AQA A2 Economics Unit 4 - June 20th

These are basically a list of everything you need to know for AQA unit 4. If you can answer all these questions, then you should be good for the exam, providing the structure is good. I've done the same thing for Unit 3 so have a look on that thread.

Where is the Unit 3 thread?

Reply 81

tarek1

[QUOTE="Axellia;37968387"]

Original post by tarek1

Where is the Unit 3 thread?

http://www.thestudentroom.co.uk/showthread.php?t=2007100&page=4&p=37962505#post37962505

Reply 82

gtcalder

Got a few questions from my textbook that I haven't been able to answer, can anybody help?

- What are the determinants of long term economic growth?
- What may be the effect of reducing unemployment below its natural rate?
- How may the NRU be reduced?

Thanks.

Reply 83

tarek1

Original post by gtcalder

Got a few questions from my textbook that I haven't been able to answer, can anybody help?

- What are the determinants of long term economic growth?
- What may be the effect of reducing unemployment below its natural rate?
- How may the NRU be reduced?

Thanks.

Long term economic growth:

- Looks more at supply side policies that increase productivity.
- Improving physical capital through training and education schemes, apprenticeships etc.
- Foreign direct investment, leads to innovation, availability of finance for businesses.
- Privatisation, leads to greater efficiency, and innovation due to profit motive.
- Tax relief on tech spending.
- Lower corporation tax.
- Also, demand side policies that increase AD, although there are some supply side that will increase AD as well.

What may be the effect of reducing unemployment below natural rate, or below NAIRU (non accelerating inflation rate of unemployment):

- Think of the phillips curve.
- Deflation, and poorer business performance since higher unemployment = to loss in domestic consumption.
- higher dependancy on state benefits, which can lead to high government borrowing, crowding out, leakages through interest rates, since buyers of bonds tend to be international investors.
- Loss in tax revenue for government.
- Loss in productivity.
- Also, there are social costs.
- Incentives, health effects, crime, black markets, inequality, hysteresis effect etc.

How may the natural rate of unemployment be reduced:

- This again looks more at supply side reforms.
- Policy reform to reduce unemployment trap, so reductions on benefits, progressive taxation.
- Training and education schemes, to improve physical capital, and hence make them more employable.
- Trade union reforms, to reduce the wage rate, and increase employment.
- Improve factor mobility, both occupational and geographical.
- There are also demand side policies such as:
- Tax reforms to encourage businesses to employ.
- reduce interest rates which = to increase investment, increase in AD, and employment opportunities.
- higher government expenditure on infrastructure leads to private finance initiative, and hence creates jobs.
- Grants and subsidies of poor performing industries and businesses, to improve business and hence employment.
- Links with developing and emerging markets ( BRICS) both politically and economically to provide opportunities for our financial industry as well as targeting them for future exports. Increases money into circular flow, and improves business performance involved with exports, and hence leads to employment opportunities.

I think thats about it, hope it helps, and if you disagree with anything, just let me know :smile:

Reply 84

gtcalder

Original post by tarek1

x

Thanks a lot for that, really appreciated!

So when it says '..how can you reduce the NRU' etc its just asking the same as how to reduce unemployment generally? Ah that's cleared a lot up, thanks. I was getting confused as to what exactly it was asking!

Is therefore the NRU also when the economy is operating on its PPF/LRAS?

Sorry to be a pain but could you explain the second one ie What may be the effect of reducing unemployment below natural rate? Why would it lead to a loss of tax revenue? Would it not ease pressure on the budget deficit as not as much is being paid out in benefits, JSA etc?

Thanks again.

Reply 85

xXACEXx

Original post by The Doggfather

Any particular topics you can get away without knowing?

Like for Econ 3 in January, I did not learn labour market

Well in section 1 there is always a choice between a question on trade globalisation or a question on the eurozone/euro.

I'm going to avoid the euro question and do the one one globalisation and trade

Reply 86

tarek1

Original post by gtcalder

Thanks a lot for that, really appreciated!

So when it says '..how can you reduce the NRU' etc its just asking the same as how to reduce unemployment generally? Ah that's cleared a lot up, thanks. I was getting confused as to what exactly it was asking!

Is therefore the NRU also when the economy is operating on its PPF/LRAS?

Sorry to be a pain but could you explain the second one ie What may be the effect of reducing unemployment below natural rate? Why would it lead to a loss of tax revenue? Would it not ease pressure on the budget deficit as not as much is being paid out in benefits, JSA etc?

Thanks again.

Im really sorry I misunderstood the second one, and basically wrote the opposite, I thought you meant what would the effect be of a higher natural unemployment rate (i.e. higher level of structural unemployment). So it's basically the opposite of everything I said for that one. Im sorry, hope i haven't confused you :s-smilie:

Basically when it says how can you reduce the NRU, then its basically saying how can you reduce the structural level of unemployment, and so you would focus on supply and demand side policies, that i highlighted, to increase the level of employment where inflation remains constant. And natural rate of unemployment is when the labour market is in equilibrium, where demand = supply. So if supply/ demand side policies where reformed to reduce NRU, then naturally either demand or supply curve would shift, reducing the NRU.

(edited 11 years ago)

Reply 87

gtcalder

Original post by tarek1

Im really sorry I misunderstood the second one, and basically wrote the opposite, I thought you meant what would the effect be of a higher natural unemployment rate (i.e. higher level of structural unemployment). So it's basically the opposite of everything I said for that one. Im sorry, hope i haven't confused you :s-smilie:

Basically when it says how can you reduce the NRU, then its basically saying how can you reduce the structural level of unemployment, and so you would focus on supply and demand side policies, that i highlighted, to increase the level of employment where inflation remains constant. And natural rate of unemployment is when the labour market is in equilibrium, where demand = supply. So if supply/ demand side policies where reformed to reduce NRU, then naturally either demand or supply curve would shift, reducing the NRU.

Ah yes I get it now; as structural and fiscal unemployment make up equilibrium unemployment which translates from a level to a rate which is the NRU? So to reduce NRU you reduce Frictional unemplyoment (by reducing the replacement ratio etc) and Structural unemployment (supply side policies, which you listed)

Thanks a lot for that, life saver! I don't think anyone could have had a bad as teacher as I did! Going through the spec basically teaching myself is far from ideal..

edit: apologies, but it would only let me rate one of your posts!

(edited 11 years ago)

Reply 88

howag

Hi, I was wondering what is meant when an exam question refers to private or public sectors and consumption or saving in those sectors...

Thanks in advance.

Reply 89

ilovecatsforlife

2

Anyone know if it's possible to revise the additional stuff within 6 days? As I have other exams that I'm revising for. I've got 88 in Unit 2 but don't normally leave it this late. Would it be possible to learn balance of payments, exchange rates, protectionism, trade, globalisation and EU within 6 days?

I say learn but it's more of 'refresh' than learn

Reply 90

megan.cl

Original post by ilovecatsforlife

Anyone know if it's possible to revise the additional stuff within 6 days? As I have other exams that I'm revising for. I've got 88 in Unit 2 but don't normally leave it this late. Would it be possible to learn balance of payments, exchange rates, protectionism, trade, globalisation and EU within 6 days?

I say learn but it's more of 'refresh' than learn

If you focus then I'd say so yes, i do this every year, as i can't focus untill i really have to and am under pressure. I'm doing the same but with added in Phillips Curve and Living Standards in 5 days, so you should be able too, just be sure to focus!

Reply 91

. . .

Original post by howag

Hi, I was wondering what is meant when an exam question refers to private or public sectors and consumption or saving in those sectors...

Thanks in advance.

Public sector is the government or state controlled sector. For example NHS and education is public sector as the government controls it pays wages etc..

Private sector is the sector controlled by non-government people so people like you and me.

I don't really get what you mean by consumption and saving in those sectors could you post the question.

Reply 92

. . .

Original post by tarek1

Im really sorry I misunderstood the second one, and basically wrote the opposite, I thought you meant what would the effect be of a higher natural unemployment rate (i.e. higher level of structural unemployment). So it's basically the opposite of everything I said for that one. Im sorry, hope i haven't confused you :s-smilie:

Basically when it says how can you reduce the NRU, then its basically saying how can you reduce the structural level of unemployment, and so you would focus on supply and demand side policies, that i highlighted, to increase the level of employment where inflation remains constant. And natural rate of unemployment is when the labour market is in equilibrium, where demand = supply. So if supply/ demand side policies where reformed to reduce NRU, then naturally either demand or supply curve would shift, reducing the NRU.

Wouldn't you reduce structural employment with just supply side policies and not demand side. How would you use demand side policies to reduce structural unemployment?

Reply 93

ilovecatsforlife

2

Original post by . .

Wouldn't you reduce structural employment with just supply side policies and not demand side. How would you use demand side policies to reduce structural unemployment?

By nature, supply side policies create their own demand, that is what is meant by supply side creating demand. I.e. if the National Minimum Wage was abolished labour demand would be created, not because of any demand side policy, but because supply side policy has made people more employable. The same goes for red tape, by removing red tape people are more likely to set up business and make their money, whereas if there's loads of regulation, people won't be bothered as it's too much effort. Hence, removing the obstacle created incentive.

As for your second question, it's impossible for structual unemployment to be reduced without supply side reform. Think about this way, it's as if they're disabled and are unable to be economically active, the only way for them to enter the labour market again is to become more employable, whether it be grants, retraining, regional policy, or relocation.

All of these are supply side policies aimed at helping those who are structurally unemployed. Think about this - fiscal policy - a direct tax cut, it'll have little on those who are unable to find work.

EDIT: Sorry about that, didn't mean to talk to you like you knew nothing, thought you were asking a question about supply/demand side policies, apologies!

(edited 11 years ago)

Reply 94

Nomolos

12

I'm predicting a question on 'Prospects for the UK Economy', a fiscal/monetary policy question, a trade imbalances/exchange rate question, and a eurozone question.

Reply 95

ilovecatsforlife

2

Original post by joshgoldman

I'm predicting a question on 'Prospects for the UK Economy', a fiscal/monetary policy question, a trade imbalances/exchange rate question, and a eurozone question.

I reckon something on globalisation will be up for world question, most probably the impact of something abroad on the UK economy - seems to be the trend, maybe the stimulus and recovery of the US economy (obv. not that specific but something along the lines of a global recovery). For Europe, I think it may be fiscal policy/effect of a double dip etc on the UK (sovereign debt crisis started roughly a year ago), so I think this euro euphoria is justified.

Tbh just revise everything, there isn't much to it if you use the revision guides :smile:

Reply 96

. . .

Original post by joshgoldman

I'm predicting a question on 'Prospects for the UK Economy', a fiscal/monetary policy question, a trade imbalances/exchange rate question, and a eurozone question.

I know nothing about exchange rates (nothing about advantages/disadvantages or how they are determined) I'm going to hedge my bets and revise everything else thoroughly.

Reply 97

Nomolos

12

Original post by ilovecatsforlife

I reckon something on globalisation will be up for world question, most probably the impact of something abroad on the UK economy - seems to be the trend, maybe the stimulus and recovery of the US economy (obv. not that specific but something along the lines of a global recovery). For Europe, I think it may be fiscal policy/effect of a double dip etc on the UK (sovereign debt crisis started roughly a year ago), so I think this euro euphoria is justified.

Tbh just revise everything, there isn't much to it if you use the revision guides :smile:

Original post by . .

I know nothing about exchange rates (nothing about advantages/disadvantages or how they are determined) I'm going to hedge my bets and revise everything else thoroughly.

My prediction is based on what the tutor2u revision workshop covered. For the ECON3 workshop every single topic they covered came up... might just be luck but y'know!

Reply 98

scottb3scott

1

hype hype hype hype hype hype hype

Reply 99

howag

Original post by . .

Public sector is the government or state controlled sector. For example NHS and education is public sector as the government controls it pays wages etc..

Private sector is the sector controlled by non-government people so people like you and me.

I don't really get what you mean by consumption and saving in those sectors could you post the question.

2 quuestions here:

The level of Uk public sector spending grew from 37% of GDP in 1997 to over 45% in 2008To what extent do you regard such an expansion of the public sector as beneficial to the uk economy.

Discuss the view that the main reason for a country wanting to achieve sustained economic growth is to bring about an increase in private sector consumption.

Both 25 marks.

AQA A2 Economics Unit 4 - June 20th

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