The Definitive Diagram Drill — WEC12

N13 | Version 3 — N-Standard Rebuild | VERIDIAN™

21 min read

#Pearson Edexcel IAL Economics WEC12/01

Not affiliated with or endorsed by Pearson Edexcel.

#PART 1: THE NON-NEGOTIABLE RULES — MEMORISE BEFORE DRAWING ANYTHING

These are not guidelines. They are confirmed mark-loss triggers from every WEC12 examiner report 2019–2026.

#RULE 1 — AXIS LABELS (confirmed zero-tolerance, every series)

AD/AS DIAGRAMS:
┌──────────────────────────────────────────────────────┐
│  Y-AXIS: "Price level"                               │
│  X-AXIS: "Real output" OR "Real GDP"                 │
└──────────────────────────────────────────────────────┘
CONFIRMED WRONG — K mark lost every time:
  ✗ "Price"        ✗ "Prices"       ✗ "P"
  ✗ "Output"       ✗ "Quantity"     ✗ "Q"  ✗ "GDP"

PHILLIPS CURVE — AXES ARE COMPLETELY DIFFERENT:
┌──────────────────────────────────────────────────────┐
│  Y-AXIS: "Inflation rate (%)"                        │
│  X-AXIS: "Unemployment rate (%)"                     │
└──────────────────────────────────────────────────────┘
CONFIRMED WRONG on Phillips Curve:
  ✗ "Price level" on Y-axis (that's AD/AS, not SRPC)
  ✗ "Real output" on X-axis (that's AD/AS, not SRPC)

Why this is the highest-priority rule: The K mark on a Draw question is awarded for basic correct features — the axis labels are the first thing examined. A student who draws a perfect diagram with wrong axis labels loses the K mark immediately, maximum 3/4. This is a pure technique error that costs marks every time regardless of economics knowledge.

#RULE 2 — DOTTED LINES TO BOTH AXES

Every equilibrium point requires dotted lines to both the Y-axis (price level) and the X-axis (real output). Lines to one axis only = App mark lost per incomplete equilibrium.

CORRECT:                    WRONG:
Price level                 Price level
   │ P₂ ─ ─ ─ ─●               │     ●  (no lines)
   │ P₁ ─ ─ ─●  │               │
   └─────┬───┬──             └──────────
        Y₁  Y₂                (no dotted lines to either axis)

#RULE 3 — ZERO TEXT ON DRAW QUESTIONS

Confirmed Oct 2021 examiner report verbatim: "There are no marks for additional text which some candidates have included to support their diagram."

Written explanations alongside a Draw diagram earn zero marks. If you feel the need to explain the diagram in words, it means the diagram itself is incorrect. Fix the diagram. Delete the text.

#RULE 4 — SHIFT ARROWS

Every curve shift requires an arrow showing the direction of movement.

CORRECT:                    WRONG:
  AD₂                         AD₂
  ↗ (arrow showing shift)      (no arrow — examiner
  AD₁                         cannot confirm direction)

#CONSEQUENCE TABLE — EXACT MARK COST PER ERROR

Error	Mark lost	Source
Y-axis: "Price" not "Price level"	K mark = −1	Confirmed every series
X-axis: "Output" not "Real output"	K mark = −1	Confirmed every series
No dotted lines to Y-axis at equilibrium	App −1 per equilibrium	Mark scheme requirement
No dotted lines to X-axis at equilibrium	App −1 per equilibrium	Mark scheme requirement
Shift direction wrong	App shift −1	Mark scheme requirement
Written text alongside diagram	0 for all text, 0 AO1 on text	Oct 2021 examiner report
LRAS drawn upward sloping	K mark −1 (fundamental error)	Mark scheme
SRAS drawn vertical	K mark −1 (confuses SRAS/LRAS)	Mark scheme
Both equilibria missing labels (P₁/Y₁)	App marks lost	Mark scheme
Phillips curve: "Price level" on Y-axis	K mark −1 (wrong diagram type)	Mark scheme

#PART 2: THE SAME DIAGRAM AT THREE LEVELS

Using the AD shift scenario: "Draw a diagram to show the effect of expansionary monetary policy on an economy."

#LEVEL 2 VERSION (2/4 — what earns half marks)

Student's diagram described:

Y-axis labelled "Price" ← WRONG (K mark lost)
X-axis labelled "Output" ← WRONG (K mark still lost)
AD curve drawn downward sloping ✓
Arrow showing AD shifts right ✓
New equilibrium marked with a dot but no dotted lines to either axis

What the examiner sees:

"Price"  │       LRAS
         │        │
         │        │
    P₂ ──┤─ ─ ─ ─●     ← dot present but no dotted lines
    P₁ ──┤─ ─ ●         ← same problem
         └────────────
              "Output"
              (WRONG label)

Mark: 2/4. K lost (axis labels). App partial (shift direction present but equilibria incomplete). AN available but limited by K/App failure.

Exact fixes needed to reach 3/4: Change "Price" → "Price level" (one word change, +1 mark) Change "Output" → "Real output" (one word change, +1 mark)

#LEVEL 3 VERSION (3/4 — one element missing)

Y-axis: "Price level" ✓
X-axis: "Real output" ✓
LRAS: vertical line labelled ✓
AD₁ and AD₂ both labelled ✓
Arrow on AD showing rightward shift ✓
Original equilibrium: dot at P₁/Y₁ with dotted lines to Y-axis only ← missing X-axis dotted line
New equilibrium: dot at P₂/Y₂ with dotted lines to Y-axis only ← same issue

What the examiner sees:

Price level │       LRAS
            │        │
        P₂ ─┤─ ─ ─ ─●    ← line to Y-axis ✓ but not to X-axis ✗
        P₁ ─┤─ ─ ●        ← same
            └──────────
                Real output

Mark: 3/4. K ✓ (correct labels). App partial — dotted lines incomplete. The App mark for each equilibrium requires lines to both axes.

Exact fix to reach 4/4: Add dotted lines from each equilibrium point down to the X-axis. 10 seconds. +1 mark.

#LEVEL 4 VERSION (4/4 — complete and correct)

Price level │        LRAS
            │         │
        P₂ ─ ─ ─ ─ ─ ─│─ ─ ─●
            │         │    ↗AD₂
        P₁ ─ ─ ─ ─ ─ ─●
            │         │  AD₁
            └─────────┼────────────
                     Yfe    Real output
                     (=Y₁=Y₂ if at full employment)
                     OR Y₁  Y₂ if below Yfe

Five elements present:

Y-axis: "Price level" ✓
X-axis: "Real output" ✓
LRAS vertical at Yfe, labelled ✓
Original equilibrium P₁/Y₁: dot + dotted lines to both axes ✓
New equilibrium P₂/Y₂: dot + dotted lines to both axes + arrow on AD ✓

Mark: 4/4. Zero written text anywhere.

#PART 3: ALL EIGHT DIAGRAM TYPES — COMPLETE REFERENCE

#DIAGRAM 1 — AD/LRAS: EXPANSIONARY DEMAND-SIDE POLICY

When to use: AD shifts right — fiscal stimulus, monetary easing, any policy that raises aggregate demand.

Key relationship: If AD shifts right at full employment → P rises, Y stays at Yfe (demand-pull inflation only). If AD shifts right below Yfe → both P and Y rise.

Price level │        LRAS
            │         │
        P₂ ─┼─ ─ ─ ─ ─┼─ ─ ─●    ← new equilibrium (at full employment:
        P₁ ─┼─ ─ ─ ─ ─●          Y unchanged; below Yfe: Y₂ > Y₁)
            │          │       ↗AD₂
            │          │   AD₁
            └──────────┼──────────
                      Yfe   Real output

The exam insight: At full employment, AD rightward shift raises ONLY price level — real output cannot exceed Yfe (LRAS is the ceiling). This is why expansionary policy at full employment generates demand-pull inflation without real growth — the most important diagram implication for essay content.

Written reference sentence: "As the diagram illustrates, when the economy is at full employment, the rightward AD shift raises the price level from P₁ to P₂ without increasing real output beyond Yfe — confirming that demand-side stimulus generates demand-pull inflation rather than real growth when no spare capacity exists."

#DIAGRAM 2 — AD/SRAS: COST-PUSH SHOCK (STAGFLATION)

When to use: Supply shock (energy prices, import costs, wage rises above productivity) — SRAS shifts LEFT.

The stagflation rule: SRAS shifts left = P rises AND Y falls simultaneously. Both happen in the same diagram. This is the only scenario that generates this combination.

Price level │
            │     SRAS₂  SRAS₁
        P₂ ─┼─ ─ ─ ─●           ← new equilibrium: HIGHER price
        P₁ ─┼─ ─ ─ ─ ─ ─ ─●    ← original equilibrium
            │
            └──────────────────
                  Y₂    Y₁   Real output
                  (Y FALLS)

Critical annotation: Y₂ is to the LEFT of Y₁. Y falls. P₂ is ABOVE P₁. P rises. Both happen simultaneously. This is stagflation.

The policy dilemma this diagram creates: Rate rises to reduce P₂ would compress AD further, worsening the fall in Y — making the recession deeper to control inflation. This is why cost-push inflation cannot be resolved through monetary tightening alone without accepting a recession.

The wrong version to avoid: Many students draw SRAS shifting RIGHT for a cost-push shock. SRAS shifts LEFT when costs rise (firms supply less at every price). SRAS shifts RIGHT when costs fall or productivity improves.

#DIAGRAM 3 — AD/LRAS: SUPPLY-SIDE POLICY (NON-INFLATIONARY GROWTH)

When to use: Education investment, infrastructure, R&D — anything shifting long-run productive potential.

The key claim: LRAS shifts right → Yfe rises → non-inflationary growth because supply expands alongside demand.

Price level │     LRAS₁  LRAS₂
            │      │      │
        P₁ ─┼─ ─ ─●      │
        P₂ ─┼─ ─ ─ ─ ─ ─●    ← P₂ LOWER than P₁ (supply expands)
            │      │      │
            │    AD│      │
            └──────┼──────┼──────────
                  Yfe₁  Yfe₂   Real output

The distinction from Diagram 1: AD shift → P rises (inflationary). LRAS shift → P falls slightly (disinflationary). Same real output increase, opposite price effects. This is why supply-side policy generates non-inflationary growth — the most important claim in supply-side essay content.

#DIAGRAM 4 — NEGATIVE OUTPUT GAP

When to use: Economy operating below potential — recession context, spare capacity argument.

Price level │     LRAS
            │      │    SRAS
        Pe ─┼─ ─ ─ ●          ← actual equilibrium (below Yfe)
            │      │
            │    AD │
            └───────┼──────────
                   Ye Yfe  Real output
                   ←gap→

The negative output gap: Ye < Yfe. Actual output left of potential. Spare capacity and cyclical unemployment.

The positive output gap (demand-pull inflation context): Ye > Yfe — AD has shifted right beyond LRAS, generating demand-pull inflation.

Memory rule: Negative gap = actual LEFT of potential. Positive gap = actual RIGHT of potential (beyond capacity).

#DIAGRAM 5 — SHORT-RUN PHILLIPS CURVE (SRPC)

AXES CHANGE — this is the most commonly confused diagram.

Inflation   │
rate (%)    │●  A (low unemployment, high inflation)
            │  \
            │   \  SRPC
            │    \
            │     ● B (high unemployment, low inflation)
            └────────────────
                  Unemployment rate (%)
           NAIRU
           (vertical LRPC)

The axis alert:

Y-axis: "Inflation rate (%)" — NOT "Price level"
X-axis: "Unemployment rate (%)" — NOT "Real output"

Movement ALONG the SRPC = demand-side policy changing unemployment. Moving from B toward A = expansionary policy reducing unemployment but raising inflation.

SHIFT of the SRPC = supply shock or expectations change. The whole curve moves upward/leftward = same unemployment level now generates higher inflation.

The LRPC = vertical line at NAIRU. No permanent trade-off in the long run. Expansionary policy that pushes unemployment below NAIRU generates only inflation, not permanently lower unemployment.

#DIAGRAM 6 — J-CURVE (CURRENT ACCOUNT AFTER DEPRECIATION)

Axes:

Y-axis: "Current account balance" (zero line in the middle — positive above, deficit below)
X-axis: "Time"

CA balance │
  surplus  │          -─────────
     0 ────┼──────-            ←── Long run: CA improves
  deficit  │     ↓  -────
           │   ↙    ← Short run: CA worsens first
           │ (depreciation occurs here)
           └──────────────────────────
                        Time

The J-shape:

Short run (the dip): import volumes unchanged (pre-existing contracts), but import costs rise in domestic currency → CA worsens
Long run (the recovery): import volumes fall, export volumes rise as price elasticities respond → CA improves

The Marshall-Lerner condition: Long-run improvement only if PED(exports) + PED(imports) > 1. If both are inelastic, J-curve recovery doesn't materialise.

#DIAGRAM 7 — PPF (PRODUCTION POSSIBILITY FRONTIER)

Axes:

Y-axis: "Good B" (or named good)
X-axis: "Good A" (or named good)

Good B
  │●
  │  ●─────PPF₂ (outward shift = potential growth)
  │   ●
  │    ●──PPF₁
  │     ●   ← efficient (on PPF₁)
  │      ●
  │   × ←── inefficient (inside PPF₁ = spare capacity)
  └───────────────
              Good A

Three positions:

ON PPF₁: productively efficient — all resources used
INSIDE PPF₁: inefficient — spare capacity (where cyclical unemployment exists)
PPF₂: potential growth — supply-side investment shifts the frontier outward

The essay connection: Moving from inside PPF₁ to the frontier = actual growth (demand-side policy closes the output gap). PPF shifting to PPF₂ = potential growth (supply-side policy raises the ceiling).

#DIAGRAM 8 — CIRCULAR FLOW OF INCOME

Layout:

INJECTIONS (I + G + X)
                    ↓
HOUSEHOLDS ──────────────────→ FIRMS
   ↑   (factor services)          │
   └────────────────────────────←─┘
         (income payments)
                    ↑
         WITHDRAWALS (S + T + M)

The equilibrium condition: I + G + X = S + T + M The multiplier context: Any injection (I, G, or X) generates rounds of spending until withdrawn through saving, tax, or imports.

#PART 4: WRONG vs RIGHT — THE FIVE MOST COMMON ERRORS

#ERROR 1 — "Price" on Y-axis

WRONG:          CORRECT:
"Price"  │      "Price level"  │
         │                     │

Mark consequence: K mark lost immediately = maximum 3/4 on any Draw question. One word change. Zero economics knowledge required. Pure technique error.

#ERROR 2 — SRAS drawn vertical

WRONG:              CORRECT:
Price level │       Price level │
            │SRAS               │      SRAS
            ││                  │    ╱
            ││   ← vertical     │  ╱      ← upward sloping
            ││   (this is LRAS) │╱
            └──                 └──

SRAS is upward sloping. LRAS is vertical. Drawing SRAS vertical confuses the two — examiner reads fundamental misconception about the difference between short-run and long-run supply.

#ERROR 3 — Cost-push: SRAS shifts RIGHT instead of LEFT

WRONG:                  CORRECT:
Energy costs rise       Energy costs rise
→ SRAS shifts RIGHT     → SRAS shifts LEFT

SRAS₁ SRAS₂             SRAS₂ SRAS₁
  ╱     ╱   ← wrong!      ╱     ╱   ← correct
(P falls, Y rises)        (P RISES, Y FALLS = stagflation)

When costs rise, SRAS shifts LEFT (firms supply less at every price level). SRAS shifts right only when costs fall or productivity improves.

#ERROR 4 — LRAS shifts left for a negative output gap

WRONG:                  CORRECT:
Recession occurs        Recession occurs
→ LRAS shifts left      → AD shifts LEFT (not LRAS)

(LRAS = productive      LRAS stays put.
capacity. A recession   AD contracts, creating
doesn't destroy         a negative output gap
productive potential    between AD intersection
immediately)            and LRAS.

Recessions reduce actual output (AD falls), not potential output (LRAS stays). Hysteresis eventually damages LRAS — but in the short run, the recession diagram shows AD shifting left, not LRAS.

#ERROR 5 — Phillips Curve with AD/AS axis labels

WRONG:                  CORRECT:
"Price level"           "Inflation rate (%)"
      │                       │
      │  SRPC                 │  SRPC
      │ ╲                     │ ╲
      └─────────             └─────────
        "Real output"           "Unemployment rate (%)"

The Phillips Curve is not an AD/AS diagram. It uses completely different axes. A student who draws SRPC with "Price level" and "Real output" has drawn the wrong type of diagram entirely — zero marks likely.

#PART 5: DIAGNOSE YOUR DIAGRAM — FIVE STUDENT DESCRIPTIONS

Five students describe what they drew. Find the one that matches your output. Apply the fix.

DESCRIPTION 1: "I drew two axes. On the Y I wrote 'Prices' and on the X I wrote 'Real Output'. I drew a downward sloping AD curve and a vertical LRAS. I marked the equilibrium where they cross and drew new AD to the right to show an expansionary policy."

Level: 2/4. Y-axis error: "Prices" not "Price level" — K mark lost. X-axis: "Real Output" acceptable (capitalisation doesn't matter). Equilibrium: No mention of dotted lines to both axes — likely missing. Fix: Change to "Price level" (one word). Add dotted lines from equilibrium to BOTH axes. These two changes: +2 marks.

DESCRIPTION 2: "I drew the AD/AS diagram with 'Price level' and 'Real output' correctly labelled. I drew LRAS vertical and AD downward sloping. I marked P₁ and Y₁ at the original equilibrium with dotted lines going across to the Y-axis. Then I shifted AD right and marked the new P₂ and Y₂."

Level: 3/4. Axes: correct ✓ Equilibria: dotted lines to Y-axis only — X-axis dotted lines missing for both equilibria. Fix: Add dotted lines from each equilibrium point DOWN to the X-axis as well as across. One additional line per equilibrium. +1 mark.

DESCRIPTION 3: "I drew LRAS vertical with a label. I drew SRAS upward sloping with a label. I drew AD downward sloping. I labelled all curves. I marked original equilibrium P₁/Y₁ with dotted lines to both axes. Then I shifted LRAS right to show supply-side policy — drew LRAS₂ and marked new equilibrium P₂/Y₂ with dotted lines to both axes. I also wrote underneath: 'This shows how supply-side policy increases productive capacity.'"

Level: 3/4. Everything structurally correct. But written text present ("This shows how...") earns zero and may confuse the examiner. Oct 2021 confirmed: no marks for additional text. Fix: Delete all written text. The diagram speaks for itself. If the text is there, the examiner ignores it — but it wastes time and risks annotation confusion. +0 marks from removing it, but no mark loss. The actual issue here is whether SRAS was needed (for supply-side it's LRAS shift only — SRAS presence isn't wrong but unnecessary).

DESCRIPTION 4: "I drew the cost-push inflation scenario. Y-axis 'Price level', X-axis 'Real output'. I drew SRAS and AD. For the cost-push, I drew SRAS shifting to the RIGHT and marked new equilibrium with lower price and higher output."

Level: 1/4. SRAS direction: WRONG. Cost-push shifts SRAS LEFT (rising costs → firms supply less at every price). Shifting right shows the opposite: a supply improvement. New equilibrium: WRONG direction — P falls and Y rises is the opposite of cost-push stagflation. Fix: SRAS shifts LEFT. New equilibrium: P₂ HIGHER than P₁ AND Y₂ LOWER than Y₁. Both price rise and output fall simultaneously = stagflation.

DESCRIPTION 5: "I drew a Phillips Curve. Y-axis: 'Inflation rate (%)', X-axis: 'Unemployment rate (%)'. Downward sloping SRPC from top-left to bottom-right. Labelled NAIRU with a vertical LRPC dotted line. Marked two points — A (low unemployment, high inflation) and B (high unemployment, low inflation). No written text."

Level: 4/4. All elements correct. Axis labels ✓. Shape ✓. NAIRU/LRPC ✓. Two points labelled ✓. No text ✓. This is Level 4. Nothing to fix.

#PART 6: AO MAPPING — WHY EACH ELEMENT EXISTS

COMPONENT                   AO IT SATISFIES
─────────────────────────────────────────────────────────

Axis labels                 AO1 — "Accurate and precise
"Price level" / "Real output"  knowledge." Imprecise labels
                            indicate imprecise knowledge.

Curve shapes                AO1 — AD downward sloping,
(AD down, SRAS up, LRAS     SRAS upward sloping, LRAS
vertical)                   vertical. Shape encodes
                            economic relationship.

Shift direction              AO2 — "Ability to apply
(AD right for expansion,    knowledge in context." The
SRAS left for cost-push)    correct direction shows the
                            scenario has been understood.

Dotted lines to both axes   AO2 — "Using relevant
at both equilibria          examples fully integrated."
                            The coordinates confirm the
                            student knows P₁/Y₁ and
                            P₂/Y₂ — not just that they
                            moved.

No written text             AO3 (Draw questions) — the
                            diagram IS the analytical
                            chain. Text alongside a Draw
                            diagram earns zero because
                            the question asks for the
                            diagram, not a written
                            explanation.

#PART 7: THE 60-SECOND DIAGRAM CHECKLIST — BEFORE EVERY DRAW

□ Y-axis: "Price level" (or "Inflation rate %" for SRPC)?
□ X-axis: "Real output" / "Real GDP" (or "Unemployment rate %" for SRPC)?
□ All curves labelled (AD, SRAS, LRAS, etc.)?
□ Shift direction: correct for this scenario?
□ Original equilibrium: dot + dotted lines to BOTH axes + P₁/Y₁ labelled?
□ New equilibrium: dot + dotted lines to BOTH axes + P₂/Y₂ labelled?
□ Shift arrow: present on the moved curve?
□ ZERO written text anywhere on the diagram?

If ALL eight boxes checked = 4/4. Time: 4-5 minutes.

#PART 8: THE 10-MINUTE DRILL PROTOCOL

Five diagram types in 10 minutes — from memory.

Cover this document. Draw each diagram on blank paper. Check against the reference descriptions above. Score yourself.

Diagram	Time	K mark check	App mark check
AD/LRAS — expansionary	2 min	"Price level" + "Real output"	Dotted lines to both axes at P₁/Y₁ AND P₂/Y₂
AD/SRAS — cost-push	2 min	Same axis labels	SRAS shifts LEFT, P₂ higher + Y₂ lower
LRAS shift — supply-side	2 min	Same axis labels	LRAS₂ to right of LRAS₁, P₂ slightly lower
SRPC — Phillips curve	2 min	"Inflation rate (%)" + "Unemployment rate (%)"	SRPC downward sloping, NAIRU labelled
Negative output gap	2 min	Same AD/AS axes	Ye to LEFT of Yfe, gap labelled

Scoring: 5/5 correct: diagrams are exam-ready. Move on to essay practice. 3–4/5 correct: identify the failed diagram type. Reread its section. Redraw twice. Below 3/5: return to Part 2 (same diagram at three levels) before drilling again.

#PART 9: THE SAME COST-PUSH DIAGRAM AT THREE LEVELS

Question: "Draw a diagram to show the effect of a rise in imported raw material costs."

LEVEL 2 (2/4): Y-axis: "Price level" ✓ X-axis: "Real output" ✓ SRAS drawn upward sloping ✓ SRAS shifts to the RIGHT ✗ — WRONG DIRECTION New equilibrium: lower P, higher Y ✗ — the opposite of cost-push

Mark: 2/4. K ✓ (axis labels correct, shapes correct). App ✗ (wrong shift direction — cost-push = SRAS LEFT not right).

This is the most common error on cost-push diagrams. Rising costs reduce what firms supply at every price — SRAS shifts LEFT. SRAS shifts RIGHT only when costs fall or productivity improves.

LEVEL 3 (3/4 — direction correct, one equilibrium incomplete): Y-axis: "Price level" ✓ X-axis: "Real output" ✓ SRAS₁ upward sloping, SRAS₂ to the LEFT of SRAS₁ ✓ Arrow on SRAS showing leftward shift ✓ Original equilibrium P₁/Y₁: dot + dotted lines to Y-axis only ✗ — missing X-axis dotted line New equilibrium P₂ (higher)/Y₂ (lower): dot + dotted lines to Y-axis only ✗ — same problem

Mark: 3/4. Direction correct. Both equilibria partially correct but missing X-axis dotted lines on both.

Fix: Add dotted lines from each equilibrium DOWN to the X-axis. 10 seconds each. +1 mark.

LEVEL 4 (4/4 — complete):

Price level │    SRAS₂  SRAS₁
            │      ╱      ╱
        P₂  ─ ─ ─●         ← new equilibrium (P HIGHER, Y LOWER)
        P₁  ─ ─ ─ ─ ─ ─ ─●  ← original equilibrium
            │              ╱  AD (unchanged)
            └──────────────────
                 Y₂   Y₁   Real output
                 ← Y FALLS

All elements: Y-axis "Price level" ✓, X-axis "Real output" ✓, SRAS₂ LEFT of SRAS₁ ✓, arrow on shift ✓, original P₁/Y₁ dotted lines to BOTH axes ✓, new P₂/Y₂ dotted lines to BOTH axes ✓.

The stagflation annotation (earns the AO3 mark): P₂ is ABOVE P₁. Y₂ is BELOW Y₁. Both happen simultaneously. This is the cost-push stagflation scenario — the only diagram where price rises and output falls together. Label it: "stagflation: P↑ and Y↓ simultaneously."

#PART 10: THE SAME PHILLIPS CURVE AT THREE LEVELS

Question: "Draw a Short-Run Phillips Curve showing the trade-off between inflation and unemployment."

LEVEL 2 (2/4 — wrong axis labels): Y-axis: "Price level" ✗ — this is the AD/AS axis, NOT the Phillips Curve axis X-axis: "Real output" ✗ — same error SRPC: downward sloping ✓ Two points labelled ✓

Mark: 2/4. K ✗ (wrong axes — the student has drawn AD/AS axes on a Phillips Curve, showing fundamental confusion between diagram types). Everything else correct but wrong axes = K mark lost.

This is the most common Phillips Curve error. The axis labels completely change between diagram types.

LEVEL 3 (3/4 — correct axes, missing NAIRU/LRPC): Y-axis: "Inflation rate (%)" ✓ X-axis: "Unemployment rate (%)" ✓ SRPC: downward sloping from top-left to bottom-right ✓ Two points labelled (A: low unemployment/high inflation; B: high unemployment/low inflation) ✓ LRPC (vertical at NAIRU): ABSENT ✗

Mark: 3/4. K ✓. App ✓ (two points correctly placed). Missing LRPC = one App mark lost.

Fix: Add a vertical dotted line at the NAIRU point labelled "LRPC" and mark "NAIRU" on the X-axis. 20 seconds. +1 mark.

LEVEL 4 (4/4 — complete):

Inflation   │●  A (3% unemployment, 8% inflation)
rate (%)    │  ↘
            │   ↘  SRPC
         2% ┼    ↘
            │     ● B (6% unemployment, 2% inflation)
            │          │
            └──────────┼────────────
               NAIRU   6%     Unemployment rate (%)
                       ↑
                      LRPC (vertical)

All elements: Y-axis "Inflation rate (%)" ✓, X-axis "Unemployment rate (%)" ✓, SRPC downward sloping ✓, two points labelled ✓, LRPC vertical at NAIRU ✓, NAIRU marked on X-axis ✓.

Zero written text. The diagram is self-contained.

#PART 11: WHICH DIAGRAM FOR WHICH QUESTION — DECISION TREE

QUESTION ASKS ABOUT:

Demand-side policy effect on price/output?
→ AD/AS (LRAS or SRAS depending on policy type)
  Monetary/fiscal/consumer demand → AD shifts
  Supply-side → LRAS shifts
  Cost shock → SRAS shifts

Trade-off between inflation and unemployment?
→ Phillips Curve (SRPC + LRPC at NAIRU)
  Movement along SRPC = demand-side policy
  Shift of SRPC = supply shock or expectations

Current account after depreciation (over time)?
→ J-curve (CA balance vs time)

Output gap (actual vs potential)?
→ AD/AS showing Ye left of Yfe (negative)
  or Ye right of Yfe (positive/inflationary)

Long-run productive potential change?
→ PPF shift outward OR LRAS shift rightward
  (use PPF for growth potential; AD/AS for macro effects)

The anti-confusion rule: If the question asks about UNEMPLOYMENT AND INFLATION TOGETHER → Phillips Curve. If it asks about price level and output → AD/AS. Never mix these.

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