Global analysis is a chain of consequences, ideally anchored to a diagram. For example:
AO3 Analysis — build the chain
Global analysis is a chain of consequences, ideally anchored to a diagram. For example:
Worked example
Model chain — a currency depreciation
The currency depreciates → exports become cheaper abroad and imports dearer at home → if Marshall-Lerner holds (PEDx + PEDm > 1), net exports rise → AD rises → higher growth and employment → therefore the current account improves and output expands… but the J-curve means it worsens first, and dearer imports raise inflation.
AO4 Evaluation — the MICE toolkit
| Letter | Prompt | Unit 4 example |
|---|---|---|
| M — Magnitude | How big is the effect? | How large are the elasticities? How big the depreciation or tariff? |
| I — It depends | On what conditions? | On Marshall-Lerner, the J-curve, and the stage of development. |
| C — Counter-argument | What's the other side? | Imported inflation, retaliation, or trade diversion may offset the gains. |
| E — Economic context | Which time frame & economy? | Short vs long run; developed vs developing economy. |
Exam tip
Unit 4 rewards real-world examples and elasticity thinking. Whenever you mention a depreciation, a tariff or the terms of trade, ask "how elastic is demand?" — that single question powers most of your evaluation.
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