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323

11 Dec 2025

1 page

A Level Economics Theme 2 Overview Mind Map

D

Douglas Chigonda

@douglaschigonda_rogz

Macroeconomics might seem overwhelming, but it's actually about understanding the... Show more

Caves CA
deyicir
High unit labour cos
Reccession cur
templbynor and growth
Song ER
for quality
High inalarion
Demand side Sola
AD ley Shut
•

Understanding Economic Growth and Inflation

Economic growth happens when an economy produces more goods and services over time. You'll see this measured through changes in Gross Domestic Product (GDP), which tracks the total value of everything a country produces.

Inflation occurs when prices generally rise across the economy. There are two main types you need to know: demand-pull inflation (when there's too much demand chasing too few goods) and cost-push inflation (when production costs increase, forcing prices up). The Consumer Price Index (CPI) measures inflation by tracking price changes in a basket of goods that typical households buy.

Aggregate Supply (AS) represents the total amount of goods and services producers are willing to supply at different price levels. Short-Run Aggregate Supply (SRAS) can shift due to changes in production costs, whilst Long-Run Aggregate Supply (LRAS) depends on factors like productivity improvements, technology advances, and investment levels.

Quick Tip: Remember that LRAS represents the economy's maximum possible output - it's like the economy's speed limit!

Components of Economic Activity

Aggregate Demand (AD) shows the total spending in an economy and includes four key components. Consumption makes up over 60% of GDP and represents household spending on goods and services. This is influenced by factors like disposable income, interest rates, and consumer confidence.

Gross investment refers to business spending on capital goods like machinery and buildings. Don't confuse this with net investment, which accounts for depreciation (the wearing out of existing capital). Investment decisions are heavily influenced by interest rates and business expectations (sometimes called "animal spirits").

Government spending and net exports (exports minus imports) complete the AD equation. Net exports are affected by exchange rates, trade policies, and protectionism measures that countries might implement.

Key Formula: Remember that AD = Consumption + Investment + Government Spending + Net Exports C+I+G+(XM)C + I + G + (X-M)

Balance of Payments and Income Distribution

The balance of payments tracks all economic transactions between a country and the rest of the world. It's split into three main accounts: the current account (trade in goods and services plus income flows), the financial account (transactions changing ownership of assets), and the capital account (transfers of assets and patents).

National income represents the total income earned by a country's factors of production. This gets distributed as wages to workers, rent to landowners, and dividends to shareholders. Understanding this flow helps explain how economic growth translates into improved living standards.

The multiplier effect shows how an initial increase in spending leads to a larger overall rise in national income. This happens because one person's spending becomes another person's income, creating a ripple effect throughout the economy.

Real-World Connection: When the government invests in infrastructure, the multiplier effect means the economic benefits extend far beyond the initial spending - it's like dropping a stone in a pond and watching the ripples spread!



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4.8/5

Google Play

The app is very easy to use and well designed. I have found everything I was looking for so far and have been able to learn a lot from the presentations! I will definitely use the app for a class assignment! And of course it also helps a lot as an inspiration.

Stefan S

iOS user

This app is really great. There are so many study notes and help [...]. My problem subject is French, for example, and the app has so many options for help. Thanks to this app, I have improved my French. I would recommend it to anyone.

Samantha Klich

Android user

Wow, I am really amazed. I just tried the app because I've seen it advertised many times and was absolutely stunned. This app is THE HELP you want for school and above all, it offers so many things, such as workouts and fact sheets, which have been VERY helpful to me personally.

Anna

iOS user

Best app on earth! no words because it’s too good

Thomas R

iOS user

Just amazing. Let's me revise 10x better, this app is a quick 10/10. I highly recommend it to anyone. I can watch and search for notes. I can save them in the subject folder. I can revise it any time when I come back. If you haven't tried this app, you're really missing out.

Basil

Android user

This app has made me feel so much more confident in my exam prep, not only through boosting my own self confidence through the features that allow you to connect with others and feel less alone, but also through the way the app itself is centred around making you feel better. It is easy to navigate, fun to use, and helpful to anyone struggling in absolutely any way.

David K

iOS user

The app's just great! All I have to do is enter the topic in the search bar and I get the response real fast. I don't have to watch 10 YouTube videos to understand something, so I'm saving my time. Highly recommended!

Sudenaz Ocak

Android user

In school I was really bad at maths but thanks to the app, I am doing better now. I am so grateful that you made the app.

Greenlight Bonnie

Android user

very reliable app to help and grow your ideas of Maths, English and other related topics in your works. please use this app if your struggling in areas, this app is key for that. wish I'd of done a review before. and it's also free so don't worry about that.

Rohan U

Android user

I know a lot of apps use fake accounts to boost their reviews but this app deserves it all. Originally I was getting 4 in my English exams and this time I got a grade 7. I didn’t even know about this app three days until the exam and it has helped A LOT. Please actually trust me and use it as I’m sure you too will see developments.

Xander S

iOS user

THE QUIZES AND FLASHCARDS ARE SO USEFUL AND I LOVE THE SCHOOLGPT. IT ALSO IS LITREALLY LIKE CHATGPT BUT SMARTER!! HELPED ME WITH MY MASCARA PROBLEMS TOO!! AS WELL AS MY REAL SUBJECTS ! DUHHH 😍😁😲🤑💗✨🎀😮

Elisha

iOS user

This apps acc the goat. I find revision so boring but this app makes it so easy to organize it all and then you can ask the freeeee ai to test yourself so good and you can easily upload your own stuff. highly recommend as someone taking mocks now

Paul T

iOS user

The app is very easy to use and well designed. I have found everything I was looking for so far and have been able to learn a lot from the presentations! I will definitely use the app for a class assignment! And of course it also helps a lot as an inspiration.

Stefan S

iOS user

This app is really great. There are so many study notes and help [...]. My problem subject is French, for example, and the app has so many options for help. Thanks to this app, I have improved my French. I would recommend it to anyone.

Samantha Klich

Android user

Wow, I am really amazed. I just tried the app because I've seen it advertised many times and was absolutely stunned. This app is THE HELP you want for school and above all, it offers so many things, such as workouts and fact sheets, which have been VERY helpful to me personally.

Anna

iOS user

Best app on earth! no words because it’s too good

Thomas R

iOS user

Just amazing. Let's me revise 10x better, this app is a quick 10/10. I highly recommend it to anyone. I can watch and search for notes. I can save them in the subject folder. I can revise it any time when I come back. If you haven't tried this app, you're really missing out.

Basil

Android user

This app has made me feel so much more confident in my exam prep, not only through boosting my own self confidence through the features that allow you to connect with others and feel less alone, but also through the way the app itself is centred around making you feel better. It is easy to navigate, fun to use, and helpful to anyone struggling in absolutely any way.

David K

iOS user

The app's just great! All I have to do is enter the topic in the search bar and I get the response real fast. I don't have to watch 10 YouTube videos to understand something, so I'm saving my time. Highly recommended!

Sudenaz Ocak

Android user

In school I was really bad at maths but thanks to the app, I am doing better now. I am so grateful that you made the app.

Greenlight Bonnie

Android user

very reliable app to help and grow your ideas of Maths, English and other related topics in your works. please use this app if your struggling in areas, this app is key for that. wish I'd of done a review before. and it's also free so don't worry about that.

Rohan U

Android user

I know a lot of apps use fake accounts to boost their reviews but this app deserves it all. Originally I was getting 4 in my English exams and this time I got a grade 7. I didn’t even know about this app three days until the exam and it has helped A LOT. Please actually trust me and use it as I’m sure you too will see developments.

Xander S

iOS user

THE QUIZES AND FLASHCARDS ARE SO USEFUL AND I LOVE THE SCHOOLGPT. IT ALSO IS LITREALLY LIKE CHATGPT BUT SMARTER!! HELPED ME WITH MY MASCARA PROBLEMS TOO!! AS WELL AS MY REAL SUBJECTS ! DUHHH 😍😁😲🤑💗✨🎀😮

Elisha

iOS user

This apps acc the goat. I find revision so boring but this app makes it so easy to organize it all and then you can ask the freeeee ai to test yourself so good and you can easily upload your own stuff. highly recommend as someone taking mocks now

Paul T

iOS user

 

Economics

323

11 Dec 2025

1 page

A Level Economics Theme 2 Overview Mind Map

D

Douglas Chigonda

@douglaschigonda_rogz

Macroeconomics might seem overwhelming, but it's actually about understanding the big picture of how our economy works. This covers everything from why prices rise (inflation) to how countries measure their economic success through GDP and trade balances.

Caves CA
deyicir
High unit labour cos
Reccession cur
templbynor and growth
Song ER
for quality
High inalarion
Demand side Sola
AD ley Shut
•

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Understanding Economic Growth and Inflation

Economic growth happens when an economy produces more goods and services over time. You'll see this measured through changes in Gross Domestic Product (GDP), which tracks the total value of everything a country produces.

Inflation occurs when prices generally rise across the economy. There are two main types you need to know: demand-pull inflation (when there's too much demand chasing too few goods) and cost-push inflation (when production costs increase, forcing prices up). The Consumer Price Index (CPI) measures inflation by tracking price changes in a basket of goods that typical households buy.

Aggregate Supply (AS) represents the total amount of goods and services producers are willing to supply at different price levels. Short-Run Aggregate Supply (SRAS) can shift due to changes in production costs, whilst Long-Run Aggregate Supply (LRAS) depends on factors like productivity improvements, technology advances, and investment levels.

Quick Tip: Remember that LRAS represents the economy's maximum possible output - it's like the economy's speed limit!

Components of Economic Activity

Aggregate Demand (AD) shows the total spending in an economy and includes four key components. Consumption makes up over 60% of GDP and represents household spending on goods and services. This is influenced by factors like disposable income, interest rates, and consumer confidence.

Gross investment refers to business spending on capital goods like machinery and buildings. Don't confuse this with net investment, which accounts for depreciation (the wearing out of existing capital). Investment decisions are heavily influenced by interest rates and business expectations (sometimes called "animal spirits").

Government spending and net exports (exports minus imports) complete the AD equation. Net exports are affected by exchange rates, trade policies, and protectionism measures that countries might implement.

Key Formula: Remember that AD = Consumption + Investment + Government Spending + Net Exports C+I+G+(XM)C + I + G + (X-M)

Balance of Payments and Income Distribution

The balance of payments tracks all economic transactions between a country and the rest of the world. It's split into three main accounts: the current account (trade in goods and services plus income flows), the financial account (transactions changing ownership of assets), and the capital account (transfers of assets and patents).

National income represents the total income earned by a country's factors of production. This gets distributed as wages to workers, rent to landowners, and dividends to shareholders. Understanding this flow helps explain how economic growth translates into improved living standards.

The multiplier effect shows how an initial increase in spending leads to a larger overall rise in national income. This happens because one person's spending becomes another person's income, creating a ripple effect throughout the economy.

Real-World Connection: When the government invests in infrastructure, the multiplier effect means the economic benefits extend far beyond the initial spending - it's like dropping a stone in a pond and watching the ripples spread!

We thought you’d never ask...

What is the Knowunity AI companion?

Our AI Companion is a student-focused AI tool that offers more than just answers. Built on millions of Knowunity resources, it provides relevant information, personalised study plans, quizzes, and content directly in the chat, adapting to your individual learning journey.

Where can I download the Knowunity app?

You can download the app from Google Play Store and Apple App Store.

Is Knowunity really free of charge?

That's right! Enjoy free access to study content, connect with fellow students, and get instant help – all at your fingertips.

Most popular content in Economics

Most popular content

Can't find what you're looking for? Explore other subjects.

Students love us — and so will you.

4.9/5

App Store

4.8/5

Google Play

The app is very easy to use and well designed. I have found everything I was looking for so far and have been able to learn a lot from the presentations! I will definitely use the app for a class assignment! And of course it also helps a lot as an inspiration.

Stefan S

iOS user

This app is really great. There are so many study notes and help [...]. My problem subject is French, for example, and the app has so many options for help. Thanks to this app, I have improved my French. I would recommend it to anyone.

Samantha Klich

Android user

Wow, I am really amazed. I just tried the app because I've seen it advertised many times and was absolutely stunned. This app is THE HELP you want for school and above all, it offers so many things, such as workouts and fact sheets, which have been VERY helpful to me personally.

Anna

iOS user

Best app on earth! no words because it’s too good

Thomas R

iOS user

Just amazing. Let's me revise 10x better, this app is a quick 10/10. I highly recommend it to anyone. I can watch and search for notes. I can save them in the subject folder. I can revise it any time when I come back. If you haven't tried this app, you're really missing out.

Basil

Android user

This app has made me feel so much more confident in my exam prep, not only through boosting my own self confidence through the features that allow you to connect with others and feel less alone, but also through the way the app itself is centred around making you feel better. It is easy to navigate, fun to use, and helpful to anyone struggling in absolutely any way.

David K

iOS user

The app's just great! All I have to do is enter the topic in the search bar and I get the response real fast. I don't have to watch 10 YouTube videos to understand something, so I'm saving my time. Highly recommended!

Sudenaz Ocak

Android user

In school I was really bad at maths but thanks to the app, I am doing better now. I am so grateful that you made the app.

Greenlight Bonnie

Android user

very reliable app to help and grow your ideas of Maths, English and other related topics in your works. please use this app if your struggling in areas, this app is key for that. wish I'd of done a review before. and it's also free so don't worry about that.

Rohan U

Android user

I know a lot of apps use fake accounts to boost their reviews but this app deserves it all. Originally I was getting 4 in my English exams and this time I got a grade 7. I didn’t even know about this app three days until the exam and it has helped A LOT. Please actually trust me and use it as I’m sure you too will see developments.

Xander S

iOS user

THE QUIZES AND FLASHCARDS ARE SO USEFUL AND I LOVE THE SCHOOLGPT. IT ALSO IS LITREALLY LIKE CHATGPT BUT SMARTER!! HELPED ME WITH MY MASCARA PROBLEMS TOO!! AS WELL AS MY REAL SUBJECTS ! DUHHH 😍😁😲🤑💗✨🎀😮

Elisha

iOS user

This apps acc the goat. I find revision so boring but this app makes it so easy to organize it all and then you can ask the freeeee ai to test yourself so good and you can easily upload your own stuff. highly recommend as someone taking mocks now

Paul T

iOS user

The app is very easy to use and well designed. I have found everything I was looking for so far and have been able to learn a lot from the presentations! I will definitely use the app for a class assignment! And of course it also helps a lot as an inspiration.

Stefan S

iOS user

This app is really great. There are so many study notes and help [...]. My problem subject is French, for example, and the app has so many options for help. Thanks to this app, I have improved my French. I would recommend it to anyone.

Samantha Klich

Android user

Wow, I am really amazed. I just tried the app because I've seen it advertised many times and was absolutely stunned. This app is THE HELP you want for school and above all, it offers so many things, such as workouts and fact sheets, which have been VERY helpful to me personally.

Anna

iOS user

Best app on earth! no words because it’s too good

Thomas R

iOS user

Just amazing. Let's me revise 10x better, this app is a quick 10/10. I highly recommend it to anyone. I can watch and search for notes. I can save them in the subject folder. I can revise it any time when I come back. If you haven't tried this app, you're really missing out.

Basil

Android user

This app has made me feel so much more confident in my exam prep, not only through boosting my own self confidence through the features that allow you to connect with others and feel less alone, but also through the way the app itself is centred around making you feel better. It is easy to navigate, fun to use, and helpful to anyone struggling in absolutely any way.

David K

iOS user

The app's just great! All I have to do is enter the topic in the search bar and I get the response real fast. I don't have to watch 10 YouTube videos to understand something, so I'm saving my time. Highly recommended!

Sudenaz Ocak

Android user

In school I was really bad at maths but thanks to the app, I am doing better now. I am so grateful that you made the app.

Greenlight Bonnie

Android user

very reliable app to help and grow your ideas of Maths, English and other related topics in your works. please use this app if your struggling in areas, this app is key for that. wish I'd of done a review before. and it's also free so don't worry about that.

Rohan U

Android user

I know a lot of apps use fake accounts to boost their reviews but this app deserves it all. Originally I was getting 4 in my English exams and this time I got a grade 7. I didn’t even know about this app three days until the exam and it has helped A LOT. Please actually trust me and use it as I’m sure you too will see developments.

Xander S

iOS user

THE QUIZES AND FLASHCARDS ARE SO USEFUL AND I LOVE THE SCHOOLGPT. IT ALSO IS LITREALLY LIKE CHATGPT BUT SMARTER!! HELPED ME WITH MY MASCARA PROBLEMS TOO!! AS WELL AS MY REAL SUBJECTS ! DUHHH 😍😁😲🤑💗✨🎀😮

Elisha

iOS user

This apps acc the goat. I find revision so boring but this app makes it so easy to organize it all and then you can ask the freeeee ai to test yourself so good and you can easily upload your own stuff. highly recommend as someone taking mocks now

Paul T

iOS user