Economic Performance | AQA A-Level Economics (7136)

Economic Performance

222 questions
11 subtopics
Paper 2: The national and international economy, and available on Paper 3
Paper 2 and Paper 3

Economic performance is examined on Papers 2 and 3.

It takes the four policy objectives one at a time, explains what causes movement in each, and closes on the conflicts between them.

Sample questions from Economic Performance

Answer each one closed book first, then open the answer.

Short-run and long-run economic growth

How does government spending influence short-run economic growth from the demand side?

Show the answer
Increased government spending raises aggregate demand, boosting real GDP in the short run.
The economic cycle and output gaps

How does unemployment typically behave across the economic cycle?

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Unemployment typically falls during expansion and rises during contraction.
Demand-side and supply-side shocks

What are the effects of a negative supply-side shock on the economy?

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It shifts SRAS leftward, reducing real GDP and increasing inflation, potentially causing stagflation.
Measuring unemployment and the types of unemployment

How does investment influence employment levels in the economy?

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Increased investment raises aggregate demand and creates jobs in capital goods industries and related sectors; reduced investment lowers employment.
The determinants of employment and policies to reduce unemployment

How can globalisation and increased foreign competition cause structural unemployment in the UK?

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Industries may decline and jobs may move overseas as UK firms become less competitive, leaving workers with skills that no longer match available jobs.
Inflation and deflation

What types of production costs might rise to cause cost-push inflation?

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Wages, raw materials, or energy costs.
The quantity theory of money

Why is Q (real output) used instead of T (transactions) in Fisher's equation?

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Using Q makes PQ equal to nominal national income and avoids the problems of counting intermediate transactions.
Consequences of inflation and deflation

Why can high and volatile inflation reduce investment and long-run growth?

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It creates uncertainty about future costs, prices and real returns, making firms reluctant to commit to long-term investment.

The 11 subtopics

One subtopic is one session. Work down the list.

Subtopic	What it covers	Questions
Short-run and long-run economic growth	The difference between the two, and the demand-side and supply-side causes of each.	23
The economic cycle and output gaps	The four phases of the cycle, how the main indicators behave, and positive and negative output gaps.	21
Demand-side and supply-side shocks	What each type of shock does to output and the price level, with examples of both.	10
Measuring unemployment and the types of unemployment	The claimant count and the ILO measure, and seasonal, frictional, structural and cyclical unemployment.	27
The determinants of employment and policies to reduce unemployment	Demand-side and supply-side influences on employment, and matching the policy to the cause.	26
Inflation and deflation	Demand-pull and cost-push inflation, deflation and disinflation, and the effects of each.	26
The quantity theory of money	Fisher's equation of exchange, MV = PQ, the assumptions that turn it into the Quantity Theory of Money, the monetarist explanation of inflation, worked calculations of the price level and velocity, and the Keynesian criticisms.	11
Consequences of inflation and deflation	The costs of inflation, from menu and shoe-leather costs to redistribution, competitiveness and fiscal drag, the difference between anticipated and unanticipated inflation, and the consequences of deflation, including deflationary spirals, debt burdens and Japan's experience.	16
The balance of payments on current account	What the current account records, what a deficit or surplus means, and the benefits of trade.	19
Output gaps and the growth-inflation conflict	Why growth, inflation, unemployment and the current account pull against each other.	26
Reconciling policy objectives in the AD/AS model	How supply-side policy can shift LRAS and ease the short-run conflicts.	17

Economic Performance is 222 of the 2,344 questions in the guide.Get the guide, £8

How the guide is worked

Answering a question from memory stores it far better than reading the answer again. The guide runs that as a fixed procedure on one subtopic at a time, about twenty minutes a session.

Step 1 · Closed book
Cover the answers. Work through one subtopic and write down what you can. Leave blanks where you have nothing.
Step 2 · Open book
Go back to the top. Read each printed answer and write it out in full, including the ones you had right.
Step 3 · Closed book again
Same questions, same order, from memory. The gap between pass one and pass three is the session result.

Read the full method, the return schedule and the research behind it.