© For RI Year 6 in preparation for A levels. Not for sale/profits. 17/11/2012 20:37:19

ECONOMICS ESSAY CHECKLIST: Economics structure, skills framework, mark allocation (just a guide) for essays

PLAN content, STRUCTURE content and apply SKILLS Plan, plan, plan Red the entire question Pick out the key words as they give you an indication of the topic and the econs framework to

use Read the command word for the skills to illustrate Look at the mark allocation for how much to write Read the entire question to know what the question is really asking. Do not provide a rehearsed

answer without repackaging it to suit the question Use examples from the preamble to illustrate your points; set your analysis/evaluation in the

context given, highlighting how unique and broad characteristics of different countries or situations can affect economic outcomes

Structure your points well; one well-elaborated point per paragraph – for instance, impact on one goal per paragraph; impact on one specific market per paragraph

Well-balanced answer Scope of coverage – perspectives, variety of distinctly different factors TAS/Argument vs counter-argument/flip-side

Linkages back to the focus of the question Command word: Distinguish/Compare , Explain, Discuss, Evaluate

Use the appropriate signposts like “similarly”, “however”, “to evaluate”, “In conclusion”

Mark allocation Organisation and classification Accuracy

EXPLANATION/ANALYSIS/RIGOUR/SCOPE What (identify) Why (reasons) How (process; cause-effect relationship) Who (perspectives/parties involved) When (time frame – short run vs long run); Where (location) Breakdown into parts Use economic concepts, theories and diagrams where useful to do so

USE EXAMPLES TO ILLUSTRATE YOUR POINTS From context or preamble (if there is) Own knowledge

EVALUATION SKILLS TAS &/or Value-adds to TAS State/Clarify assumptions of theory, context, situation, time frame

Relax/question assumptions and predict different outcomes Make a stand/judgement and explain your stand Useful phrase: “It all depends on…”

ECONOMIC FRAMEWORK MICRO – concepts, principles, definitions, diagram and its application: E.gs Basic assumption of economic theories – rational economic agents in pursuit of self-interest PPC

Illustrate scarcity, choice, opp cost Illustrate econ growth – actual and potential growth Unemployment of resources vs full employment

1. Market failure arising from structural unemployment which includes immobility of factors of production like structural unemployment and frictional unemployment (due to imperfect information)

PE & AE (macro perspective) Demand-supply diagram

Price and output determination in a SPECIFIC good or service market i. Automatic price adjustment process

Analyse impact on the market – i. Eqm P, Q, TR, CS, PS

Market failure arising from imperfect information Application to non-goods markets

i. Explain how exchange rates are determined ii. Explain how interest rates are determined

iii. Explain how equilibrium wage rate (price of labour) is determined

© For RI Year 6 in preparation for A levels. Not for sale/profits. 17/11/2012 20:37:19

Elasticity of demand and supply

Refinement of analysis to impact on a market using the dd-ss diagram: i. PED, YED, CED, PES ii. E.g. PED & PES: Incidence of indirect taxes, subsidies

Usefulness of elasticity concepts to a firm i. PED: Reduce or increase price to increase TR depends on PED ii. YED: If money income changes, apply YED, ceteris paribus

1. Sign of YED - positive for normal goods and negative for inferior

goods - Normal goods: Necessities 0<YED<1; Luxuries

YED>1 2. Value of YED will enable firm to estimate by how much to

increase or reduce production and sales for a given increase or reduction in money income, ceteris paribus

iii. CED: If price of substitutes or complements increase, apply CED, ceteris paribus

1. Sign of CED - Substitutes have positive CED - Complements have negative CED

2. Value of CED will enable firm to estimate by how much to change production and sales for a given change in price of a substitute or complement

iv. Limitations of elasticity of demand concepts to the firm Cost of production diagram –

Short run cost curves: SRATC=AVC+AFC; SRMC LRAC and LRMC; MES, IEOS, IDOS (expansion of the size of a firm) EEOS, EDOS (expansion of an industry)

Firms’ level of analysis Illustrate SR and LR profits of firms in the different market structures

i. LR profits depends on whether barriers to entry/exit are high or low or nil

Analyse changes to profits of a firm in different market structures; Analyse price and output determination of a firm in different market structures

i. Only PC firm is a price taker (why?) and is only able to make LR normal profits because of no BTE (eqm price is determined by the PC industry)

ii. MPC firm is a price setter (why?) and able to make only LR normal profits because of low BTE

iii. Oligopoly and monopoly are price setters (why?) and are able to make LR supernormal profits because of high BTE

Assess whether PE and AE is achieved in the different market structures Market failure: Failure of the free market/price mechanism to achieve efficient allocation of

resources (which includes AE and PE) and other social goals like equity Externalities:

i. MSB/MSC framework Merit goods/Demerit goods:

i. Personal well-being argument due to imperfect information (Dd/Ss) ii. Externalities due to pursuit of self-interest (MSB/MSC)

Public goods i. Non-rivalry, non-excludability, free rider problem

Imperfect market structures Imperfect information Immobility of factors of production

i. Occupational and geographical immobility of fop (structural unemployment)

ii. Frictional unemployment Efficiency (AE and PE) and equity

© For RI Year 6 in preparation for A levels. Not for sale/profits. 17/11/2012 20:37:19

MACRO AD/AS diagram

Explore effects on GPL (inflation) and real NY (economic growth – actual and potential growth) arising from

i. Shifts in AD curve due to changes in C, I, G, X, M ii. Shifts in AS curve due to changes in

1. Cost of production upward or downward shift of AS curve 2. Quality and quantity of factors of production and technology

outward shift of AS curve and/or downward or upward shift of AS curve

Analyse changes in GPL (if increases in GPL is persistent inflation) Analyse changes in real national income Keynesian multiplier – to illustrate full multiplier effects must shift AD curve

along the horizontal part of the AS curve (For the full K process to be achieved, GPL must be held constant)

i. When the AD curve shifts along the upward sloping or vertical part of the AS curve, GPL increases and this causes the multiplier process to be dampened

Keynesian cross diagram and diagrammatic stepped illustration of the multiplier process Only if the focus of the question is just on extent of change in national income

for a given increase in autonomous spending (autonomous C, I G, X and autonomous M)

Use the intuitive explanation of the multiplier process if the question’s focus is on 2 or more goals of the economy with impact on national income being one of the goals; AD/AS diagram to illustrate the changes in GPL and changes in real national income (full K effect if AD curve shifts along the horizontal part of AS curve but dampened K effect if AD curve shifts along upward sloping or vertical part of AS curve)

“Impact on the economy” Refers to impact on the 4 macro goals and 2 micro goals

i. Internal stability 1. Economic growth (actual and potential growth), 2. Inflation (demand-pull and cost-push inflation; anticipated and

unanticipated; stable and unstable; high vs low) 3. Unemployment (demand-deficient, real wage, structural,

frictional and seasonal unemployment) ii. External stability – LR balance of payments equilibrium (current and

financial/capital account) and stable exchange rates iii. Efficient allocation of resources: (Allocative efficiency AND Productive

Efficiency. Note in order for AE to be achieved, PE must be achieved) iv. Equity

Explain the goals of the economy Refers to the desirable effects arising from achieving the goals and the

undesirable effects if the goals are not achieved Theory of comparative advantage

Numerical illustration required if the question is focusing on gains from specialisation and trade or if the question specifically asks u to explain the theory of CA

i. Engine behind international trade (and globalisation) Tariff diagram

Welfare gains from removing tariffs on imports vs deadweight losses from imposing tariffs on imports

Tariff revenue Marshall-Lerner condition (for basics) and “J-curve” effect (for evaluation)

Explore impact of changes in exchange rate on balance of trade as a component of balance of payments

OK to apply MLC to explore impact of changes in ER on AD in terms of X and M as components of AD

Interest rate determination: out of the syllabus Loanable funds theory

i. Interest rate is determined by demand and supply of loans Liquidity preference theory

i. Interest rate determination via money dd and money ss (out of the syllabus)

Crowding out effects Financial crowding out, physical crowding out

© For RI Year 6 in preparation for A levels. Not for sale/profits. 17/11/2012 20:37:19

Marginal efficiency of investment theory Inverse relationship between interest rates and investment Shifts in vs movement along MEI function Interest elasticity of MEI curve

Standard of living – material and non-material SOL Globalisation

Theory of comparative advantage as the engine of globalisation Includes 3 aspects (importance in the following order)

i. Trade in goods and services – exports and imports 1. Lowering of trade barriers on imports – tariff diagram 2. Lowering of trade barriers by other countries on domestic

country’s exports – E.g. Impact of exports on economic growth - AD/AS diagram; IEOS

ii. Foreign direct investment – inward and outward investment iii. Labour flows between countries

Impact of 4 macro goals and 2 micro goals

STRUCTURE OF ESSAY

Introduction o Define key terms and clarify ambiguity and assumptions or direction of essay

Body: Depending on the command word o Explain and provide a balanced scope of coverage (e.g. a variety of distinctly different factors) and/or o Thesis-Antithesis-Synthesis (arguments-flipside structure) o Evaluation of individual ideas

Conclusion o Synthesis /Holistic evaluation; address the question directly first (make a stand on the issue and explain

why you arrive at that stand) o Anything interesting, intelligent and insightful (3Is)

Command Word Mark/Time Allocation Points

Plan 3 minutes

Explain 10 marks (about 15-17 mins)

Introduction: Clarify ambiguity; state direction Body:

3 distinctly different points/broad categories

Within each category, can provide 2 sub-points if appropriate

Conclusion: Make a stand and explain why (Each point must be well-elaborated)

Discuss/To what extent/Assess/Comment

12-15marks (about 20-25 mins)

Introduction: Clarify ambiguity; state direction Body: TAS structure/evaluation

Thesis 2-3 distinctly different points(depends on marks

and time) Anti-thesis

2-3 distinctly different points (depends on marks and time)

Conclusion: Make a stand and explain why; 3Is (Each point must be well-elaborated; must go beyond one or two sentences)

Discuss/To what extent/Assess/Comment

25 marks (45 mins)

Introduction: Clarify ambiguity; state direction Body: TAS structure/evaluation

Thesis 4-5 distinctly different points

Anti-thesis 4-5 distinctly different points

Conclusion: Make a stand and explain why; 3 Is (Each point must be well-elaborated; must go beyond one or two sentences.)