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

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ruta999
Original post by harryleavey
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%


Thankyou!!!
Original post by harryleavey
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%



Its not 11,500 households, it is 7000 households
Original post by Hot&SpicyChicken
Its not 11,500 households, it is 7000 households


The target is 11,500. Hence why I wrote 'Asks'

However the textbook probably says 6000-7000 as only between 50-60% of the people contacted actually decide to take part.
If someone refuses to take part, they do not find someone else.

You can use this as a disadvantage of the LCF: if only one person responds: that is what the basket of goods is based upon (This is very unlikely though as they offer a £10 gift card to anyone who takes part, and £5 to children who take part)

http://hleavey.site/ugttDf Page 5

I hope this makes sense. Sorry if anyone was confused by 11,500
(edited 7 years ago)
Can anyone take some broad guesses at what the essay questions could be on?
Would be helpful as I'm running low on time. Also if anyone can link me to flashcards or notes specific to our course that would be nice.
Original post by harryy99
Can anyone take some broad guesses at what the essay questions could be on?
Would be helpful as I'm running low on time. Also if anyone can link me to flashcards or notes specific to our course that would be nice.


I have over 1000 macro flascards:
https://s.tudy.it/ebh3p

Oh and, SNAP - That is a great name you've got there
(edited 7 years ago)
Original post by harryy99
Can anyone take some broad guesses at what the essay questions could be on?
Would be helpful as I'm running low on time. Also if anyone can link me to flashcards or notes specific to our course that would be nice.


Or there is a Quizlet deck on definitions here: https://quizlet.com/_2bh3cn
increasing taxation acts as a disincentive to work. workers' earnings would be lower so they might prefer claiming benefits than working hence a decrease in employment
Original post by lilavocado
increasing taxation acts as a disincentive to work. workers' earnings would be lower so they might prefer claiming benefits than working hence a decrease in employment


Yes, the technical term for this is the replacement ratio: a ratio between income out of work (on benefits) vs income in work (on a wage)
Original post by brickbybrick
Does anyone have adapted papers like there were for unit 1?

Only one see attached i made it for myself so no mark scheme but in same style as exam tommorow and new spec stuff in it
homemade past paper theme 2 economics.docx298.8KB
Hi, can someone please explain Purchasing Power Parities? I've done some reading around it but I don't quite understand. I know it has something to do with exchange rates but I'm unclear.
Original post by amelienine
Hi, can someone please explain Purchasing Power Parities? I've done some reading around it but I don't quite understand. I know it has something to do with exchange rates but I'm unclear.


It is used to adjust GDP to relative costs of living in each country.
It is considered more accurate than just using exchange rates to adjust GDP.

For instance the value of $1 in China will buy you a lot more than the value of $1 in Norway.

https://www.youtube.com/watch?v=S5xqBK6s4bI
Can someone help me with this question:

'Discuss the likely impact of both a lack of investment and an appreciation of the British Pound on 'inflationary pressures' in the UK' (15 marks)

Was unsure what it means by 'inflationary presures'
(edited 7 years ago)
How do you actually flesh out your paragraphs how are you meant to Analyse and gives chains of Analysis could someone and also how are you meant to Evaluate could someone write an example paragraph please?
Original post by LordHeskey
Can someone help me with this question:

'Discuss the likely impact of both a lack of investment and an appreciation of the British Pound on 'inflationary pressures' in the UK'

Was unsure what it means by 'inflationary presures'


Inflationary pressure just means inflation.

If investment falls/lack of:
Cost push inflation:
Cost push: if there is a lack of investment, capital stock will depreciate, causing the productive potential to fall. This causes a fall in AS. This is cost push inflation.
However if investment falls, AD falls this can reduce inflationary pressures as demand pull inflation is reduced.

An appreciation of the pound will cause imports to become cheaper. This means that the demand for imports increases. As a result AD decreases. Therefore inflationary pressures are reduced.
index numbers.pdf

Please could someone tell me how the answers in the green boxes were figured out. Thanks!
Original post by bulletman54
How do you actually flesh out your paragraphs how are you meant to Analyse and gives chains of Analysis could someone and also how are you meant to Evaluate could someone write an example paragraph please?


Do not 'flesh out' paragraphs. Be concise and include a diagram.

Your question on 'how to evaluate' is at too general. There are endless ways of evaluating. If you can provide a point, I will evaluate it for you.

Remember to use the extract in your analysis and evaluation also.
Original post by harryleavey
Inflationary pressure just means inflation.

If investment falls/lack of:
Cost push inflation:
Cost push: if there is a lack of investment, capital stock will depreciate, causing the productive potential to fall. This causes a fall in AS. This is cost push inflation.
However if investment falls, AD falls this can reduce inflationary pressures as demand pull inflation is reduced.

An appreciation of the pound will cause imports to become cheaper. This means that the demand for imports increases. As a result AD decreases. Therefore inflationary pressures are reduced.


Thanks:smile:
Original post by harryleavey
Do not 'flesh out' paragraphs. Be concise and include a diagram.

Your question on 'how to evaluate' is at too general. There are endless ways of evaluating. If you can provide a point, I will evaluate it for you.

Remember to use the extract in your analysis and evaluation also.

ok for example if you had the question Evaluate the likely impact of higher inflation on three macroeconomics objectives
what would an example paragraph look like and how would you evaluate
Original post by nicoleb132
index numbers.pdf

Please could someone tell me how the answers in the green boxes were figured out. Thanks!


This was from Tutor2U right?
The second one is actually wrong.
For the first one:
The base index is Q3 of 2014. So you will need to calculate percentage change between 74,459 and 70,061

So use change/original * 100
-4398/74,459 * 100 = -5.9

So the index for Q4 of 2013: 100- 5.9 = 94.09 (ignore the rounding error)
What does the term 'bubbles in asset prices mean'?

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