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    (Original post by Wish)
    But... AD isn't about demand so why would that be influenced? Will consumption fall due to demand falling?
    AD = Aggregate demand = total goods and services DEMANDED in an economy. why isn't AD about demand? :eek:
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    (Original post by ayandutta)
    hello to all. i got a chem exam in an hr so dont want to fill my head with econ stuff.
    althou i understand how a Balance of payment deficit signifies deceasing competitiveness of UK goods, i dont really grasp the idea.

    i will come back and post my answer to such a question, but was wwondering if any1 could post up a model answer to HOW BoP DEFICIT SHOWS DETERIORATING UK COMPETITIVENESS

    thanks

    Theres no such thing as a 'balance of payments deficit'. The Balance of Payments balances out, i.e. = 0 (if it doesnt then we just put the change in value in the net errors/omissions part).

    Perhaps you mean a trade in goods deficit? in which case it suggests UK consumers have preference on imported foreign goods rather than domestic ones. Thus UK goods are seen to be less competitive.
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    Do you guys find that the candidate answers at the back of the green Phillip allan Updates book (by Dudley-Smith) are marked harshly? I am talking about both the long essays and short data-response questions. I never write proper introductions- why waste time- just start off with the definition and then jump into the main body and start answering what they are asking. Is it really bad that I do that?
    Also, guys, how deep into the evaluation point do you get? say, the mark scheme says the standard evaluation points such as "short vs long run", "prioritisation of factors" and so on. But how much do you write in each evaluation point??
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    (Original post by Apricott)
    Do you guys find that the candidate answers at the back of the green Phillip allan Updates book (by Dudley-Smith) are marked harshly? I am talking about both the long essays and short data-response questions. I never write proper introductions- why waste time- just start off with the definition and then jump into the main body and start answering what they are asking. Is it really bad that I do that?
    Also, guys, how deep into the evaluation point do you get? say, the mark scheme says the standard evaluation points such as "short vs long run", "prioritisation of factors" and so on. But how much do you write in each evaluation point??
    I never bother with an introduction! I define things as they crop up in my essay. I just dive straight in. The first point/factor/cause....etc.

    I usually write about 3/4 lines. Just enought to make my point. If I need to write more or less, I will.
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    (Original post by Wish)
    Can someone tell me why rise in oil price would decrease AD?
    A rise in oil prices has adverse effects on AS and AD:

    1 - Costs of production for firms rises, as oil is necessary for them in producing the goods. Thus AS falls
    2. Households have less discretionary income, i.e. income after committed payments. Rising oil prices mean energy bills are higher, cost of petrol also soars, and thus AD for goods and services falls since consumers are less willing and able to purchase goods
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    (Original post by hmjessop)
    I never bother with an introduction! I define things as they crop up in my essay. I just dive straight in. The first point/factor/cause....etc.

    I usually write about 3/4 lines. Just enought to make my point. If I need to write more or less, I will.
    quality > quantity

    just use transmission mechanisms to get to your point and then evaluate.
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    hmjessop, same, i never write proper intros... but the examiners seem to like the longer ones, I assumed this by looking at the way they mark the essays.
    I feel horrible now
    50 mins only on FAT essays- and you have to write the intro.... Geeezzz
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    imagine you have a 40 or 60 mark essay, and you're making a point+evaluation that involves no diagrams.. how many lines do you think you should take in order to get the marks for analysis and evaluation? im just asking this because i find that when i make points that dont have diagrams attatched, they appear very short even though i explain and evaluate!
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    i have an example of this actually - does a deficit in the trade in goods matter?

    point 1 - no because it can be due to cyclical changes in gdp (i can explain this ok)
    point 2 - no because we have a C.A. in Financial services (again, ok in explaining)
    point 3 - yes because it shows we're less competitive. (this is where the point seems a bit slim, and self explanatory so i dont know how to expand!)
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    yeah i never draw a diagram for an evaluation. For analysis- yes (depends on the question) but not for conclusion / evaluation
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    http://www.youtube.com/user/pajholden some useful economic videos i found
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    (Original post by newlife)
    i have an example of this actually - does a deficit in the trade in goods matter?

    point 1 - no because it can be due to cyclical changes in gdp (i can explain this ok)
    point 2 - no because we have a C.A. in Financial services (again, ok in explaining)
    point 3 - yes because it shows we're less competitive. (this is where the point seems a bit slim, and self explanatory so i dont know how to expand!)
    sorry but can you please explain your first point?
    on this type of essay, i normally answer YES, it does matter (downward pressure on your currency; financing debt- cannot always rely on capital inflows and FDI)
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    For 8 mark question, what the structure?
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    DO you think European Monetary Union is going to come up?
    My teacher said that EMU isn't such a big issue currently, that was more discussed couple of years ago rather than now. So i kinda didn't revise that much on EMU.. what d'u guys reckon?
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    (Original post by newlife)
    i have an example of this actually - does a deficit in the trade in goods matter?

    point 1 - no because it can be due to cyclical changes in gdp (i can explain this ok)
    point 2 - no because we have a C.A. in Financial services (again, ok in explaining)
    point 3 - yes because it shows we're less competitive. (this is where the point seems a bit slim, and self explanatory so i dont know how to expand!)
    I'd add to that the deficit as a % of GDP is a useful measure - if the nominal deficit is large it does not necessarily mean that it's a cause for concern.

    I'd also add to that why some solutions could be bad. The 'standard' remedy for a cur a/c deficit is to devalue the currency. However, as the UK is (since 2005) a net importer of oil and the PED for oil is inelastic, we can invoke the Marshall Lerner Condition to say that in fact, ceteris paribus, the deficit will not improve.
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    Why does fall in UK competitiveness cause lower economic growth?
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    (X-M) is a component of AD....and BoP falls as UK competitiveness falls which mean AD shifts inwards....this reduces real GDP AKA economic growth...

    Also falling UK competitiveness can mean export markets are doing worse than import markets which means...employment within export markets will fall....again reducing economic growth
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    Because you export less in a nutshelll.
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    I dunno bout evaluation though
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    (Original post by Apricott)
    sorry but can you please explain your first point?
    on this type of essay, i normally answer YES, it does matter (downward pressure on your currency; financing debt- cannot always rely on capital inflows and FDI)
    When the UK came out of a recession in the 1990's, GDP was on the rise. Since our marginal propensity to import was high, the imports rose over the years, thus leading to a trade in goods deficit. now however, we're at a slowdown and so GDP levels have fallen, which means demand for imports falls and hence the deficit in trade in goods may be self corrected. Thus it isnt really a matter of concern.
 
 
 

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