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Edexcel AS Economics (New Spec) Unit 2 - 23rd May 2016

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Reply 220
Hi guys.

How would i evaluate Macroeconomic objective conflicts ?

Also In supply side policies it is clear and easy to evaluate Policies, eg- Education/training may involve large opportunity cost for governments. You can clearly identify the different policies however how would you do that for supply side policies ? In other words how can you think of points to answer such us
"Evaluate the effectiveness of Monetary and Fiscal Policies"

Thanks.
Original post by Baghel
Hi guys.

How would i evaluate Macroeconomic objective conflicts ?

Also In supply side policies it is clear and easy to evaluate Policies, eg- Education/training may involve large opportunity cost for governments. You can clearly identify the different policies however how would you do that for supply side policies ? In other words how can you think of points to answer such us
"Evaluate the effectiveness of Monetary and Fiscal Policies"

Thanks.


Evaluating Monetary Policy:

If on fixed rate mortgage: no affect on consumption

Depends on other factors such as income

Depends on magnitude of interest rate

Depends on consumer confidence

Time lag between base rate and consumer interest rates

Government fiscal policy may affect/counteract

Depends on level of spare capacity (AS inelastic or not)

Exchange rates may affect AD

Change in Base rate may not affect consumer rates if banks are financially suffering

Banks may not be willing to lend, despite QE

Evaluating Fiscal Policy:

Depends on Marginal propensity to save

Depends on consumer & firms' confidence

If consumption rises as a result of low tax, imports may rise, causing opposite effect on AD

If multiplier is small, infrastructure spending has less impact

Nor as effective at stimulating AD if LRAS (inelastic AS)

Time lags of infrastructure spending

Increased national debt

Worsened current account (Expansionary F.P)

Not as effective if real incomes rising (Contractionary F.P)

Taxes may cause disincentive to work

Original post by Baghel
Hi guys.

How would i evaluate Macroeconomic objective conflicts ?

Also In supply side policies it is clear and easy to evaluate Policies, eg- Education/training may involve large opportunity cost for governments. You can clearly identify the different policies however how would you do that for supply side policies ? In other words how can you think of points to answer such us
"Evaluate the effectiveness of Monetary and Fiscal Policies"

Thanks.


It is too broad to answer 'evaluate macro objective conflicts'

Maybe you could provide some examples for some conflicts which we can try and evaluate?
Original post by Bruce267099
Can someone explain what the negative multiplier effect is and how it is started?


I was just confused about this too.So obvs there are withdrawals and injections to the circular flow of income.The multiplier looks at the effect after an initial injection/withdrawal to an economy.1/MPW = multiplier effect It can also be written as 1/(1-MPC) [since].Anyway... where there's a fall in export revenue, consumption or investment there will be a negative multiplier effect. [Either MPC, MPX and MPC become negative.]That's different to a reverse multiplier- where one of the component of MPW increase. If MPW is closer to 1 (than the MPC), the multiplier is lower; if MPW is closer to 0, the multiplier is higher.
That is, as far as I know.
Hope that helps..
Reply 224
Few questions while studying macro

1. When do we ever have to write about elasticity of demand in macro? Is it just the demand for imports or exports or specifically in which evaluation should we use it on?

2. can anyone please exlain what redistributional cost is for the costs of inflation? I just don't knnow where to approach it

3, In one of my sheets I got "government instability" as a constraint of economic growth. Do any of you guys get this.....?

4, For the Phillips curve, is it the conflict between unemployment and inflation? Then is inflation and wage inflation the same thing? :frown:

5. Can anyone explain the impact on distribution of income/wealth of changing interest rates? This, I really don't get.

Thanks guys xx good luck tomorrow!
Reply 225
Original post by Bruce267099
Can someone explain what the negative multiplier effect is and how it is started?


Isnt it just that the postivie multiplier effect is for instance if government spends money of $100 this would become income for other peope, and goes on like that so if the MPW was 0.2, the multiplier would be 5, which has a total of $500 in the economy

And the negative multiplier effect is if the goverment decides to cut spending of $100, this would be just the same but -.

Feel free to fix me tho!
Original post by 17lina
Few questions while studying macro

1. When do we ever have to write about elasticity of demand in macro? Is it just the demand for imports or exports or specifically in which evaluation should we use it on?

2. can anyone please exlain what redistributional cost is for the costs of inflation? I just don't knnow where to approach it

3, In one of my sheets I got "government instability" as a constraint of economic growth. Do any of you guys get this.....?

4, For the Phillips curve, is it the conflict between unemployment and inflation? Then is inflation and wage inflation the same thing? :frown:

5. Can anyone explain the impact on distribution of income/wealth of changing interest rates? This, I really don't get.

Thanks guys xx good luck tomorrow!


1. Inelasticity of LRAS: can lead to demand pull inflation
2. I don't understand what you are asking? (redistribution of income?)
3. The reason for this is that economic growth can be unsustainable, leading to inflation or bubbles. For instance inflation in Germany led to the rise of the Nazi party, or the UK Lawson Boom in 1980s
4.Yes and Yes (wage inflation leads to cost-push inflation)
5. Increasing interest rates makes it more expensive for consumers to borrow. This is likely to affect low incomes the most, worsening income distribution

:wink:
Hi guys, do you know when an opposing viewpoint is the same as an evaluation or are they separate? Because the opposing viewpoint of an argument could be the evaluation
Original post by rosemondtan
Hi guys, do you know when an opposing viewpoint is the same as an evaluation or are they separate? Because the opposing viewpoint of an argument could be the evaluation


I asked this to my teacher on the last day. (Well done in asking your question in one sentence, it took me ages put this into words and to ask this to my teacher)

They said that an opposing point can act as an evaluation.
So evaluations could be:
- Opposing argument, depends on..., magnitude, elasticities...

If a question says evaluate something, I would make all of my analysis points about one side of the argument, and evaluate with the opposing, or general evaluative points
Original post by harryleavey
I asked this to my teacher on the last day. (Well done in asking your question in one sentence, it took me ages put this into words and to ask this to my teacher)

They said that an opposing point can act as an evaluation.
So evaluations could be:
- Opposing argument, depends on..., magnitude, elasticities...

If a question says evaluate something, I would make all of my analysis points about one side of the argument, and evaluate with the opposing, or general evaluative points


I'd give you infinite rep if I could. :woo: thank you!!!
I dont feel ready for this exam. My heads all over the place and I cant seem to focus down on one thing
Original post by Diastal
I dont feel ready for this exam. My heads all over the place and I cant seem to focus down on one thing


Don't worry about it. What you don't know now, you probably won't know tomorrow.

Just have a relaxing evening. Stressing is only going to make things worse.

I would recommend doing a past paper to boost your confidence.

Remember that the exam isn't final. This AS is linear, so this result will not contribute to your overall A-Level. I know some people who are not even doing this AS exam, because they know they are studying economics next year.

Go over the specification, and revise things you are not too sure on: http://hleavey.site/qjHgUl

Good luck :smile:
(edited 7 years ago)
[QUOTE=harryleavey;65047237]Don't worry about it. What you don't know now, you probably won't know tomorrow.

Just have a relaxing evening. Stressing is only going to make things worse.

I would recommend doing a past paper to boost your confidence.

Remember that the exam isn't final. This AS is linear, so this result will not contribute to your overall A-Level.

Go over the specification, and revise things you are not too sure on: http://hleavey.site/qjHgUl

Good luck :smile:

The thing is, I know everything I need to know for the exam. I'm not worried about not covering everything on the spec because I have. I just feel like giving up and I don't have much motivation to do any past papers. I've also been having headaches recently. And no, although the course is linear I still need to do well in these exams because unis see how well you did in your AS exams and isn't that what uni's use to decide whether or not they'll accept you?
Original post by Diastal
The thing is, I know everything I need to know for the exam. I'm not worried about not covering everything on the spec because I have. I just feel like giving up and I don't have much motivation to do any past papers. I've also been having headaches recently. And no, although the course is linear I still need to do well in these exams because unis see how well you did in your AS exams and isn't that what uni's use to decide whether or not they'll accept you?

Not sure what I can suggest. go to sleep?
Original post by 17lina
Few questions while studying macro

1. When do we ever have to write about elasticity of demand in macro? Is it just the demand for imports or exports or specifically in which evaluation should we use it on?

2. can anyone please exlain what redistributional cost is for the costs of inflation? I just don't knnow where to approach it

3, In one of my sheets I got "government instability" as a constraint of economic growth. Do any of you guys get this.....?

4, For the Phillips curve, is it the conflict between unemployment and inflation? Then is inflation and wage inflation the same thing? :frown:

5. Can anyone explain the impact on distribution of income/wealth of changing interest rates? This, I really don't get.

Thanks guys xx good luck tomorrow!


By government instability, they mean there's a lack of transparency, corruption, political tension or possibly even wars that's keeping the country from growing. They're unable to attract investment. The government is likely to have a fiscal deficit and so it can't spend much money to encourage growth.
Reply 235
can someone explain rpi
Reply 236
Can someone give me an example of a 20 mark question,, because i'm not sure how to structure it, thankyou
Original post by ruta999
Can someone give me an example of a 20 mark question,, because i'm not sure how to structure it, thankyou


20 Mark Structure:
Original post by ruta999
can someone explain rpi


RPI:
A measure of the price level which has been calculated in the UK for over 60 years and is used in a variety of contexts such as by the government to index welfare benefits

How is the living costs & food survey completed?

1.

Asks 11,500 households chosen randomly to record what they spend over 2 weeks

2.

Used to decide a 'basket': 650 goods & services (for which price info is collected in the next survey)

3.

RPI and CPI are weighted to reflect importance of different expenditures in the basket

Explain what weighting is, with regard to CPI and RPIIn the Living Costs and food survey:weighting is used to understand the relative importance of each good or service in the basket - done using proportion of income spent on goode.g if 10% of income is spent on food, then 10% out of 100 weighting is assigned to food
Outline the main differences between RPI and CPI

International comparisons: CPI used in all EU countries

Calculation Method: RPI: Arithmetic mean for prices > CPI: Geometric mean for prices

Housing Costs: CPI excludes items related to housing e.g mortgage interest rates

Population Covered: CPI covers all households, RPI excludes extreme 4%

Reply 239
Original post by harryleavey
20 Mark Structure:


Thankyou!!

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