AQA A2 Economics - European Context

Each of the AQA a2 economics papers contains data response questions where understanding and awareness of the context of the economics of the European Union comes into play. We have a EU Economy in Focus study companion which is published in updated form each year. Details are available here. One area for revision focuses on the analysis diagrams that might be used to support your answers to EU context questions, I have put together a listing of topic areas where a diagrammatic approach might pay dividends - it is not exhaustive of course, merely some suggestions that might be useful. It appears below:

Opportunities for diagrams when discussing the EU context

Economic Integration and the Single Market
Trade creation from having free trade within a customs union
Trade diversion – impact of a tariff, consumer and producer surplus
Trade and the PPF, trade and economies of scale
Labour market diagrams
Competition within the single market – contestable market diagrams
Fiscal harmonization – effects of different taxes incl. indirect taxes, Laffer curve

European Monetary Union / Developments in the EU economy
AD-AS analysis of external economic shocks, changes in interest rates
Economic cycle diagram, trend growth and the output gap / spare capacity
Optimal currency area illustration e.g. convergence and flexibility
Housing market supply and demand
Phillips Curve – changing relationship between inflation and unemployment
Supply and demand in the currency market / fixed and floating exchange rates
Economic effects of unemployment on the EU economy including PPF
Crowding out from high budget deficit (market for loanable funds)

Living standards and EU regional policies
Lorenz Curve e.g. for showing income and wealth inequality
PPF – impact of high unemployment or effects of successful regeneration

EU Enlargement
AD-AS effects arising from increased trade, foreign direct investment
Labour market diagrams related to migration flows, e.g. changes in labour supply
Diagrams to show changes in unemployment, natural rate, NAIRU etc

CAP and Fishing
Government intervention in farming markets e.g. price support, set aside, quotas
Environmental impact of farming and fishing – externalities diagrams

Environmental policy and transport + cost benefit analysis
Market failure diagrams including externalities from pollution and waste
Diagrams showing carbon trading markets
Diagrams showing the effects of carbon taxes and government subsidies
Cost benefit analysis diagrams including externalities

Competition policy inside the EU
Monopoly and economic welfare, natural monopoly, cost and revenue analysis - price, outputs and profits
Price capping by a regulator e.g. EU mobile phone roaming charges capped
Contestable markets, different objectives of businesses
Price discrimination and economic welfare
Costs, prices, profits – economies and dis-economies of scale