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Can anyone explain social/private/external costs and benefits? For AS level (OCR). I'm fairly sure I've been taught wrongly...

Simply put: social cost/benefit = private cost/benefit + external cost/benefit.

Reply 2321

sianmay

Original post by alex_hk90

Simply put: social cost/benefit = private cost/benefit + external cost/benefit.

Thanks!

Reply 2322

Anus

A man has 532 Mango trees in his orchard. He has an additional 500 in his nursery and 2,00 hectares of sugar cane planted.
Demand for sugar cane is such that the regulated market price is $20 a pound of raw sugar cane (spot) and for mangoes
$25 a kilogram (spot), how many apple trees of the Jonathan variety does he have in his orchard without counting any in his nursery.

Now try that out with your Econometrics and advanced maths for economic analysis. No the question is not illogical or a teaser.
It requires superior Macro and Micro economic knowledge and application and a good understanding and analytical ability using econometrics
and advanced maths for analysis.

Reply 2323

alex_hk90

Original post by Anus

Is this a typo? Everything else is about mangoes and sugar cane then suddenly apples ("of the Jonathan variety?) are involved.

Reply 2324

Mr_PC

Are these all three government policies:

1) Fiscal /// supply side
2) Monetary
3) Quantitative easing

Is supply side another name for fiscal?

Or have I made any mistakes? I can find the definition myself.

And it is embarrassing that something so simple has slipped my mind .

Please correct any mistakes, thank you!

Reply 2325

alex_hk90

Original post by Mr_PC

Demand-side policies:
- fiscal
- monetary (of which QE is one type)

Supply-side policies (usually microeconomic, things like labour market reform).

Reply 2326

Mr_PC

Original post by alex_hk90

Demand-side policies:
- fiscal
- monetary (of which QE is one type)

Supply-side policies (usually microeconomic, things like labour market reform).

So the three policies (not including all of the tight and lose) are:
Fiscal
Monetary
Supply side

Are you 100% sure?

Thanks!

Reply 2327

alex_hk90

Original post by Mr_PC

So the three policies (not including all of the tight and lose) are:
Fiscal
Monetary
Supply side

Are you 100% sure?

Thanks!

For A-level, more or less, yes.

Reply 2328

Mr_PC

Original post by alex_hk90

For A-level, more or less, yes.

Mind answering these, I need to study for something else now (I ****ed up badly with time management no lectures please!):

1) 4 stages of a business cycle (isn't that introduction, maturity etc... still tell me as I don't know)

2) Two types of normal good

3) Macroeconomics

4) Economies of scale diagram

5) Market share (isn't that what % of a market a business owns, such as entertainment)

6) Market share diagram

7) Delegation (isn't that when you give your job to someone else but you're still responsible?)

8) Organisational structure (everyone employed by the business)

Thanks in advance!

Reply 2329

Nilsdejongh

m just studying for my AQA Economics Unit 2 exam and was looking at fiscal policy. I understand that it used to be Keynesian lead and mainly focused on Demand side policies and how it is now mainly Supply side fiscal policies where tax and gov spending changes are mainly focused to shft the LRAS to the right - to increase incentives etc..

However i was getting to the end of the chapter where it says
(Figure 12 is a diagram containing a LRAS Curve and a SRAS Curve, and AD1 shifting to the right to form AD2 to create a new equilibrium)

"the extent to which expansionary fiscal policy reflates real output (in this case from y1 to y2), or creates excess demand that leads to demand pull inflation (in this case an increase in the prie level from p1 to p2), depends on the shape of the AS curve, which in turn depends on how close initially the conomy was to full employment. The nearer the conomy gets to full employment, the greater the inflationary effect of expansionary fiscal policy and the smaller the reflationary effect"

I dont understand the paragraph completely, especially when they talk of the inflation it causes.. is this a downside with Demand side fiscal policy is that it causes inflation? why does it depend on the shape of the AS Curve etc.

If somebody could explain id be very greatful

Reply 2330

SEM94

How does increased productivity, as a result of investment in new capital equipment for example, lead to increased international competitiveness?

Correct me if I'm wrong but is it because as firms costs decrease they are able to lower their prices below their competitors?

Reply 2331

Nilsdejongh

What determines the shape of the SRAS Curve? :smile:

Reply 2332

usycool1

Original post by Seanm1994

Yup, you're right :smile:

Reply 2333

usycool1

I had my GCSE Economics paper last week. The last question threw me a little:
In your opinion, should the government reduce government spending or increase taxation to reduce a budget deficit? Explain your answer (8 marks)

I thought that reducing government spending would be better. This is because increasing taxation could have regressive or progressive effects ( I explained it in more detail in the exam), so the government could lose out on taxation all together, so the budget would not improve.

However, most of my other friends said that they selected to increase taxes.

I'm not sure who's right, so I was wondering if someone could tell me the 'correct' answer (i.e. what method you think would be best).

Thanks :smile:

Reply 2334

alex_hk90

Original post by usycool1

There is no correct answer, you can argue either way. In some ways this is the American Democrat (increase taxation) vs Republican (reduce government spending) public deficit argument.

Reply 2335

LeedsLad95

I'm doing OCR as economics (macro) I asked my teacher for a potential essay question on income redistribution ang got this
'*
Discuss the extent to which fiscal policy can be used to achieve income redistricution (18)'

I don't really know how to answer it, any help please?

Reply 2336

alex_hk90

Original post by LeedsLad95

Taxation and government spending policies. Tax in terms of income tax thresholds and percentages, also other taxes (VAT, duty, etc.). Spending in terms of welfare (benefits, etc.). Think about whether the policies are progressive or regressive, presumably for income redistribution they'll be looking at predominately progressive policies.

Reply 2337

Nilsdejongh

Hey there, as i know the various different SSP's are hugely diverse, i was wondering if you could desribe afew that'd be useful for answering a variety of different questions..

From AQA book splits them up into Industrial policy measures, Labour market measures, and finacial/capital market measures.

If you could desribe/analyse/evaluate afew and help me out with how to drop them into exam questions thatd be great!! also, maybe mention whether their a Freemarket or interventionalist approach etc

Thanks

Reply 2338

Nilsdejongh

Did a multi choice and these are the ones i got wrong

1. The economy is currently operating at its normal capacity level of output. It is estimated that the long-run trend rate of growth of the economy is around 2.5% per annum. In the coming year, it is expected that inflation will be 4% per annum and money national income will grow by 5%. Which one of the following is most likely?
A Unemployment will fall and the economy will grow below its trend rate
B Employment will be stable and the economy will grow at its trend rate
C Employment will rise and the economy will grow above its trend rate
D Unemployment will increase and the growth of the economy will be below its trend rate

i put C the correct answer was D.. Why is this? i understand that 4% inflat and 5% income rises will mean that its actually only a 1% real income increase.. i dont understand how you'd relate with to the long-run trend rate of growth though?
-------------------------
2.Inflation in an economy is currently at 10%. Which of the following changes in monetary and fiscal policy, A, B, C or D, is most likely to bring down the rate of inflation in the economy?
Interest rates --- Government expenditure ---Taxation revenue
A Increase Increase Decrease
B Decrease Decrease Increase
C Increase Decrease Increase
D Decrease Increase Increase

i put B, it was actually C... why?

-------------------------------------
3. The underlying trend rate of growth in an economy is declining and the economy is also experiencing an increase in its rate of unemployment. Which one of the following is likely to be most effective in dealing with these problems?
A An expansionary fiscal policy and a restrictive monetary policy
B A restrictive monetary and fiscal policy
C An expansionary monetary policy and supply-side policies
D A restrictive fiscal policy and supply-side policies
i put A - It was C - Why?
------------------------
4.An economy is experiencing a balance of payments deficit and inflation. All ther things being equal, which policy is most likely to reduce both the balance of payments deficit on current account and the rate of inflation?
A A fall in government spending
B A cut in interest rates
C A decrease in the rate of income tax
D A reduction in the exchange rate

Reply 2339

alex_hk90

Original post by Nilsdejongh

You've already answered your own question. If it's 1% then it's below the long-run trend of 2.5%, and since unemployment will increase the answer has to be D (rather than A).

Original post by Nilsdejongh

2.Inflation in an economy is currently at 10%. Which of the following changes in monetary and fiscal policy, A, B, C or D, is most likely to bring down the rate of inflation in the economy?
Interest rates --- Government expenditure ---Taxation revenue
A Increase Increase Decrease
B Decrease Decrease Increase
C Increase Decrease Increase
D Decrease Increase Increase

i put B, it was actually C... why?

Increase in interest rates restricts spending (both household and business) via reduced lending.

Original post by Nilsdejongh

3. The underlying trend rate of growth in an economy is declining and the economy is also experiencing an increase in its rate of unemployment. Which one of the following is likely to be most effective in dealing with these problems?
A An expansionary fiscal policy and a restrictive monetary policy
B A restrictive monetary and fiscal policy
C An expansionary monetary policy and supply-side policies
D A restrictive fiscal policy and supply-side policies
i put A - It was C - Why?

Supply-side policies for the underlying trend rate, expansionary monetary (fiscal would also work here, just needs to be demand-side) policy for the unemployment.