important in other words at this point shouldn't be making this mistake okay so um typically when you receive the question paper you would you would just have a look at what the question is and then you know all the titles and headings and then you start now for case study for H2 total marks is always 30 the last two question 18 marks is always higher order thinking question so there are two imperfect indicators for higher order thinking questions number one it would be your command word and then write Mark allocation and the remaining 12 Marks here is always lower order thinking question so if you look at the command word explain make clear explain make clear explain again make clear and here explain so um Cambridge does tend to use the word explain the distinction lies in what comes after the word explain okay right so I'm going to start right so the very first question always command word so in this case explain make clear and then what comes after explain what is meant by in other words you know you need to give the very specific representation of the information asked and what is the information asked here is real GDP per capital so if you look at the question you know it's a definition type of question okay so I'm just going to take you through what it means and then I'm going to point out um what examiner is saying okay so rail all right it it eliminates the effects of inflation all right um gross gross here simply means total and then when we look at GDP later it is all about the monetary value monetary and the value of it domestic here focuses on production and very importantly the word domestic it tells you is about production in the country's geographical boundary not Beyond it's within the country and the product here is all about the final goods and services produced so for Capital here it refers to the amount all right per average resident average citizen in that country itself i' like you to take note now um I've given you space to write in the hand out right so I've given to you one column which is the examiner commands so I've given you um PR analysis then examin comments and then a lot of space for you to write i' like you to take note when it comes to gross domestic product the emphasis is always on produ ction and this value is what is produced in current year so for example if the government built this new Road in 2024 the production of this new road is counted in 2024 GDP figures okay it does not include how much is bought or resold in other words resale or secondhand Goods or Goods that's produced in 2000 it will not be counted will not be considered in 2024 GDP so let's take a quick example in this LT that you're sitting in right now will it be counted as Singapore's GDP in 2024 you just tell me you shake your head you say no if you think yes you you not your head okay so the question again the LT that you're sitting in right now will it be counted as part of Singapore's 2024 GDP figures not for yes shake your head for no right so no okay and the other thing I want to point out to you here we always looking at the final good because every good that we produce we always use intermediate Goods like your steel your glass right so all this um only the final value of that final good that's produced will be taken into account otherwise there'll be double accounting so the word final is very important so that you know you will not be accounting for intermediate Goods right for example your capital goods Goods that are produced to it in the production of further goods and services okay so this is the suggested answer there are three components to it so when it comes to the word real it's about the effects of inflation being eliminated that's one part of it okay the other part of it GDP so the GDP here total monetary value all final goods and services it's about production okay the focus is on production and because it's domestic it's within the country's geographical boundary and the word here per capit okay is about what is available amount available for the average resident going to go through examiner comments now although it's a very simple question very few gained the two months why because didn't fully answer the three different components of the question up so either you got one mons or zero months now Examiner is also saying some simply stated a formula in other words just wrote like expression of a formula per person or about divide by population okay so let me remind you what a formula is about calculation right you show the equation so some really show the equation some Express which is not okay so this is not the requirements of the question again let me remind you when it says what is meant I all right you need to express okay what this information is asking you so therefore it's about the um available whatever is available to the um average resident okay so let me just take you down memory lane by beginning of the year okay so down here um the GDP it's total monetary value a value it is not amount right so amount in different interchangeable terms quantity units volume it's not that it's not price it's the value won't get marks if you equate incorrectly so let me take you through Memory Lane right okay so you recall right GDP you learned that is um commonly used measure indicator of national income right so you remember what is national income it refers to the income generated right for the production of all final goods and services by a country within a period of time typically normally a year so there are three different methods to calculating national income so the output approach really it just adds up all the value of the goods and services so the focus here is on production call it the output approach and then the other approach okay an alternative approach is the income approach so the income is really all the production that generates the income for households because you recall right households own all the factures of production so very simple one for example in exchange for labor um households will receive wages in return and then next we got an alternative expenditure approach so here focuses on spending okay to purchase all the national production the nation's production so it is an identity in other words this value whichever approach is a value whichever approach that you take it will sum up to the same value okay so it must be value nothing more than that so common errors amount please write down refers to quantity unit or volume and the other one the focus of GDP is always on production Euro consumption no wrong okay so last but not least there was some that thought I had to look at the change in GDP the growth rates that was for part A Part Two not a part one so misinterpretation so you wasted your time writing I'm going to move on to a part two four mark question so very easy you know that two marks goes to material living standards two marks go to non-material living standards okay I'm going to do the question analysis with you so again explain make clear what do I need to make clear in this case I need to make clear the keyword here is just one one indicator one measure that will show this change so show change in what all right so so change in this case it would be economic content material standard of living non-material standard of living so again what does the definition of material stand of living tell you it's all about amount of goods and services that the average individual have for consumption because you and I we are we are the average individual but we consume goods and services so you can refer to unit two national income accounting Beach eight right then what about non-material standard of living okay is all about other indicators other social factors thank you okay so you need to make reference to table one which I have put it into your hand out for you for ease of reference so you need to look at table one and table one tells you about there are the selected economic indicators for in India so for this question if you look at it is a cause and effect type of question because you need to look at what's the cost which is the indicator you need to select and then you explained what is the impact effect on material standard of living and non-material standard of living in in terms of the direction of change okay the most straightforward answer is to use growth in Real GDP per capita right because it encapsulates very nicely definition of material standard of living per capita can look at the average individual and then grow like I've said to you in examiner comments right is a very good indication so I'll let me go to that in a while time so in other words um the first indicator you reflect material stand of living all right and then your average part metal concentration a that would be for your non-material standard of living so in other words for the two mons the breath of this question it would be indicator show a change in material standard of living the other indicator that shows how it affects non-material standard of living okay so let me go through step by step with you before we look at examiner comments so step one all right um in terms of that development I need to identify the selected indicator so this was be growth in Real GDP per capita and then very importantly all right in order to show the change in material standard of living is all about the purchasing power of who the average individual because we know there's a growth in Real GDP means your there's higher national income this must mean higher disposable income so therefore purchasing power and then I need to fulfill what is the definition of material in of living so it's all about consumption right about the consumption of this amount of goods and services that is produced in the economy then finally answer back to the question direction of change rise in material standard of living okay so that's my first step I've already gotten my two marks there now my second step my first um my indicator I would use it would be the average particulate metal con concentration so if you look at the figures given to you 2020 and 2021 it is higher so this is um a social Factor so I want to say something about the air quality so it's about worsening against based on standard of living the definition is all about the average person right so we all write differently as long as you have worsening and then about the average person okay um you will get your marks once you have answered back to the question what's the direction of change so that's that's it for the first for for this answer so the tools of tools of analysis what it would be number one question ask you about indicator so did you have your indicator there yes number two right it's about showing the change so do you have this comparison to over time yes and you will get your four marks okay let me go through examiner commands with you okay so many actually attain the full four marks so the distinguishing Factor was your choice of indicator to explain material standard of living so these are the stronger responses because stronger responses recognize GDP good indication right so recall a part one so this a part two what is GDP so we talked about it is about the production output produced right so the level of production and the incomes generated from it so once you got production then you got income generated from it from there we can use it to go on to explain about what happens the change in living standards then more importantly because of the word ra so effects of inflation is removed in other words it tells us the actual volume produced actual volume produced means the amount the actual amount available to the average person for consumption okay because I really remove all the um effects of inflation and then lastly okay it tells you about the amount the quantity that the average individual or the households can consume so this is the best indicator that was some okay who chose this so it's not actually Fair very poorly it's the poorest of all the um the compared to unemployment rate why because they were incomplete incorrect confused the most inaccurate one was this okay describe general price level as falling then purchasing power higher wrong okay let me go through um look at the table first then we'll look at why is this inaccurate so if you look at table one unit of measurement right rate of inflation if you look in 2020 6.1 positive PE up you look at 2021 still positive e up right in other words um there is still inflation except the rise in inflation is at a lower rate in 20 21 in other words there is inflation is increasing but at a decreasing rate so they thinking is this this inflation that is reflected here yes right so the correct interpretation should have been a reduced rate of increase in prices or increas in uh inflation rate at a decreasing rate okay um all accepted it means that purchasing power falling now if you can turn to page eight wa uh let me remind you that later after we turn to page eight all right so I thought I'd do a quick recap right so recap here inflation it refers to the sustained increase in general price level all right so level increase but then when we want to look at how fast what's the speed of change how fast is changing we look we use the unit of measurement in this case percentage change so typically we will use consumer price in Index right to measure what is the rate of change so a quick reminder why do we use consumer price index as opposed to the others like GDP deflator PPI because recall inflation is all about how it affects our cost of living right the consumer even if you're entrepreneur you're also a consumer so this is always the most um common indicator that we use to measure the percentage change okay and the price of a representative basket of goods and services consumed by a typical household in that country every country this representative basket of goods and services defers very simple example um if you think about the tempered countries definitely they need heating during the winter months um then then maybe you know during the summer Ms they do not need but it's different here in the tropical re U region we do do need um cooler temperature so Aon is one of the big thing other than the kind of food that we consume as well because different cultures so composition all different right so I'd like you to turn to page eight so I thought I'd do a very quick reminder between rate of change right typically we use it to measure the percentage the annual percentage change in Consumer Price Index and then level change which it's just general price level okay so based on this figure here you can start um drawing in the inflation I didn't draw in for you so if you look at this time period from 204 to 2013 okay so inflation so okay again recall what is the definition of inflation sustained rise in general price level in other words if you talk about the rate of change is just Rising right inflation is rising at an increasing rate and then of course in this um diagram here I saw have this inflation in other words if you can see here right it's still positive right so it's a positive figure except the current year the rate is lower than the previous period right so we say here it's um rate of inflation is increasing at a decreasing rate or just reduced rate of an increase in prices and then we also learned about negative rate of inflation that is deflation so you can see over here on the um horizont on the vertical axis it's all negative so that is deflation when it comes to level change we're just looking at you know what is the change in the prices average prices price level so when it comes to inflation general price level is increasing when it comes to disinflation right average prices are still increasing except that the rate of change is lower in the um current period so when we want to describe level change we just say general price level is increasing for both of this if prices are still increasing purchasing power Falls your ability okay to buy the amount of goods and services which you put before now you will count purchase a smaller amount when it comes to deflation right general price level is falling purchasing power is increasing right so um please be sure about the distinction between a level change and then the rate of change right so those who chose Consumer Price Index um other than this inaccurate very confused diff uh distinction between price level how to describe the change and um associated with the purchasing power the other one is not recognizing the significance of nominal wage growth so only a handful of stronger responses okay they recognize this significance of the nominal wage growth and its impact on material standard of living in other words what's the impact on the average individual the amount that person can consume so this stronger responses said know if there's no change in nominal wage growth right then if there is um disinflation it will still lead to lower material standards or you know they said something about if noral ninal wage growth exceeds the um this inflation then material standard of living would be higher all right so whoever chose this very poor right so I'm going to move on to the third one there was some who chose okay um just to summarize again um rate of change is not the same as level change when you want to look at the cost in this case a change in inflation rate and the effect on material standard of living you must consider okay what is the change in nominal wage growth I'm just going to move on to the third um choice of indicator it's less preferred okay why is L preferred okay it's less preferred because number one real GDP per capital already provided and then you know right because you had a derived demand concept so in other words right your changes in unemploy rate really depends on your economic activity most importantly then number two if you look at the definition of unemployment rate it doesn't encapsulate right the definition of the um standard of living very well when you have real GDP per capital okay non-material living standards no issue okay um the other issue can I remind everyone please do not use this acronyms this acronyms here is only for teaching purposes but when it goes over to Cambridge um it's not it's not appropriate so don't use it okay right I'm going to move on to Part B okay so for Part B again explain so you need to make clear what do you need to make clear it's some two measures two ways so this you need to make reference to extract two okay that's used to address inflation in the context of India so the two ways is already given me my bread so two marks for one way two marks for the other way so when you read in the extract interest rates and the other one is fuel now fuel um so I went to Google so that I could explain to you what it means so according to um Cambridge Dictionary all right it's a substance used to generate power usually by being burned so you can think about cood oil for example during the infl inflation lecture I showed you this speaker about fractional distillation CR oil at different boiling points different types of fuel electricity diesel Petrol in other words your fuel here is a key factor input all right it's not consumption who consumes cruded oil nobody does right in other words it's used to produce goods and services by all the firms in the different Industries across the sectors of an economy so it will impact your sras now when it comes to interest rates okay it's a tool instrument of monetary policy if you read very carefully all right it only impacts upon consumption spending by households so extract one paril one so this is the relevant component that will influence ad the other thing I want to just point out to you so you can see here very clearly one is AD one is a okay right so again step by-step approach right um you learned that when it when it came when it comes to interest rates is the price of money right price of money the terms of cost of borrowing it can also be viewed as a reward to savings so both analysis were accepted so how you going to develop your debt if I were to look at cost of borrowing so in increase in interest rates increases cost of borrowing now extract one per one tells me the most relevant component is consumption expenditure so of course I might I must have consumption spending here in other words if you look at you know when we say the word here big ticket items implicit in here we are saying that all these items they are interest sensitive responsiveness they are very responsive to changes in interest rate all right and then this will have an impact on your ad and then this will lead to a fall in your general price level all right so this is how it address inflation or if you chose to take as the reward to savings so this is about opportunity cost for gone because right now consumption higher so again step by step which is the relevant component consumption expenditure fall in 80 fall in general price level okay so you should be on page five right now because I already put down the answer for you all you need to do if you got some things to add on then you just add on okay when it comes to step two cutting fuels cutting taxes on fuel we already established that it's something that you've burn to generate electricity to run your machines for your transportation very importantly it's all about the unit cost of production it's a key factor input so this will lead to an increase in sras a fall in general price level if you look at the question itself that is no diagram required so just to fact check you know have you got all your tools of analysis did you use Adas framework my step bystep approach to depth development tells you yes I've got all the key things and they're all highlighted in blue so I'm going to go through examiner commments now if you look at here I marked out clearly assessive which means that you must have compromised on other parts of your answers why is it accessive because these answers went on to analyze on investment spending on net exports even got multiplier process even got diagram so the thing here is only four marks number one two me measures two marks for each measure another didn't tell you a diagram no so don't draw okay just focus read and plus tell you extract the extract so you look at extract two just reference but you look at extract one clearly it tells you the component relevant it's just consumption spending okay so I just want to remind you if you look at um you read extract there is no clear evidence about investment spending or net exports all right so don't especially when such a tiny Mar allocation only two Mars for each measure okay um this one is very important okay um when it comes to residential investment it is not consumption expenditure so I've written for you under the column my notes okay because um it's better that I put it out for you and then you can just make your own notes so I will go through with you okay number one when we talking about ad equation where the intersection between AD your as gives you your GDP and your GDP by definition tells you about you know we are looking at the production in that current year so it's all about new all right so expenditure by households or new houses new housing apartments it is investment expenditure why because if you think about it what do you do at home okay helps us to be productive right so before we set out we were rest we eat then then we go out go to work go to school we go we go and be productive in other words housing stock is housing stock is part of capital if you recall the definition of capital is Goods that produced to make other Goods all right so because it helps us to be productive so remember when it comes to expenditure by households on new housing apartment it's always investment expenditure not consumption then of course um the usual investment expenditure by firm those are non-residential investments it still stands okay right then the other on is about okay less well understood about the fuel affected input um yeah so it it just uh tells us you you're not really familiar what the word is fuel all right so um and therefore you know you went on about Direct direct taxes so what is direct taxes is basically taxes that I've got my name on it that the government sends to me I have to pay right it is not then the other ones is that um some of them some of you choose not to address the impact of the fuel taxes directly you digress say oh you know about F and join increase profit P back all right so reinvestment back of no right always do direct analysis then next here because the moment you talk about firms I can imagine in your minds you're thinking about free market analysis right market analysis are you talking about the firm analysis which is an imperfect firm right uh that's micro no right so we talking about all the FMS collectively in the economy so Adas analysis then the other one please go and um learn how to make sure your direction of change is correct and it shifts okay uh B part two last part not least so um pressure analysis command what here again make clear make clear what so you need to take into account of all the the words that comes after the word du so the content word here is trade all involved all right play off in other words it's all about opportunity cost forgone right what is forgone you need to determin so the opportunity cause of India trying to M inflation to reduce general price level is GDP growth for gone so they are actually enacting policies to reduce ad in order to reduce general price level but because you asked about what is involved all right you do need to um explain that this will have an implication on real GDP so in other words what type of question is this is like unintended consequences outcome type of question so again step by step so number one you identify what's the goal what's the intended outcome right intended outcome is to reduce general price level so they're prioritizing because you know the government has four micro aims so this is one of the aim and they're prioritizing price ability so they're going to use policies in order to reduce ad and therefore reduce general price level but because of the question phrasing what is the tradeoff involved in this case is opportunity cost forgot so what is forgone it's your GDP growth so opportunity cost of reducing your general price level is GDP growth for gone what this means it's that your economic growth is sacrificed so this the other term that's also acceptable and then with this contined excessive fall in ad going along the lines of your sustained um increase and therefore you know a decrease in your inflation right now so this will lead to a fall in real general price level okay so have you got your tools of analysis so it's about using your ad and as framework okay so um One Last Thing Before I end offw examiner comments um some try to link to lowering of unemployment so again he not the best okay so um national income is always um the one because like saw earlier on is all about the indicates the level of production and then you know derive demand and then impacts upon unemployment okay the other one is about indirect analysis so some answers went on let's see how a growth is Achieve and then this can conflict with inflation all right um this is not because the question already tells you what is the government priority the government is choosing to control inflation so that is the main objective the main priority right so don't do indirect analysis okay then the the another one is about being very descriptive in other words um you wrote it you can't distinguish is it an English paper or is it an econs paper right make sure you got your economic t Okay the last one here it's um slowing of economic growth okay so um because of the question phrasing what is the trade-off involved right opportunity cost for gone so this is inaccurate because all you needed to do this trade-off is you know because I do this so the other one you know that is um a negative impact so all we want to see is that it's just say that you know in this case it's a fa right because the other thing here it's if you look at what examiner is saying I'm trying to do a highlight if you write economic growth slows in other words what this means is that your national income is increasing but at a slower rate so it doesn't show what is the tradeoff involved okay so therefore this is inaccurate not accepted right okay so that's all I have for you okay so I'm going to pass time over to miss