Tip 1: Review economics news stories – potential contexts
Economics news to be aware of, at the time the paper may have been written (in line with content in the advance information). These are worth being briefly aware of.
- Monetary policy – the possibility of negative interest rates and the Bank of England gradually raising interest rates.
- Fiscal policy – rise in corporation tax, UK Government’s budget deficit, pandemic spending and withdrawal of pandemic-related government spending (ending the furlough scheme for example).
- Economic cycle and growth – downturns caused by the pandemic and the nature of the UK’s “bumpy” economic recovery. Fiscal and monetary policy that contributed to this recovery such as low interest rates and the furlough scheme, VAT cuts.
- Globalisation and trade – trend for deglobalisation, that is increasing tariffs, supply-chain issues and reshoring (moving production closer to the location of end consumers).
- Inequality – inequality in terms of the effects of the Covid-19 pandemic, the UK Government’s levelling up agenda.
- Financial markets – increased use of cryptocurrency, leading to speculation. Also “buy now pay later” firms such as Klarna which could increase household debt, how the financial system fared in response to the Covid-19 pandemic downturn.
- Supply-side policy – privatisation of Royal Mail and possibly Channel 4. Infrastructure projects such as HS2, Crossrail and broadband access. Education spending schemes such as the National Skills Fund.
Other contexts could appear, including for other economies. These are good areas to revise for section C as well as section B.
Tip 2: Learn key UK economy data
See below the key data on the UK economy as of May 25th 2022. If you cannot remember anything, remember these key facts!
Key macro data
- Unemployment rate 3.7% (very low).
- Inflation rate 9% (very high).
- Consumer confidence at a new low of -40 in May 2022 on the GfK INDEX, driven by concern over the cost of living crisis.
- The UK economy typically runs a current account deficit. In 2020 the UK current account was -3.5% of GDP.
- GDP annual growth was 8.7% in the 12 months from Q1 2021 to Q1 2022.
Key policy data
- Bank of England interest rate (also known as Bank rate) is 1% (low but rising).
- The UK Government budget deficit is 15% of GDP for 2020-21 fiscal year. This is a level not seen since World War II!
- The UK Government debt is 94% of GDP for 2020.
- Personal income tax rates: approximately £12,500 is free of income tax. The top (marginal) rate of income tax is 45% for the highest incomes.
- The UK has tariff-free trade with the EU, but there are customs regulations in place such as “rules of origin” regulations that UK exports must adhere to. The UK has quotas on the number of fish that French fishermen can take from UK waters.
- For an example of tariffs, I recommend looking beyond the UK. The US put in place tariffs on Chinese steel and China responded with its own tariffs on frozen pork.
In preparing for the actual exam, you may want to know more facts and policy examples. The facts above are a good starting point.
For updated data, I recommend using the Trading Economics website linked here.
Tip 3: Practice key evaluation points
Key evaluation points for macroeconomics
- Usually the other side of the argument (e.g. if your analysis was an advantage of a policy, your evaluation can be a disadvantage for Edexcel. See examiner’s reports for evidence of this).
- Other factors matter more than the factor mentioned.
- The state of the economy, in particular the position on the Keynesian LRAS.
- Level of consumer or business confidence. Consumer confidence can influence the effects of an interest rate or tax change.
- Opportunity costs of government spending programs. Related to this, the government’s deficit and debt levels.
- Time lags of supply-side policies.
- Short run versus long run considerations.
- Risks of retaliation from protectionist policies.
- The fraction of firms or consumers affected by a policy change.
- Other points may be appropriate for the particular question.
See this link here for specific evaluation examples for 25 mark questions. Obviously the evaluation should be scaled down for shorter questions. While this article is meant for AQA, the takeaways apply to Edexcel Economics as well.
Other pieces of advice (tips 4-7)
- Time management: have a plan for managing time for each question. My broad recommendation is as follows:
- Section A: 10 to 15 minutes.
- Section B: 1 hour to 1 hour 5 minutes
- Finally section C: 35 to 40 minutes.
- Remaining time to be used to complete any unfinished answers.
- Feel free to adjust the above according to your preferences.
- Be prepared to move on if you do not know what to write or have only put a half-answer, particularly for sections A and B. You can always come back to them later.
- Do lots of practice in timed conditions! The past papers as well as practice papers provided should help with this.
- Know the requirements for each question type, particularly in section B. For more information on this, I recommend viewing the article here. See here for an example high-scoring 25 mark question response on macroeconomics.
- Practise questions from past papers or practice papers based on the advance information (see below).
Practice Papers
For practice papers based on the advance information and current affairs, see the link below:
Good luck!