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
Economic Growth
- 7 subtopics
- 21 things to know
- Papers 2 and 3
What Economic Growth covers
Covers why economies grow and why growth is uneven: the causes of actual and potential growth, output gaps, the four phases of the trade cycle, and the costs that come with rising output.
Where it is assessed
Papers 2 and 3
The national and global economy, then the synoptic paper.
Check the Pearson Edexcel specification ↗The 7 subtopics
Each one has its own page.
- What causes economic growthRecall questions on the factors of production, investment, technology and the components of aggregate demand as causes of growth.Open →
- Actual against potential growth, and export-led growthRecall questions on the difference between the two kinds of growth, how each appears on a PPF, and how trade drives growth.Open →
- Trend growth and positive and negative output gapsRecall questions on the long-term trend rate, what a positive and a negative output gap mean, and why output gaps are hard to measure.Open →
- Identifying an output gap on an AD/AS diagramRecall questions on locating actual and potential output on an AD/AS diagram and reading the size of the gap.Open →
- The four phases of the trade cycle, and the boomRecall questions on the phases of the cycle and on what happens to output, unemployment, inflation, confidence and the budget in a boom.Open →
- Recession, recovery and the output gapRecall questions on the technical definition of a recession, what happens through it and the recovery, and which output gap belongs to each phase.Open →
- The impact of economic growthRecall questions on the benefits of growth for living standards and public finances, set against inequality, inflation and environmental cost.Open →
What you need to know
Answer each one before you reveal it.
Your recallNot started
Evaluation
What are the costs and benefits of economic growth?
Key term
How does an increase in enterprise contribute to economic growth?
Process
Explain how investment in capital equipment can cause economic growth.
Key term
How is actual growth represented in terms of the production possibility frontier?
Key term
Can an economy experience potential growth without experiencing actual growth? Explain how this is possible.
Key term
How is the actual growth rate of an economy measured?
Key term
What is a negative output gap?
Key term
What does the LRAS curve represent when identifying an output gap on a diagram?
Key term
What does spare capacity in the economy correspond to in terms of output gaps?
Key term
Define a boom in terms of real GDP and trend growth.
Key term
What defines the recession phase of the trade cycle?
Process
How do consumer and business confidence behave during a recession?
Evaluation
Name three types of tax revenue that increase for government during economic growth without changes to tax rates.
Key term
Name the four factors of production whose increased quantity can cause economic growth.
Key term
Define actual economic growth.
Key term
Why does actual growth fluctuate around the long-term trend growth rate?
Key term
What would happen to the position of the AD/SRAS equilibrium relative to LRAS if aggregate demand increased significantly in an economy already at full employment?
Key term
What is meant by the trade (business) cycle?
Key term
State the technical definition of a recession.
Key term
How does economic growth increase consumer purchasing power?
Take Economic Growth further
The same content, four other ways.
Commonly confused
Pairs that lose marks when they are blurred together.
Actual economic growth vs Potential economic growth
Actual economic growth: an increase in real output actually produced, shown as a move toward the frontier. Potential economic growth: an increase in the capacity to produce, shown as an outward shift of the frontier.
A positive output gap vs A negative output gap
A positive output gap: actual output above the trend rate, associated with inflationary pressure. A negative output gap: actual output below the trend rate, associated with spare capacity and rising unemployment.
A recession vs A slowdown
A recession: a period conventionally dated from two consecutive quarters of falling real output. A slowdown: a period in which output is still growing but at a decreasing rate.
Questions from this topic
Each one with the model answer underneath.
- 1
Name the four factors of production whose increased quantity can cause economic growth.
Model answer
Land, labour, capital, and enterprise.
- 2
How can an increase in the quantity of land contribute to economic growth?
Model answer
More land (including natural resources) expands the productive base, allowing greater output of goods and services.
- 3
How does an increase in the quantity of labour cause economic growth?
Model answer
A larger workforce means more workers are available to produce goods and services, increasing total output.
- 4
Explain how an increase in the quantity of capital can lead to economic growth.
Model answer
More capital goods (machinery, equipment, infrastructure) enable greater production capacity and higher output.
- 5
How does an increase in enterprise contribute to economic growth?
Model answer
More entrepreneurs create new businesses, introduce innovations, and combine other factors of production more effectively, raising output.
- 6
How can improved education and training cause economic growth?
Model answer
They raise the quality and productivity of labour, enabling workers to produce more output per hour worked.
What is inside Levo
Six ways to work the same material.
Economic Growth revision questions
- What does Economic Growth cover in Edexcel A-Level Economics A?
- 7 subtopics: what causes economic growth, actual against potential growth, and export-led growth, trend growth and positive and negative output gaps, identifying an output gap on an ad/as diagram, the four phases of the trade cycle, and the boom, recession, recovery and the output gap and the impact of economic growth. Each one has its own page with questions and model answers.
- How is Economic Growth organised?
- By the Edexcel 9EC0 specification, subtopic by subtopic, so it matches the order you are taught it in.
Every question in Economic Growth, 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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