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

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30 markers can't tell if i evaluated a little to much. (Question 2)

defined subsidies
LRAS curve expanding to the right
Explained subdues cause increase in demand due to lower price, resulting in investment and then shift in LRAS to the right (not sure that's to far forward or not). Drew a normal supply/demand curve demonstrating supply shifting downwards. Went onto explain that an increase in output due to more quantity sold and higher total value of goods.
Then showed a PPF curve with ppf shifting but not a change in output as it is below ppf line. Also showed a LRAS curve with AD to low down on the curve for a shift in LRAS to make any difference.
Then talked about the cost of subsidies, government borrowing or taxes increase (With taxes meaning less money in circular flow of income, causing AD to shift to the left) and government borrowing causing an added burden on later generation and briefly mentioned that there would be IR repayments. (is this evaluation or KAA)
Then went to say the multiplier effect will mean that the first investment will be re-spent, maybe getting back the initial cost in borrowing through taxation and an increase in AD and output.
Reply 661
Avatar for irMike
irMike
5
Original post by Tommy 97
30 markers can't tell if i evaluated a little to much. (Question 2)

defined subsidies
LRAS curve expanding to the right
Explained subdues cause increase in demand due to lower price, resulting in investment and then shift in LRAS to the right (not sure that's to far forward or not). Drew a normal supply/demand curve demonstrating supply shifting downwards. Went onto explain that an increase in output due to more quantity sold and higher total value of goods.
Then showed a PPF curve with ppf shifting but not a change in output as it is below ppf line. Also showed a LRAS curve with AD to low down on the curve for a shift in LRAS to make any difference.
Then talked about the cost of subsidies, government borrowing or taxes increase (With taxes meaning less money in circular flow of income, causing AD to shift to the left) and government borrowing causing an added burden on later generation and briefly mentioned that there would be IR repayments. (is this evaluation or KAA)
Then went to say the multiplier effect will mean that the first investment will be re-spent, maybe getting back the initial cost in borrowing through taxation and an increase in AD and output.


You based your whole answer on subsidies?
What did people write for low stable inflation, particularly with evaluation. I wrote benefit was good for people with fixed incomes, stability means could plan ahead have financial confidence blah blah (EV not that a big problem most people on nominal wages) . Also said about it helping international competitiveness and curren account (EV only in long term, contracts long term with firms will only increase exports when foreign firms contract end etc) and then stability is good as gives workers confidence no price wage spiral etc. Felt my answer was **** and so vague 🐙🐙
(edited 8 years ago)
Original post by irMike
You based your whole answer on subsidies?


yeah, lol, wtf
I would make another banterous video like my last Unit 1 one... https://www.youtube.com/watch?v=4MK_pMyy04g (Shameless plug :biggrin:) but that paper was just unbearable, wouldn't be surprised if that drags my grade down to a D... cant banter when im crying :'(
Did anyone else find the 6 marker for question 2 ridiculous?! And the two 12 markers were quite difficult too, I felt like I was repeating my points continuously in that!
Original post by irMike
You based your whole answer on subsidies?


I'm guessing that's not a good thing:/ Will some of the points not be counted for?
Id like to give a shout out to my boy Joshua J real quick, welsh brothers for life, die welsh or die trying
Did investment decrease in those dates mentioned in Question 2????
Original post by Rigster122
I would make another banterous video like my last Unit 1 one... https://www.youtube.com/watch?v=4MK_pMyy04g (Shameless plug :biggrin:) but that paper was just unbearable, wouldn't be surprised if that drags my grade down to a D... cant banter when im crying :'(


that was you? loved it
Original post by member1753327
Did investment decrease in those dates mentioned in Question 2????


yes the general trend was that investment was decreasing from 2008-2013
does anyone hae an unofficial mark scheme for econ
Original post by AJC1997
yes the general trend was that investment was decreasing from 2008-2013


Perfect, also the other 12 marker asked how real output and price level were affected due to the change investment?

Diagram showing lower real output and falling price level, would be that be valid KAA?

I just forgot the question
Can anyone briefly say the question 1 questions??? And if possible the marks too. Just brief cause can't remeber 😓
Original post by Tommy 97
30 markers can't tell if i evaluated a little to much. (Question 2)

defined subsidies
LRAS curve expanding to the right
Explained subdues cause increase in demand due to lower price, resulting in investment and then shift in LRAS to the right (not sure that's to far forward or not). Drew a normal supply/demand curve demonstrating supply shifting downwards. Went onto explain that an increase in output due to more quantity sold and higher total value of goods.
Then showed a PPF curve with ppf shifting but not a change in output as it is below ppf line. Also showed a LRAS curve with AD to low down on the curve for a shift in LRAS to make any difference.
Then talked about the cost of subsidies, government borrowing or taxes increase (With taxes meaning less money in circular flow of income, causing AD to shift to the left) and government borrowing causing an added burden on later generation and briefly mentioned that there would be IR repayments. (is this evaluation or KAA)
Then went to say the multiplier effect will mean that the first investment will be re-spent, maybe getting back the initial cost in borrowing through taxation and an increase in AD and output.


You're going to get 0 for AA and evaluation as the only way you can mention subsidies is by them subsiding education, other forms of subsidies cant be used e.g to farmers as this doesn't increase productivity just output , the mark scheme never awards for simply subsidies and textbooks advise against using it.
Original post by member1753327
Perfect, also the other 12 marker asked how real output and price level were affected due to the change investment?

Diagram showing lower real output and falling price level, would be that be valid KAA?

I just forgot the question


Yes, did you shift LRAS to the left and AD also to the left?
Reply 676
Avatar for Mowtoe
Mowtoe
2
Original post by cuppycake3
I wrote about how macroeconomics objectives can conflict but didn't mention demand side policies at all! I completely forgot how many marks do you think I will lose?

omg!! this kind of happened to me as well!! but i tried to use the demand side policies in my explanation when i realised
This is what I wrote for the 30 markers in Q2, which was also what most of my friends did. Take this for consideration only.

Define supply side policy.
Few arguments:
1. Cut benefits -> create incentive to find jobs -> more work -> output increase
2. Cut income tax -> create incentive to work for workers -> productivity increase -> output increase
3. Cut corporation tax -> more investment -> technology, efficiency etc -> output increase
4. Training and education -> skills goes up -> more output.

Evaluation: time lag, quality of training, other factors cancelling out, firms may not invest but will keep it for themselves, other way to increase real output ( I referred to other policies, fiscal and monetary to compare, that kind of stuff).

Hope this helps.
Original post by member1753327
Perfect, also the other 12 marker asked how real output and price level were affected due to the change investment?

Diagram showing lower real output and falling price level, would be that be valid KAA?

I just forgot the question


Since it was 12 marks it would be 8 marks for KAA and 4 marks for eval

8 KAA

Diagram showing both the AS (1) and AD(1) falling (4 for being correct overall)

Then explanation about why AD falls (2)

And why AS falls (AD)

4 eval (2x2 or one for 4)

e.g I is a small component of AD, other components of AD
for the productivity question, i put as the productivity decreased, firms have to hire more workers. therefore, the cost of production might increase and results in inflation.
is it right?

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