Winston, representing the UK, is competing in 'The Great Economics Snail Race' against snails from other countries. The document discusses the UK's economic performance in 2015 based on measures like GDP growth, unemployment, government debt, and inflation compared to other countries. It also covers topics like measuring economic performance, the aggregate demand curve, and achieving sustainable economic growth.

1. A Level Economics – Year 1 (AS) Revision Workshop
Session 3
Measuring UK Economic
performance
24
In this session we will consider how the UK’s economic
performance is measured, how the economy is currently
performing and discuss the validity of the measures that are
used.

2. Welcome Back
Settle down quickly and get ready to play
The Great Economics Snail Race

3. Meet Winston. He’s representing the UK in ‘The Great Economics Snail Race’!
He is going to compete against snails from other countries over 4 different heats.
Your task is to decide which position you think that Winston will finish (out of 5)
and which snail will win in each race.
Get ready to start!

4. China
Spain
Australia
India
UK
6.4%
3.5%
2.5%
7.4%
1.9%
2nd
3rd
4th
1st
5th
Which of these countries had the highest annual
rise in GDP (as a percentage) in 2015?
1

5. Italy
France
Japan
USA
UK
11.4%
10.6%
3.3%
5.0%
5.1%
5th
4th
1st
2nd
3rd
Which of these countries had the lowest rate of
unemployment (LFS measure) in 2015?
2

6. Spain
Japan
USA
France
UK
97.7%
230.00%
102.98%
95.0%
89.4%
3rd
5th
4th
2nd
1st
Which of these countries had the lowest Government debt
(as a percentage of GDP) in 2015?
3

7. China
Russia
Brazil
Germany
UK
1.6%
12.9%
10.7%
0.5%
0.2%
1st
5th
4th
2nd
3rd
Which of these countries had an inflation rate
that was closest to 2.0% in 2015?
4

8. A Level Economics – Year 1 (AS) Revision Workshop
Session 3
Measuring UK Economic
performance
24
In this session we will consider how the UK’s economic
performance is measured, how the economy is currently
performing and discuss the validity of the measures that are
used.

9. A Level Economics – Year 1 (AS) Revision Workshop
The Economic Cycle
24
Indicator
A
The number of new
housing starts begins
to fall
B Rising real income
C Rising homelessness
D
More building skips
start appearing on the
streets
E
More companies
attempt to introduce
wage freezes
F
Imports of sewing
machines rise
A
B
C
D
E
F

10. A Level Economics – Year 1 (AS) Revision Workshop
TheEconomicCycle Indicator Depends on…..
A
The number of new housing starts
begins to fall
B Rising real income
C Rising homelessness
D
More building skips start
appearing on the streets
E
More companies attempt to
introduce wage freezes
F Imports of sewing machines rise
24
How much supply shortage there is in
housing
Whether firms use their increased profits
to pay higher wages
Government initiatives to prevent
homelessness
Confidence that growth will continue and
builders’ bills can be paid
Rising national minimum wages
An appreciation of the exchange rate

11. A Level Economics – Year 1 (AS) Revision Workshop
The Components of Aggregate Demand
25
3.4 1.42 No Mode

12. A Level Economics – Year 1 (AS) Revision Workshop
Shifts in the Aggregate Demand Curve
25
AD2
AD2
AD3

13. A Level Economics – Year 1 (AS) Revision Workshop
Indicator Depends on…..
A fall in income tax
A fall in interest rates
A rise in the value of the
GB Pound compared to
the Euro
25
People save the extra cash they have (=
leakage from the circular flow)
How much the interest rates fall
The proportion of UK goods sold to countries
who have the Euro as their currency and of
imports from those countries
Analysis - Again, for each of the changes above,
write a ‘depends on’ phrase to illustrate the level
of impact for each change:

14. A Level Economics – Year 1 (AS) Revision Workshop
Shifts in Aggregate Supply
25
• Decreases (left/upwards shift) if
production costs increase
• Increases (right/downwards shift) if
production costs decrease
SRAS (or, elastic
section of
Keynesian AS curve)
• Decreases (shifts left) if the quantity or
quality of factors of production falls
• Increases (shifts right) if the quantity or
quality of factors of production rises
LRAS (or, inelastic
section of
Keynesian AS curve)

15. A Level Economics – Year 1 (AS) Revision Workshop
Shifts in Short run Aggregate Supply
25
AS3
AS2
AS3

16. A Level Economics – Year 1 (AS) Revision Workshop
Application – Universal credit – Changing labour supply
Universal Credit
rolled out to
replace other
benefits
Key feature of policy is
to gradually reduce
benefits to workers as
they remain in
employment
Counteract ‘trap’ caused
by sudden loss of
benefits if claimant
started to work beyond
16 hours a week
Report in Dec 2015
indicated that UC has
led to a 8% better
chance that someone
will return to work and
earn more money
86% were trying to
work more hours
under UC, compared
to 38% under
Jobseeker’s
Allowance
77% were trying to
earn more, compared
to 51% under
Jobseeker’s
Allowance.
27

17. A Level Economics – Year 1 (AS) Revision Workshop
TASK: Analyse the view that move towards to the Universal Credit
system has led to a long term change in Aggregate Supply.
Introduction of Universal Credit
This means that…
This can lead to….
This can cause…
It depends upon……
Increase in the long run aggregate supply
As someone on low income works more hours the difference
between what they lose as benefits and what they earn in
income is less than the previous system.
A greater incentive to work longer hours
An increase in the amount of available labour (a factor of
production) which shifts LRAS to the right
27
The availability of more work

18. A Level Economics – Year 1 (AS) Revision Workshop
27
2
2

19. A Level Economics – Year 1 (AS) Revision Workshop
Growth in the UK Economy 28
Slow down in the
growth of some
international
economies e.g. China
Wage growth in
the UK decreased
Continued low
inflation stunts
consumer spending

20. A Level Economics – Year 1 (AS) Revision Workshop
What are the economic and social costs of
Economic Growth?
A large rise in AD
could be met with
rising prices.
Interest rates rise to
curb high inflation.
Environmental
damage (negative
externalities) caused
by economic activity
(e.g. pollution) rises
with a growth in
output
Growth tends to
benefit some groups
more than others
(e.g. urban citizens
of China vs rural
farmers)
28

21. A Level Economics – Year 1 (AS) Revision Workshop
What is the best way to attain sustainable
economic growth in the long run?
29
What is meant by ‘sustainable’?
‘Sustainable’ growth is a level of economic
growth that can be achieved without creating
other significant economic issues, particularly for
future generations.

22. A Level Economics – Year 1 (AS) Revision Workshop
What is the best way to attain sustainable
economic growth in the long run?
29
A growth of networks
and shared norms so
that society is more co-
operative
Expand role of organisations
such as WTO, allow more
countries to feel benefit of
trade agreements
Ensure all institutions
(e.g. legal, financial) are
more economically
efficient
Provide market places
that do not over-
regulate enterprise
Policies such as use of
interest rates to control
inflation
A ‘fairer’ distribution of
income may reduce
waste

23. A Level Economics – Year 1 (AS) Revision Workshop
Equality vs Equity!

24. A Level Economics – Year 1 (AS) Revision Workshop
Employment
29

25. A Level Economics – Year 1 (AS) Revision Workshop
Evaluate the view that employment and unemployment rates of 16 to 25 year olds (in the
UK) represents a significant issue with regards to the performance of the UK economy.
Argument for
Point
Explanation
Evidence
Evaluation
Link back
Employment amongst young people is disproportionately lower than
older age groups; unemployment is disproportionately higher.
This results in greater spending on benefits, and is an inefficient use of
labour resources; furthermore it can lead to long-term unemployment
Employment of 16-18 year olds is only 25.5% compared to 83.3% of 35-
50 year olds. The figure is compounded by a 24% unemployment rate
30
Many 16-18 year olds are in FT education, therefore will be more
employable in the future. Unemployment rates may reflect lack of skills
– but the Universal Credit Youth Option requires them to work or train.
The low youth employment rate is less of a problem for the UK
economy than the high youth unemployment rate

26. A Level Economics – Year 1 (AS) Revision Workshop
Evaluate the view that employment and unemployment rates of 16 to 25 year olds (in the
UK) represents a significant issue with regards to the performance of the UK economy.
Argument against
Point
Explanation
Evidence
Evaluation
Link back
The employment and unemployment rates of this age category should
also be compared with other similar countries
The employment and unemployment rates may be “typical” of that age
group in similar economies, therefore not too concerning
The average unemployment rate for 16-18 year olds in Europe is
23.5%, and in some countries is close to 50% e.g. Spain
30
However, youth poverty and long-term unemployment can have
significant impact on LR growth, crime, and gov’t spending
The youth employment and unemployment rates may be similar to other
countries, but should still be tackled to improve the UK’s performance

27. A Level Economics – Year 1 (AS) Revision Workshop
Inflation
The UK has had consistently low inflation levels over the last 2 years. In
recent months the Consumer Price Index has shown inflation to be
close to zero – way below the targeted level of 2%. Much of the issue
appears to be the falling price of fuel and food in the UK.
30

28. A Level Economics – Year 1 (AS) Revision Workshop
31
Inflation levels for food, fuel and other products

29. A Level Economics – Year 1 (AS) Revision Workshop
Evaluate the view that the very low levels of inflation within the UK should not concern
the Government as it is primarily caused by falling prices for fuel and food.
Argument for
Point
Explanation
Evidence
Evaluation
Link back
Falling prices of fuel and food are good for the UK’s consumers and
businesses
Food and fuel are essential items so lower prices help poor households
especially, and increase discretionary income. SRAS may also increase.
Governor of BoE believes low inflation does not require immediate
action – other prices are still rising, and we aren’t suffering deflation
30
Falling prices are bad for profits of food/fuel producers, and could impact
on long-term supply of these products because investment may fall
On balance, low UK inflation rates caused by low fuel and food costs
are probably a benefit as long as they don’t lead to reduced supply

30. A Level Economics – Year 1 (AS) Revision Workshop
Evaluate the view that the very low levels of inflation within the UK should not concern
the Government as it is primarily caused by falling prices for fuel and food.
Argument against
Point
Explanation
Evidence
Evaluation
Link back
Falling fuel prices have a secondary impact on prices of many
products, which could cause issues.
Many products and services are impacted by the cost of fuel. A
reduction in their costs will keep prices low generally.
Inflation of ‘others’ category is also very low (less than 1% in 2015)
30
General low prices may lead to a reduced level of consumption as
people wait to see if prices fall any lower.
A fall in inflation generally is a cause concern for the UK economy as it
could lead to a reduction in consumption.

31. A Level Economics – Year 1 (AS) Revision Workshop
Extension
activities
32