Question spotting for F585 Economics The Global Economy OCR A level June 2011

Liberalisation means deregulation and other measures, including the lowering of trade barriers, aimed at opening up a market or industry to full competition. In the context of world trade it is a process whereby countries sign bilateral or multilateral trade agreements to reduce import tariffs, quotas and other forms of protectionism in a bid to stimulate greater trade in goods and services.

also, say that demand-management are of little use as the there are constarints of the polices liek the ECB setting intrest rates and the SGP, SSP's are the main way to go, Remember unit labour costs can be reduced by an increase in productiivty, so i would focus on education and training. Education increases productivity and AS due to producitivity increase the quality of the labour force. The government can give subsidies to firms, but they may become to relaint on these sunbsidies and may become productivly ineffcient as there is no need to keep costs low.

You said that it would bring prices down talk about consumer surplus and producer surplus. it depends on the PED of the good. Reducing barriers to entry could really harm Spain atm as they are uncompetitive so, intense competition could potentially close some idustries down - unemployment. also it does not depend on price competitivenes but also about the quality of the product, if it is a good quality of product, consumers are still likely to by it because they know it is gd quality, this is all i can think of atmm

u on edexcel for c4?

By the way, what would i say about consumer surplus and producer surplus? how does that relate?

well if there is a reduction in price there will be an increase in consumer surplus and a reduction in producer surplus. So the consumer benefits consuming the good at a lower price, as before he was willing to buy the good above and over the price of the equilibrium point. producer surplus is reduced as producers find it a disncentive to supply the good. Although looking at ths point, now, does not relate to the question.

actually maybe due to price and non-price competitiveness. so yh the consumer surplus may have increased but what about quality of the good. Due to firms facing intense competiton, they may produce goods at a lower price due to being productive efficient, but what about quality. Although i really dont think this is leading on to anything so i would retract my comment about the consumer and producer surplus

Hi there,

Due to lack of past papers and little practise on shorter questions - have no idea how much to write for the 4 and 6 markers?

Any advice?

only just discovered this thread..luckily its not too late!

got a couple of questions im stuck on so would appreciate any help:

1) Have EU countries made the right decision in choosing to break their fiscal rules during this recession?

2) Discuss the extent to which the Euro Area is an optimal currency area and the whether this matters for the long-term viability of the currency union.

thanks

edit: wow someone just negged the f*uck out of me..:'(...but seriously, can anyone help?

Lol! i don't know why you got a negative rating... lol...

but erm...how marks are they roughly?
Hm...I think you should start discussing the position they're in, like their budget deficits... like Spain, although they had a shallower recession, they now have a huge budget deficit which can stifle any future growth. Although having a deficit on the Bop isn't always necessarilly a problem, but it has to be justified for investment. In this case. It doesn't quite seem like an investment, as for example, with spain again, they had a ridiculously gnerous welfare system which just encouraged more rates of natural unemployment and made the labour force really inflexible etc etc etc... i think thats the jist of it??

Next, well, an optimal currency area is just an area which the euro area need to be in to avoid any downfalls of the monetary union. Like they need a flexible labour market and the also need to ensure that external shocks don't affect different economies differently. So no, as you can see, like I said earlier spains labour market is really inflexible and this is because of things like generous welfare system, minimum wage and trade unions...and all the economies have reacted differently to the credit crunch...some economies had more severe recessions, or longer recessions, or went in to recession at different times... so it's not in an optimal currency area....
I'm not really sure about the extent to which though, cause i can't think of reasons why they WOULD be in an optimal currency area.
Oh wait i know! to be in an optimal currency area, you need to be able to have things in place to be able to make fiscal transfers which is taxing in one country to help anther ones economic difficulties...which has happened through things like bailing out. AND YES, i'd say it does matter. they need to achieve this to help keep things like international trade stable etc etc....

Hope that helps... Just expand on what i've said cause I made it pretty short and basic and i'm not really sure how many marks these are....If you have ay more pointers please tell me! cause i'd like to know thanks!

Does a BOP have any relevance to fiscal rules??? I think you meant the deficit "Golden Rule" we only borrow to invest, more jam for tomorrow

Does a BOP have any relevance to fiscal rules??? I think you meant the deficit "Golden Rule" we only borrow to invest, more jam for tomorrow

Hello
Can someone help me answering that question please
Comment on the extent to which a fixed exchange rate rather than a floatinf exchange rate is a stimulus to inflows of foreign direct investment.
I know that a fixed exchange rate would reduce the cost of trade and will increase the productivity of firms so they can match the improvements of foreign cometitors so that would attract FDI.
But I thought a fixed exchange rate wouldn't atrtact investment as much as a floating one as it does not reflect the economy's performance (because isn't their perfomance reflected though their exchange rate when it's floating) so foreign countries would be more reluctant to buy their goods, and if the country has a balance of payments problem it wouldn't be corrected automatically if it's fixed. Also, an economy operating at fixed exchange rate wouldn't be effective in controlling inflation through monetary policy..?
Help, please?

reduces uncertainty on fixed ER?

Yes but wouldn't the country's main trading partners be reluctant to buy their exports as it doesn't reflect their performance, so wouldn't that put FDIs off?
(btw, thanks for helping me )

U give a valid point, Also in fixed the gov. has to keep a large amount of foreign exchange reserves to adjust it, and obv, there is a opp cost, there maybe less spending on education, which leads to lower human capital thereby making it less attractive to FDI. I g2g eat

Lol, this a stupid q, i know...

Describe what is meant by economic performance (4 marks)

Also:

Comment on the extent to which Spain's dependence on the construction industry has led to a delayed economic recovery