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Home > Edgenie Sunday Schroll: Newsletter > Are You Using Diagrams Wrong in Your Answers? Let’s Fix That! 📊

Welcome to the 59th edition of our Newsletter EdGenie's 📜 Sunday Scroll...

Every Sunday I send out actionable tips, tricks and real-world application insights from my 15 year experience coaching students to achieve As and A*s in their Economics A Levels via EdGenie.

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Are You Using Diagrams Wrong in Your Answers? Let’s Fix That! 📊

Hey Genies

Let’s talk about diagrams.

How do you include them in your answers?

Do you write your point, explain your answer, and then separately, in a completely different paragraph, draw your diagram and describe it without really linking it back to your initial point?

Like this:

Example 1: (What NOT to do)

Point (separate from diagram):


"When interest rates rise, the immediate effect is felt by consumers through the higher cost of borrowing. Loans for large-ticket items such as cars, homes, and durable goods become more expensive, causing consumers to cut back on spending. As borrowing becomes more expensive, consumption—a significant component of Aggregate Demand (AD)—falls.

With less spending, real output in the economy decreases as demand for goods and services drops. Businesses, especially those reliant on consumer discretionary spending, begin to feel the pressure of reduced demand. Reduced sales in key sectors, such as automotive and housing, lead to lower revenue for these firms. As a result, businesses may respond by cutting jobs or delaying investments in new projects. This further weakens economic activity as household incomes fall, leading to even lower consumption.

The broader impact of these changes is felt across the economy, affecting growth, inflation, and unemployment levels. While the increase in interest rates may help reduce inflation, the cost is slower economic growth, or even a contraction."

Separate Diagram paragraph:
"The Aggregate Demand curve shifts leftwards, from AD1 to AD2, representing the fall in overall demand due to reduced consumer spending and investment.

As AD shifts left, there is a corresponding decrease in real output, from Y1 to Y2, indicating a contraction in the economy’s output level.

The price level also falls, moving from PL1 to PL2, as reduced demand eases inflationary pressures."
It seems logical, right?
But there’s a problem: your diagram isn’t fully integrated into your explanation.

It feels like an afterthought, instead of being the backbone of your answer.
Here’s what you should be doing instead:
Diagrammatical Analysis—where the diagram drives your answer, not the other way around.

Example 2: (What to Do Instead)

"When interest rates rise, it immediately impacts the cost of borrowing for households and firms. Consumers, faced with more expensive loans, cut back on purchases such as cars, appliances, and holidays. This causes a reduction in overall consumption, which, in the AD/AS diagram, leads to a leftward shift of the AD curve.
But that’s not all. Firms also react to higher interest rates by reducing their investment in capital goods, such as new machinery or technology upgrades, as the cost of financing these investments rises. This further reduces Aggregate Demand, pushing the AD curve from AD1 to AD2 on the diagram.

As demand in the economy falls, businesses experience lower sales and revenues. To adjust, they may reduce production or cut jobs, further slowing down economic activity. This additional contraction in demand can cause a multiplier effect, where the initial reduction in demand creates a further reduction in income, leading to even lower consumption and investment.

On the AD/AS diagram, we now see real output decrease from Y1 to Y2. Meanwhile, the price level falls from PL1 to PL2, showing a reduction in inflationary pressure.

However, the situation isn’t entirely positive. While inflation may be controlled, the decrease in real output and the possibility of job losses could push the economy into a slowdown or even a recession if AD continues to contract. This illustrates the trade-off between controlling inflation and maintaining economic growth."

Why you need to incorporate diagrams like this:

  • Clarity: Your explanation flows directly from the diagram, showing a deeper understanding of both the concept and its visual representation.
  • Precision: You aren’t just mentioning a diagram; you’re actively using it to explain and expand on the economic effects.
  • Depth: This method shows examiners that you can handle complex analysis without waffling. It also naturally increases the number of links in your chain of reasoning.


By integrating diagrammatical analysis into your answers, you’ll automatically push your answers from Bs and Cs to As and A*s.
Key Takeaway:
  • Don’t use diagrams as a separate part of your answer.
  • Embed diagrams in your analysis to show a deeper understanding.
  • Practice integrating them into your explanations for that A/A* grade!

Make sure every diagram is fully embedded into your analysis, so you can show the depth of understanding that examiners are looking for.

Trust me, this method works every single time.

Cheers to making your answers diagram-driven!

With the right approach and techniques like I preach at EdGenie, you will get there in no time.

If you want to join our Live A* Exam Technique and Question Practice Masterclasses, make sure you’re on EdGenie’s platform and come along every Tuesday and Thursday.
I’ll show you exactly how to master this.


Let's smash those As and A*s!

Emre 🧞‍♂️

​Big retail discounts push UK shop prices lower in September

Summary

Price Decline: 📉 UK shop prices fell for the second month in September, marking the lowest rate in over three years.

Annual Rate: 🛒 Prices dropped by an annual rate of 0.6%, down from a 0.3% decline in August.

Easing Crisis: 📊 Early data suggests the cost of living crisis is easing, improving household finances.

Discount Drivers: 🏷️ Significant discounts on clothing and furniture drove deflation, according to the British Retail Consortium (BRC)

Non-Food Prices: 🏡 Non-food prices decreased by 2.1%, the largest drop since March 2021.

Food Inflation: 🍽️ Food inflation rose slightly to 2.3%, influenced by poor harvests affecting cooking oils and sugary products.

Current Rate: 📅 The UK's official inflation rate was stable at 2.2% in August, with expectations of a rise to 2.5% by the end of 2024.

Early Insights: 🔍 The BRC's figures provide early insights ahead of the official monthly inflation data due on October 16.

Bargain Month: 🛍️ September was a great month for bargain hunters, driven by fierce competition among retailers.

Positive Deflation: 📉 Deflation in shop prices is a positive sign following a record inflation rate of 9% last May.

​Rising Prices: 🌾 The UN highlighted rising palm oil prices due to low output in Indonesia, contributing to food inflation.

Temporary Easing: 📈 Economists warn that easing inflation may be temporary, with external factors potentially driving prices up again.

Ongoing Monitoring: 🤝 Helen Dickinson, BRC chief executive, noted the importance of continued monitoring of geopolitical and climate-related impacts.

Consumer Uncertainty:
💬 Overall, while consumers may welcome the current price reductions, uncertainty remains regarding future inflation trends

A Level Economics Questions:

Q. Explain the role of retailer discounts in driving deflation in non-food items like clothing and furniture in September 2024.
​A. Retailers offered large discounts in September 2024 to attract shoppers, resulting in deflation in non-food items like clothing and furniture. This helped push shop prices down overall, as intense competition and economic pressure on consumers led to price reductions.

Q.Explain how geopolitical tensions can impact inflation, particularly in food prices.
​​
A. Premium cameras like Leica's Q3 are in high demand because they offer superior image quality and advanced features that smartphones cannot match. Additionally, they have become status symbols, appealing to both professional photographers and amateurs seeking a more authentic photography experience.

Q. Explain the concept of 'cost of living crisis' and how deflation in shop prices might impact it.
A. The cost of living crisis refers to the financial strain on households due to rising prices, especially in essential areas like energy and food. Deflation in shop prices, particularly in non-essential goods like clothing and furniture, can help ease some of this pressure, allowing households to stretch their budgets further.

Q. Discuss the challenges that retailers might face as they attempt to maintain profitability while offering large discounts to attract consumers.
A. Retailers offering large discounts face the challenge of maintaining profitability, especially if consumer demand remains weak despite price cuts. While discounts can drive short-term sales, they may erode profit margins, forcing retailers to find a balance between attracting customers and ensuring long-term financial health. Additionally, ongoing inflation in production costs could make it difficult for retailers to sustain such discounts.

Possible A Level Economics 25 Marker Question

Evaluate the impact of sustained deflation on the UK economy. (25 marks)

Infographic of the Week

2024's Healthiest Nations: A Global Ranking

In 2024, Singapore emerges as the healthiest country in the world, followed closely by Japan and Switzerland, according to Ray Dalio's Great Powers Index. This ranking is based on a variety of health indicators, notably average life expectancy, child mortality rates, and access to essential resources. Singapore's remarkable life expectancy is attributed to government initiatives promoting walkability and family cohesion. Japan, renowned for its high longevity, benefits from cultural values like "ikigai" and strong community support, particularly in the Okinawa region. Switzerland's health is bolstered by economic stability and exceptional healthcare access, boasting the highest life expectancy in Europe. In contrast, the United States, despite significant healthcare spending, ranks 13th overall due to lower life expectancy and poorer health outcomes compared to other leading nations.

Chart of the Week

Rising Corporate Taxes: A New Era for Multinationals

Starting January 1, 2024, a global minimum corporate tax of 15% will take effect in various European and Asian countries, part of an initiative led by the OECD and G20 to combat tax avoidance by multinational corporations. This move aims to tackle base erosion and profit shifting (BEPS), which has allowed large firms to exploit low-tax jurisdictions. Countries known for minimal taxation, such as the Bahamas and the British Crown dependencies (Guernsey, Jersey, and the Isle of Man), are beginning to implement these changes, marking a significant shift in their tax policies. Even traditionally low-tax areas like Andorra are adjusting their corporate tax rates, despite having few large companies affected. The OECD highlights that over half of multinational profits taxed below 15% originate from high-tax jurisdictions that often grant exemptions to select corporations. As more nations adopt these new laws, the landscape of corporate taxation is poised for substantial transformation.

Macroeconomic Data


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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