Readers Question: I wanted to ask if it is necessary to include some facts, figures or information about what is really going on in the world. I am not really sure about it. I’ve seen my friends include details like the National Income figure of some countries or mention recession and what is really going on in the world to illustrate their answers.
As an examiner, I can say it is possible to get full marks without remembering data from the real world. It is certainly not required.
However, having said that, I think a good student should have a reasonable background on the main trends which the economy has been experiencing. e.g. if you don’t know the UK has experienced a recession in the past few years, then this is a limiting factor. You don’t need to memorise the fact GDP fell 6% in 2009, and recovered by +0.6% in Q2 2013 – this kind of detail is not expected (I can’t always remember off the top of my head.)
I remember one A-Level question (2007): Explain the trends in UK unemployment in past 10 years. – If you didn’t know unemployment had fallen in the years 2007-1997, you would struggle. You don’t need to remember any exact figures like the unemployment rate, but you should be aware of the main trends.
As a teacher, you also tend to find there is a very strong correlation between students who take an interest in the real world economy and those students who get good grades. I think this is for a few reasons:
- If people take time to read about what is going on in the economy, they are very likely to spend more time understanding the theory too.
- One of the best ways to learn theory, is to read what is happening in the economy and relate it to the material. I remember as an A-Level student, I always got mixed up about the effects of a devaluation. But, because I read newspapers, I could always remember that when the Pound fell, exporters were generally happy. So I could check that I was writing a devaluation makes exports cheaper and increases the quantity of exports.
- Using examples from the real world can make an answer much stronger. For example, if you have a question:
– Discuss the effect of an interest rate cut
- A satisfactory answer would say lower interest rates should increase spending and AD because borrowing is cheaper. But, if you know about the UK economy, you could add for evaluation:
- However, a cut in interest rates doesn’t always stimulate higher economic growth. When the Bank of England cut interest rates to 0.5% in 2009, there was little increase in spending. This was because consumer confidence was low, therefore, although interest rates were zero, we didn’t see much increase in investment and spending because people still preferred to save. Also, a cut in interest rates will not have much effect if commercial banks don’t pass the interest rate cut on to consumers. In 2009/10 many banks didn’t pass the full base rate cut onto consumers.
This is just one example of how some knowledge about what is happening in the economy can give you ideas for essays – especially evaluation, and you will get credit.
What practical steps to take?
1. Have a look at summary of main trends in the UK economy (I will post a summary soon). But you can have a look at main stats here
2. Don’t waste time trying to remember exact figures. But, try to look at big economic stories and spend time understanding how they can relate to theory. e.g. why was inflation high in 2008? why has unemployment increased? What could explain UK current account?
3. Always make sure your answer includes basic theory and models like AD/AS diagrams.