Application is a key component in the AQA and Edexcel A-level Economics mark schemes.
Make sure to include application to improve your grade. Below I will cover what application is, as well as some examples you can use.
What is application?
First, application means using examples from the real economy or context. It can also include applying economic theory to the particular question.
Here I will focus on the importance of examples.
Examples can come from your own knowledge or information given in the exam.
For example if you know the growth rate of the UK economy, that could prove useful in writing an economics essay.
Sources of Examples
So where can you find examples?
Mainly you can use the news. Keep up to date with the state of the economy, with news stories about different industries
For macroeconomics examples, you can typically find a lot of examples on other websites. For example, Trading Economics contains examples on the UK economy.
Also, think about the topics you are familiar with, especially for microeconomics. This will make it easier to remember.
For example you may know about your phone and its technology, such as Apple’s use of FaceID software.
Or maybe you are familiar with the market dominance of Sony, Microsoft and Nintendo in the video game console industry.
Think about the technology you use the hobbies you may have, and how you could use any examples from that industry.
How to use examples
Try to use examples in most if not all of your essay paragraphs.
Initially, you can start by dropping in a fact or piece of context. If you can state whether this is a high or low level, this would help your application.
In addition, it is even better to use it to support or counter an argument that is being made.
Consider the following example:
“The UK economy has a low unemployment rate of 4.1%. This means there is likely low spare capacity. So if government spending increases, according to the Keynesian LRAS curve, the resulting shift in aggregate demand will only increase inflation, with little effect on real GDP”.
For an example essay, see the link here. This essay shows how to use examples in an AQA-style essay. But this kind of use of examples may also apply to Edexcel style essays too.
Key Macroeconomics Examples
Below I have listed some possible examples for various areas of the A-level AQA or Edexcel Economics syllabus.
This list is not exhaustive. In other words you should be aware of examples for other topics beyond this list.
These figures are correct at the time of writing. For the latest figures you should search for these online, for example in the news.
Macroeconomic objectives UK
- A. Economic growth was 0.6% for the year to 2022 Q4 (from 2021 Q4). For 2023, the average forecast for annual growth is -0.2%.
- B. Unemployment is estimated at 3.8% of the labour force.
- C. Inflation is 10.1% in the year to March 2023. The Bank of England forecasts a significant fall in inflation in the coming months.
- D. For 2022, the current account on the balance of payments was -5.6% of GDP.
Macroeconomic policy UK
- Fiscal policy. The Chancellor has frozen the personal allowance, the level of income at which workers begin to pay income tax. He is also raising corporation tax rates, particularly for businesses making large profits. While the Chancellor announced a future income tax rate cut for the ”basic rate” from 20% to 19%.
- A. The UK Government’s budget deficit is high, at 5.2% of GDP.
- B. UK Government debt is 101% of GDP.
- C. The Bank of England’s “base rate” interest rate has been rising and is now 4.5%.
- D. The Bank of England’s asset purchases (mostly government bonds) under quantitative easing stand at £826 billion, having been wound down from a peak of £895 billion.
- Supply-side policy. Interventionist supply-side policies include building Crossrail and HS2. More free-market supply-side policies include the privatisation of firms like Royal Mail.
Also you should be aware of the level of consumer or business confidence relative to normal.
You may want other examples for international economics, for example on development, exchange rates and globalisation. A key example for tariffs are the tariffs from the US Government on Chinese steel. This led to retaliatory tariffs by China, including tariffs on US frozen pork.
Key Microeconomics Examples
Market failures and interventions
- Negative externality – pollution. Pollution is causing sea levels to rise, habitat destruction, conflict and mass migration. Pollution also leads to breathing problems. Possible solutions include a pollution permits scheme like the EUETS; a carbon tax as in South Africa or subsidies for electric vehicles as in the UK. Also the UK Government has set a target of “Net Zero” carbon dioxide emissions by 2050.
- Also positive externality – healthcare. Healthcare means reduced transmission of transmissible diseases as well as fewer sick days for workers. Possible solutions include government provision such as the NHS in the UK, or subsidising healthcare such as the Affordable Care Act in the US.
Market power:
- Monopoly – Google. As of writing, more than 90% of internet searches in the UK were through Google.
- Oligopoly – banks and energy firms. Lloyds Group, Barclays and RBS made up over half of the total market share in UK banking in 2015, though these markets have become more competitive in recent years.
Examples of other market structures include restaurants and hairdressers for monopolistic competition; and foreign exchange market or international agricultural markets for markets closest to perfect competition.
Also you may want examples on other areas, such as asymmetric information, firm objectives as well as more market failure and intervention examples etc. More information about the examples above will help improve your essays even further.
More Resources for A-level Economics
How to write essays for AQA A-level Economics
AQA Economics Paper 1 Microeconomics – 3 Practice Papers (predicted questions and topics)
AQA Economics Paper 2 Macroeconomics – 3 Practice Papers (predicted questions and topics)
Edexcel Economics A Paper 1 – 3 Practice Papers 2022 (predicted questions and topics)