Economics Unit 2 Edexcel - Managing the UK economy Tuesday 19th May 2015 (PM)

how does a decrease in interest rates affect balance of payment... what wud ur analysis n evaluation be for this thnx in advance!!!

Firstly you wanna talk about expansionary ofc, so.. deacreasing consumer and prod. tax whilst increasing govt. spending.Then you can suggest what govt. can spend on to imrprove standard of living e.g. Hospitals, education, benefits etc.After describe how decreasing taxes will improve, simply more disposable income for consumer spending/firms investment therefore circular flow increase and AD increases blah blahThen depending on how many marks say growth may only be beneficial to high earners and those on lowest income may suffer as prices rise causing increase in income inequality

Decrease income tax (disp income to spend)

Increase govt spending ( better for uk like health care etc)

Decrease corporation tax

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Assess the policies that might be used to prevent deflation in the UK?
Would the policies be increased G and tax cuts so an expansionary fiscal policy as well as monetary policy reducing interest rates to increase spending as well as quantitative easing to increase supply of money to further reduce interest rates
what would the eval points be

not sure about QE, never got my head round it but the other 2 points are right, just say how it will conflict with B.o.P, Stimulate econ growth, reduce unemployment but Increase budget deficit

why would it conflict with BOP?

What is austerity?

because you're increasing AD, people are more wealthy and as a result of britains high marginal propensity to import, imports will increase. Also, if the price level increases the pound gets stronger, meaning our exports become dearer and less foreign countries will opt to buy from us

What is austerity?

High inflation will worsen the current account. This is because inflation causes price level to rise, therefore export becomes more expensive and import becomes cheaper. There will be less export and more import, so worsen current account.

Can someone give me a brief overview of privatisiation.

is expansionary monetary policy the same thing as a loose monetary policy

Privatisation is a supply side policy that involves selling state owned assets to the private sector. It is argued that the private sector is more efficient in running businesses because they have a profit motive to reduce costs and develop better services.