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Revision/Discussion Thread Edexcel Economics Unit 2 Friday 25th of May 2012

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Reply 40
Original post by QwertyG
Damn this exam man I need 90+ UMS for this sheit, 30 marks questions are actually do able but its those 12 mark questions which do my head in


yeah i agree, 30 marker question are easy to write about cos they can usually be answered in many ways, but 12 mark questions seem to be more narrow and specific, i find it harder to think of answers for them, *sigh*
Reply 41
Original post by QwertyG
Its the way the questions are given which does my head in, in the 30 mark you know the question is going to be on policy conflicts or how X could improve with the use of SSP or MP or FP


lol I personally think that Unit 2 is easier :smile: hehe
Can somebody explain to me the multiplier effect
Reply 43
Original post by Jamiesonn
Can somebody explain to me the multiplier effect


I don't really know 'the definition' but i remember it as though whenever there is an injection into the circular flow of income, it has a greater than proportionate effect on the overall output. for example the government pumping in 20million leads to 40million as it travels through from firms to households? ish? somebody else help me here :smile:
Reply 44
Original post by Jamiesonn
Can somebody explain to me the multiplier effect


an initial change in AD can have a greater final impact on equilibrium national income, i.e. the multiplier effect, it comes about because injections of demand into the circular flow of income stimulates further rounds of spending.

basically, if government spend more money, then that directly adds to AD, higher spending= more jobs created and work done, this leads to more people employed---> spending money---> higher consumption, hence an even higher AD---> businesses making more profits and expanding/investing/supplying more--> hiring more worker---> more people spending money/higher consumer disposable income--> higher consumption again---> AD rises further...etc etc....
a multiplying effect.

one effect of aggregate demend may stimulate further rounds of AD going up. this can also apply for the reverse, as in AD falling back if the multiplier effect is working in contraction.
Reply 45
What resources are you lot using to revise the unit Anforme book is useless.
Could someone please please explain the wealth effect and influences from inflation or economic growth on it please.L!?!?
Reply 47
Original post by liabhimani
Could someone please please explain the wealth effect and influences from inflation or economic growth on it please.L!?!?


Inflation means that MPC may raise interest rates to fight it. An increase in interest rate means that mortgage interest repayments will increase and so will have a negative wealth effect on UK economy since majority people in the UK owns a mortgage. This will cause consumer confidence to fall and thus lead to fall in consumption, hence a decrease in AD.

Economic growths means that house prices could be increasing. This will have a positive wealth effect as most people have houses as part of their wealth. So increase in house prices will increase people's wealth. Therefore, people will be more confidence and thus spend more.

Evaluation could be that fixed mortgage holder will not be affected by raise in interest rates.
Original post by MOMI5K
an initial change in AD can have a greater final impact on equilibrium national income, i.e. the multiplier effect, it comes about because injections of demand into the circular flow of income stimulates further rounds of spending.

basically, if government spend more money, then that directly adds to AD, higher spending= more jobs created and work done, this leads to more people employed---> spending money---> higher consumption, hence an even higher AD---> businesses making more profits and expanding/investing/supplying more--> hiring more worker---> more people spending money/higher consumer disposable income--> higher consumption again---> AD rises further...etc etc....
a multiplying effect.

one effect of aggregate demend may stimulate further rounds of AD going up. this can also apply for the reverse, as in AD falling back if the multiplier effect is working in contraction.


Thanks

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Original post by ryanboi
Inflation means that MPC may raise interest rates to fight it. An increase in interest rate means that mortgage interest repayments will increase and so will have a negative wealth effect on UK economy since majority people in the UK owns a mortgage. This will cause consumer confidence to fall and thus lead to fall in consumption, hence a decrease in AD.

Economic growths means that house prices could be increasing. This will have a positive wealth effect as most people have houses as part of their wealth. So increase in house prices will increase people's wealth. Therefore, people will be more confidence and thus spend more.

Evaluation could be that fixed mortgage holder will not be affected by raise in interest rates.


Thank you so much!!!!!!!
What are the evaluation points for the multiplier effect? I know one is time lags but what else?
Reply 52
Original post by Jamiesonn
What are the evaluation points for the multiplier effect? I know one is time lags but what else?


With the multiplier effect you could talk about the size of the investment and how large the multiplier might be. You could also mention the size of withdrawals such as the propensity to save rather than continue to spend (this will reduce the effect of the multiplier).

Hope that helps :smile:


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Reply 53
bump?
Original post by shaminn
With the multiplier effect you could talk about the size of the investment and how large the multiplier might be. You could also mention the size of withdrawals such as the propensity to save rather than continue to spend (this will reduce the effect of the multiplier).

Hope that helps :smile:


This was posted from The Student Room's iPhone/iPad App


Thanks very much
Reply 55


I tip my hat and monocle to you sir, thank you.
Reply 56
what are the key diagrams bar the standard AD/AS ones?
Original post by ryanboi
x


I'm doing this exam but I'm only starting revision today so only 2 days revision. What do you think is the best way to revise so I can at least secure a C grade is it possible for me to get a C seeing as I'm only starting revision now? Thanks
Reply 58
Original post by Student296
I'm doing this exam but I'm only starting revision today so only 2 days revision. What do you think is the best way to revise so I can at least secure a C grade is it possible for me to get a C seeing as I'm only starting revision now? Thanks


you can easily get an A in this unit with not much revision, as long as you can wrap your head around main concepts and ideas. can follow a case study, you should be fine.
Reply 59
Is very hard. What you can do is, do at least 4 past papers (4 questions), find out what you don't understand from those 4 papers. Revise that. Then read through all the examiner reports and memorise facts that you don't feel confidence about. If you still have some time, pick on your weaknesses. If you are bad at 30 markers, do as many of that as possible.

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