F581/ F582 Economics June 2013

Scroll to see replies

the fall in exchange rate means demand for pounds is low - thats the only thing i got for that haha , not sure why that's bad actually as it allows exports to get cheaper

You could talk about it being good for the economy, but not consumers, because they will have a reduced purchasing power in terms of imports since they'll be finding goods and services from other countries much more higher priced.

Effectively, an increase in imports is bad for AD in terms of net exports, but not for consumers because of the bigger market they'll be able to spend in if imports were cheaper, and a fall in the exchange rate would mean imports would become higher priced.

Reply 201

UnknownGuy

What about trade as an 18 marker?

Reply 202

RoryH

Original post by UnknownGuy

What about trade as an 18 marker?

It's a very broad topic!

Reply 203

KanKan

Original post by UnknownGuy

What about trade as an 18 marker?

Oh I do hope not! :frown:

But, I suppose you can talk a lot about protectionist methods :tongue:

Reply 204

UnknownGuy

Original post by fletchdd02

It's a very broad topic!

I mean something like discuss whether governments should protect their industries?

Reply 205

HeyMickey6

What would you write for this essay :

"Discuss whether a decrease in aggregate supply is always harmful to national economic performance"

Reply 206

RoryH

Original post by HeyMickey6

What would you write for this essay :

"Discuss whether a decrease in aggregate supply is always harmful to national economic performance"

It is harmful as it can cause inflation, it will increase unemployment, it will give balance of payments problems.

However, if there is a reduction in supply due to a higher school leaving age or more people entering higher education then in the long term AS will benefit and increase. It also depends if there is a lot of spare capacity in the economy, because decreasing AS whilst at (yf) will be more harmful than if there is spare capacity.

There will be more but I can't think at the minute haha!

Reply 207

Ahmed-

Can anyone tell me how economic growth is measured plz, what is the output, expenditure, income method? And what is national economic performance?

Reply 208

KanKan

Original post by HeyMickey6

What would you write for this essay :

"Discuss whether a decrease in aggregate supply is always harmful to national economic performance"

L1: Define AS and Economic Growth
L2: Show how a reduction in AS decreases Real GDP
L3:

•

Inflation

•

Loss of output and thus unemployment

•

Current account deficit

L4:

•

Depends on what AD is doing

•

Size of the decrease

•

We could be switching to capital goods?

L4+: Something to do with LR vs SR.

Anything else I could add?

Reply 209

RoryH

Original post by Ahmed-

Can anyone tell me how economic growth is measured plz, what is the output, expenditure, income method? And what is national economic performance?

Output=income=expenditure so measuring any of these will show you GDP.

However with output you have to be careful of double counting for example counting raw materials and then re-counting them in the final products.

Income can often be undervalued as there is a lot of unmeasured activity, such as cash in hand work etc that goes unrecorded.

Reply 210

wolalala

Original post by CTArsenal

Nope, a negative output gap is when the economy is not achieving its full potential, in this case even though AS has fallen, AD would still be on the inelastic part of the new AS curve, but probably just exceeding it in terms of output.

In the short run, it could be argued that it would cause a positive output gap due to the time lag in AD falling in response to the fall in AS, since consumers would take some time to adjust their spending if their income fell or they became unemployed, etc. It would take a while to work through the economy really.

I guess in the long run you could argue that it may cause a negative output gap, but only if you specifically stated that.

oh okay I see, ah gosh I need to make sure I always remember the effects in the short run and long run. Thanks for replying :smile:

Reply 211

Ahmed-

Original post by fletchdd02

Ohh ok, thanks alot :biggrin:

Reply 212

RoryH

Original post by Ahmed-

Ohh ok, thanks alot :biggrin:

No problem, how are you feeling about it?

It's not as bad as you think, it all comes flooding back in the exam hall :smile:

Reply 213

username963570

Original post by CTArsenal

never thought of that , thanks ! :smile:

Reply 214

username963570

Original post by Ahmed-

Can anyone tell me how economic growth is measured plz, what is the output, expenditure, income method? And what is national economic performance?

Output = expenditure = income is the theory behind measuring economic growth anyway.

Some problems wit measuring growth :

- double counting
- if an increase in growth is exceeded by a rise in population
- the existence of an informal economy

Reply 215

wolalala

does anyone have any problems of measuring Unemployment?
Also for the question ' Discuss whether Unemployment is always harmful for the economy' for why it is harmful I know you stay stuff like -

decrease in output - negative output gap, less productive capacity, hinders growth
( and then show of PPF or AS& AD graph), less tax revenue for government - budget deficit
hysteresis -income inequality
reduce international competitiveness - less goods made - less consumer choice
Doesn’t meet macro objectives of full employment

its not harmful depends on:
- type of unemployment,
current economic cycle, depends if long term or short term
Depends if other policies are happening at the same time e.g. supply side may prevent unemployment
what else can you say for both sides of the argument? Thank you in advance :smile:

& what's a good conclusion please?

(edited 10 years ago)

Reply 216

wolalala

anyone know the determinants of exchange rate? tourism, interests rates, anything else?