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AQA Macroeconomics (Unit 2) OLD SPEC (AS level Resits) Watch

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    (Original post by JamezWebb)
    Was quite tough I found, chose context 1 but struggled with time on the 25 Marker.

    What were the consequences of a rapid fall in the exchange rate other than that it is inflationary and causes unemployment?
    AS shifting to the left because of increased price of imports for businesses. So there may also be cost-push inflation.
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    (Original post by JamezWebb)
    Was quite tough I found, chose context 1 but struggled with time on the 25 Marker.

    What were the consequences of a rapid fall in the exchange rate other than that it is inflationary and causes unemployment?
    you could say current account improves with more exports and inflation could actually lead to higher interest rates therefore the value of the pound would rise and imported good would be cheaper for firms . As a result reducing cost of production
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    (Original post by Kiranjott)
    That sounds really good tbh. what do you normally average in essays? You seem to have included a decent amount!! i talked about fiscal policy and increasing AD(reducing tax and increasing govt revenue). Increasing govt revenue on welfare benefits resulting in more consumption in the economy therefore employment. However, an increase in inflation means international competitiveness of exports is reduced therefore unemployment would rise. Also, there's no guarantee that consumers will spend with lower tax rates. I also talked about monetary policy and how low interest rates stimulate demand and can result in greater investment(supply side effect). This would shift the lras curve to the right and therefore increase output and employment. Also inflation remains low, so exports increase therefore employment increased too.But with monetary policy, there's an issue with business confidence so they may choose not to invest. Unfortunately, I didn't get time to include supply side policies like educating the labour force or increasing incentives
    I would usually get 18-23 on my essays, but on this one I should've mentioned about the different sorts of unemployment and how a government might not manage to address all sorts of unemployment solely through fiscal/monetary policy. I'm glad you think I've done well though, thanks ^^

    You did well about the AD, but how does expansionary fiscal policy increase government revenue? Unless the drop in taxes causes so much economic growth that the government actually sees a higher revenue despite the lower % taxes? Did you use the Laffer curve?

    Did you explain how inflation would come about?

    Yeah you definitely seem to have included a lot of understanding; you know your stuff. It seems quite good. Yeah I didn't manage to say much about education and the sort, and I was stopped half way through my conclusion; did you manage to write yours?

    Either way, good job on your essay! I think you've done really quite well.
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    who did context 1 what did you write..lol if you remember
 
 
 
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