Summary

Summary A-level Economics Diagrams

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Course
Macroeconomic Diagrams

Institution
AQA

A fully detailed list of all essential diagrams for A-level Economics. This document includes all diagrams drawn out (digitally, so very clear) with labels and annotations. Also included are analysis of the diagrams and evaluation too, used in preparation for 2024 A-levels, this document helped me ...

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Uploaded on August 17, 2024
Number of pages 13
Written in 2023/2024
Type Summary

economics
alevel
diagrams
macro
micro
microeconomics
macroeconomics
fully detailed
annotated
accurate

Study Level
A/AS Level
Examinator
AQA
Subject
Economics
Unit
Macroeconomic Diagrams

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Diagram Name / analysis - As-AD

Diagram for circular flow of income.

Diagram Name / analysis - As-AD

AS-AD; AD shift right

Suppose government spending (G) rises. G is a component of
aggregate demand (AD). So higher G increases AD - AD shifts right
from AD to AD1.
This results in rising real GDP from Y to Y1 and a rising price level
from PL to PL1.
To move to the new equilibrium, there is an extension along the
aggregate supply curve.

Diagram Name / analysis

AS-AD; SRAS shift right

Suppose the prices of raw materials fall. This lowers business costs.
So short-run aggregate supply shifts right from SRAS to SRAS1.
This results in rising real GDP (Y to Y1) and falling price level (PL
to PL1).
To move to the new equilibrium, there is an extension along the AD
curve.

Diagram Name / analysis

AS-AD; LRAS shift right

An improvement in productivity shifts long-run aggregate supply
(LRAS) right from LRAS to LRAS1.
This raises real GDP (from Y to Y1) and lowers the price level from PL
to PL1.
To move to the new equilibrium, there is an extension along the AD
curve.

, 1

Diagram Name / analysis

AS-AD: SRAS and LRAS shift right

An increase in productivity will shift the LRAS as above. It may also
mean lower business costs,
shifting the SRAS to the right as well.
This combines the two previous diagrams.

Diagram Name / analysis

Trend Growth Rate

Diagram Name / analysis

AS-AD: AD shift right plus multiplier

The Multiplier Effect

Adding to the "AD shift right diagram", the multiplier effect causes a
second shift right in aggregate demand from AD1 to AD2.

Higher government spending on construction materials makes the
suppliers richer. This raises incomes of the suppliers' workers, so
those workers spend more in local shops.

● Y to Y1 is the initial government spending (P to P1).
● Y1 to Y2 is the multiplier effect (resulting in P1 to P2).
● Multiplier = Y2 - Y / Y1 - Y

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