IDK EXAM TECHNIQUE: AQA ECON2 Q3- DIAGRAM
Mark breakdown (12 marks max)
- Written explanation alone can get you all 12 marks, this is not specifically a diagram question unlike unit 1 (max. 12)
- Diagram (at least 4).
- Definitions (max. 2). Examiner will accept a broad range of unit 2 definitions for most questions here. Commonly accepted definitions include: economic growth, unemployment, inflation, demand side policy, interest rates, imports, exports.
June 2012 Q3
Question paper: http://filestore.aqa.org.uk/subjects/AQA-ECON2-QP-JUN12.PDF
Mark scheme: http://filestore.aqa.org.uk/subjects/AQA-ECON2-W-MS-JUN-12.PDF
1. Start with your written definitions. The question mentions three key terms from unit 2: unemployment, aggregate demand and the trend rate of growth- pick any two of these. Alternatively, it would have made sense to define productivity in this question as this ties in nicely with unemployment. Make sure you don't define the term you've defined in the 5 mark definition question.
The level of unemployment is the proportion of the population who are willing and able to work but unable to do so. Aggregate demand is the total demand for final goods and services in an economy at a given time. The trend rate of growth is the long run average rate for a country over a period of time.
2. Now draw your diagram. Be creative in the way you adapt your basic diagram (AD/AS) to explain the concept in the question. Make sure it's fully labelled (curves, axes and any other relevant features) and explained.
If AD rises from AD1 to AD2, but LRAS rises from LRAS1 to LRAS2, the output gap will grow from X to Y. This leads to a rise in unemployment.
3. Structure your written explanation into two chains of reasoning i.e two separate points, each with its own paragraph. Start each paragraph by referring back to the question (see below)- this should form part of your first link in the chain of reasoning. You get two marks for each relevant "link" in your chain of reasoning- if you've already picked up 6 marks from the definitions/diagram, you only need 3 links in total across both your paragraphs which should be easy!
If AD grows more slowly than LRAS, then spare capacity or the output gap will increase as shown in the diagram. Firms will cut back on production and will reduce the number of workers employed, thus unemployment will rise.
If the underlying trend rate of growth is strong, this implies that productivity per worker is rising. Accordingly, as productivity growth outstrips demand growth, firms are required to employ fewer and fewer workers to produce the market output. As a result, unemployment will rise.
Full mark response:
The level of unemployment is the proportion of the population who are willing and able to work but unable to do so. Aggregate demand is the total demand for final goods and services in an economy at a given time. The trend rate of growth is the long run average rate for a country over a period of time.
If AD rises from AD1 to AD2, but LRAS rises from LRAS1 to LRAS2, the output gap will grow from X to Y. This leads to a rise in unemployment.
If AD grows more slowly than LRAS, then spare capacity or the output gap will increase as shown in the diagram. Firms will cut back on production and will reduce the number of workers employed, thus unemployment will rise.
If the underlying trend rate of growth is strong, this implies that productivity per worker is rising. Accordingly, as productivity growth outstrips demand growth, firms are required to employ fewer and fewer workers to produce the market output. As a result, unemployment will rise.