Here are two suggested answers to the 12 mark AS macro questions set by the edExcel board. I look for students to define key terms in the question, build and evaluate 2 main points + use a diagram. Use the extract if asked to and focus clearly on what the question is asking!
Solution Manual for Principles of Corporate Finance 14th Edition by Richard B...
Answering the 12 Mark Question in EdExcel AS Macro
1. Structure for a 12 marker on EdExcel
• 8 KAA marks and 4 evaluation marks
• All KAA and Evaluation marks must be linked to wording of Q
• Getting the KAA (this will vary from Q to Q)
– Definition of key terms in the question (worth 2)
– One fully complete and relevant diagram (worth 4)
– Include an actual data reference (worth 2)
– Analysis using clear causal chains of reasoning for 2 separate points
• 2 marks if the question does not ask for a diagram
• 1 mark if the question does ask for a diagram
• Getting the Evaluation marks
– 2 small pieces of evaluation 2 marks each
– Relevant to the question
– Identify the piece of evaluation and then support it (make + support)
2. Example of a 12 marker on EdExcel
Assess the likely effects on the UK economy of a rise in investment (12 marks)
Definition: Investment is spending on capital goods such as new plant and equipment, factories
and technology, these can be used to produce consumer goods and services in the future
Analysis Evaluation
Increased capital investment is an
injection of aggregate demand and will
lead to faster economic growth. There
might be a positive multiplier effect from
the extra jobs created in infrastructure
projects such as CrossRail or new housing
investment
The multiplier effect
from increased capital
investment might be low
if there is a high
propensity to import
new technology
Higher investment can lead to a rise in the
productive capacity of the economy and
also improved levels of labour
productivity. These supply-side gains can
raise competitiveness of exporters and
help the UK’s net trade balance.
There are often long
time lags before the
investment has a big
effect e.g. it could take a
decade for the
completion of a new
nuclear power station.
GPL
Real National Output
AD1
AD2
AS1
AS2
Y1 Y2
3. Example of a 12 marker on EdExcel
Assess the likely effects on the UK economy of an appreciation in the exchange rate (12)
Definition: An appreciation is a rise in the external value of a currency against one or more other
currencies, for example the £ might increase against the US dollar from £1=$1.50 to £1 = $1.60
Analysis Evaluation
An exchange rate appreciation usually leads
to an increase in the foreign price of UK
exports. This will lead to a contraction in
demand for exports and an expansion in
demand for imports. The net effect is likely
to be a worsening of the trade balance and a
fall in aggregate demand – this is shown in
the diagram by AD shifting from AD1 to AD2
This effect depends in part
on the scale of the
currency appreciation and
the PED for exports and
imports. If Ped X is only
0.4, then a 20% rise in
price will cause only an 8%
drop in demand
If the pound is stronger for example against
the US dollar, then the prices of imported
raw materials, energy and components will
fall leading to lower production costs and an
outward shift of aggregate supply. This will
help keep inflation under control and might
help to increase business profits.
The benefits of lower
import prices might be
offset by rising costs
elsewhere, for example
higher import prices could
lead to workers asking for
increased wages.
GPL
Real National Output
AD2
AD1
AS1
AS2
Y2 Y1