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Home > Wednesday Wisdoms: Newsletter > The Second Year of A-Level Economics: Preparing for the Challenge

Welcome to the 1st 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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The Second Year of A-Level Economics: Preparing for the Challenge
UK economy 'close to stalling' in July as high interest rates hit firms 
Infographic of the Week
Chart of the Week
Macroeconomic Data

The Second Year of A-Level Economics: Preparing for the Challenge

Hi! 

Gear up for the second year of A-level Economics. It's a big leap, but with EdGenie's help and your determination, you have got this!

These are 5 steps you need to action this summer:

1) Grab Your Support Mechanism 

It’s crucial to have a good support system. Falling short of your predicted grade or not getting your preferred university place can be disappointing. But with the right support, you can prevent such setbacks.

Action Step: Identify your support network. It could be a dedicated tutor, a study group, or a helpful platform like EdGenie. Make sure you have people and resources you can rely on when things get challenging.

2) Review, Review, Review

You have to hit the ground running in November. Going over old content solidifies your knowledge and enhances your understanding.

Action Step: Revisit your past learning materials regularly. You can use resources like EdGenie with its vast collection of videos and downloadable material or even free resources available online

3) Keep Up with the Real World

Economics isn’t just theory; a lot of it’s also about real-world applications. The best form of learning is through context. Understanding current economic events can make your studies more engaging and relevant.

Action Step: Stay updated with economic news. Consider subscribing to resources like BBC, Guardian, Tradingeconomics.com, and Visualcapitalist.com. 

4) Practice Exam Questions

Practising exam questions is vital. Start with multiple-choice questions for new topics, move on to short-form questions, and then tackle long-form ones. If you find a topic challenging, approach the content from a different angle.

Action Step: Find exam practice resources, such as past papers or question banks. Use them regularly to familiarise yourself with different question types and improve your answering techniques.

5) Consistency is Key 

Doing all of the above is great, but doing it consistently is what really counts. Regular effort can make a huge difference in your understanding and performance.

Action Step: Develop a consistent study plan. Allocate time for different study activities, like revision, practice, and reading. Whether you use a platform like EdGenie or your own system, remember to do something study-related every other day. Consistency indeed is a superpower!

UK economy 'close to stalling' in July as high interest rates hit firms

Summary:

  • The pound has experienced its longest sequence of daily drops since the onset of the Covid-19 pandemic, due to speculation that a faltering economy will restrict further rises in UK interest rates.
  • The UK economy nearly stagnated in July, causing sterling to depreciate for the seventh consecutive day against the US dollar, the worst run since March 2020.
  • The decline reflects market expectations that the Bank of England will not need to raise borrowing costs beyond 6% from the current 5% to control inflation.
  • Despite expectations of a 0.25 percentage point rate increase in the upcoming monetary policy committee meeting, the pound has continued to fall against the dollar, reaching $1.281.
  • The purchasing managers' index (PMI) supported these views, with output declining from 52.8 in June to 50.7 in July, suggesting that the economy is barely growing; inflation in the private sector has also been at its lowest in over two years.

A Level Economics Questions:

Q1: Explain the impact of the weakening UK economy on the value of the pound and its implications for interest rates.
A: The weakening UK economy can lead to a depreciation of the pound as it reduces investor confidence, leading to lower demand for the currency. This can also imply that the economy is not robust enough to handle higher interest rates, which could lead to slower growth or a contraction, so the Bank of England may limit further increases in interest rates.

Q2: Discuss the relationship between interest rates and currency value, using the case of the UK and the recent depreciation of sterling.
A: Interest rates and currency value are interconnected. Higher interest rates typically support a currency's value as they offer investors a higher yield, making the currency more attractive. In the recent case of the UK, despite the Bank of England raising interest rates, the pound has depreciated due to concerns over the health of the UK economy.

Q3: Analyse the Purchasing Managers' Index (PMI) data and explain its role as an economic indicator in the context of the UK's current economic situation.
A: The Purchasing Managers' Index (PMI) is a measure of the economic health of the manufacturing sector. It provides information about current and future business conditions to company decision-makers, analysts, and investors. In the UK's current situation, the fall in the PMI indicates a slowing economy, which is barely growing.

Q4: How might a decline in the value of the pound impact UK's import and export markets? Consider the concepts of elasticity and terms of trade in your answer.
A: A decline in the value of the pound can make UK exports cheaper and more attractive to foreign buyers, potentially leading to an increase in export volume. However, it also makes imports more expensive, which can lead to inflation if the increase in import costs is passed onto consumers. The overall impact on the trade balance would depend on the price elasticity of demand for UK's imports and exports.

Q5: Evaluate the potential impact of the Bank of England's expected interest rate increase on the UK economy, considering both short-term and long-term consequences.
A: The Bank of England's expected interest rate increase can have both short and long-term impacts on the UK economy. In the short term, it could lead to higher borrowing costs, which could slow down consumer spending and investment, potentially slowing economic growth. However, in the long term, higher interest rates could help control inflation and stabilize the economy, which might be beneficial if the economy is overheating.

Possible A Level Economics 25 Marker Question

Evaluate the potential economic impacts of a weakening currency on a country's economy, with specific reference to the recent depreciation of the pound in the UK. Discuss the implications for interest rates, inflation, trade, and overall economic growth. Provide examples and relevant economic theory in your response.

Infographic of the Week

Write your awesome label here.
A report from Goldman Sachs predicts a significant shift in the global economic landscape over the next few decades. By 2050, China is projected to be the largest economy, followed by the U.S., India, and Indonesia, with Asia commanding a larger share of the global GDP. Remarkably, Indonesia is expected to become the fourth biggest economy, surpassing Brazil and Russia as the largest emerging market.

By 2075, the economic landscape will further evolve, with Nigeria, Pakistan, and Egypt breaking into the top 10 due to their rapid population growth. Meanwhile, European economies are expected to decline in their rankings. Lastly, China, India, and the U.S. are anticipated to have similar GDPs, suggesting a new balance of global economic power.

Chart of the Week

This week's chart of the week highlights the tighter labour markets in southern and eastern Europe, leading the OECD countries, with Slovakia showing a remarkable 7.3 percentage point reduction in unemployment. Inflation-wise, Switzerland has become the first country to return to old-normal inflation targets of around 2%.

The US industrial policy is triggering a construction boom, compensating for a downturn in homebuilding. Meanwhile, the gold price is evaluated against historic norms, and economic theories suggesting an overreaction to the recent yuan weakness in China are explored. Finally, the analysis tracks the performance of the S&P 500 after previous Fed tightening cycles ended, with the dotcom bust being the only time stocks fell.

Macroeconomic Data

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

If you or your child are looking to Boost your A level Economics Grades in under 30 days, I'd recommend starting with an all-in-one support network where you get 24/7 access to a SuperTutor:

→ Join EdGenie 🧞‍♂️: Transform your A-Level Economics essays and exam marks (genuinely) with our comprehensive on-demand learning platform. This carefully curated course blends engaging content with effective exam techniques, the same ones that have empowered over 1,000 of my students to achieve an A or A* over the last 13 years. 
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
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