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Economics Revision Guides
A-Level Revise Aid: This resource is designed to support your revision and may contain errors. If you find a discrepancy with your class teaching, your teacher is correct -- please let us know at alevelrevise@scott.scottrix.co.uk.

Macroeconomics

Year 1 / ASYear 2 / A-Level All Boards (AQA, Edexcel, OCR, WJEC, CCEA) AQA

A-Level Economics revision: Macroeconomics. Learning objectives, key points, worked examples and practice questions across AQA, Edexcel, OCR, WJEC and CCEA.

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📌 Key Points

Key Fact: GDP = C+I+G+(X-M); Real = nominal/deflatorx100; Deflator = nominal/realx100
Key Fact: AD: C (wealth, confidence, rates), I (confidence, rates, tech), G (policy), X-M (exchange rate, world income)
Key Fact: SRAS: sticky wages/prices; LRAS: vertical at Yf (classical) or upward (Keynesian); AS shifts: costs, productivity
Key Fact: Inflation: demand-pull (AD>AS), cost-push (AS left); CPI basket vs RPI (housing); costs: menu, shoe-leather, uncertainty
Key Fact: Unemployment: frictional (search), structural (skills mismatch), cyclical (AD deficient), natural = frictional+structural
Key Fact: Fiscal: G↑/T↓ -> AD↑; Multiplier = 1/(1-MPC); Crowding out: G↑->r↑->I↓
Key Fact: Monetary: Bank Rate -> market rates -> AD; QE: buy bonds -> money supply↑; Inflation target 2%
Key Fact: Exchange rate: floating (market), fixed (peg); Appreciation: X↓ M↑ -> AD↓; BOP: current + capital + financial account

🎯 Learning Objectives

  • Measure economic activity: GDP (expenditure, income, output), real vs nominal, GDP deflator
  • Analyse aggregate demand (C+I+G+X-M) and aggregate supply (SRAS, LRAS)
  • Understand inflation: causes (demand-pull, cost-push), costs, CPI/RPI
  • Explain unemployment: types (frictional, structural, cyclical, seasonal), natural rate
  • Evaluate fiscal policy: discretionary vs automatic stabilisers, multiplier, crowding out
  • Evaluate monetary policy: interest rates, QE, transmission mechanism, inflation targeting
  • Analyse exchange rates: determination, appreciation/depreciation effects, BOP
  • Understand supply-side policies: interventionist vs market-based, time lags

💡 Worked Example

Exam-Style Question

Question: Using AD/AS, analyse the effect of a rise in oil prices on price level and real output

Model Answer:

Oil price rise -> production costs ↑ -> SRAS shifts left. Result: price level rises (cost-push inflation), real output falls (stagflation). If central bank accommodates (AD↑), output restored but inflation higher. If not, recession

❓ Practice Questions

Questions:

  • Calculate GDP deflator: nominal=GBP 2.2T, real=GBP 2T
  • Draw AD/AS for recessionary gap
  • Explain multiplier with MPC=0.8
  • Why might fiscal policy be ineffective in open economy?
  • Analyse effect of GBP depreciation on BOP

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📄 Past Papers & Exam Resources

🔗 Further Reading & Resources