A2 Economics - F585 June 2013

As far as your essay goes, I wrote a very similar one to you I think quite alot of people did go down this route, you will get 20 so long as the evaluation was good which Im sure it was as those points are quite nice ones to actually evaluate. I cant remember the rest of my answers though, sorry about that.

This is my whole structure

1) Fiscal/monetary convergence

Fiscal convergence involves government spending.
Government debt < 60% go GDP
Budget debt < 3%

Monetary convergence involves setting a single interest rates
Involves single exchange rate

Extent to monetary convergence depends on fiscal convergence

2) Benefits of euro zone for Estonia

1. Lower transaction costs means a boost in trade/investment as firms incur less costs by not having to change their currency into the euro. Firms get to keep more of their profits which will boost trade. Boost AD, boost growth.

2. Price transparency means consumers/firms find it easier to compare prices within the Euro. More allocatively efficient. Can boost consumer expenditure and investment. May boost development.

3) FDI question

Benefits

Trade and investment
Jobs
Increase in productivity

Costs

May not last long
Dependency
Doubts over benefits

4) Economic growth and development

Definitions, contrasts.

5) diagram question

I drew AD shifting to the left. This is so wrong. So lets assume I got 0/6

6) trade question influencing growth

Defined trade
Said it can boost consumer expenditure and exports. AD shifts to the right due to trade creation
But it depends on other factors such as the tax on profits, confidence in the economy due to recession

7) 20 marker

Defined sustainable development
Explained how growth in welfare can be achieved + diagram (AS shifting to the right)
Explained how cultural objectives can be achieved
Explained how coherent society can't be achieved + diagram ( Lorenz curve)
Explained how ecological balance can't be achieved + diagram (externalities)

Said growth alone can't influence sustainable development. Depends on other things I.e. government policy.

To be honest, all of that sounds pretty reasonable and if you've explained/analyse them well then that should be fine! I answered my Q1 and Q2 pretty much the same as you I don't think AD to the left would get you 0 marks too, I've seen questions before and although they dock a few marks, if you've analysed it well, you can often get a couple of marks from it

Can I just ask, for your Q4 how did you answer that, I don't think I defined them right or even contrasted them right :s

Ah decent! Really? Meh. Only 6 marks. Need 70 ums for an A anyways

Okay so for question 4,

Economic growth is an increase in the productive potential of the economy. It can also be said to be an increase in total output or GDP over time. Economic development however is an increase in the social welfare and living standards of a population. Economic growth can have a positive influence on economic development, but not the other way round. Some countries e.g. USA, have high growth and high development but countries like China have high growth and medium/low development. So growth influencing development has many other factors.

(Literally word for word of what I wrote lol)

Can someone rip my answers apart please? I wanna know the worst score I could possibly get to prepare myself i think my 6 markers and 20 marker were fine, could someone tell me what they reckon i got especially for my 4 and 10 markers (provided i analysed the points well)


1a) fiscal convergence and monetary convergence both used for similarities in macroeconomic indicators. and so policies benefit all countries. Fiscal convergence uses fiscal policy eg 3%Budget deficit of GDP, 60% National debt of GDP to reduce need for fiscal transfers and monetary convergence to control growth and ER stability.


1b) analysed 1- ER stability 2- Lower transaction cost (cost of changing currencies)


1c)GOOD:more FDI more investment so AD increase. More employed. More tax rev for gov to invest in supply side policies.
BAD: may hire workers from own countries in top jobs and may be more prone to leave in a time of recession reducing I reducing AD
COMMENT: maybe FDI not most important factor ie, Gov Investing in education and training


2a)Growth: increase GDP over time period, development: increase in economic and social welfare.
growth necessary not sufficient for development.


2b) AS to left due to increased inflation abroad so higher cost of raw materials


2c) GOOD:Benefit from imported tech for AS, firms may benefit from EofS, increased exports (X led ADgrowth)
BAD: firms in bigger economies benefit from bigger EofS so domestic firms outcompeted.
COMMENT: maybe infrastructure more important


3)Good: Increase money for spending on healthcare.
Increase tax rev for gov to spend on hospitals
Bad: Pollution and depletion of fossil fuels
-income unevenly distributed
COMMENT: CDM(from kyoto protocol) better

Nice, lets just hope we both now get 6/6

Btw guys for the graph question, im pretty sure you only had to analyse inflation and not what happened to GDP, the question only asked about it so a diagram showing cost push inflation and an explanation would have been fine.

surely AD and As both shift left, not AS left and AD right ?

I did AD going to the left...

Recession means less AD idk

Ok. So in my opinion, everything here is mostly correct. However for the 10 markers, they seem good, but kinda iffy 6/10 +

It seems to me that you have only mentioned a few benefits/costs?

I mentioned at least 3 of each...however your evaluation is great! So you would have done fine

One slight problem. The drawback of FDI seems quite subjective. I looked in the guid and it says things like, dependency, may not last long, and doubts over the benefits...

So answering each question and giving a mark ( worst case scenario)

1) 3/4
2) 5/6
3)7/10
4) 3/4
5) 6/6
6) 8/10
7) 14/20 plus

Giving you an A maybe an A* (46/60)

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?

Exactly the same thing as I did :/

And also for the graph question, you can get away with shifting AD if you talk about a timelag.