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

They export more because their goods are cheaper to other countries. Let's say £1 is $1.50 if the pound goes down the following year to 80p/$1.50 the Americans would want to buy more goods cause they can get more for exactly the same money they did a year ago

Is this correct? i am confused. Wouldn't the dollar be less valuable if the UK currency went from £1/$1.50 to £0.80/$1.50

in fact the UK currency would be more valuable right? As they receive more dollar for less of the pound than before???

SOMEONE PLEASE TELL ME IF I AM CORRECT OR WRONG, I AM CONFUSED?

Reply 541

Dilzo999

19

Original post by MATTTT

Is this correct? i am confused. Wouldn't the dollar be less valuable if the UK currency went from £1/$1.50 to £0.80/$1.50

in fact the UK currency would be more valuable right? As they receive more dollar for less of the pound than before???

SOMEONE PLEASE TELL ME IF I AM CORRECT OR WRONG, I AM CONFUSED?

Yes so the UK's exchange rate has appreciated.

Reply 542

MATTTT

2

Original post by Dilzo999

Yes so the UK's exchange rate has appreciated.

so the americans would not want to buy more goods right? This would reduce our exports then?

Reply 543

ThatGirlYasmin

Original post by TheHenri

whats the best way to integrate the extract into your answers for section b? quoting?

I was told by my teacher you don't get application marks just by re-quoting what's in the extract, you have to quote and explain it.

Reply 544

Livaren

What is dependency theory?

Reply 545

Farringtonn

1

When talking about improving inequality by benefits could you talk about the replacement ratio saying it will increase it??

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Reply 546

Fullycorporate

Original post by Razina17

They are just asking how it was caused like for example UK has a trade in goods deficit because of strong exchange rates. This makes imports cheaper and exports more expensive, same with US. However there has been a decline in exchange rates for the US since 2002 so this may not be a suitable point. For Germany they have a trade in goods surplus because they focus on exported goods such as cars and manufacturing. So if there exports are greater than imports then this will lead them to have a trade in goods surplus. Just explain points like this and you should be fine

Is it essentially a competitiveness question?

Reply 547

Farringtonn

1

Original post by ThatGirlYasmin

I was told by my teacher you don't get application marks just by re-quoting what's in the extract, you have to quote and explain it.

What about if it's just figures though?

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Reply 548

Dilzo999

19

Can anyone explain to me dutch disease effect?

Reply 549

Farringtonn

1

Is effective marginal tax rate basically when your income rises you lose money from tax but also benefits? So it can lead to the poverty trap because incomes on low incomes receiving benefits don't want to work more hours because they'll lose benefits

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Reply 550

Razina17

2

Original post by Fullycorporate

Is it essentially a competitiveness question?

Sort of. You can bring in competitiveness

Reply 551

80286

What are the costs and benefits of being in a trading bloc?

Reply 552

Kutie Karen

19

Original post by Dilzo999

Can anyone explain to me dutch disease effect?

Yes . I need to know that too. Any one able to help?

Reply 553

holly.briggs

6

Can anyone please explain capital account of the B of P?? So confused :s-smilie:

Reply 554

aminkaram

Original post by Dilzo999

Can someone give me a good nice and concise definition of the prebisch-singer hypothesis? One that's easy to remember XD thanks.

I would say The easiest way to define it is:
Primary products tend to be income inelastic as opposed to manufacturing products which are income elastic. This means that with time, as growth occurs the terms of trade for countries that are primary product dependent will worsen due to falling demand for their exports.

And then from there you can go all sorts of places. i.e link it to growth, unemployment, current account, competitiveness etc...

Reply 555

Ff96

1

How relevant are pages 53-55 in the edexcel revision guide? (Role of international financial institutions, role of non government organisations) as it makes no sense to me and I am not able to learn anything new at this point

Reply 556

Kutie Karen

19

Original post by holly.briggs

Can anyone please explain capital account of the B of P?? So confused :s-smilie:

I think it is the direct capital investment such as FDI and inflows of capital spending by foreign firms.

Reply 557

spspspiderman

Original post by holly.briggs

Can anyone please explain capital account of the B of P?? So confused :s-smilie:

The capital account is made up for four bits: the trade in goods, the trade in services, investment income and current transfers

Reply 558

aminkaram

Can someone tell me if there's anything wrong with this piece of analysis:

An increase in protectionism, for example through the imposition of a tariff will essentially make imports more expensive. Since imports are used as inputs to many of the products that manufacturing country's produce this will lead to an increase in the cost of production. Hence, the final cost of the product will increase. Producers will pass the higher costs on to consumers as higher prices, hence leading to cost push inflation.

In evaluation, This will depend on many other factors. Firstly, if the rise in import costs is low producers may choose to absorb the higher costs rather than pass it on to consumers in order to maintain their international competitiveness and revenue. Secondly, if the increased import prices are significant producers may seek alternative domestic sources for their raw materials. This could have a negative effect on the quality of the product but costs and prices would not change.

Reply 559

holly.briggs

6

Original post by 80286

What are the costs and benefits of being in a trading bloc?

Benefits:
- Increased trade within member countries
- Free access to other countries markets means that countries can specialise and maximise their comparative advantage
-Trade creation, (switching from high-cost producer to low cost-producer)
-Increased market access + transparency?
-E.O.S= lower prices for consumers, greater consumer choice, increase in standard of living
-Protection
-Increased employment, more trade =more demand and so more business set-ups and more jobs. (helping to achieve one of the government's macroeconomic objectives)
-Increased competition and efficiency
-Greater international relations between the members.

Costs
-Retailation
-Distortion of trade
-Perhaps trade diversion
-Because firms are protected from cheap imports, they become less efficient
-Some national governments have signed international treaties, their freedom of using protectionist policies is limited. This proves to be a disadvantage, especially when countries want boost trade with non-member countries.
-Some trading blocs distribute gains from trade unequally.

Hope that helps :smile:

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

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