Well, you have a few days left and then you will be sitting in rows of other economists, clock ticking, stern invigilator pitter-pattering about…and you have a few hours during which to prove your worth as an economist. How lucky I was to have a school system, Swedish, with no external exams! I could never have done what we now ask of you – and I have often pointed out to my students what a terrible student I myself was. No, I do not intend to write about that part.
You will excuse me for writing rather ‘off-the-cuff’ – it is more important to put forward what I wish to say rather than spend too much time pondering over how to say it. Basically, at this stage, what you have managed to learn is what you will be able to put to paper next week. In this respect, swotting away all night will have serious diminishing returns – and perhaps even negative returns.
Having said that, it’s never too late for last-minute tactical gear-up, and I do this in three brief bullet points; 1) Prioritising last-minute revision; 2) looking at the probabilities, and; 3) keeping in mind to answer the basic question posed. One should also mention having a ‘battery’ of ways to earn evaluation marks.
Don’t get exam nerves. Have a snack.
Some things are basically more important than others, however much my egalitarian social democratic Swedish background might rebel against that thought. You know full well that the questions you will address tend to focus on s few core concepts. Revise these and make sure you have the definitions down as strictly as possible.
In micro you should focus on elasticities and application, for example in taxes, revenue and trade. You can rest assured that there will be a market failure question also, and thus you would do well to revise the four diagrams and the possible solutions (and evaluation hereof) one can put forward. Market intervention (taxes/subsidies…) is another crowd-pleaser and you should focus on being able to give a few examples along evaluative line, say the unintended consequences of a tax (black markets) or a maximum price (arbitrage and black markets again). Theory of the firm (ToF) is a whole new ball game and I shall deal with that last.
In macro it becomes a bit more difficult because of the breadth of the content. However, clearly you will need to use and apply the AS-AD model and probably also know the arguments for/against D-side and S-side. If you link this clearly to the SR and LR (for HL) Phillips curve and labour market (diagrams for both!) then you are well on your way. The evaluative issues pretty much outline the rest; we are dealing with trade-offs, so income distribution (Gini) and inflation rear their heads. Finally I would recommend looking at the methods and limits to monetary policies – and the links to Section 3!
Trade means a ‘pentagon’ of balance of payments (BoP), exchange rates, barriers to trade (BTT), AS-AD and terms of trade (ToT). Make sure you can link to all of these and clearly understand cause and effect; an increase in the price of the British pound will have effects on the price and quantity of exports/imports…and thus AD…and the ToT. BTT, for example tariffs, will have an effect on the demand for X and M…and thus on AD…and the exchange rate. Trade agreements and the issue of a floating vs fixed currency is also well worth revising.
Development is at the same time the easiest and most difficult! It is ‘easy’ because circa 60% of the section is revision of the other topics covered in the other three sections. It is difficult because development economics has a very weak record in reality – so little of what we teach and learn has any general applicability across incredibly diverse countries. It is also an area that lends itself easily to woolly thinking, unclear definitions and an alarming lack of rigour in use of economic terms and concepts. Focus on the three main areas of debate; trade vs aid, market orientation or government intervention and export promotion vs import substitution.
Here’s where a very large CAVEAT EMPTOR needs to be posted, e.g. let the buyer beware. Every year I do a version of ‘predicting the content’ in three bullets but I do it rather tongue in cheek and also in the manner done by the Delphic Oracles – a bit vague in other words!
- ToF has been 100% avoidable for the last 16 years or so. No, this does NOT mean that you will be able to avoid it this year! It’s been a while since a few of the ‘classic’ (note: not ‘classical’ – let us not get that Delphic) ToF questions were posed, so I have recommended my students to keep a heavier eye on a) perfectly competitive markets (PCM) vs either monopoly or oligopoly; b) analysis of price discrimination; c) diminishing returns and diminishing returns to scale.
- In macro one might expect an element of deflationary issues (e.g. falling AD…and a self-fulfilling prophecy of falling prices and falling AD), the limitations to D-side policies (deficits, debt) with particular focus on monetary policy. This has been a rather big issue in EU countries facing monetary curbs and high levels of foreign debt in later years.
- Trade issues: I rather anticipate free trade areas to be a subject, together with the issue of a common currency vs floating. This too has been seriously debated in later years.
- In development, I simply repeat the three main questions outlined earlier.
- Answering the question
It is still amazing how many students seem to veer off the path staked out by any given question in exams. This is either intentional (when the student really doesn’t know the answer and tries to avoid it) or the result of single-mindedly focusing on a series of arguments that lead off the grid and give a good answer…but not to the question posed.
It cannot be said any clearer: READ THE QUESTION NOW AND THEN WHILE YOU ARE WRITING YOUR ANSWER!
During reading time, roll around in your head what core concepts you will bring up and how you will broadly arrange your answer. No, you get no marks for artistry, only clarity. If it is hazily written the examiner will simply assume it is hazily thought through. The examiner is always right.
Pick up your pen, underline key concepts in the question, go to work. No preamble, no introduction, no flowery phrases explaining how you will address the question (that’s for history)…just Define, Exemplify/Explain, Diagram and Context. Dead Sea or DEDC. So, if you get, for example, ‘Explain why an indirect tax on a de-merit good might not be that effective.’
Define: indirect tax, de-merit good and ‘effective’ (i.e. did it decrease consumption by much)
Explain how an indirect tax works (using a diagram that is well referred-to), refer to PED and use an example (say, alcohol). Then put this into context of why low PED for alcohol will not decrease quantity demanded very much…and thus consumption and negative externalities will not be affected that much. You have ANSWERED THE QUESTION by using core terms, defining them and answering ‘…the tax, which decreases supply, will not decrease the quantity demanded as much owing to the fact that PED is low…’
I often ask parents at parent-teacher meetings if they are proud of their children. I always get a warm and loving smile and a ‘Yes! Of course.’ Know this young economists: All of your teachers are thinking of you. All of them want nothing more than you to do well. All of them will be SOOOOOOOO proud of you.