A2 Economics - F585 June 2013

Yeah, but they said one factor, therefore it is likely to mean more than one. A reduction in AD due to a global economic crises is one, because a fall in exports takes time to feed through and to affect the inflation rate (the inflation rate in 2009 was much lower)

Hmm, I don't think that is correct, the question was pretty explicit in stating which other factors promoted Estonian economic growth. That said I feel there's still marks available for counter arguing international trade as driver.

Are you all aware that for the diagram question, GDP is not falling, but the rate at which GDP grows is, therefore growth is slower. We predicted the question in our class and noted that this might trick people out.

Growth was around 7% in 2007, so it wouldn't be in a recession, 2009 would be a recession, In 2008 the economy would still be growing positively but just at slower rate. It was economic growth rate, not the actual level of GDP.

No, it was on the importance of trade, since trade is a large proportion of GDP, it should be mentioned. It didn't ask for other drivers of growth, otherwise it would have been a very broad question. Anyway, it's about what OCR feel, as to whether you are required to talk about trade or other factors, but take heed from the questions, not saying "Comment on whether trade is the most important driver of growth", but "the importance of international trade"

for the importance of international trade on growth i think it wanted you to talk about just trade otherwise it would have generally said "the causes of economic growth in estonia" and not specifically said international trade. So i tried to squeeze out a second point (i know it doesn't say estonia specialized but its still correct theory?) by saying that it would give estonia the ability to specialize blah blah blah would make their goods more competitive and increase X-M and AD? anyone that can confirm this was ok or that did this?

yeah it did say importance of international trade but you have to comment that it couldnt have been the only factor because other EU members (who receive the same benefits of trade) did not have as much success of growth. This should then lead you to talk about other factors which could have helped growth, no?

I think you've missed the point. The idea we got anyway in class and the teacher agreed, is that AD shifts to the right, inflation may be demand pull but most probably cost push inflation.

But in 2008 there was clear negative economic growth? And a 10% increase in the price level?

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I think you've missed the point. The idea we got anyway in class and the teacher agreed, is that AD shifts to the right, inflation may be demand pull but most probably cost push inflation.

mate your right i do know why this guy is trying to say he is right when he is clearly wrong and he knows it. In 2008, growth was negative, not increasing at a slower rate.

GDP was falling why inflation was increasing.

why are you truing to tell the other guy he is wrong, when in fact you are. Growth is negative so GDP is falling. GDP is falling an inflation is rising in 2008.

For the question that needed a diagram, (6 marks) i shifted my AD TO THE LEFT ?? due to lack of confidence and prices dropping, but i didn't shift my AS, would i still get some marks for noting that it was a recession?

mate your right i do know why this guy is trying to say he is right when he is clearly wrong and he knows it. In 2008, growth was negative, not increasing at a slower rate.

GDP was falling why inflation was increasing.

I think hes right to be fair, think there's only one way to get the mark though which is a decrease in lras

I am not sure whether that is the only correct way of answering that question as I think there was another possibility - inward shifts in both AS and AD.

There was a huge slump in consumption and investment as well as exports after the onset of the recession, leading to a fall in both domestic and external demand, shifting AD to the left and reducing both the level of national income and inflation.

Consequently, due to aggregate demand being severely depressed, unemployment soared and this can be represented by an inward shift in AS. The effect of this was inflationary in terms of the price level and contractionary in terms of real GDP.