List of Important Questions A Level Economics Paper 2 for May/June 2025 exam series.

Summary

This video provides a comprehensive guide for students preparing for the May/June 2025 economics exam in Pakistan. It highlights key topics, including the production possibility curve (PPC), demand elasticity, indirect taxes, and types of goods, with a focus on areas likely to appear in the exam. The video also emphasizes important macroeconomic concepts such as economic growth, fiscal policy, and exchange rates. The speaker stresses the importance of studying the entire syllabus while giving extra attention to the discussed topics, offering practical advice and exam-focused questions for better preparation.

Takeaways

• 😀 Focus on understanding the Production Possibility Curve (PPC), including shifts and movements along the curve, and the impact of rising unemployment on the economy.
• 😀 Pay special attention to the concepts of price elasticity of demand, income elasticity of demand, and cross elasticity of demand, particularly the signs and sizes of coefficients.
• 😀 Indirect taxes are a crucial topic for microeconomics, particularly how they affect market equilibrium and the tax burden distribution between consumers and producers.
• 😀 Prepare for questions on the effectiveness and fairness of direct versus indirect taxes, and understand their role in reducing inflation and targeting specific goods.
• 😀 Economic growth is a key macroeconomic topic, with a focus on its positive consequences (e.g., employment, purchasing power) and negatives (e.g., inflation, income inequality).
• 😀 Fiscal policy is another important area to focus on, especially the difference between contractionary and expansionary fiscal policies, and their impact on the economy.
• 😀 Exchange rates are vital for macroeconomics, including the causes and effects of currency appreciation and depreciation, as well as the benefits and drawbacks of each.
• 😀 Direct provision of goods and services by the government could be a potential exam topic, especially in the context of essential goods and services.
• 😀 The impact of buffer stock schemes on the provision of primary goods and ensuring uninterrupted supply should be understood and prepared for.
• 😀 Pay attention to the current account deficit and surplus, particularly the causes and consequences of each, as well as the implications of fiscal policies on the balance of payments.

Q & A

What is the significance of focusing on the production possibility curve (PPC) for the upcoming economics exam?

The production possibility curve (PPC) is a crucial topic because it helps explain the trade-offs between different goods and services in an economy. Students should understand the shifts and movements along the PPC, the causes behind these movements, and the impact of unemployment on the curve. Previous exams have asked questions about these concepts, so paying extra attention to them is important.

What is the difference between a movement along the PPC and a shift in the PPC?

A movement along the PPC occurs when there is a change in the quantity of one good, causing a shift from one point to another along the same curve. A shift in the PPC happens when there is a change in factors such as technology or resources, leading to an outward or inward shift of the entire curve.

Why is understanding the different signs of cross elasticity of demand important for the exam?

Understanding cross elasticity of demand is important because it explains how the demand for one good changes in response to the price change of another good. The sign (positive, negative, or zero) indicates whether goods are substitutes, complements, or independent. This concept has appeared in past exams, and students need to know not only the signs but also the reasons behind them.

What should students understand about income elasticity of demand for the upcoming exam?

Students should understand the relationship between income changes and the demand for different types of goods. For normal goods, income elasticity is positive, while for inferior goods, it is negative. They should also know how to explain the size and sign of the coefficient, as this topic has been frequently tested in previous exams.

What is the impact of indirect taxes on the economy and why is it important for exam preparation?

Indirect taxes raise the cost of production and shift the supply curve upwards, increasing prices for consumers and reducing revenues for producers. Understanding the effects of taxes on market equilibrium and how the tax burden is shared between consumers and producers is essential for answering related exam questions.

How does the price elasticity of supply (PES) influence the effectiveness of indirect taxes?

The price elasticity of supply (PES) determines how much the quantity supplied changes in response to a price change. If PES is inelastic, producers will bear a larger share of the tax burden, while if PES is elastic, consumers may bear a larger share. This understanding is vital for answering questions on tax incidence in the exam.

Why is fiscal policy considered an important topic for the macroeconomics section of the exam?

Fiscal policy, which involves government spending and taxation decisions, plays a crucial role in managing economic growth, inflation, and unemployment. Understanding expansionary and contractionary fiscal policies, their impacts, and how they are used to address economic issues is important for students preparing for macroeconomics exam questions.

What are the key differences between direct and indirect taxes, and why should students focus on this topic?

Direct taxes are levied on individuals' income or wealth, while indirect taxes are imposed on goods and services. Indirect taxes are often regressive, affecting lower-income individuals more. Understanding the fairness, effectiveness, and impact of each tax type is important, as this has been a recurring theme in past exams.

What should students know about exchange rates, specifically regarding the appreciation and depreciation of currency?

Students should understand that currency appreciation makes imports cheaper and exports more expensive, while depreciation has the opposite effect. Both processes affect inflation, employment, and economic competitiveness. This topic is essential for the exam, as the causes and impacts of exchange rate fluctuations are often tested.

Why is economic growth an important topic in macroeconomics for the upcoming exam?

Economic growth, which refers to an increase in real GDP, is a central concept in macroeconomics. Students need to understand both the positive effects, like increased employment and improved living standards, and the negative effects, such as inflation and income inequality. Exam questions often focus on the causes and consequences of economic growth, making it a key area to focus on.