This is a revision resource for students taking the EdExcel unit 2 economics paper - suggesting a way of approaching the 30 mark question and scoring high marks for evaluation.

1. Falling Unemployment in the UK

2. Knowledge Application
Analysis Evaluation
Exam Skills and Mark Allocation in EdExcel
Unit 2 Economics
• Knowledge (20)
• Define economic terms in each sub-question
• Application (20)
• Give a data reference in each sub-question.
• Analysis (20)
• Explain the economic theory (including AS/AD diagram)
• Evaluation (20)
• Discuss the effectiveness of your analysis point

3. Knowledge Application
Analysis Evaluation
Evaluation marks in EdExcel Unit 2
• 7 sub-questions in each data response questions
• Significant number of evaluation marks (20 out of
80) especially for high mark base questions.
• More evaluation than for micro, which was 16/80
• A standard formula for evaluation:
– 12 from 30 mark question (18 KAA + 6 Evaluation)
– 4 each from 2x12 mark questions (8KAA + 4 Evaluation)

4. Knowledge Application
Analysis Evaluation
The 30 Mark Question (18 KAA Marks)
• KAA = 18
• 2 to 6 marks for definitions
• Usually 4 marks awarded for an accurate and
relevant AD/AS diagram (occasionally 2 marks)
• Analytical explanation of 2
policies/causes/factors/effects = (2 x 6 marks)
• Explanation of 3 policies .. = (3 x 4)
• They will only mark your best 3

5. Knowledge Application
Analysis Evaluation
The 30 Mark Question (12 Evaluation)
• Award 2 well developed points (6 marks each)
• Or three factors clearly given (4 marks each)
• Candidates should “present an argument and
conclude on the basis of that argument”

6. Knowledge Application
Analysis Evaluation
The 30 Mark Question – 8 paragraphs
1 Definitions
2 KAA for factor 1
3 Evaluation for factor 1
4 KAA for factor 2
5 Evaluation for factor 2
6 KAA for factor 3
7 Evaluation for factor 3
8 Justified conclusion

7. Using the data and your own knowledge, evaluate the
benefits of falling unemployment for the UK economy (30)
Figure 1: Unemployment rate in the United Kingdom from 2000 to 2013
5.4%
5.1% 5.2%
5%
4.8% 4.9%
5.4% 5.3%
5.7%
7.7% 7.8%
8.1%
7.9%
7.6%
0.0%
1.0%
2.0%
3.0%
4.0%
5.0%
6.0%
7.0%
8.0%
9.0%
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
Unemploymentrate

8. Using the data and your own knowledge, evaluate the
benefits of falling unemployment for the UK economy (30)
Figure 2: Percentage of young people not in education, employment or
training (NEET) in the UK from 2012 to 2014
15.2%
14.8% 15.1% 15.1% 14.9%
14.2%
13.5% 13.2% 13.1%
0.0%
2.0%
4.0%
6.0%
8.0%
10.0%
12.0%
14.0%
16.0%
Jul-Sep
2012
Oct-Dec
2012
Jan-Mar
2013
Apr-Jun
2013
Jul-Sep
2013
Oct-Dec
2013
Jan-Mar
2014
Apr-Jun
2014
Jul-Sep
2014
PercentageNEET

9. Using the data and your own knowledge, evaluate the
benefits of falling unemployment for the UK economy (30)
Figure 3: Unemployment in the UK from July 2013 to September 2014, by
length of unemployment
1,168
1,104
1,046
999
950
427 396
350 333 321
894
848 816
741
688
0
200
400
600
800
1000
1200
1400
Jul-Sep 2013 Oct-Dec 2013 Jan-Mar 2014 Apr-Jun 2014 Jul-Sep 2014
Numberofunemployedpeopleinthousands
Up to 6 months Over 6 and up to 12 months Over 12 months

10. Knowledge Application
Analysis Evaluation
Using the data and your own knowledge, evaluate the
benefits of falling unemployment for the UK economy (30)
Standard economic and social benefits of
falling unemployment
Potential disadvantages of falling
unemployment
• Increased employment – boosts real
GDP, helps to lift living standards,
demand
• Extra spending from expanding labour
market might worsen the current
account
• More people in work – creates extra
tax revenues for the government
either to lower the deficit / increase
spending (G)
• Risk of an acceleration in demand-pull
and cost-push inflationary pressures if
unemployment falls rapidly
• Social costs of high unemployment are
severe – progress in cutting it has
important economic + social benefits
• Fewer spare labour will mean a rise in
unfilled vacancies; labour shortages
might put off some inward investment

11. Knowledge Application
Analysis Evaluation
Using the data and your own knowledge, evaluate the
benefits of falling unemployment for the UK economy (30)
Point Benefit of falling unemployment Evaluation arguments
1
Falling unemployment will help to sustain
the recovery – boosts real incomes, leads
to more consumption, possible multiplier
effects from higher AD + rising confidence
• A high percentage of increased
consumption may go on imported
products, UK current account deficit
was > 5% in 2014
2
Reduced unemployment will provide a
fiscal dividend to the UK government –
more tax revenues, less welfare spending
– helps to lower the budget deficit
• Deficit has remained high despite
recent fall in unemployment, rising
housing costs and falling real wages
has increased welfare bill
3
Getting the long term unemployed into
work will help to prevent hysteresis which
happens when those out of work for a
long time lose skills and motivation.
• The unemployment rate may have
fallen because people have left the
labour market, there might still be a
high level of hidden unemployment

12. Knowledge Application
Analysis Evaluation
Using the data and your own knowledge, evaluate the
benefits of falling unemployment for the UK economy (30)
Point 1 Evaluation 1
Figure 1 shows that unemployment in the UK has
been falling steadily from 8.5% of the labour force in
2011 to 7% in 2013. Since then it has dropped
quickly to only 5.5% in 2015. A fall in unemployment
means that labour resources are being used more
effectively and an outward shift of aggregate demand
will move the economy closer to the production
possibility frontier. This means that there will be
faster growth of real GDP as more people are
producing goods and services. This in turn will help
the British economy to achieve a full recovery from
the 2008-09 financial crisis and recession and it will
also cause an improvement in living standards.
Many people have only
been able to find part-time,
low-paid work rather than a
full-time job. This means
that under-employment in
the UK economy might
actually have risen in recent
years. There might be a lot
of hidden unemployment
not shown in the official
figures

13. Using the data and your own knowledge, evaluate the
benefits of falling unemployment for the UK economy (30)
General price level
Real GDP
GPL2
AS
Y2
AD1
AD2
Y1
GPL1
Falling Unemployment – AD Diagram

14. Knowledge Application
Analysis Evaluation
Using the data and your own knowledge, evaluate the
benefits of falling unemployment for the UK economy (30)
Point 2 Evaluation
Another benefit of a drop in unemployment is that
the government will earn more in tax revenues from
people in work and from companies making profits.
This, together with a fall in spending on
unemployment welfare will help to bring down the
UK budget deficit which was 5.5% in 2014. If
unemployment can continue falling, then the
government is more likely to achieve it’s target of
balancing the budget by 2018 and perhaps achieving
a fiscal surplus. This will enable them to start
reducing the size of the national debt currently at
80% of GDP.
A counter argument to this
is that the UK budget deficit
has remained high despite a
fall in unemployment. One
reason is that real wages
have fallen and millions of
people have had to claim
top-up benefits because of
rising house prices, rents
and the rise of insecure zero
hours contract jobs

15. Knowledge Application
Analysis Evaluation
Using the data and your own knowledge, evaluate the
benefits of falling unemployment for the UK economy (30)
Point 3 Evaluation
A third benefit of getting more people into work is
that the economy can avoid some of the long-term
economic and social costs of high long-term
unemployment. Figure 3 shows that the number of
people out of work for more than a year has fallen
from 894,000 to 688,000 in the last few years. This
is important because the longer someone is without
a job, the less chance they have of finding work.
This is because their skills can become outdated
and their motivation to look for work reduces. This
problem is called the hysteresis effect and can lead
to a very high level of long term structural
unemployment.
Getting more people into
work is good, but reductions
in unemployment might
eventually lead to conflicts
with other key
macroeconomic objectives.
The Phillips Curve theory
suggests that inflation will
start to rise and increased
spending by consumers could
lead to a bigger trade deficit
as demand for imports
grows.

16. Using the data and your own knowledge, evaluate the
benefits of falling unemployment for the UK economy (30)
Unemployment
Inflation
P1
P2
P3
U2U3
A favourable trade-
off because the
economy SRAS is
elastic when
unemployment is
high
Trade-off is
worsening as the
economy comes up
against capacity
constraints
Phillips Curve Analysis Diagram

17. Knowledge Application
Analysis Evaluation
Using the data and your own knowledge, evaluate the
benefits of falling unemployment for the UK economy (30)
Final reasoned comment
Overall, I would argue that the benefits of falling unemployment outweigh the
risks. This is because being out of work has significant economic and social costs
and if the government wants to achieve an equitable increase in living
standards, it is important to find effective policies to reduce long-term
unemployment, get more young people into work and reduce the regional gaps
in job opportunities. Britain has enjoyed falling unemployment and lower
inflation in the last few years, so the dangers of a Phillips Curve trade –off
between objectives are low.

18. Evaluate the benefits of falling
unemployment for the UK economy