OCR Economics F585 June 2012

I know that! Any explanation?
All i got is that increasing the money supply of the yuan puts downward pressure on interest rates and for a 6 marker that isn't a lot lol

Could you say how if interest rates are increased to prevent exchange rate from depreciating it causes conflict with maintaining econ growth and explain why and if interest rates are increased to prevent exchange rate from appreciating it causes conflict with maintaining stable prices and explain why or is that just repetition of the point I made before lol?
. I think that there's very limited stuff to say on that.. Hopefully that would be a 4 marker if anything :/

This is all in unit 2 though

Okay, can someone clarify something please?
Chinese economy can be rebalanced through inflation right?
This would mean that exports will drop as chinese producers lose international competitiveness, but doesn't inflation mean that the value of the currency will drop? Meaning that exports will be cheaper, and demand increase given it is elastic? :| Or am I confusing myself with something else?

I was looking at the possible 20 marker on China's export ban, and what impact it would have on growth and development.

I thought that one point you could make is the impact on growth and development depends on the reaction of the WTO, China wants to stop 95% of all rare earths being circulated into the global economy. Surely as the WTO tries to encourage things like market liberalisation this ban goes against everything they stand for, so they may attempt to prevent the ban, meaning that there would be no impact on growth and development. I believe the WTO could do this as in 2009 they did successfully prevent a trade dispute between China and the USA (even though the dispute has re-emerged).

Inflation is a rise in the price of goods and services the value of the currency will drop but that won't make the goods any cheaper... I think
It's def true that the inflation still makes the goods relatively more expensive

Extent to which the ban will be a threat to growth and development
3rd and final point:
restrictions on trade will have the effect of reducing the volume of trade and this does against free trade principles of the WTO of which china is a member
L3 analysis:
decline in trade will undermine the benefit of specialisation by comparative advantagemeaning higher prices, lower real incomes in the developed world and reduction in global growth
Restrictions can lead to retaliation leading to further falls in trade which will affect even chinese export led growth having a adverse effect on growth and development
L4 eval: effect dependant on marshal lerner condition

Can you expand this, I don't really understand how to evaluate that

Hmm.. If value of Yuan decreases, then surely exports will be cheaper for rest of the world? How does that balance the economy?

Fixed exchange rate...

Inflation up = imports "relatively" cheaper, exports relatively more expensive. Imports rise, exports fall. CA worsens. High imports, low exports = D for £ low, S of £ high = depreciation.
Depreciation will fix this problem. Makes imports relatively more expensive, exports relatively cheaper. CA rebalanced.

point 2 = marshal-lerner.

(Credit to uxa595)