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

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Original post by holly.briggs
Do you think we need to know this? I have never heard of it :s-smilie:


You definitely don't need to know it. It's beyond the scope of this syllabus but if you can explain it properly then it's a good application and analysis point.
Reply 601
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Livaren
Can anyone explain the kuznets curve and where it can be used in inequality?
How can wealth generate income? And vice versa


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Spartz
4
could someone please highlight the differences between economic development and economic growth

the mark scheme seems to be making a big of deal if a candiate gets confused between the two, i feel like there's not much differences between the two
Could someone please just read this and give me some feedback?
One strategy the government may take to improve thecompetitiveness of a country’s goods and services is making improvements ineducation and training. This is because workers will acquire more skills whichwill increase their productivity and efficiency within the workforce willincrease. The more productive firms become the more able they are to cut pricesand by cutting prices it makes goods more internationally price competitive anddemand for these goods will rise.
However, this may only have an effect in the long runbecause attaining an education and having training takes time so the benefitswon’t be seen in the short run; also providing workers with training can becostly for firms and can actually increase their cost of production in theshort run so this may not be the most effective way of improving international competitivenessof a country’s goods and services.
Original post by Spartz
could someone please highlight the differences between economic development and economic growth

the mark scheme seems to be making a big of deal if a candiate gets confused between the two, i feel like there's not much differences between the two


Development is related to the economic welfare of the population within the economy and measured using HDI which includes literacy rates, life expectancy and GDP per capita. Growth is technically part of development because growth is measured in terms of changes in real GDP
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Original post by Livaren
Can anyone explain the kuznets curve and where it can be used in inequality?

Kuznuts Curve explains how a country that is only beginning to develop will have rampant income inequality as people move from subsistence farming to manufacturing, as well as the fact that governments are reluctant to heavily tax and redistribute income/wealth when an economy is taking off in order to keep it growing. As the economy grows and income per capita rises, inequality peaks and falls when governments start to tax more heavily and become more able to redistribute income.



Example of a country at the left hand side of the curve would be China, as there is a huge divide between coastal regions and the rural areas. On the other half lies Brazil since they are starting to tackle issues such as poverty and income inequality but you could argue they went a bit overboard with it.
Kuznets_curve.png4.4KB
how does currency depreciation cause inflation?
Why do prices of commodities fall overtime in comparison to manufactured goods? Would both not rise ?


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Original post by aminkaram
how does currency depreciation cause inflation?

Imports from other countries appear more expensive.
Original post by aminkaram
how does currency depreciation cause inflation?


Import are more expensive which shifts AS left causing cost push inflation :smile:


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Original post by aminkaram
how does currency depreciation cause inflation?


It increases exports which would therefore increase AD so would shift to the right and therefore increase price levels which would in turn cause inflation and you can show that through the diagram of AD and AS
Original post by Farringtonn
Import are more expensive which shifts AS left causing cost push inflation :smile:


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Why would imports being more expensive shift AS to the left?
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Original post by Farringtonn
Why do prices of commodities fall overtime in comparison to manufactured goods? Would both not rise ?


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No, this is due to the Prebisch-Singer hypothesis where the income elasticity of demand is higher for manufactured goods than it is for primary products. Both rise but the former rises faster, the only thing that decreases is the terms of trade for countries that solely rely on primary product exports.
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Original post by aminkaram
Why would imports being more expensive shift AS to the left?

As factors of production are largely imported into the UK.
Original post by 4.2.0
As factors of production are largely imported into the UK.


I see thanks.
Predictions for the 20 and 30 markers?
Original post by holly.briggs
Do you think we need to know this? I have never heard of it :s-smilie:

Definitely not :tongue:
Original post by Farringtonn
Why do prices of commodities fall overtime in comparison to manufactured goods? Would both not rise ?


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The rise less quickly because they are income inelastic in demand.
By the way is anyone here doing the international paper? If so, what questions did you guys get for unit 3?

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