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    (Original post by Ecomax)
    The Single European Market is a Customs Union with a CAT (Common Ex Tariff)
    The Eurozone is a Currency Union

    Not stepping on Kelbels Toes or anything :P Just knew the answer, i also did well at AS (100ums in Macro and 85 in Micro) and have strong knowledge at A2, more than happy to help
    Hi
    Could you please explain how interest rates may be manipulated if the exchange rate depreciates or appreciates and why? - I keep getting confused on this one topic!
    Thanks!
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    (Original post by kelbel1)
    Oh right, yeah, sort of. It's just because Unit 2 and 4 are very similar, my class think. I got 100/100 UMS in Econ 3 in Jan.. I wouldn't have exactly called it a dream, much harder if you were sitting the exam on the day I think! Much easier when you're looking at past papers at home lol! Luckily for me, I was hot on Oligopoly for the data question
    Trust me, I'd have swapped exams in a heart beat, i was very strong on the Concentrated Market section and did the Jan paper as a mock, it was lovely
    The first section in June was horiffic, well done
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    (Original post by Ecomax)
    Trust me, I'd have swapped exams in a heart beat, i was very strong on the Concentrated Market section and did the Jan paper as a mock, it was lovely
    The first section in June was horiffic, well done
    It's just all about what comes up, you found it easy because you were good on that section maybe I'd have found your paper easy in June, we'll never know! Just happy I've secured my 100 lol! x
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    (Original post by kelbel1)
    It's just all about what comes up, you found it easy because you were good on that section maybe I'd have found your paper easy in June, we'll never know! Just happy I've secured my 100 lol! x
    Happy for you too haha, its a great feeling, takes the pressure off for the A overall and puts you in good position for the A*
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    (Original post by Ecomax)
    Happy for you too haha, its a great feeling, takes the pressure off for the A overall and puts you in good position for the A*
    Thanks dude All the best for your results when you get them!
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    (Original post by kelbel1)
    It's just all about what comes up, you found it easy because you were good on that section maybe I'd have found your paper easy in June, we'll never know! Just happy I've secured my 100 lol! x
    No chance you would have found the June paper easy
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    (Original post by Axion)
    No chance you would have found the June paper easy
    Everyone is ganging up on me saying my paper was easy and yours was hard, not fairrrr!! haha I didn't choose what paper I got! My friend did the resit, was Context 1 on externalities on water or something, and the second context on hospitals? She said it was abit tricky but thought she had a good go! Got my fingers crossed for you guys, you clearly know your stuff, it's just down to luck on the day with the questions too! :bigsmile: xx
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    New to this forum, is the Jan '13 paper anywhere?
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    (Original post by bestfriends33)
    Hiya, Could you please explain quantitative easing to me...
    (Original post by charlie7wright)
    Most of the capital held by high street banks to back their loans to customers takes the form of UK government bonds bought by the banks on the bond market. With QE, the BoE buys these illiquid bonds from the banks, paying for them with the liquid 'new money' that QE creates. It basically means that the BoE is giving high street banks money in the hope that it will lend out more of it to consumers and businesses, however, this hasn't happened.

    You can talk about it as a part of monetary policy. It's a good policy to talk about because it has been done by the government in recent years and you can easily point out the flaws in the idea (such as the one I have pointed out that banks did not use this new money to lend to businesses) for evaluation points. Hope this helped
    That's pretty good but there's a bit more to it.
    If you want some more analysis/evaluation points.

    Quantitative Easing increases the demand and hence the price of bonds.
    This reduces the rate of return for investors. Pension funds are major investors in bonds so there's a potentially large negative impact. You can take that as far as you like given that reduced pensions will hit consumption.
    There's also a risk of short term inflation (potentially hyper inflation) due to an increase in the money supply - that's the monetarist theory of inflation anyway.
    In the long term the bank is supposed to sell off the bonds and destroy the money it receives for them. Therefore there's no long term increase in the money supply. You could however question when and if this will happen though.
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    what would be the macroeconomic performance for the UK economy if they left being a member of the EU?
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    I preferred the June paper as price discrimination came up which everyone predicted, and externalities question although it was confusing

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    (Original post by Patriot Rich)
    That's pretty good but there's a bit more to it.
    If you want some more analysis/evaluation points.

    Quantitative Easing increases the demand and hence the price of bonds.
    This reduces the rate of return for investors. Pension funds are major investors in bonds so there's a potentially large negative impact. You can take that as far as you like given that reduced pensions will hit consumption.
    There's also a risk of short term inflation (potentially hyper inflation) due to an increase in the money supply - that's the monetarist theory of inflation anyway.
    In the long term the bank is supposed to sell off the bonds and destroy the money it receives for them. Therefore there's no long term increase in the money supply. You could however question when and if this will happen though.
    Yeah those are points I would also bring in but I tried to make it as simple as possible to explain the basic concept and any possible flaws because all that information above might be a bit hard to digest if you don't understand the basic principle of QE. Good analysis/evaluation though.
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    (Original post by ineedtorevise127)
    what would be the macroeconomic performance for the UK economy if they left being a member of the EU?
    Much worse, in my opinion.
    Here's a list of pros and cons

    Pros
    .Reduced trade barriers (single market)
    .Increased mobility of labour and capital
    .Encourages foreign direct investment - Obama said Britain leaving would cost them £10 billion a year in US FDI
    .Economies of scale from single market - it's good to quote the fact that the EU has 500 million people and 27 countries
    .Common rules and regulations
    .Farm subsidies, which make just under half the EU budget, would have to be paid anyway
    .52% of British exports are to the EU
    .More influence negotiating trade deals

    Cons
    .Increased bureaucracy
    .Pressure on domestic companies from EU competitors
    .Freedom from EU laws
    .No payments to the EU (you could evaluate this by pointing out that the EU budget is only 1.12% of member state's combined GNI)
    .Access to independent labour market policies
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    .;l
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    (Original post by charlie7wright)
    Yeah those are points I would also bring in but I tried to make it as simple as possible to explain the basic concept and any possible flaws because all that information above might be a bit hard to digest if you don't understand the basic principle of QE. Good analysis/evaluation though.
    Thanks very much to both of you! And QE can be brought into an essay when talking about how the government could boost the economy/ use MP to get out of a recession/increase growth etc?
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    (Original post by Axion)
    Question! - Is subsidising firms a macroeconomic supply side policy?
    I *think* its generally supply side.

    A subsidy can encourage firms to produce more. The demand curve is unaffected but firms should be more willing to sell at a lower price. There is a new equilibrium at high quantity and low price.


    On the demand side you have subsidies too, often called rebates. The government pays consumers back a proportion of the amount they spent on the item in order to incentivise demand. Shifting the demand curve. They might do this for merit goods.
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    (Original post by Patriot Rich)
    That's pretty good but there's a bit more to it.
    If you want some more analysis/evaluation points.

    Quantitative Easing increases the demand and hence the price of bonds.
    This reduces the rate of return for investors. Pension funds are major investors in bonds so there's a potentially large negative impact. You can take that as far as you like given that reduced pensions will hit consumption.
    There's also a risk of short term inflation (potentially hyper inflation) due to an increase in the money supply - that's the monetarist theory of inflation anyway.
    In the long term the bank is supposed to sell off the bonds and destroy the money it receives for them. Therefore there's no long term increase in the money supply. You could however question when and if this will happen though.

    (Original post by charlie7wright)
    Yeah those are points I would also bring in but I tried to make it as simple as possible to explain the basic concept and any possible flaws because all that information above might be a bit hard to digest if you don't understand the basic principle of QE. Good analysis/evaluation though.
    Thanks very much to both of you! And QE can be brought into an essay when talking about how the government could boost the economy/ use MP to get out of a recession/increase growth etc?
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    Also @the guy who asked about interest rates and the exchange rate. If the BoE increased interest rates it may attract more hot money flows into the UK banks because investors will be looking to make the highest return on their money possible and so may move their money from an overseas bank into a UK bank. This increase in demand for the pound will increase its value, and hence make its exports less competitive. - This could lead to a reduction in AD and possibly an increase in unemployment (mostly in exporting firms). It is also likely to lead to a deterioration in the country's balance of payments current account. The opposite is true for a decrease in interest rates.

    Two good evaluation points when talking about the exchange rate are the J-Curve and the Marshall-Lerner condition. The J-Curve states that a devaluation of a currency will first lead to a deterioration of that country's current account in the short-term before it starts to improve.

    The Marshall-Lerner condition states that devaluation will only lead to an improvement in the current account if the combined price elasticities of imports and exports are greater than 1.

    Hope this helped
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    (Original post by bestfriends33)
    Thanks very much to both of you! And QE can be brought into an essay when talking about how the government could boost the economy/ use MP to get out of a recession/increase growth etc?
    No problem. That would be a great place to do a paragraph on QE.
    There's no diagram I know of but there's so much potential for analysis and evaluation.
    Another thing to mention to make it more relevant - the UK used QE for the very first time in January 2009. The BoE claimed that if they hadn't used it the UK's annual economic output (GDP) would have been 1.5-2% lower (although some economists dispute this).
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    (Original post by Ecomax)
    The Single European Market is a Customs Union with a CAT (Common Ex Tariff)
    The Eurozone is a Currency Union

    Not stepping on Kelbels Toes or anything :P Just knew the answer, i also did well at AS (100ums in Macro and 85 in Micro) and have strong knowledge at A2, more than happy to help
    Hahaha, thank you very much!!!

    Clearly you're very smart too =]

    So, this might sound like a stupid question, but, is the UK part of the CU?
 
 
 
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