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

I also said that my other factors such as lack of infrastructure was more significant as a constraint than savings gap i think it is ok if you argue that way describing four factors was the right approach I think, but you could also evaluate those factors. eg ppd not that signficiant because some countries developed with dependancy etc.

I did June 2013 last year and section A was so much more straight forward, also the sections B's in 2013 were straightforward. This one had much more complex wording to the question.
I found 3b difficult as who can think of 4 KAA to the savings gap:l
This is what a marker would've answered 3b) Several ways to answer the Savings gap question. My preference would be:

Intro: E/G - real GDP (AD) and Potential GDP (AS). State savings leak out therefore reducing AD but may provide funds for Investment.

Main 1: Provides funds for Investment. Link to Harrod Domar perhaps. State I increasing AD in SR and AS in LR. Diagram.

Main 2: Counter stating savings are a leakage. Reduce AD. Increasing Savings will reduce multiplier. Debate multiplier.

Savings can be compensated by FDI. Examine strings of FDI- positive and negative.

Evaluation: Examine "most important" - consider other issues in Russia. Consider time scale - immediate medium and long term. Link to type of E/G - SR or LR E/G

Tbh it was bloody hard paper. Grade boundaries should be lower than last year.

I did June 2013 last year and section A was so much more straight forward, also the sections B's in 2013 were straightforward. This one had much more complex wording to the question.
I found 3b difficult as who can think of 4 KAA to the savings gap:l
This is what a marker would've answered 3b) Several ways to answer the Savings gap question. My preference would be:

Intro: E/G - real GDP (AD) and Potential GDP (AS). State savings leak out therefore reducing AD but may provide funds for Investment.

Main 1: Provides funds for Investment. Link to Harrod Domar perhaps. State I increasing AD in SR and AS in LR. Diagram.

Main 2: Counter stating savings are a leakage. Reduce AD. Increasing Savings will reduce multiplier. Debate multiplier.

Savings can be compensated by FDI. Examine strings of FDI- positive and negative.

Evaluation: Examine "most important" - consider other issues in Russia. Consider time scale - immediate medium and long term. Link to type of E/G - SR or LR E/G

Tbh it was bloody hard paper. Grade boundaries should be lower than last year.

So you're essentially saying you approached this as if it was asking: "evaluate four limits to development in developing countries?"
Excuse me while I go jump of a bridge :P. This means my dream question came up and I was to stupid to realise it. Could someone confirm that this was in fact a valid approach so I don't kill myself in vain?

Define international competitiveness. State how international competitiveness was measured i.e. global competitive index since that's what the figure was on. A few factors affecting global competitive index (unit labour costs, macroeconomic stability etc...), quoted two countries from the figure which I compared and constrasted.

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This was a fairly tricky paper, question 5 was really weird.

For 1a)

I did 1) Bank bailouts in 2009 made the budget deficit high

2) automatic stabilisers back in 2009 made the deficit high, since then tax revenue has risen
eval: this was only ever a short run cause

3) austerity
eval:magnitude of deficit shrinking has been fairly small and they havent really reduced spending by much

For 1b)
1) Fall in tax revenues due to laffer curve
however: optimal tax rate varies for all countries - tax revenue might rise

2) Tax avoidance/tax evasion
Eval: evasion is illegal, and avoidance is deterred by naming and shaming people

3) Substitution effect - eceonomic growth falls
Eval: Income effect + government might spend revenues on education or w/e

4)Fall in inequality

For question 5:

A) - gave 2 examples of countries ranking,
- it's how good a country is at selling it's products abroad
- price/non price
- gave a few components of the index

B) - this really threw me off. I baisically just waffled about how economic growth has been negative since 07, and drew an AS/AD diagram with AD shifting

C) Unit labour costs have risen due to fall in productivity Eval: I don't remember, probs long run/short run BS

Unit labour costs ahve risen due to rise in regulation/ national insurance equivalents However: since 2007 countries have removed these in labour market policies


D)
Germany's surplus might have fallen due to british sterling's depreciation in 2008 Eval: germany's surplus only fell a tiny bit, and the eu remained relatively low compared to currencys other than the sterling

Greece's deficit has fallen due to contracted economic growth reducing marginal propensity to import Eval: This is only short run

E)
- trade union power reducing can remove wage price spiral eval: you need product market policies to compensate labour market

- remove nmw, reduces classical unemployment eval: exploitation

- education eval: time lag

I only stated about how Greece has reduced it's deficit instead of talking about surplus.. will my mark be capped

oh god 12 marks going down the drain ((
do you think I would still get some marks? like 2 Application and maybe saying that germany was reducing surplus and otehres reducing deficit? basically I outlined reasons for the reduction in imbalances of countries such as germany could then reduce inflation and greece achieve econ growth. oh the question was so easy, just misunderstood it
guess doing 2 MCQ stupidly wrong and now this this is costing me my A*

Good evening students.

Unit 4 was considerably harder than Unit 3, due to a combination of question ambiguity and question complexity.

I would hasten to add that your Edexcel board had experienced examiner recruitment problems last year for unit 4; has the situation changed appreciably? Anyone's guess.

If what happened with Unit 4 last year repeats this year, I would urge you all to get a remark asap. Under no conditions should you allow a poorly constructed unit 4 in conjunction with the possibility of less experienced examiners threaten your future!

What evaluation points did people put down?

I wouldn't say so. The question didn't explicitly ask why both surpluses and deficits dropped so I suppose you could be fine mentioning one or the other or both. Last year's paper had a similar question for the essay and you could get all marks by mentioning just reducing deficits so I think you'll be fine.

This was a fairly tricky paper, question 5 was really weird.

For 1a)

I did 1) Bank bailouts in 2009 made the budget deficit high

2) automatic stabilisers back in 2009 made the deficit high, since then tax revenue has risen
eval: this was only ever a short run cause

3) austerity
eval:magnitude of deficit shrinking has been fairly small and they havent really reduced spending by much

For 1b)
1) Fall in tax revenues due to laffer curve
however: optimal tax rate varies for all countries - tax revenue might rise

2) Tax avoidance/tax evasion
Eval: evasion is illegal, and avoidance is deterred by naming and shaming people

3) Substitution effect - eceonomic growth falls
Eval: Income effect + government might spend revenues on education or w/e

4)Fall in inequality

For question 5:

A) - gave 2 examples of countries ranking,
- it's how good a country is at selling it's products abroad
- price/non price
- gave a few components of the index

B) - this really threw me off. I baisically just waffled about how economic growth has been negative since 07, and drew an AS/AD diagram with AD shifting

C) Unit labour costs have risen due to fall in productivity Eval: I don't remember, probs long run/short run BS

Unit labour costs ahve risen due to rise in regulation/ national insurance equivalents However: since 2007 countries have removed these in labour market policies


D)
Germany's surplus might have fallen due to british sterling's depreciation in 2008 Eval: germany's surplus only fell a tiny bit, and the eu remained relatively low compared to currencys other than the sterling

Greece's deficit has fallen due to contracted economic growth reducing marginal propensity to import Eval: This is only short run

E)
- trade union power reducing can remove wage price spiral eval: you need product market policies to compensate labour market

- remove nmw, reduces classical unemployment eval: exploitation

- education eval: time lag

Good evening students.

Unit 4 was considerably harder than Unit 3, due to a combination of question ambiguity and question complexity.

I would hasten to add that your Edexcel board had experienced examiner recruitment problems last year for unit 4; has the situation changed appreciably? Anyone's guess.

If what happened with Unit 4 last year repeats this year, I would urge you all to get a remark asap. Under no conditions should you allow a poorly constructed unit 4 in conjunction with the possibility of less experienced examiners threaten your future!

How did you define international competitiveness? I did a definition, used data from the table and the said that what affects it, ie. exchange rate, commodity prices, then linked it


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