foreign direct investment in UK - makes UK dependent on situation of other countries (evaluation - but is overexposure a necessary risk to take for the good of domestic growth, investment etc - link to macroeconomic objectives)
- Shocks reduce confidence & cause speculation in economy - increased cyclical volatility and uncertainty, could cause decreased C and I (negative multiplier and accelerator - show on SR AD/AS)

No it hasn't: pros of openness to trade outweigh cons - trade creation diagram, increased openness & trade routes = increased overall supply at lower prices = increased welfare and standards of living for consumers (evaluation BUT depends on how competitive domestic firms are, could be forced out of market by large MNCs/ not prepared to deal with shocks)
- We still have government to bail out banks e.g Northern rock - so yes overexposure but we have safety net which is adequate enough to deal with shocks.
- Benefits greater than the cons: Overexposure necessary part of globalisation and cannot be wholly prevented. All the UK can do is prepare for shocks rather than give up comp. adv.


Difficult question to answer as has so many points.. what would you write?

Sort of, but also mixed with how financial services links economies together and allows contagion to take place.

I sort of wrote it as a joke, because I think that would be quite a tricky question for them to pose! I suppose I would go down a similar route you did though

Becca, whats the trade creation diagram?

What do you mean by contagion? And yeah, just thought it would be good practice to plan it!

These are basically a list of everything you need to know for AQA unit 4. If you can answer all these questions, then you should be good for the exam, providing the structure is good. I've done the same thing for Unit 3 so have a look on that thread.

Chapter 11

Measure of economic growth.
What is the PPB curve.
What is the economic cycle.
How to generate economics growth, (supply and demand side factors)
How to improve physical capital.
Factors that increase activity/ productivity in the economy.
Factos that reduce the productivity rate.
What are the drawbacks of using GDP as a measure of living standards.
Alternatives to national income, NI.
Is economic growth sustainable.
Explanations of the economic cycle.
What is the multiplier effect.

Chapter 12

How to measure inflation.
Limitations of CPI.
Causes of inflation.
Explain the quantity theory of money, and state the formula.
Types of deflation.

Chapter 13

How to measure unemployment.
Types of unemployment.
Causes of unemployment.
Drawbacks of unemployment, (social and economic costs)
Benefits of unemployment.
What are the demand side factors to reduce unemployment.
What are the supply side factors to reduce unemployment.
What is the phillips curve and explain why the Long run phillips curve is vertical.
What is the Non accelerating inflation rate of unemployment.
What is stagflation.

Chapter 14

Reasons for taxation.
Types of taxation.
What is Adam Smith's law of taxation, 'cannons of taxation'.
Benefits and drawbacks of indirect taxation.
Types of government expenditure.
What are balanced budget, budget deficit and budget surplus.
What is the fiscal stance and draw the graph.
Explain the term public sector net cash requirement.
Benefits and drawbacks of a budget deficit.
What are the main fiscal rules.
What are the limitations of the fiscal policy.

Chapter 15

What are the two main types of money.
What effects demand for holding money.
Types of assets.
Types of interest rates.
What are the main functions of money.
What are the main objectives of the Central bank.
What are policy indicators and instruments.

Chapter 16

Types of exchange rate systems.
Benefits and drawbacks of floating exchange rate system.
Factors that effect the exchange rate.
What is foreign direct investment.
What is Hot Money.
What is a fixed exchange rate system.
Types of fixed exchange rates.
Benefits and drawbacks of a fixed exchange rate.

Chapter 17

What is the difference between the current account and the financial account.
What are the three main components of the financial accounts.
Does a current account deficit matter.
What policies are used to deal with a deficit in current account.
Explain the J-curve.
Policies to control and current account surplus.

Chapter 18

What are the factors that have contributed to globalisation.
Benefits and drawbacks of globalisation.
What are the needs and wants of developed and developing countries.
What is the Marshall Lerner condition.
Arguments for and against international trade restrictions.
Types of restrictive trade practices.

Chapter 19

What is the structure of the EU.
Why was the EU formed.
What is the single market.
What are the benefits and drawbacks of the single market.
How to increase EU integration.
What is trade diversion, deflection, and creation.
What are the benefits and drawbacks of expanding the EU.
What are the benefits and drawbacks of Uk joining the single currency EURO.

If there is a question someone doesn't understand then just quote the question and it can go up for discussion.

Hey, is it alright if I you could inbox me the answers to these questions? It would be greatly appreciated, I feel this exam is one of the hardest there is at A2 level. If you could post the answers so everyone could see, that would be good too

I haven't written them up yet, I've been rather busy with revision. I'll try and write them up asap, maybe later today at some point.

i just made this list of statistics if anyone wants to have a look

https://docs.google.com/document/d/1oTdIEU3lzXYUwcfi9m65CLjPMiBR3FyrapDe-u8L3wo/edit

ps. sorry for all the posts haha!

Hopefully that pic's been attached, sorry it's so messy. Essentially without trade we were at S UK . With trade we are now at S EU (this was to answer the question "should the UK trade with the EU more"). As you can see there's now greater supply at a decreased price - the shaded area shows the increase in consumer surplus, welfare and standards of living. However you could evaluate by saying that it depends on how competitive UK firms are - could either be good in forcing firms to become efficient, or bad if it drives them out of the market. The government can provide export subsidies to domestic firms to make their goods seem cheaper and thus more competitive in a global market.

Oh god... I haven't even started to look at economics yet. I have 3 exams next week and it appears economics is the least of my concern! How is everyone's revision going? I don't want to fall at this last hurdle!

Okay, thank you so much for that! But I don't understand your point about overspecialisation at the bottom of the page :s
Tried to +rep you but I've ran out

Oh that was a disadvantage of comparative advantage: if countries overspecialise. This is particularly prominent in developing countries - e.g. Nicaragua specialises in coffee, which means that if there's a bad harvest for one year, it has a huge effect on the whole economy. Thus (in evaluation) it depends on how developed/specialised the country it

(this is more an argument against comp. advantage rather than trade creation)

It is greatly appreciated that you would lend out your hand. At this moment in time, the exam feels very cluttered, and although it is simple and logical chains of reasons, there's a lot of downtrodden and sidelined topics that come into play for extensive evaluation. I'd rather not roll the dice and hope for a good mark, your small quizzes you created for both ECON3 and 4 have helped me, so thank you.

+ rep That saves me 10 minutes, cheers!

Fun fact: Turkey has an inflation rate of 8.3%, Brazil 5%, Russia 3.6%, China 3% and India 10% (BRICs + Turkey)

While mature economies such as Norway, Japan, Switzerland and Sweden are 0.5%, 0.5%, -1% and 1% respectively.

SOURCE