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Edexcel Economics Unit 4 Global Economy Discussion Thread (10.June.2014)

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Reply 220

ThatGirlYasmin

you would use the laffer curve as evaluation as to why raising taxes may not reduce a fiscal deficit right?

Reply 221

cashisking

Original post by ThatGirlYasmin

you would use the laffer curve as evaluation as to why raising taxes may not reduce a fiscal deficit right?

Yes. If the government raises tax too much then this acts as a disincentive to work and causes high earners to move abroad to a country with a more favourable tax rate. Therefore, tax revenue would decline.

Reply 222

rathani278

How does globalisation causes inequality between developed and developing countries? ?

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Reply 223

holly.briggs

Original post by Juseejay

It's all practice.. After a good 6 essays and possibly 3 data response, you will start grasping the concept. Believe me!!

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Ahh, hopefully. Do you want to do, Q & A?

Reply 224

80286

How does free trade and exploiting your comparative advantage lead to growth and development?

Reply 225

Trilo9y

Predictions on this guys?

Reply 226

Chirag_95

Original post by Benlm9

Im pretty sure that it doesn't matter which way round you argue your point as long as you get a supported argument and evaluation in as the other side of the argument.

I think when answering any question on Development you should base it around the 3 components of the HDI.

So reducing the amount of people living in absolute poverty may increase life expectancy at birth as people will be able to live longer with the increase in their income because of being able to afford basic needs like food, shelter and clean water etc. However you may suggest that although consumers now have incomes of above £1.25 (absolute poverty line set by the world bank) they still will not be able to afford all of the basic necessities, especially not expensive medicines etc.

Reducing the level of people living in absolute poverty may also increase the average years of schooling as more families can afford schooling for there children and can survive without sending them to work in order to earn a small income for the family. I would struggle to evaluate this point directly however so may use a generic "absolute poverty may not be a sufficient measure as it is too generalised etc".

Increasing incomes will also improve the final component of HDI; GDP at purchasing power parity, because people will have more income and therefore consume more leading to a shift outwards of AD and also a positive multiplier effect. You could evaluate this point however with the theory of worsening hyperinflation in a county like Nigeria as an increase in consumption is likely to contribute to this.

I guess you could also talk about a possibility of an decreased savings gap leading to a greater capital accumulation in the future, further improving development, however thats relatively unlikely considering these consumers are still on very low incomes and will most likely still have a very high marginal propensity to consume.

In terms of the blue text, I'm guessing maybe its an answer that needs to be applied or maybe its QWC.

Hope that helps..

Thank you that does help :smile:

, gives me a good idea of what I need to be doing. I guess those points that I thought were small can be expanded, I think that's what I need to work on.

Reply 227

Dilzo999

Original post by Ehawks

Which one of you lovely people would like to explain quantitive easing to me please? :smile:

Quantitative easing is when the central bank buys up government bonds and corporate bonds, this will mean that commercial banks will have more deposits thus giving them the ability to lend more easily to private and business corporations.
Evaluations include: Japan, banks may still not lend, can cause a huge bout of inflation due to increase in money supply and depreciation in exchange rate.

Reply 228

Anonymous1717

Could someone please explain how the foreign exchange gap is a constraint to growth and development? :smile:

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Reply 229

aminkaram

Guys for the data response does our application have to be from the text? I thought we can use examples from our own knowledge.

Reply 230

Juseejay

Sure let's do it

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Reply 231

Juseejay

Original post by holly.briggs

Ahh, hopefully. Do you want to do, Q & A?

Sure let's do it

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Reply 232

Chirag_95

Can someone explain this to me please. The question from a DRQ was:
To what extent are large trade imbalances a cause for concern? (12 marks)
And in the mark scheme one of the analysis points was this:
'Financial inflows from surplus countries to western capital markets led to asset price bubbles and to financial institutions taking
excessive risks (could count as 2 points)'
What does this mean?

Thanks

Reply 233

Farringtonn

For constraints on economic growth and development such as primary product dependancy, debt. Could theses also be causes of poverty in developing countries?

Also for causes of inequality/ poverty in developed countries could they be the same points e.g unemployment.

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Reply 234

ThatGirlYasmin

Why do trade imbalances occur?

Reply 235

aminkaram

Original post by Farringtonn

Of course they could as long as it's clearly linked to the question. So how would you link primary product dependency to poverty for example?

Reply 236

Razina17

Original post by Farringtonn

Some can yes such as corruption within the government and high inequality and also debt. It depends on what type of poverty and how you would relate it to poverty