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Home > Wednesday Wisdoms: Newsletter > Ace Your A-Level Economics: The Power of Prioritising Points

Welcome to the 24th edition of Wednesday Wisdoms by EdGenie!

Every Wednesday I send out actionable tips, tricks and real-world application insights from my 13-year experience coaching students to achieve As and A* in their Economics and Business A Levels.

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Ace Your A-Level Economics: The Power of Prioritising Points

Hey Genies,
In my experience of coaching over 1000 students and consistently achieving As and A*s, I've noticed a crucial aspect often overlooked on the path towards exams....
...the art of prioritising your points!

The Key to Scoring High: Prioritisation
When tackling an Economics question, it's tempting to list down every related point that comes to mind. However, the real game-changer is understanding that not all points have equal significance.

What Does Prioritisation Entail?

Aligning with the 'Why' of the Question: Each point you make must directly address the question's core objective. It's about the purpose! Don't talk about AD when it's asking about LRAS elements.

Driving Points with Data: Leverage the data or extract provided. Your points should emerge from, and be supported by, this given information. Don't start with a point not in the extract.

Depth in Analysis and Evaluation: If you can't Talk about it. Don't Write about it! Your chosen point should allow for an extensive chain of reasoning, perhaps 10-20 steps, with relevant diagrams and insights. Depth is crucial.

If your answer doesn't meet these three criteria, chances are you're missing out on valuable marks.

The Impact of Getting It Right
Correctly identifying and prioritising your points doesn’t just enhance the quality of your answers; it's a strategic move that can significantly boost your grades. It's about being smart with your knowledge and choosing the path that leads to the highest rewards.

Remember, in A-Level Economics, it’s not just about what you write; it's about writing what matters most. Sharpen your discernment, and let's turn your hard work into top-notch results.

Best Regards,

Emre

Is the economy facing another energy price shock?

Summary

🌍 Global Impact of Houthi Attacks: Prime Minister Rishi Sunak and President Joe Biden attribute military action to the economic effects of Houthi attacks on Red Sea cargo ships.
💹 Recession Risk in the UK: The Treasury's scenarios suggest Red Sea disruptions could lead to a UK recession, with potential crude oil price hikes of $10 per barrel and a 25% increase in natural gas prices.
Stabilisation by Saudi Arabia: These price rises haven't occurred yet, largely due to Saudi Arabia's efforts to stabilize the market with oil price cuts.
🚢 Securing Red Sea Trade Routes: US and UK strikes on Houthi rebels aim to alleviate delays and disruptions in Red Sea trade, ensuring safe passage through the Bab-al-Mandeb Strait.
📈 Potential for Wider Conflict: These actions risk escalating into a broader Middle East conflict.
🛢️ Current Oil Prices: Despite recent rises, oil prices remain manageable at $80 per barrel, following a significant drop that led to petrol prices in the UK falling below £1.40 per litre.
🌏 Further Risks in Key Trading Routes: Disruptions could extend from the Red Sea to the Strait of Hormuz, another vital route, particularly with recent tensions involving Iran.
💥 Possible Energy Shock: Escalating tensions could lead to oil prices reaching $100 per barrel, amidst the fading impact of the Ukraine crisis.
🌐 Europe's Energy Dependence: Europe now heavily relies on shipped gas from Qatar, with increased deals following the halt of Russian gas supplies.
🇺🇸 US as an LNG Exporter: The US, as the largest exporter of liquified natural gas, could fill supply gaps, but prices would rise with any Gulf disruptions.
📊 Inflation and Economic Disruption: A serious escalation in tensions could entrench global inflation and disrupt economic stability, mirroring the energy crises of the 1970s.
📉 Historical Parallels: The situation draws parallels with the 1970s' geopolitical energy shocks, which led to prolonged inflation, highlighting the delicate balance in actions taken to protect the global economy.

A Level Economics Questions:
Q: Evaluate the potential impact of a $10 per barrel increase in crude oil prices on the UK economy.​

​A: A $10 per barrel increase in crude oil prices could lead to higher production and transportation costs for businesses, contributing to increased inflation. It may also reduce disposable income as consumers spend more on fuel and energy, potentially leading to reduced consumer spending and slower economic growth.

Q: Analyse the effect of a 25% increase in natural gas prices on European economies.

A: A 25% increase in natural gas prices could significantly impact European economies, particularly those heavily reliant on gas for energy. It could lead to increased production costs for businesses, higher utility bills for consumers, and potentially higher inflation rates. This might also strain government budgets if subsidies are provided to cushion the impact on consumers.

Q:How might changes in oil prices influence the Bank of England’s monetary policy?

A: Changes in oil prices, particularly increases, can contribute to inflationary pressures in the economy. The Bank of England might respond to higher inflation by adjusting its monetary policy, potentially by raising interest rates to control inflation. However, if the increase in oil prices is expected to be temporary, the Bank might choose to maintain current rates to avoid stifling economic growth.

Q: Evaluate the potential risks and benefits of the US becoming the world's largest exporter of liquified natural gas (LNG).

A: The US becoming the world's largest LNG exporter could benefit the country through increased trade revenues and job creation in the energy sector. It also enhances energy security for importing countries. However, this position could expose the US to global market fluctuations and geopolitical tensions, particularly in energy-dependent regions. Increased focus on fossil fuel exports could also impact the country's commitments to climate change initiatives.

Possible A Level Economics 25 Marker Question

Assess the likely effects of a prolonged increase in oil prices, similar to the $100 per barrel on the global economy. 

Infographic of the Week

Navigating 2024's Perilous Global Risk Landscape

As we approach 2024, the world faces a diverse array of significant risks. According to the World Economic Forum's survey of global leaders, extreme weather, driven by record global temperatures, tops the list of threats, potentially causing irreversible environmental damage by the 2030s. Misinformation and disinformation emerge as the second most significant risk, with the potential to exacerbate societal polarization and undermine trust in global elections across major countries like the U.S., Russia, and India. This threat is compounded by technological advancements in AI-generated content. Economic challenges, including a cost-of-living crisis, and geopolitical tensions in the Middle East, which might escalate into broader regional conflicts, add to the complexity of these risks. Looking further into 2034, environmental concerns are predicted to dominate, while technological risks like AI's destabilizing potential and cyber insecurity will continue to be significant concerns, highlighting the need for global preparedness and resilience against these multifaceted challenges.

Chart of the Week

UK Air Travel: A Slow Ascent from Pandemic Turbulence

The UK's aviation sector has experienced notable fluctuations over the past five years, as reflected in the number of flights departing and arriving from its airports. Data from the Office for National Statistics shows a steep decline from 2,137,000 flights in 2019 to 835,000 in 2020, gradually recovering to 1,931,000 in 2023, which is still only 90% of pre-pandemic levels. This shortfall is attributed to changes in business travel patterns, with increased reliance on video conferencing, corporate carbon reduction efforts, and cost-saving measures reducing the need for business trips. Consequently, airlines have been adapting by focusing on higher seat utilisation, targeting leisure travelers with premium offerings, and shifting towards budget carrier models. With a 9% increase in flights in the latter half of 2023 compared to 2022, the industry remains hopeful for continued recovery and growth into 2024.

Macroeconomic Data


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A huge thanks for hopping on board EdGenie's Wednesday Wisdoms newsletter! 
I'm Emre, and I've got a big goal - to make A* education accessible to all A-level students.
And it Starts With You!

Emre Aksahin
Chief Learning Officer at Edgenie