AQA Economics AS May 2015

Original post by BigDaave

Hmm, interesting. Not sure how I'd answer that one...

you could mention supply side policies to shift out lras and AD at the same time creating non inflationary economic growth, and reducing inflation :smile:

you could mention how supply side policies increases ppb outwards causing output to increase and decreasing the price level

(edited 8 years ago)

Reply 646

BigDaave

Original post by VonDutchyy

Yeah Ok, a fall in money wages reduces costs of production but also reduces incentives to work reducing SRAS and ultimately reducing productivity, secondly shouldn't the true answer be a fall in the exchange rate seeing that exports will be cheaper reducing one of the main costs in order to sell the good and services in the first place? Economics shouldn't have multi choice questions seeing that it's not a science and opinions differ..

You're right, it ultimately reduces worker productivity, if we were to see wage prices fall continously, LRAS may be affected as nobody wants to work anymore, but short term I think the answer is correct as a fall in wages short term would case SRAS to shift right, as businesses can supply the product at a cheaper price.

R.E. Multiple choice qu - they're simply testing knowledge, it's a box ticking exercise, they want to see how much you can remember from the textbook; the more complex analysis will come in the essay portion, that's why they have both

Reply 647

BigDaave

Original post by jennifer.tariah

you could mention supply side policies to shift out lras and AD at the same time creating non inflationary economic growth, and reducing inflation :smile:

So, this sounds so blindingly obvious I don't know why I ignored non-inflationary growth. Examples of such being education and training schemes, infrastructure projects to improve links between the North and South to improve labour mobility?

Reply 648

Original post by BigDaave

So, this sounds so blindingly obvious I don't know why I ignored non-inflationary growth. Examples of such being education and training schemes, infrastructure projects to improve links between the North and South to improve labour mobility?

yes, measures to increase productivity and overall output (migration)

infrastructure projects include : HS2 results in less congestion in London ( you could evaluate this by saying, this may not reduce labour immobility if there are no jobs in northern parts of England )
educational and training schemes include : Apprenticeships (also reduces structural unemployment which is accounts for the largest amount of unemployment in the UK. and it helps reach macroeconomic objective of full employment)

a question like that would be good as you may decide to focus on supply side policies that may increase output, and I'd advise you to not go into depth about unemployment as this doesn't answer the question.

feel free to PM me if you need any help

(edited 8 years ago)

Reply 649

Krollo

OP

17

Random discussion question: is the size of the budget deficit as important as politicians are making out?

Posted from TSR Mobile

Reply 650

SotonianOne

Original post by Krollo

Random discussion question: is the size of the budget deficit as important as politicians are making out?

Posted from TSR Mobile

Considering we have the highest budget deficit to GDP in the Western world, yes.

We have about -5%, for comparison, France has -4.4%, Greece -3%, US about -2.5% while Germany has 0.4% (marginal surplus)

Reply 651

Jim Riley

These revision webinar videos cover a huge amount of ground for anyone making final preparations for tomorrow's AS macro paper:

UK Economy in 2015 - AS Macro Update & Overview

Aggregate Demand and Aggregate Supply

Living Standards and Human Development Index

Exchange Rates

Supply-side Policies

Multiplier and Accelerator

If you need some further help try these:

AS Macro Key Terms / Definitions

AS Macro Study Notes by Topics

AS Macro Final Exam Technique Advice

All the best tomorrow

Jim

Reply 652

Curtis1234

2

Can someone explain how to answer an essay question for econ2? I feel like my teacher has over prepared us for econ 1 essays

Reply 653

Original post by Krollo

Random discussion question: is the size of the budget deficit as important as politicians are making out?

Posted from TSR Mobile

no, economically, an increasing budget deficit shows AD is shifting outwards, indicating we are approaching a positive output gap, business confidence is increasing meaning they are investing more, real output of the economy is increasing consequently so is GDP

Reply 654

Original post by Curtis1234

Can someone explain how to answer an essay question for econ2? I feel like my teacher has over prepared us for econ 1 essays

its very simple, I use this technique:

QUESTION: Using the data and your economic knowledge, assess the likely consequences of
increased spending on infrastructure for the performance of the UK economy.

Intro: define 2 keywords in the questions e.g. infrastructure & Aggregate supply. Highlight the macro economic objectives and their indicators. (all you need to do in the intro tbh)

then 3-4 points with the structure of :
I - Identify point (e.g. increases productivity of labour)
E - Explain point with logical chain of reasoning ( e.g. increasing spending on infrastructure > improve transport links > reducing travel time > resulting in more people coming to work earlier and leaving later > they work for a longer period of time > consequently increasing the output of the economy
D - Diagram (e.g. show the utilisation of more space capacity in the PPB, so a movement from inside the ppb to on the ppb)
E - Evaluation (e.g. may be hard to improve infrastructure in cities like London as it Is already very developed)
R - Real LIFE Example (e.g. spending on HS2 or M25 )

DO NOT FORGET TO EVALUATE ON EVERY POINT, you will not be able to evaluate all in your conclusion and leaving it till your maybe risky as you may run out of time and the evaluation makes are higher than that of actual points.

then your conclusion :
start with phrases like OVERALL, Finally. and think on the long term and short term impact on spending and APPLY IT TO THE UK. how is the economy now? will it benefit from infrastructure or any fiscal measure? should the Bank of England step in to add some monetary measures in order for the effects to be long term ??

hope this helps

Reply 655

ozzie2

Hey guys why is the answer to this Question A, I thought it was D?

Consumers delay purchases as deflation, by definition is the persistent fall in the general price level. So if prices are falling consumers expect prices to fall even more so they will just wait until the good/service they want to purchase is even cheaper

Reply 657

jimgordan

Does an increase in GDP mean that AD and LRAS shifts to the right?

Reply 658

BBeyond

15

Original post by ozzie2

Hey guys why is the answer to this Question A, I thought it was D?

if prices fall the value of money increases!

Reply 659

ozzie2