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# Economics Unit 2 prediction for 17th may 2013 :) Watch

1. (Original post by tigerz)
Limitations of using GDP statistics for international comparisons include:

Differences in the distribution of income
Although two countries may have similar GDP per capita figures, the distribution of income in each country may be very different.

Differences in hours worked

As when comparing a country over time, the number of hours worked to generate a given level of income may be quite different. e,g workers in the UK tend to work longer hours than those in France, and this would falsely inflate the GDP figures in the UK relative to France.

International price differences
International prices will also vary. This is significant because an individual's purchasing power is based on price in relation to income. To solve this problem, GDP statistics can be re-calculated in terms of purchasing power. The purchasing power of a currency refers to the quantity of the currency needed to purchase a given unit of a good, or common basket of goods and services. Purchasing power is clearly determined by the relative cost of living and inflation rates in different countries. Achieving purchasing power parity means equalising the purchasing power of two currencies by taking into account cost of living and inflation differences.
For example, if we simply convert GDP in Japan to US dollars using market exchange rates, relative purchasing power is not taken into account, and the validity of the comparison is weakened. By adjusting rates to take into account local purchasing power differences, known as PPP adjusted exchange rates, international comparisons are more valid.

Difficulty of assessing true values
The true value of public goods and merit goods, such as defence, education and transport infrastructure is largely unknown. This means that it is difficult to compare two countries with very different levels of spending on these goods and assets.
The unofficial economy

Similarly, the existence of a large unofficial economy may make comparisons based on official GDP very misleading. For example, comparing the official GDP of the UK and Russia may be misleading because of the size of Russia's unofficial economy. While all countries have unofficial economies, their size and significance can vary considerably.

Currency conversion
GDP figures for different countries must be converted to a common currency, such as the US dollar, and this may give misleading figures. For some countries, exchange rates against the US dollar may be unrepresentative of the true value of the currency, especially where international trade is relatively small. In such cases, converting to US dollars may significantly under-value national output. This explains why conversion to purchasing power parity is often preferred to conversion to US dollars.
Hoping that trade off between objectives comes up.
Yah i hope so....is it the first time ur sitting in an edexcel exam....?
3. Can anyone tell me what the difference between CPI and RPI is and why the figures are always so dramatically different?
4. so nice of you ppl for responding my thread!!!

there is a less chance of asking questions about unemployment and economic growth. but u know the high chance is for confliction between objectives and something related to government objectives... according to my prediction one question about ILO and Claimant count will be asked.. but i dunno much about both of them. can u guys help me..
also that RPI and CPI may ask!! but i dunno what it is.. only few information i have with me!!
5. (Original post by Amydx6)
Can anyone tell me what the difference between CPI and RPI is and why the figures are always so dramatically different?
a good question.. it may ask!!! i also need to know that,,,,
6. (Original post by cham_E)
a good question.. it may ask!!! i also need to know that,,,,
If I'm not mistaken, CPI excludes mortgage repayments and housing costs so the value is usually much lower, while RPI does not exclude them.
7. (Original post by Livaren)
If I'm not mistaken, CPI excludes mortgage repayments and housing costs so the value is usually much lower, while RPI does not exclude them.
That helps a lot !! Tank you

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8. Any guesses on what might come up???
9. (Original post by sonya786)
Any guesses on what might come up???
I potentially think supply side policies or demand side policies

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10. Well after looking at all the past papers, one of the 30 marker question always has something to do with policies! (supply, fiscal, monetary policies and one unusual labour market policy question) and the other one is just...randomssss :P

Reducing economic growth probably wont come as its been in 2 past papers, reducing unemployment has also came twice

Jan 13 questions also wont come
1.Evaluate the macroeconomic effects of the UK government trying to reduce its budget deficit, assuming economic growth remains weak.

2.Other than investing in education, evaluate policies a government can implement to raise living standards.
11. (Original post by Shar-Sharaff)
Nice thread shamy....can any one guess the 30 marks question...i guess Economic growth might come
If a question asking about supply side policies to fuel growth comes up I will be over the moon, it is so easy to write about and evaluate. I hope nothing on exchange rates or BOP comes up... hard to write 30 marks on that for me personally. I have a feeling there might be something on government policies, which will be good I guess.
12. (Original post by Amydx6)
I potentially think supply side policies or demand side policies

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yeah.... more chance for demand side policy.. coz it has asked only one time till now!!
13. Also, I'm not sure if this will be useful to any of you or not, but I thought it might be helpful to create one document showing all of the 30 markers from 5 past exam papers. Here's the download link if any of you want to check it out... http://speedy.sh/8pT8J/ECON2-30-markers.docx
14. (Original post by cham_E)
yeah.... more chance for demand side policy.. coz it has asked only one time till now!!
Demand side is just fiscal and monetary right? I would find it hard to write 30 marks on that. Supply side would be a god send!
15. (Original post by MobQ)
Demand side is just fiscal and monetary right? I would find it hard to write 30 marks on that. Supply side would be a god send!
What sort of things would you talk about for 30 marks of supply side? Infrastructure, education/training, de-regulation and what else? Or if that's it, what things would you talk about to do with those? Because I really couldn't get 30 marks on those.

Also, I'm very unclear on HDI and equality stuff, so if anyone can help I would be very grateful!
16. Ahhh economics is just longgg I'm doing 30 marker first

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17. I'm so scared
18. (Original post by Cobra64)
What sort of things would you talk about for 30 marks of supply side? Infrastructure, education/training, de-regulation and what else? Or if that's it, what things would you talk about to do with those? Because I really couldn't get 30 marks on those.

Also, I'm very unclear on HDI and equality stuff, so if anyone can help I would be very grateful!
Well our teacher has taught us an acronym for supply side policies:

Privatisation
Incentives (cut benefits, cut income tax, incentive to work)
Education

Deregulation
Investment
Entrepreneurship
Trade Union Reform (reduce TU power, less strikes = more output)

Fair amount to talk about there and fairly easy to evaluate
19. O, I really recommend you guys to check the examiners reports for recent past papers! Never knew the beauty of these sources until today!
20. (Original post by MobQ)
Well our teacher has taught us an acronym for supply side policies:

Privatisation
Incentives (cut benefits, cut income tax, incentive to work)
Education

Deregulation
Investment
Entrepreneurship
Trade Union Reform (reduce TU power, less strikes = more output)

Fair amount to talk about there and fairly easy to evaluate

What could you write about for privatisation and investment?

For investment doesnt interest rates play a bigger part? how can it be related to SSP?

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