Economics Essay Plans 2023
2022 Q9) Explain how expenditure-switching policies can be used to reduce a deficit on a country’s balance of
trade in goods and services (15 marks)
• Shift right AD (domestic demand)
• Expenditure-reducing policies aim reduce demand in economy, spending imports fall. Expenditure-switching policies aim switch
consumer spending towards domestic goods + away from imports.
• Expenditure-switching policies linked to protectionism:
➢ Tariffs
➢ Quotas
➢ Non-tariff barriers
➢ Export subsidies
• Expenditure-switching policies in terms of exchange rate manipulation in terms of:
➢ Direct government intervention terms buying + selling currency
➢ Indirect intervention terms manipulation of interest rates
• Explaining expenditure-switching policies in terms of supply-side policies and making domestic
• Goods and services more competitive
➢ Relative effects on the volume and value of imports and exports
➢ the impact on net trade.
2022 Q13) Explain reasons for changes in the value of exports from the UK to the rest of the world (15 marks)
• LRAS shift right
• Explaining value exports terms quantity/volume + price of exports
• Explaining how changes pattern trade can affect trade values
• Explaining comparative advantage + possibly giving numerical example of comparative advantage
• Explaining possible reasons for changes in value exports from the UK to rest of world:
➢ Changes in comparative advantage
➢ Changes in protectionist/free trade policies in other countries
➢ Leaving or changing membership of trading blocs such as the EU
➢ Consideration of trade diversion/trade creation arguments
➢ Exchange rate changes
➢ Changing quality/reputation
➢ De-industrialisation
➢ Economic growth (or decline) in other nations
➢ External shocks
➢ Innovation and invention (both product and process)
➢ Technological improvements that have led to reductions in cost of transport and
➢ Communications
2022 Q14) Evaluate the view that international trade always benefits nations (25 marks)
• International trade exchange capital, goods + services across international borders/territories as there is a need/want of
goods/services
• considering the term ‘always’: not always so agree to limited extent
• Alternatives international trade such as protectionism or closed economies
• Different stakeholder groups for analysis: firms, households, the government or in terms macroeconomic objectives/other
objectives such as environment
International trade always benefits nations International trade doesn’t always benefit nations
• Benefits from comparative advantage • Loss of domestic industry (LRAS shift left)
• Economies of scale (shift LRAS to right) • Structural unemployment
• Increased competition • Potential loss of infant/sunset industry arguments
• Lower prices • Leakages to the circular flow if a net importer (AD shift
• Access to more diverse markets left)
• Trade creation • Environmental damage due to transportation
• Export-led growth and employment (right shift LRAS) • Trade deals may cause political arguments (China/US
• Encouraging FDI (right shift AD) trade war)
• Increased product and process innovation • Potential trade of demerit goods/illegal
• Welfare gains goods/weapons
• Improving international relations/reducing conflict
• Limitations trade such as assumptions about model comparative advantage/inability able fully exploit advantage
• Different industries that LEDCs + MEDCs end up specialising in + effects of this in terms development (LEDCs primary
product/agricultural dependency)
• Considering both positive/negative impact MNCs on different nations
, 2021 Q3) Explain how a reduction in government spending could increase unemployment in the private sector
(9 marks)
• Left shift AD
• Areas reduced government spending such as public goods, merit goods, welfare benefits etc
• Linking reasons cutting gov spending to deficit/structural deficit
• Gov spending component AD + falling AD likely reduce private sector firms output + reduction in contracts
• Falling output to falling derived demand for labour in private sector + negative multiplier effects
• Long run effects of people leaving labour force + effects on LRAS
• Falling business investment due to falling AD + existence spare capacity + rise in cyclical unemployment
2021 Q4) Evaluate the view that an increase in a country’s national debt is damaging for its economy (25
marks)
Define ‘damaging’: depends circumstances of economy ‘damaging’ or not; damaging if proposes significant
threat to country’s economic position/situation
Benefits of increased national debt by increased government Costs of increased national debt
spending on
• Merit goods such as education or healthcare (right • Crowding out (privatisation benefits)
shift AD diagram) • Lower credit rating + the effect on debt repayments
• Public goods such as roads or defence • Possible inflationary pressure (AD right showing
• Welfare benefits/social provision increased demand-pull inflation)
• Redistribution income/welfare • Effects on future generations/possible future tax rises
• AD as part demand management • Higher national debt ay be caused by tax cuts vs
• Supply side policies/infrastructure spending (LRAS increased gov spending: tax avoidance/evasion
right) • Alternatives to building up national debt such as
• Reduced taxation may cause greater incentives to work market based supply side policies
+ increase GDP growth in long run • Raising tax rates past optimal apex of Laffer curve is
• Consider the current levels of debt and the value of counterproductive leading to reduced tax revenue for
debt if it is sustainable the government (Laffer curve)
2021 Q14) Assess policies which can be used to reduce cyclical instability in the UK (25 marks)
• Cyclical economic instability is a stage in which economy going through a recession or unhealthy expansion associated with
increase in the price level.
• Benefits of cyclical stability i.e., economy nearer trend rate growth/in equilibrium/less pressure price level etc
➢ Monetary policy used reduce cyclical instability: B of E, pre-emptive use bank rate, forward guidance, QE when needed
➢ Fiscal policy can be used to reduce cyclical instability: automatic stabilisers (taxes + unemployment benefits), demand
management policies, Keynesian multipliers
➢ Supply side policies to reduce cyclical instability: creating flexible workforce that can adapt to changing demand conditions
❖ Creating conditions suitable for investment to increase productive capacity
➢ Financial regulation can be used to reduced cyclical instability:
❖ Regulations FPC, PRA, FCA; reduction systemic risk by ‘firewalls’ between investment and commercial banking
activities + ensure Basel accords abided by (international regulatory framework for managing credit risk +
market risk)
• Global exogenous shocks may render all policies ineffective such as the Covid-19 pandemic + appropriate response may depend
on the cause of the instability + time lags involved
• Consider view that ‘stability is destabilising’ and that some degree of instability can help economic agents avoid complacency
2020 Q4) Evaluate the view that free market supply-side reforms to labour markets are beneficial to the UK
economy (25 marks)
• Supply-side policies aim increase quality and quantity of the factors of production, aiming increase productivity and efficiency in
the economy
• Different free marker supply-side reforms to labour markets:
➢ Flexible working practices
➢ Trade union reforms
➢ Changes to income tax
➢ Changes to benefits
➢ Legislation changes and deregulation
2022 Q9) Explain how expenditure-switching policies can be used to reduce a deficit on a country’s balance of
trade in goods and services (15 marks)
• Shift right AD (domestic demand)
• Expenditure-reducing policies aim reduce demand in economy, spending imports fall. Expenditure-switching policies aim switch
consumer spending towards domestic goods + away from imports.
• Expenditure-switching policies linked to protectionism:
➢ Tariffs
➢ Quotas
➢ Non-tariff barriers
➢ Export subsidies
• Expenditure-switching policies in terms of exchange rate manipulation in terms of:
➢ Direct government intervention terms buying + selling currency
➢ Indirect intervention terms manipulation of interest rates
• Explaining expenditure-switching policies in terms of supply-side policies and making domestic
• Goods and services more competitive
➢ Relative effects on the volume and value of imports and exports
➢ the impact on net trade.
2022 Q13) Explain reasons for changes in the value of exports from the UK to the rest of the world (15 marks)
• LRAS shift right
• Explaining value exports terms quantity/volume + price of exports
• Explaining how changes pattern trade can affect trade values
• Explaining comparative advantage + possibly giving numerical example of comparative advantage
• Explaining possible reasons for changes in value exports from the UK to rest of world:
➢ Changes in comparative advantage
➢ Changes in protectionist/free trade policies in other countries
➢ Leaving or changing membership of trading blocs such as the EU
➢ Consideration of trade diversion/trade creation arguments
➢ Exchange rate changes
➢ Changing quality/reputation
➢ De-industrialisation
➢ Economic growth (or decline) in other nations
➢ External shocks
➢ Innovation and invention (both product and process)
➢ Technological improvements that have led to reductions in cost of transport and
➢ Communications
2022 Q14) Evaluate the view that international trade always benefits nations (25 marks)
• International trade exchange capital, goods + services across international borders/territories as there is a need/want of
goods/services
• considering the term ‘always’: not always so agree to limited extent
• Alternatives international trade such as protectionism or closed economies
• Different stakeholder groups for analysis: firms, households, the government or in terms macroeconomic objectives/other
objectives such as environment
International trade always benefits nations International trade doesn’t always benefit nations
• Benefits from comparative advantage • Loss of domestic industry (LRAS shift left)
• Economies of scale (shift LRAS to right) • Structural unemployment
• Increased competition • Potential loss of infant/sunset industry arguments
• Lower prices • Leakages to the circular flow if a net importer (AD shift
• Access to more diverse markets left)
• Trade creation • Environmental damage due to transportation
• Export-led growth and employment (right shift LRAS) • Trade deals may cause political arguments (China/US
• Encouraging FDI (right shift AD) trade war)
• Increased product and process innovation • Potential trade of demerit goods/illegal
• Welfare gains goods/weapons
• Improving international relations/reducing conflict
• Limitations trade such as assumptions about model comparative advantage/inability able fully exploit advantage
• Different industries that LEDCs + MEDCs end up specialising in + effects of this in terms development (LEDCs primary
product/agricultural dependency)
• Considering both positive/negative impact MNCs on different nations
, 2021 Q3) Explain how a reduction in government spending could increase unemployment in the private sector
(9 marks)
• Left shift AD
• Areas reduced government spending such as public goods, merit goods, welfare benefits etc
• Linking reasons cutting gov spending to deficit/structural deficit
• Gov spending component AD + falling AD likely reduce private sector firms output + reduction in contracts
• Falling output to falling derived demand for labour in private sector + negative multiplier effects
• Long run effects of people leaving labour force + effects on LRAS
• Falling business investment due to falling AD + existence spare capacity + rise in cyclical unemployment
2021 Q4) Evaluate the view that an increase in a country’s national debt is damaging for its economy (25
marks)
Define ‘damaging’: depends circumstances of economy ‘damaging’ or not; damaging if proposes significant
threat to country’s economic position/situation
Benefits of increased national debt by increased government Costs of increased national debt
spending on
• Merit goods such as education or healthcare (right • Crowding out (privatisation benefits)
shift AD diagram) • Lower credit rating + the effect on debt repayments
• Public goods such as roads or defence • Possible inflationary pressure (AD right showing
• Welfare benefits/social provision increased demand-pull inflation)
• Redistribution income/welfare • Effects on future generations/possible future tax rises
• AD as part demand management • Higher national debt ay be caused by tax cuts vs
• Supply side policies/infrastructure spending (LRAS increased gov spending: tax avoidance/evasion
right) • Alternatives to building up national debt such as
• Reduced taxation may cause greater incentives to work market based supply side policies
+ increase GDP growth in long run • Raising tax rates past optimal apex of Laffer curve is
• Consider the current levels of debt and the value of counterproductive leading to reduced tax revenue for
debt if it is sustainable the government (Laffer curve)
2021 Q14) Assess policies which can be used to reduce cyclical instability in the UK (25 marks)
• Cyclical economic instability is a stage in which economy going through a recession or unhealthy expansion associated with
increase in the price level.
• Benefits of cyclical stability i.e., economy nearer trend rate growth/in equilibrium/less pressure price level etc
➢ Monetary policy used reduce cyclical instability: B of E, pre-emptive use bank rate, forward guidance, QE when needed
➢ Fiscal policy can be used to reduce cyclical instability: automatic stabilisers (taxes + unemployment benefits), demand
management policies, Keynesian multipliers
➢ Supply side policies to reduce cyclical instability: creating flexible workforce that can adapt to changing demand conditions
❖ Creating conditions suitable for investment to increase productive capacity
➢ Financial regulation can be used to reduced cyclical instability:
❖ Regulations FPC, PRA, FCA; reduction systemic risk by ‘firewalls’ between investment and commercial banking
activities + ensure Basel accords abided by (international regulatory framework for managing credit risk +
market risk)
• Global exogenous shocks may render all policies ineffective such as the Covid-19 pandemic + appropriate response may depend
on the cause of the instability + time lags involved
• Consider view that ‘stability is destabilising’ and that some degree of instability can help economic agents avoid complacency
2020 Q4) Evaluate the view that free market supply-side reforms to labour markets are beneficial to the UK
economy (25 marks)
• Supply-side policies aim increase quality and quantity of the factors of production, aiming increase productivity and efficiency in
the economy
• Different free marker supply-side reforms to labour markets:
➢ Flexible working practices
➢ Trade union reforms
➢ Changes to income tax
➢ Changes to benefits
➢ Legislation changes and deregulation
