AQA Economics 25th May 2012 Unit 2 Exam

yh i talked about contrationary to reduce AD

"And also talked about how I.R would effect cost-push inflation.. and quoted it from the extract F is that alright?"

Thats fine :smile:

Reply 382

hannahjones13

In my conclusion I basically said that although interest rates are good, you first must establish the root cause of inflation and then the best suited policy can be employed. If they use interest rates for cost push it will be a waste of time as supply side may be more effective. Something like that.

Reply 383

lidiya

Original post by Ecomax

"And also talked about how I.R would effect cost-push inflation.. and quoted it from the extract F is that alright?"

Thats fine :smile:

Yep.. so is ok rite? Ah.. i messed up so badly with the Multiple choice oness.. ;ss at least hoping for a C ;SS

Reply 384

lidiya

Original post by hannahjones13

In my conclusion I basically said that although interest rates are good, you first must establish the root cause of inflation and then the best suited policy can be employed. If they use interest rates for cost push it will be a waste of time as supply side may be more effective. Something like that.

I said about the current state of the economy and how it is going to affect it in the long and the short run.. hopefully is alright? x

Reply 385

hannahjones13

Original post by lidiya

I said about the current state of the economy and how it is going to affect it in the long and the short run.. hopefully is alright? x

Yeah anything about the current economy is great - you can get like an extra 4 marks or something.

Reply 386

lidiya

Original post by hannahjones13

Yeah anything about the current economy is great - you can get like an extra 4 marks or something.

Ah.. thank God!! :smile:

) x

Reply 387

ineedtorevise127

20

OMG in the 25 mark unemployment
I talked about supply side policies and monetary policy but mostly fiscal contractionary and expansionary
I also mentioned like demand pull inflation, multiplier effect and the Eurozone crisis e..g. GREECE
is this okay or is it completely wrong
and i put 2 diagrams one supply side the other contract fiscal

Reply 388

Derrick1509

10

Did anyone do section 1? I totally forgot that there was another section and just started without looking at the other one. :facepalm:

This was posted from The Student Room's Android App on my HTC Desire

Reply 389

Ecomax

Does anyone have the paper and can upload it ? :smile:

Reply 390

Vevean

Original post by borealis72

Hey mate can you please put up the questions, I will attempt to write a mark scheme (unofficial)

Q1) which one of the following is most likely to be an example of supply-side policy: a) reduction in rate of interest to reduce inflation b) increase in government expenditure on state pensions c) reduction in company taxes d) rise in exchange rate to increase export

Q2) all other things being equal, which one of the following would be the most likely consequence of an appreciation in the external value of the country;s currency, an increase in: a) domestic price level b) volume of exports c) employment in the domestic economy d) volume of imports.

Q3) which one of the following is most likely to result in an increase in the long run trend rate of economic growth: a) increase in AD leading to inflationary pressure b) sustained increase in the value of the pound on the foreign exchange market c) reduction in taxes which increases risk taking and incentives to work d) a sustained reduction in both inflation and labour activity

Reply 391

borealis72

Original post by Vevean

Q1) which one of the following is most likely to be an example of supply-side policy: a) reduction in rate of interest to reduce inflation b) increase in government expenditure on state pensions c) reduction in company taxes d) rise in exchange rate to increase export

Q2) all other things being equal, which one of the following would be the most likely consequence of an appreciation in the external value of the country;s currency, an increase in: a) domestic price level b) volume of exports c) employment in the domestic economy d) volume of imports.

Q3) which one of the following is most likely to result in an increase in the long run trend rate of economic growth: a) increase in AD leading to inflationary pressure b) sustained increase in the value of the pound on the foreign exchange market c) reduction in taxes which increases risk taking and incentives to work d) a sustained reduction in both inflation and labour activity

Lol do you happen to have all 25...?

Reply 392

borealis72

Original post by hannahjones13

In my conclusion I basically said that although interest rates are good, you first must establish the root cause of inflation and then the best suited policy can be employed. If they use interest rates for cost push it will be a waste of time as supply side may be more effective. Something like that.

Argh I didn't explicitly say that interest rates are suitable for demand pull, but to be honest that's not really a problem in the UK right now.

Reply 393

Brainiac

Original post by Ecomax

Well you wont get any marks for talking about fiscal, unless you were stating that cuts in government spending allow low interest rates which increase AD .. and so on

That's wrong, if it asks for the best policy, it is necessary to establish what alternative policies can be used instead otherwise how can it be the best, if it is the only policy,

Personally I mentioned fiscal policies- more tax less give spending to reduce ad and reduce demand pull inflation
Then I said how interest rates affect both cost push and demand pull inflation, then said to achieve both low inflation you could use supply side and linked this with fiscal, but this has a time lag as policies take time to reap rewards like education

Reply 394

Vevean

Q4) all other things being equal, which one of the following is most likely to move the economy from point Y to point X within its PPF: a) decrease in inflation b) decrease in investment c) reduction in productive capacity d) reduction in trend rate of growth

Q5) which of the following best illustrates the accelerator process: a) change in one of the components of AD leading to much greater increase in national income b) increase in national income resulting in proportionately larger rise in investment c) government subsidies to firms for research and development helping to increase the rate of innovation d) increase in government spending during a recession helping to stimulate investment.

Q6) the table shows that between 2001 and 2011: a) real gdp rose by 50% b) nominal gdp rose by 50% c) real gdp rose by less than 50% d) nominal gdp rose by less than 50%

Q7) which one of the following is most likely to result in a rightward shift of the short run AS curve: a) decrease in wage rates b) decrease in government spending c) increase in tax d) increase in investment expenditure

Q8) cut in income tax rates could be considered: a) both m + f policy b) both m + s policy c) both f+s policy d) neither a m/f policy

Q9) diagram on change resulting from increase in innovation & productivity improvements.

Q10) rise in level of domestic investment likely result from a rise in: a) current account deficit b) interest rates c) company profits d) exchange rate

Reply 395

xxm

14

Anyone give me an unofficial mark scheme for the unemployment section?

Reply 396

Vevean

sorry, im doing it slowly LOL

Reply 397

borealis72

Original post by Vevean

sorry, im doing it slowly LOL

Haha why don't you just take photocopies or photos on your phone, respect you for taking the effort to type it all up haha :smile:

Reply 398

Yaokin

Hey guys, what do u reckon i can maxumum get if i started of with interest rates definition, then said that fiscal ways like taxation increase and government spending decrease will reduce AD and so the inflation will decrease. Then said that if exchange rate goes down then imports will increase and exports will decrease leading to unemployment and less disposable income and therefore less AD so inflation will decrease. Then said that if the money supply decreases then there is less money in the circular flow of income and so people tend to save and therefore AD will decrease and inflation too. Then concluded by saying that in my opinion IR is not the best way to control inflation but fiscal policy ways are better in efficiency way ( disadvantages)

Hope for your help guys!! Very scared

Reply 399

Axion

15

anyone else talk about spaare capacity as evaluation :colone:

AQA Economics 25th May 2012 Unit 2 Exam

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