AQA Economics Unit 4 11th June 2013

Hi

I was just wondering if anyone here is sitting the exam in June and how's your revision going, any tips, likely questions etc...

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Reply 1

Homeboy Hotel

Yeah I have AQA Unit 4 in June, I'm finding the latter chapters (Balance of Payments, Globalisation, Exchange Rate, EU) REALLY boring. Literally, I can't remember the content!

I'm literally begging/hopping the chapters that continue from Unit 2 come up (fiscal, monetary, unemployment, economic growth) as these are my favourite

Reply 2

bristew

yep i totally agree, i'd love for monetary/fiscal policy/interest rates to come up.
As its a synoptic exam it will allow us to talk about anything relevant from all units

Reply 3

curtisblackham

does anyone have any ideas of the topics which could come up for this exam? Or any that are unlikely to come up?

Reply 4

Parkway Drive

Hey all, how is everyone's revision going?

I'm pretty nervous about unit 4...

Can anyone help me out with the Phillips curve. My understanding of it is a little shady.

For unemployment to fall and inflation to rise, it has to be demand-pull inflation. So is the Phillips curve dependent on inflation being demand-pull?

Also, since supply side policies can affect unemployment without increase inflation, actually reduces inflation, does it just shift the Phillips curve to the left? I'm so confused with this.

Any help is appreciated, thank you in advance =]

Reply 5

hypercube

Original post by Parkway Drive

For unemployment to fall and inflation to rise, it has to be demand-pull inflation. So is the Phillips curve dependent on inflation being demand-pull?

Also, since supply side policies can affect unemployment without increase inflation, actually reduces inflation, does it just shift the Phillips curve to the left? I'm so confused with this.

It doesn't have to be demand pull inflation. Any type of inflation could affect unemployment level. Eg: cost push inflation caused by a rise in oil price for example, increases firms' cost of production. To protect profit margin, firms can choose to fire some workers to offset the rise in oil price, causes unemployment level to go up.

However, this doesn't have anything to do with the Phillips curve. The hold point of the Phillip curve is to illustrates that there is a trade-off between unemployment and inflation. If you were to reduce one of them, there is a potential increase in the other one. But again, this is all theory, like any other models, it has its limits and can proved to be wrong using real life examples.

Supply-side policies do shift the Phillips curve to the left, but just the LRPC. Most supply-side policies would only create long run effects.

(edited 10 years ago)

Reply 6

Bvstudent

Does anybody have any idea what questions/topics came up on the January 2013 paper?

Reply 7

Parkway Drive

Original post by hypercube

Thank you for replying. I understand how the Phillips Curve works in theory, but, the way the theory works is that employment starts at the NAIRU, inflation is at 0%, then the only way that unemployment increases with inflation is through demand-pull, so it HAS to be demand-pull inflation at first. Then, because workers bid up their wages in real terms, the cost of production increases, cost push inflation, workers are fired, unemployment returns to NAIRU but this time with inflation, and the whole process begins again... Correct me if I'm wrong.

Reply 8

hypercube

Original post by Bvstudent

Does anybody have any idea what questions/topics came up on the January 2013 paper?

Here you go...

January 2013 QP.pdf157.1KB

Reply 9

hypercube

Original post by Parkway Drive

Not sure why you're so convinced it has to be demand-pull inflation, it would be great if you can explain why "the only way that unemployment increases with inflation is through demand-pull"

Reply 10

HSR08

Original post by hypercube

Here you go...

Do you have the mark scheme by any chance?

Reply 11

Parkway Drive

Original post by hypercube

Not sure why you're so convinced it has to be demand-pull inflation, it would be great if you can explain why "the only way that unemployment increases with inflation is through demand-pull"

I was just thinking because the way you explain it is that it begins when inflation is at 0% no? Then, to model the relationship between inflation and unemployment, you say aggregate demand increases, which leads to lower unemployment by higher inflation and you explain why...

How else would you show the relationship between the two if it weren't demand-pull inflation in the first place? Cost-push inflation increases unemployment... i.e. the shift to the left of the AS curve.

Otherwise, could you please analyse how any other type of inflation i.e. cost-push leads to an increase decrease in unemployment, and use it to explain the Phillips Curve.

Thanks =]

Reply 12

CoolStoryBroo

Original post by hypercube

Here you go...

Hi, have you got the mark scheme and report?

Original post by Homeboy Hotel

You know how in unit 1 the 12 markers are always to do with externalities or S&D, then the 25 marker are on things like NHS, education etc

What are the topics that usually come up for the 10,15 & 25 markers in unit 4? or are they just random from the spec?

Reply 13

Homeboy Hotel

Original post by CoolStoryBroo

Hi, have you got the mark scheme and report?

You know how in unit 1 the 12 markers are always to do with externalities or S&D, then the 25 marker are on things like NHS, education etc

What are the topics that usually come up for the 10,15 & 25 markers in unit 4? or are they just random from the spec?

They seem to be more varied but broadly based around the UK/EU/World Economy.

However I'll be honest, I haven't seen a great deal of papers yet for Unit 4. Economics revision has been on the back foot, I'm starting right from the start at January 2010 and working my way through.

So I'm sure I'll find out sooner or later!

Reply 14

CoolStoryBroo

Would i gain marks for including AS diagrams in unit 4? Because after spending all week revising for unit 1 resit i'm now able to find so many places to include the MSB diagram in unit 4 essays

Reply 15

Parkway Drive

Original post by CoolStoryBroo

Would i gain marks for including AS diagrams in unit 4? Because after spending all week revising for unit 1 resit i'm now able to find so many places to include the MSB diagram in unit 4 essays

Mate, I guess you could include it, but you should definitely try to include a unit 4 diagram. I think you don't get as many marks if it is a really easy diagram from a previous unit.

Reply 16

ineedtorevise127

Guys how can I get level 4 or level 4+ in the essays
(17-21marks)

For example say for this question

Assess the impact that a fall in the pound will have on the macroeconomic performance of the UK economy

Reply 17

Parkway Drive

Original post by ineedtorevise127

That seems like it would be a unit 2 question.

What I would do for this essay of the top of my head...

Introduction:
Define exchange rate, international competitiveness.

1st Para:
A fall in the pound - more export, less import - BOP current account improve, BOP improve overall

Also, more injection into the economy - faster circular flow of income - multiplier effect... (Draw Graph)

However, depends on other components of BOP e.g. capital account. Changes might offset improvement in current account

Also, BOP J curve - only improves in the long run. (Draw Graph)

2nd Para:
A fall in pound - more export - BOP improve - shift AD - therefore growth in the economy. (Draw Graph)

Also, since there is growth - national income increases - can afford more choice and variety - standard of living increases

However, inflationary pressure - demand pull inflation from AD outstripping AS (Draw Graph)

Also, real exchange rate. If there is already inflation, the real price of exports might be higher than that of other exporters with a higher exchange rate but lower inflation.

Third Para:
A fall in pound - export increase - AD increase - real national output increases - more labour is needed - derived demand - unemployment falls

Government expenditure on means tested benefits and JSA falls, and they receive more tax revenue. Money can be spent on further reducing poverty and inequality... blah blah

However, use the Phillips Curve - as unemployment falls, inflation rises, expectation of inflation/cost of living means that workers big up their wages in real terms - so the rate of inflation becomes embedded in the standard wage, unemployment falls back to NAIRU and so forth, leading to spiraling wage costs and inflation. (Draw Graph)

Conclusion:

Only real improvements in the short run. UK has floating exchange rate blah blah. Need use of SSP to sustain the growth and improvements, give a few examples.

Other evals:
- More expensive imports in terms of firms costs
- Could be lower standard of living since can afford fewer imports
- If other countries i.e. main trading partners are in a recession then they are unlikely to import, therefore, exports sold by the UK may not increase by a significant amount and therefore have no real effect on the UK performance
- Maybe use purchasing power parity

That's it basically, just make sure you have clear logical steps for analysis. Like 4-5 steps is enough. And, evaluate after every point like I've done here, (shows you have mad skills :P) since its good practice, and helps get those evaluative marks.

Also, don't draw too many graphs, 2-3 is fine. I think you only get marks for 2 so make sure they're good, and if you can, make them unit 4 graphs. Remember, graphs are easy marks! =]