Economics Unit 2 prediction for 17th may 2013 :)

for ii. (effect of low sterling on current account deficit) the question said refer to extract 1, but extract 1 said that the depreciation in the exchange rate didn't cause the deficit to improve and that imports were still high and exports low because of other non price factors. did u mention that?

Well i wrote about how imports may still stay high in my evaluation, but didn't refer to the extract explicitly. I dont think ill get too penalised

Even when I was going through past papers, when they say refer to extract, and the extract contradicts the argument.
How many marks throughout the paper do you guys reckon reference to extracts hold, even when it doesn't ask in the question?

'Persistent' deficit doesn't cause a shift in AD.


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so when the extract contradicts it do you still write what the extract says or the standard argument? i said both just to be safe

IF its persistent than imports are greater than exports most of the time, therefore so X-M gets more negative so AD will constantly shift inwards

I did question 2, thought it was okay. Had no idea how to calculate an index number so that put me off question 1 straight away - I thought both 30 markers were fine though.

What did people put for the question about reasons why the 2% inflation target could have been missed? I put excessive QE and rising oil prices, but I have no idea if that's correct. I also forgot to mention the fact items are weighted in the CPI question... other than that, I thought it went fine. I got 79 UMS last time, so I'm hoping for a few more marks as a safety net for unit 4 (need an A overall).

so when the extract contradicts it do you still write what the extract says or the standard argument? i said both just to be safe

For why inflation missed 2% target I talked about how increase in average salaries would increase consumer confidence and therefore spending so consumption increase therefore as increase leading to inflation

Also talked about investment being maybe another reason as higher consumer demand so firms invest to increase production etc so ad shifts to the right causing inflation to go above 2% target


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Does unit 4 stuff get marks? I mentioned Laffer curve and the Kuznet curve to evaluate

Hey yeah. I did that question. I put down that a Decrease in gvmt spending meant the less money is injected into the circular flow of income and ad taxes increased more money withdrawn etc so a low rate of inflation was maintained the balance of payments got better and also the environment thing u said I said as well then I talked about low unemployment and lower something else and then spoke about how long I takes for changes I the fiscal policy to actually take place and also drew a diagram

Is that for Part a(ii) of Question 2 about why inflation had risen in 2011?
They actually gave you the two reasons you needed in the extract; "rising commodity prices" and an "increase in VAT". Judging by previous mark schemes, you would get two marks for identifying each point and another two marks for explaining each point.
The points you mention about consumer spending rising leading to inflation are probably not going to be accepted as they probably wanted you to mention cost-push inflation rather than demand-pull inflation. The question specifically referred to 2011 and in the extract it mentioned how the economy was contracting during the period- so your points about "higher consumer demand" and AD shifting right don't apply here.

Yeah I hope so too, hopefully like 2-3 marks do you think?


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Yh but in extract 1 it says in 2011 average salaries had increased as well....


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