A2 OCR Economics F585 June 2016

It sounds rather simple, but can can someone help me with this question:
"Distinguish the difference between a developing and developed country"

Anyone wants Econplusdhall model answers

Analyse TWO possible reasons why changes in the effective exchange rate failed to havetheir “expected impact on the US current account deficit”

One reason for the failure of exchange rate movements to eliminate the US current account deficit isthat, despite the change in relative prices, US demand for Chinese products and Chinese demandfor US products were insufficiently price elastic for trade volumes to move significantly. (1)Currency depreciation can boost exports and indeed export revenue, but only if foreign demand iselastic. (1) Similarly, currency depreciation can cause a larger than proportional contraction of demandfor imports, but only if demand for imports is elastic. (1) According to the Marshall Lerner condition,following depreciation or devaluation, a combination of falling prices for exports and rising prices forimports will only solve the problem of deficit if trade volumes move significantly, (1) ie the sum of thetwo elasticities of demand exceed one. (1)

A second reason for a continuing significant US trade deficit may be derived from the fact that USgoods and services may be becoming relatively less competitive in quality terms, thereforerepresenting poorer value for money. (1) This would mean that, at constant prices, less would bedemanded and, therefore, any increase in demand from overseas for US products arising from thefalling prices associated with the US dollar depreciation, would be reduced by the loss of demand from this loss of competitiveness. (1) Although the overall impact of these two influences on the total value of exports would depend on the relative significance of each, and also on price elasticity of demand for exports, the total export revenue would certainly be less than it would otherwise be if US products were becoming less competitive, and so the trade deficit would be sustained. (1)

Analyse TWO possible reasons why changes in the effective exchange rate failed to havetheir “expected impact on the US current account deficit”

One reason for the failure of exchange rate movements to eliminate the US current account deficit isthat, despite the change in relative prices, US demand for Chinese products and Chinese demandfor US products were insufficiently price elastic for trade volumes to move significantly. (1)Currency depreciation can boost exports and indeed export revenue, but only if foreign demand iselastic. (1) Similarly, currency depreciation can cause a larger than proportional contraction of demandfor imports, but only if demand for imports is elastic. (1) According to the Marshall Lerner condition,following depreciation or devaluation, a combination of falling prices for exports and rising prices forimports will only solve the problem of deficit if trade volumes move significantly, (1) ie the sum of thetwo elasticities of demand exceed one. (1)



A second reason for a continuing significant US trade deficit may be derived from the fact that USgoods and services may be becoming relatively less competitive in quality terms, thereforerepresenting poorer value for money. (1) This would mean that, at constant prices, less would bedemanded and, therefore, any increase in demand from overseas for US products arising from thefalling prices associated with the US dollar depreciation, would be reduced by the loss of demand from this loss of competitiveness. (1) Although the overall impact of these two influences on the total value of exports would depend on the relative significance of each, and also on price elasticity of demand for exports, the total export revenue would certainly be less than it would otherwise be if US products were becoming less competitive, and so the trade deficit would be sustained. (1)

If you want to be added to group chat for a much quicker response and for amazing resources whatsapp me on

07459131684

If you want to be added to group chat for a much quicker response and for amazing resources whatsapp me on

07459131684

Can I have his model answers too pls Ill double rep

Thanks!
I understand how comparitive advantage works, but I don't understand why being able to have a lower opportunity cost actually leads to higher AD or AS?

can someone please answer this:

Discuss the extent to which internal constraints are more significant than external contrasts to economic development in Zambia.

do you think its best to make 2 or 3 points for the 20 marker ?

Depends, quality not quantity - if you feel your 2 points are sufficient and detailed thats fine.

Just remember you need to evaluate so give yourself time for that

Would you give a judgement and a however for a "analyse and evaluate..." question?

Would you give a judgement and a however for a "analyse and evaluate..." question?