Mastering Theme 2: The Paper 1 Backbone

Most students think Theme 2 is just about memorizing business concepts... ...but here's what

your teachers won't tell you. Theme 2 is actually the backbone of Paper 1...

...because it connects microeconomic theory to real business decisions. When you study aggregate demand,

you're not just learning a curve. You're understanding why Apple holds billions in cash reserves

during economic uncertainty. The business cycle section directly links to Theme 1's market failures.

Remember when airlines collapsed during COVID? That's Theme 2's economic cycle meeting Theme 1's externalities

in action. Here's the trick nobody teaches. Every subsection in Theme 2 has

a mirror concept in macroeconomics. Productivity links to long-run growth. Exchange rates affect