Key term
WJEC A-Level Economics 1520QS
Scarcity and Choice
Topic overviewScarcity, choice and opportunity costProduction possibility frontiers (PPFs): Production possibility frontier diagrams to depict choiceProduction possibility frontiers (PPFs): Factors which may shift the PPF inwards or outwardsSpecialisation, division of labour and exchange: Advantages and disadvantages of specialisationSpecialisation, division of labour and exchange: Productivity
Demand and Supply in Product Markets
Topic overviewFactors influencing demand and supply in product markets: Product marketFactors influencing demand and supply: Main influences on demand and supply in product marketsThe determination of equilibrium price: Equilibrium price and output, and disequilibriumThe determination of equilibrium price: How the market adjusts to a new equilibriumThe determination of equilibrium price: Consumer and producer surplus on the diagramConsumer and producer surplusPrice, income and cross price elasticities: Price elasticity of demandPrice, income and cross price elasticities: Income and cross price elasticity of demandPrice, income and cross price elasticities: Price elasticity of supply, uses of elasticity and tax incidence
Demand and Supply in Labour Markets
Topic overviewWage determination: Demand for labour as a derived demandWage determination: Equilibrium wage rate and shifts in labour demand and supplyWage determination: Elasticity of demand for labour and Elasticity of supply of labourWage determination: Causes of wage differentials, Effects of wage differentials, and wages in WalesLabour market issues: Factors which affect flexibility in labour marketsLabour market issues: Effects of the statutory national minimum wage on labour marketsLabour market issues: Impact of migration on labour markets
Resource Allocation
Market Failure
Topic overviewUnderstanding market failure: Market failureUnderstanding market failure: Public goods, Merit and demerit goodsUnderstanding market failure: ExternalitiesUnderstanding market failure: Externalities of consumption and monopoly powerUnderstanding market failure: Information asymmetries and gaps, Income inequalityUnderstanding market failure: Volatile prices and externality diagramsWhy and how governments intervene in markets: Reasons for government intervention in marketsWhy and how governments intervene in markets: Maximum prices, road pricing, pollution permits and other interventionsWhy and how governments intervene in markets: Evaluating government interventionThe effects of government intervention: Government intervention can create distortions in marketsThe effects of government intervention: Reasons for government failure
Macroeconomic Theory (AS)
Topic overviewThe circular flow of income model: Flows in the circular flow modelThe circular flow of income model: Injections into and withdrawals from the circular flowThe circular flow of income model: Model to explain the concept of national income equilibriumThe units of aggregate demand (AD): Units of aggregate demand: consumptionThe units of aggregate demand (AD): Factors affecting consumption and investment, and the AD curveThe AD function: Why an AD function will slope downward from left to rightThe AD function: Changes in the unitsThe aggregate supply (AS) function: Shape of the Keynesian long run aggregate supply curveThe aggregate supply (AS) function: Factors which might result in a shift in LRASAD/AS analysis
Government Policy Objectives
Topic overviewEconomic growth: Actual and potential growth, output gaps and the business cycleEconomic growth: Benefits of economic growth for households, government and firmsEconomic growth: Illustrating growth on PPF and AD/AS diagramsUnemployment (AS): Measurement and typesUnemployment (AS): CostsUnemployment (AS): Causes
Policy Instruments (AS)
Topic overviewFiscal policy: FrameworkFiscal policy: Direct and indirect taxes and demand side fiscal policyFiscal policy: Automatic stabilisers, time lags and the Laffer curveMonetary policy: Bank of England and the Monetary Policy Committee, Inflation targetMonetary policy: Bank Rate and the transmission mechanismExchange rates and exchange rate policy: Exchange rates in a free marketExchange rates and exchange rate policy: Exchange rate policySupply side policies: Aims of supply side policiesSupply side policies: Market-based supply side policies and Limitations of supply side policies
International Trade (AS)
Costs, Revenues and Profits
Topic overviewCosts, revenues and profits: Law of diminishing returnsCosts, revenues and profits: Product, total and average costsCosts, revenues and profits: Total, average and marginal values for revenue and costsCosts, revenues and profits: Internal and external economies and diseconomies of scaleCosts, revenues and profits: Concept of profit maximisationThe growth of firms: How and why firms might growThe growth of firms: Types of integration/ mergersEfficiency
Market Structures
Topic overviewBackground to market structuresBusiness objectivesPerfect competition: Perfect competition and its underpinning assumptionsPerfect competition: Efficiency of perfectly competitive marketsMonopolistic competitionMonopoly: Monopoly and its underpinning assumptionsMonopoly: Comparing monopoly with perfect competitionMonopoly: Potential costs and benefits of monopolyOligopoly: Main features of oligopolistic markets and the concept of interdependenceOligopoly: Potential costs and benefits of oligopolyCompetition policy: Why governments are concerned about monopoly powerCompetition policy: Benefits and limits of competitionPrivatisation: Way in which privatisation may increase competitionPrivatisation: Effects of privatisation on competition
Macroeconomic Theory (A2)
Macroeconomic Objectives (A2)
Topic overviewEconomic growth: Actual vs potential economic growth and Causes of growthEconomic growth: Benefits and costs of growthUnemployment (A2): Measurement and typesUnemployment (A2): Costs, measurement and the Phillips curveUnemployment (A2): CausesInflation and deflation: Measurement and calculationInflation and deflation: CausesInflation and deflation: CostsInflation and deflation: DeflationThe balance of payments: Current account imbalances: causesThe balance of payments: Current account imbalances: impactsThe balance of payments: Solutions to current account deficits
Policy Instruments (A2)
Topic overviewControl of the national (public sector) debt: CausesControl of the national (public sector) debt: ImplicationsThe operation of monetary policy: Interest rates and how quantitative easing worksThe operation of monetary policy: Effects and criticisms of quantitative easingThe operation of monetary policy: Quantitative tightening, Funding for Lending and the financial sectorMonetary stability: Asset bubbles and financial crisesFinancial stability
International Trade (A2)
Topic overviewAdvantages and disadvantages of free trade: Advantages of free tradeAdvantages and disadvantages of free trade: Disadvantages of free tradeProtectionism: Free trade compared with protectionist measuresProtectionism: Key methods of protectionismGlobalisation: What globalisation is and what drives it, Benefits of globalisationGlobalisation: Costs of globalisation and Evaluating the net impact of globalisationTrade and the UK: Absolute and comparative advantage, Terms of trade and the gains from tradeTrade and the UK: Disadvantages of international tradeTrade and the UK: Methods of protectionTrade and the UK: Arguments for and against protectionismTrade and the UK: World Trade Organisation and globalisationTrade and the UK: UK’s major export sectors and an integrated world economy
Non-UK Economies
Economic Development
Topic overviewMeasurement: What is meant by economic development and how it is measuredMeasurement: Human development index, More indirect indicators such as access to health and educationObstacles: Why LEDCs may face difficulties in competing with MEDCsObstacles: Relevant obstaclesSolutions: Liberalisation as a route to development, Aid and debt reliefSolutions: Foreign direct investment and trade strategies
Macroeconomic Objectives (A2)
- 12 subtopics
- 34 things to know
- A2 Units 3 and 4
What Macroeconomic Objectives (A2) covers
Macroeconomic Objectives (A2) is A2 content, examined in both A2 Unit 3 and A2 Unit 4, which each cover all A level content. 187 recall questions across 12 subtopics.
Where it is assessed
A2 Units 3 and 4
Exploring Economic Behaviour and Evaluating Economic Models and Policies, both covering all A level content.
Check the WJEC specification ↗The 12 subtopics
Each one has its own page.
- Economic growth: Actual vs potential economic growth and Causes of growthRecall questions on Actual vs potential economic growth and Causes of growth.Open →
- Economic growth: Benefits and costs of growthRecall questions on Benefits and costs of growth.Open →
- Unemployment (A2): Measurement and typesRecall questions on Measurement and types.Open →
- Unemployment (A2): Costs, measurement and the Phillips curveThe costs of unemployment and hysteresis, measuring unemployment and inactivity, and the short-run and expectations-augmented Phillips curve.Open →
- Unemployment (A2): CausesRecall questions on Causes.Open →
- Inflation and deflation: Measurement and calculationRecall questions on Measurement and calculation.Open →
- Inflation and deflation: CausesRecall questions on Causes.Open →
- Inflation and deflation: CostsRecall questions on Costs.Open →
- Inflation and deflation: DeflationRecall questions on Deflation.Open →
- The balance of payments: Current account imbalances: causesRecall questions on Current account imbalances: causes.Open →
- The balance of payments: Current account imbalances: impactsRecall questions on Current account imbalances: impacts.Open →
- The balance of payments: Solutions to current account deficitsRecall questions on Solutions to current account deficits.Open →
What you need to know
Answer each one before you reveal it.
Your recallNot started
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What are the benefits of economic growth for households?
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State three benefits of economic growth for governments.
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What benefits does economic growth bring to firms?
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Explain why the natural rate of unemployment is never zero.
Evaluation
What three advantages are claimed for a more flexible labour market?
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State the equation of exchange from the quantity theory of money.
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How does demand deflation affect governments?
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If an economy experiences a positive output gap, what does this suggest about inflationary pressure?
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State four factors that determine the size of an economy's natural rate of unemployment.
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On a labour market diagram of real wage against employment, how is disequilibrium unemployment shown?
Numbers
An economy has 24.0 million people in work, 1.5 million unemployed and 9.0 million economically inactive. Calculate the labour force and the unemployment rate.
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What is meant by hysteresis in the labour market?
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How are price changes tracked when calculating inflation?
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How is the overall price index produced from individual price changes?
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What market condition results from aggregate demand exceeding aggregate supply?
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Why do borrowers benefit from inflation?
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How can inflation affect a country's international competitiveness?
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Define deflation.
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What are factor costs in the context of the balance of payments?
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Explain how exchange rates affect the balance of payments.
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How do protectionist policies influence the balance of payments?
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Give an example of a protectionist measure that could affect the balance of payments.
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What is the difference between a structural and a cyclical balance of payments deficit?
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How can deflationary policies improve the balance of payments?
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What would a negative output gap suggest about unemployment in an economy?
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State what is measured on each axis of a Phillips curve diagram and describe the shape of the short-run curve.
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Over what time period is the inflation rate typically measured?
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How do firms respond to excess demand in the economy?
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What are menu costs?
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What causes supply-side deflation?
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What would happen to a country's balance of payments if its currency appreciated significantly?
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Define the terms of trade index.
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How can supply side reforms improve the balance of payments?
Take Macroeconomic Objectives (A2) further
The same content, four other ways.
Commonly confused
Pairs that lose marks when they are blurred together.
Actual growth vs Potential growth
Actual growth: a realised increase in output. Potential growth: an increase in productive capacity.
Questions from this topic
Each one with the model answer underneath.
- 1
Distinguish actual growth from potential growth.
Model answer
Actual growth is a rise in real output achieved by using existing capacity more fully, shown as a movement towards the production possibility frontier. Potential growth is an outward shift of that frontier, caused by more or better factors of production.
- 2
If an economy experiences a positive output gap, what does this suggest about inflationary pressure?
Model answer
Inflationary pressure is likely to increase as the economy is operating above its sustainable capacity.
- 3
What does a negative output gap indicate?
Model answer
That actual output is below potential output, indicating spare capacity in the economy.
- 4
What would a negative output gap suggest about unemployment in an economy?
Model answer
Unemployment is likely to be higher than at full employment due to spare capacity in the economy.
- 5
Define the business cycle.
Model answer
The fluctuations in economic activity over time, with phases of expansion and contraction around the long-term trend.
- 6
What is the typical definition of a recession?
Model answer
Two consecutive quarters of negative economic growth.
What is inside Levo
Six ways to work the same material.
Macroeconomic Objectives (A2) revision questions
- What does Macroeconomic Objectives (A2) cover in WJEC A-Level Economics?
- 12 subtopics: economic growth: actual vs potential economic growth and causes of growth, economic growth: benefits and costs of growth, unemployment (a2): measurement and types, unemployment (a2): costs, measurement and the phillips curve, unemployment (a2): causes, inflation and deflation: measurement and calculation, inflation and deflation: causes, inflation and deflation: costs, inflation and deflation: deflation, the balance of payments: current account imbalances: causes, the balance of payments: current account imbalances: impacts and the balance of payments: solutions to current account deficits. Each one has its own page with questions and model answers.
- How is Macroeconomic Objectives (A2) organised?
- By the WJEC 1520QS specification, subtopic by subtopic, so it matches the order you are taught it in.
Every question in Macroeconomic Objectives (A2), 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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