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Home > Wednesday Wisdoms: Newsletter > Mastering A-Level Economics Topics From Scratch - Your Step-By-Step Guide! 🚀

Welcome to the 13th 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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Mastering A-Level Economics Topics From Scratch - Your Step-By-Step Guide! 🚀

Hey Genies, 🌟
🎯 Mastering a Topic in A-Level Economics from Zero to Hero isn’t just about being smart; it’s about strategic learning!
Let's delve into how you can turn a fresh topic into a strength, integrating Knowledge, Application, Analysis, and Evaluation (KAAE) throughout your learning process.s:

1. Incorporating Visual & Written Learning

   Visual Learning Through Videos:
  • Engage with videos that offer contextual examples and real-world applications of theories.
  • Ensure these videos encapsulate the essence of KAAE by offering insights, real-world examples, critical analyses, and evaluative points.

    Active Learning Through Notes:
  • Use printed notes to jot down key concepts, construct diagrams, and note down real-world applications.
  • Annotate, draw connections between concepts, and create your visual mind maps to link theories to practical applications.

2. Learning is nothing without application! Here's a progression of practice methods:

Multiple-Choice Questions (MCQs):
  • Begin with MCQs to ensure foundational knowledge and understanding of the key concepts.

Short-Form Questions (2-5 Marks):
  • Shift towards brief, concise answers that demand precision.
  • Ensure you’re applying concepts in these answers to showcase your understanding
Intermediate Questions (8-15 Marks):
  • Transition into exploring depth, developing analytical and evaluative skills.
  • Ensure that your answers are well-structured, showcasing a clear understanding and application of KAAE.

3. Excelling in Long-Form Questions (15-25 Marks)
Mastering the art of crafting impactful, insightful long-form answers involves several steps:

  • Blurting: Unload all your knowledge about a topic on paper without worrying about structure or coherence.
  • Pre-planning: Identify key points and organise your thoughts before crafting your answers.
  • Essay Plans: Create structured outlines for potential essay questions, integrating KAAE to ensure depth and breadth in your answers.
  • 25 Mark Essays: Utilise your essay plans and knowledge to produce comprehensive, well-argued essays, embedding KAAE seamlessly throughout.


Your Success Pathway
Mastering a topic is a journey, and every step of the way, focusing on Knowledge (understanding the concept), Application (linking to real-world scenarios), Analysis (dissecting and exploring concepts), and Evaluation (challenging the analysis, providing judgements) will keep your learning robust and holistic.

Iterate: After you’ve gone through one cycle of learning and practicing, revisit, and refine. Continuous reflection and adaptation are key to elevating your Economic understanding and acing those exams!
We're with You Every Step of the Way!
We believe in your potential and are here to support your journey.
Whether it's resources, advice, or encouragement, we're just a message away!

🔥 Let’s Turn Your Efforts into Excellence! 🔥

​Bank of England flags concerns over longer mortgages and rise in credit card use

Summary

Bank of England Update:
Credit Card Usage:
  • Consumers are using credit cards more due to rising living costs.
  • Steady growth at 11.8%, but there's a risk of increased household debt.
Mortgage Trends:
  • There's an increase in 35-year or longer mortgages, rising from 4% to 12% this year.
  • Compared to the US, the UK has shorter average mortgage terms.
  • Longer mortgages may offer short-term relief but could lead to long-term debt concerns.
Banking Overview:
  • A slight rise in borrowers falling behind on payments.
  • Banks are becoming more cautious with lending.
  • Overall, the UK banking system remains stable.
Stress Testing:
  • Regular stress tests for major banks are paused.
  • A new "desk-based scenario" will be introduced to evaluate various outcomes.
  • This approach could consider more types of lenders in the future.
Additional Tests:
  • A separate test for the "shadow" banking sector, including hedge funds, is in the works.
  • The IMF's global review found potential vulnerabilities for some banks in the event of economic downturns.
Recommendations:
  • The FPC suggests stricter rules for money market funds, aiming for faster access to a significant portion of their assets.

A Level Economics Questions:

Q: Based on the FPC's recommendations, how should money market funds adjust their liquidity strategies, and why?​​
A: The FPC recommends that money market funds should ensure that 50-60% of their assets can be liquidated and sold off within seven days. This is to avoid the rapid pulling out of investments like what happened at the onset of the pandemic in 2020 and during the UK's pension fund crisis in 2022. Such a liquidity strategy can provide more stability and confidence to investors, ensuring that funds can meet withdrawal demands even during financial shocks.

Q: Explain the potential economic consequences of a significant proportion of households relying heavily on credit cards for everyday expenses.
A: If a significant number of households rely heavily on credit cards for daily expenses, it could lead to:
  • Increased household debt, as credit cards often come with high interest rates.
  • Reduced future consumption if households are burdened with high-interest repayments.
  • Potential financial instability if many households default on their credit card payments, potentially affecting the banking sector.
  • A greater vulnerability to economic shocks, as households with high debt levels have less financial flexibility.

Q: How have prospective homebuyers responded to financial pressures, and what might be the long-term implications of this response?
A: Prospective homebuyers have responded by taking out longer-term mortgages, with the proportion of mortgages lasting 35 years or more increasing from 4% to 12% within half a year. While this might reduce pressures on borrowers in the short term, in the long term, they could face:Increased interest costs over the lifetime of the loan.A prolonged period of debt, reducing their financial flexibility in the future.Potential negative equity if house prices fall and they still have a significant amount of their mortgage left to pay.

Q: Describe the change in the Bank of England's approach to stress testing and its potential implications for the UK banking system.
A: The Bank of England has decided to pause its regular stress tests, which ensure that the UK's major high street lenders can withstand severe financial shocks. Instead, it will run a "desk-based scenario" that measures the health of the banking system as a whole. This approach allows for multiple test scenarios and gives policymakers an opportunity to review and potentially expand the stress-testing regime. The implications for the UK banking system include:
  • A broader overview of the banking system's health without focusing on individual lenders.
  • The possibility of including a wider range of lenders in future tests, thus increasing the comprehensiveness of the assessments.
  • A potential increase in confidence in the banking system if it performs well under multiple scenarios.

Possible A Level Economics 25 Marker Question

Evaluate the economic implications of a significant rise in long-term mortgages and increased credit card reliance among consumers, particularly in the context of a rising interest rate environment. (25 marks)

Infographic of the Week

Country Risk Map

In 2023, investment risks across countries differ due to geopolitical, legal, and economic factors. An analysis by Aswath Damodaran of NYU's Stern School of Business reveals that Belarus, Lebanon, Venezuela, Sudan, and Syria have the highest investment risks, with issues ranging from military operations to hyperinflation. In contrast, countries like several European nations, Singapore, and New Zealand exhibit the lowest risks, attributed to strong financial indicators like AAA-rated government bonds and robust property rights. Investors seeking opportunities in emerging economies must weigh these country-specific risks against potential rewards, especially as these risks can significantly impact the performance of various financial assets.

Chart of the Week

Inflation is sticky for more than 80% of Britain’s CPI basket

Britain is grappling with a persistent inflation issue. A diffusion index, based on 85 distinct sub-indices within the CPI basket monitored by the Office for National Statistics, reveals that a significant portion of this basket has sticky inflation. The chart shows that out of the 85 categories, 69 have experienced price increases exceeding 2% year-on-year. Furthermore, when adjusted for their importance in the overall inflation basket, the data implies an even greater strain on consumers. This shift from the deflationary periods observed during the pandemic is pronounced. Alarmingly, the Bank of England might take note that these proportions have remained nearly constant throughout the past year, suggesting that inflation in Britain is proving hard to curb.

Macroeconomic Data


Whenever you're ready there is one way I can help you.

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I'm Emre, and I've got a big goal - to make A* education accessible to all A-level students.
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Emre Aksahin
Chief Learning Officer at Edgenie