Help on this AS Economics Question needed!

this question is an opinionated question which means as long as you fully explain why it is then you'll get the marks

this question is judging how important to you are the economic objectives. I say the uk has a better economy as the unemployment rate is a lot lower this shows that the economy is close to maximum efficiency . Also the inflation rate is near the 2% mark which shows that there is spending and there should be consumer + business confidence

Original post by dp00

I have just started AS Level Economics! Our teacher has given us this short question to do, but I am not sure how to do it! I have attached an image of the question, so would anyone mind helping me to answer it? I would really appreciate it!

Reply 5

BasicMistake

18

That is a terrible question. How many marks is it?

I would say the UK because it has healthy inflation (closer to the 2% target) and lower unemployment which suggests growth. It is quite subjective really, I don't see the balance of trade as particularly important when it comes to economic performance and GDP per capita is relatively similar.

Reply 6

Blimey1000

UK - although key indicators like GDP growth, Interest Rates etc are missing. You need to use the phrase "ceteris parabus" (other thing being equal) in your answer.

Reasoning:-

Optimal inflation is c2% (zero inflation is not good for a country).
Optimal Unemployment (structural employment is c3-5%)
Optimal Balance of Payment should be zero.
GDP per capita the higher the better
Debt to GDP the lower the better.

Reply 7

Optimal Balance of Payment should be zero. No its not.... the higher the better, the more money coming into the country the better

Original post by Blimey1000

UK - although key indicators like GDP growth, Interest Rates etc are missing. You need to use the phrase "ceteris parabus" (other thing being equal) in your answer.

Reasoning:-

Optimal inflation is c2% (zero inflation is not good for a country).
Optimal Unemployment (structural employment is c3-5%)
Optimal Balance of Payment should be zero.
GDP per capita the higher the better
Debt to GDP the lower the better.

Reply 8

Blimey1000

Original post by zainyyyyy

Optimal Balance of Payment should be zero. No its not.... the higher the better, the more money coming into the country the better

True - However Balance of Payment is a zero sum game, there will be political repercussion.

Reply 9

how you mean

Original post by Blimey1000

True - However Balance of Payment is a zero sum game, there will be political repercussion.

Reply 10

Blimey1000

Original post by zainyyyyy

how you mean

Assume there are only 2 countries in the world A and B and a constant money supply, if A is buying less and selling more to B (running a balance surplus against B), the majority of the money will go to A. As times goes by, B will become "poorer" in monetary term and they may protect themselves by imposing tariff.

Case example .. China vs USA now, Japan vs USA in the 80's. Also look at Germany - they have a huge surplus now, if the surplus continues for a long time other govt will re-act.

(edited 7 years ago)

Reply 11

every individual country wants a surplus, assuming we care about other countries we would do so many things differently such as regulations

Original post by Blimey1000

Assume there are only 2 countries in the world A and B and a constant money supply, if A is buying less and selling more to B (running a balance surplus against B), the majority of the money will go to A. As times goes by, B will become "poorer" in monetary term and they may protect themselves by imposing tariff.

Case example .. China vs USA now, Japan vs USA in the 80's. Also look at Germany - they have a huge surplus now, if the surplus continues for a long time other govt will re-act.

Reply 12

Jane122