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

What is context 1?

Same I did the second one and used some detail I researched last night! Went well, spent too long on the 15 marker and not sure about the MCQ where it said reasons why the inflation is like it is now in the uk coz I'm not sure what level it actually is but ah well, think it was much MUCH better than micro, thank god...probs still have to resist next year lol

We can't resit, can we?
I have such terrible timing. Section A was done in ten mins so I had to go over it so I wasted another ten.

Ugh, wasn't a huge fan of this paper, for the ten marker I mostly wrote about a fall in disposable income leading to a fall in money for consumption and savings. And evaluated with the fact that base interest rates may not be constant at 0.5% and could fall even though unlikely, so the Bank of England could introduce QE. Drew a diagram and said it may lead to deflation which could reduce costs for consumers. What did you guys get for the q about the increase in income from the multiplier

What was the 6 marker again?

Asked about two reasons the rate of inflation fell, I wrote about interest rates being low causing an initial spike but due to investment leading to a rise in AS in the long run causing disinflationary pressure

I thought it was a shift in sras due to lower cost of production i.e fuel prices so reduction in cost push inflation

What I wrote for the 15 marker was that the MPC should be worried about deflation. Firstly I said that inflation is at the lowest it has ever been and said that they should look at using the expansionary MPC because the economy is really close to falling into deflation. Evaluated that by saying that interest rates are already low but inflation is still low, meaning that manipulating interest rates to change inflation is uneffective and they should use quantitative easing instead. Also I mentioned that it is a worrying factor because there are no certain tools which the MPC can use to get out of deflation and mentioned that we can become like Japan. Saying that deflation is bad because people are constantly not going to consume because they will know that prices are always falling they'll keep on waiting till it gets low instead of purchasing now, hence a negative impact on AD occurs

Asked about two reasons the rate of inflation fell, I wrote about interest rates being low causing an initial spike but due to investment leading to a rise in AS in the long run causing disinflationary pressure

I thought it was a shift in sras due to lower cost of production i.e fuel prices so reduction in cost push inflation

Is it just me or did anyone else find the 10 marker on real incomes kinda hard? What did you guys talk about for that question?