Process
Edexcel A-Level Economics A 9EC0
The Nature of Economics
Topic overviewEconomics as a social sciencePositive and normative economic statementsThe economic problemWhat a production possibility frontier showsShifts in the PPF, and capital against consumer goodsThe division of labour and its advantagesSpecialisation for trade between countriesThe four functions of moneyFree market, command and mixed economiesThe advantages and disadvantages of the free marketCommand and mixed economies assessed
How Markets Work
Topic overviewRational decision makingDemandPrice, income and cross elasticity: formulae and valuesInterpreting income and cross elasticity of demandWhat determines the elasticity of demandUsing elasticities: taxes, subsidies and business planningElasticity and total revenueSupplyPrice elasticity of supply and its valuesWhat determines elasticity of supply, and the short and long runPrice determinationPrice mechanismConsumer and producer surplusIndirect taxes and the incidence of a taxSubsidies and how their benefit is sharedAlternative views of consumer behaviour
Market Failure
Government Intervention
Measures of Economic Performance
Topic overviewMeasuring growth: real GDP, GDP per capita and GNIPurchasing power parity and the limitations of GDPNational wellbeing and the Easterlin paradoxInflation, deflation and how the CPI measures themThe limitations of the CPI, and the RPIDemand-pull, cost-push and monetary causes of inflationThe effects of inflationMeasuring employment, unemployment and inactivityThe causes of unemployment, migration and skillsThe effects of unemploymentThe components of the current accountCurrent account deficits, surpluses and global imbalances
Aggregate Demand
Aggregate Supply
National Income
Topic overviewThe circular flow of incomeThe distinction between income and wealthInjections, withdrawals and the equilibrium conditionWhat counts as an injection and a withdrawalMacroeconomic equilibrium and shifts in AD and ASThe shape of AS, demand-pull inflation and stagflationThe multiplier processMarginal propensities to consume, save, tax and importCalculating the multiplier and why its size matters
Economic Growth
Topic overviewWhat causes economic growthActual against potential growth, and export-led growthTrend growth and positive and negative output gapsIdentifying an output gap on an AD/AS diagramThe four phases of the trade cycle, and the boomRecession, recovery and the output gapThe impact of economic growth
Macroeconomic Objectives and Policies
Topic overviewPossible macroeconomic objectivesMonetary policy: interest rates and quantitative easingFiscal policy: spending, taxation and the budgetDemand-side policy on an AD/AS diagramThe Bank of England, and policy in the 1930s and 2008The strengths and weaknesses of demand-side policyMarket-based and interventionist supply-side policiesLabour market, skills and infrastructure policiesThe strengths and weaknesses of supply-side policyConflicts between growth, inflation and the current accountThe Phillips curve and the trade-offs in a policy mix
Business Growth
Business Objectives
Revenues, Costs and Profits
Topic overviewTotal, average and marginal revenueRevenue, elasticity and the revenue-maximising outputTotal, fixed, variable, average and marginal costWhy short-run cost curves take their shapeThe long-run average cost curve and returns to scaleTypes of economies and diseconomies of scaleInternal and external economies of scaleNormal profit, supernormal profit and lossesThe short-run and long-run shut-down points
Market Structures
Topic overviewEfficiencyThe assumptions of perfect competition and its revenue curvesPerfect competition: equilibrium and efficiencyThe characteristics of monopolistic competitionMonopolistic competition: short-run and long-run equilibriumExcess capacity and efficiency in monopolistic competitionThe characteristics of oligopoly and concentration ratiosCollusive and non-collusive behaviourGame theory, price and non-price competitionThe characteristics of monopoly and its equilibriumThird degree price discriminationThe costs and benefits of monopoly, and natural monopolyWhat monopsony is and where its power comes fromThe costs and benefits of monopsonyContestable markets and hit-and-run competitionBarriers to entry and exitSunk costs and the degree of contestability
The Labour Market
Topic overviewDemand for labourWhat determines the supply of labourGeographical and occupational immobility of labourWage determination in competitive and monopsony marketsCurrent issues in the UK labour marketMinimum and maximum wages, and public sector payThe elasticity of demand for and supply of labour
Government Intervention in Markets
International Economics
Topic overviewWhat globalisation is and what has driven itThe winners and losers from globalisationAbsolute and comparative advantageThe assumptions and limitations of comparative advantageThe gains and costs of international specialisationPattern of tradeTerms of tradeTypes of trading bloc and the hierarchy of integrationTrade creation, trade diversion and the costs of trading blocsThe World Trade OrganisationWhy governments restrict trade, and the instruments usedThe effects of protectionismBalance of payments in a global contextExchange rate systems, and appreciation against revaluationWhat moves a floating rate, and how governments interveneThe Marshall-Lerner condition and the J-curve effectMeasuring competitiveness: unit labour costs and export pricesWhat determines competitiveness, and the cost of losing it
Poverty and Inequality
Emerging and Developing Economies
Topic overviewThe Human Development Index and its three dimensionsThe limits of the HDI, and other development indicatorsPrimary product dependency, the savings gap and Harrod-DomarPopulation, debt, financial exclusion and infrastructureGovernance, corruption, conflict and geographyMarket-orientated strategies: trade liberalisation and FDIInterventionist strategies: human capital and protectionismInfrastructure, joint ventures and buffer stock schemesThe Lewis model, tourism, primary industries and FairtradeAid, debt relief, the World Bank, the IMF and NGOs
The Financial Sector
The Role of the State in the Macroeconomy
Topic overviewCapital, current and transfer spending, and what drives itThe effects of public expenditure, and crowding outProgressive, proportional and regressive taxesThe Laffer curve and the effects of tax changesAutomatic stabilisers, deficits and the national debtWhat drives deficits and debt, and why their size mattersReducing fiscal deficits and national debtPolicies to reduce poverty and inequalityMonetary, exchange rate and supply-side policy across countriesDirect controls, and why policy works differently elsewhereWhat an external shock is, and the kinds that occurFiscal, monetary and supply-side responses to a shockPolicy lags and the constraints on respondingMeasures to control global companies' (transnationals') operationsProblems facing policymakers when applying policies
Aggregate Supply
- 4 subtopics
- 11 things to know
- Papers 2 and 3
What Aggregate Supply covers
Covers the productive side of the economy: what the aggregate supply curve shows, what moves it in the short run, and the disagreement between Keynesian and classical economists about its long-run shape.
Where it is assessed
Papers 2 and 3
The national and global economy, then the synoptic paper.
Check the Pearson Edexcel specification ↗The 4 subtopics
Each one has its own page.
- The characteristics of ASRecall questions on what the AS curve shows, its shape, and the difference between a movement along it and a shift of it.Open →
- Short-run ASRecall questions on how raw material and energy costs, the exchange rate, indirect taxes and government-imposed costs such as employer national insurance and business rates shift SRAS, all acting through firms’ costs of production.Open →
- Keynesian and classical views of the LRAS curveRecall questions on the vertical classical curve and the Keynesian curve that is horizontal at low output, and what each implies for policy.Open →
- What shifts long-run aggregate supplyRecall questions on technology, productivity, education and skills, regulation, demographics, migration and competition policy.Open →
What you need to know
Answer each one before you reveal it.
Your recallNot started
Process
What shifts long-run aggregate supply to the right?
Key term
What does the aggregate supply curve show?
Process
How do subsidies affect the SRAS curve?
Evaluation
What effect does a decrease in energy costs have on short-run aggregate supply and why?
Evaluation
What effect might increased environmental regulations have on LRAS?
Key term
What happens to the shape of the Keynesian LRAS curve as the economy approaches capacity?
Key term
What shape is the classical long-run aggregate supply curve?
Key term
What is the shape of the short-run aggregate supply curve and why?
Key term
What happens to the SRAS curve when the costs of raw materials increase?
Key term
How do technological advances affect the long-run aggregate supply curve?
Take Aggregate Supply further
The same content, four other ways.
Commonly confused
Pairs that lose marks when they are blurred together.
The classical LRAS curve vs The Keynesian LRAS curve
The classical LRAS curve: a vertical curve at full capacity, on which extra demand raises only the price level. The Keynesian LRAS curve: a curve horizontal at low output and vertical at capacity, on which extra demand can raise real output.
Short-run aggregate supply vs Long-run aggregate supply
Short-run aggregate supply: the output firms will produce at each price level while input costs are fixed. Long-run aggregate supply: the output the economy can produce when all resources and technology are fully adjusted.
An increase in productivity vs An increase in production
An increase in productivity: more output obtained from the same quantity of inputs. An increase in production: more output obtained, whether or not any more is being got out of each input.
Questions from this topic
Each one with the model answer underneath.
- 1
What does the aggregate supply curve show?
Model answer
The total quantity of goods and services that producers in an economy are willing and able to supply at different price levels.
- 2
What is the shape of the short-run aggregate supply curve and why?
Model answer
The SRAS curve is upward sloping because in the short run some costs, especially money wages, are fixed, so a higher price level makes extra output more profitable.
- 3
Describe the shape of the long-run aggregate supply curve.
Model answer
The LRAS curve is vertical.
- 4
Why is the LRAS curve vertical?
Model answer
Because in the long run, output is determined by the productive capacity of the economy and is independent of the price level.
- 5
What causes a movement along the aggregate supply curve?
Model answer
A change in the price level, which causes a change in the quantity of output supplied.
- 6
How do changes in wage costs affect the SRAS curve?
Model answer
Higher wage costs increase production costs, shifting the SRAS curve leftward; lower wage costs shift it rightward.
What is inside Levo
Six ways to work the same material.
Aggregate Supply revision questions
- What does Aggregate Supply cover in Edexcel A-Level Economics A?
- 4 subtopics: the characteristics of as, short-run as, keynesian and classical views of the lras curve and what shifts long-run aggregate supply. Each one has its own page with questions and model answers.
- How is Aggregate Supply organised?
- By the Edexcel 9EC0 specification, subtopic by subtopic, so it matches the order you are taught it in.
Every question in Aggregate Supply, on a schedule.
Attempt a question from memory, write the correct version, then attempt it again. Levo records the jump between your first attempt and your last, and brings each question back on the day you are due to forget it.
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