Turn on thread page Beta
    Offline

    5
    ReputationRep:
    (Original post by ST_123)
    Consumers delay purchases as deflation, by definition is the persistent fall in the general price level. So if prices are falling consumers expect prices to fall even more so they will just wait until the good/service they want to purchase is even cheaper
    (Original post by BBeyond)
    if prices fall the value of money increases!
    Thanks guys, soy comprehende now
    Offline

    1
    ReputationRep:
    (Original post by jennifer.tariah)
    its very simple, I use this technique:

    QUESTION: Using the data and your economic knowledge, assess the likely consequences of
    increased spending on infrastructure for the performance of the UK economy.

    Intro: define 2 keywords in the questions e.g. infrastructure & Aggregate supply. Highlight the macro economic objectives and their indicators. (all you need to do in the intro tbh)

    then 3-4 points with the structure of :
    I - Identify point (e.g. increases productivity of labour)
    E - Explain point with logical chain of reasoning ( e.g. increasing spending on infrastructure > improve transport links > reducing travel time > resulting in more people coming to work earlier and leaving later > they work for a longer period of time > consequently increasing the output of the economy
    D - Diagram (e.g. show the utilisation of more space capacity in the PPB, so a movement from inside the ppb to on the ppb)
    E - Evaluation (e.g. may be hard to improve infrastructure in cities like London as it Is already very developed)
    R - Real LIFE Example (e.g. spending on HS2 or M25 )

    DO NOT FORGET TO EVALUATE ON EVERY POINT, you will not be able to evaluate all in your conclusion and leaving it till your maybe risky as you may run out of time and the evaluation makes are higher than that of actual points.

    then your conclusion :
    start with phrases like OVERALL, Finally. and think on the long term and short term impact on spending and APPLY IT TO THE UK. how is the economy now? will it benefit from infrastructure or any fiscal measure? should the Bank of England step in to add some monetary measures in order for the effects to be long term ??

    hope this helps
    YOU NEED OT RELATE TO THE FOUR MAIN ECONOMIC OBJECTIVES: GROWTH, PRICE STABILITY, BALANCE OF PAYMENTS AND EMPLOYMENT.

    If you relate your points back to these objectives then your guaranteed to high marks (Assuming there relevant).

    E.g Increase infrastructure leads to an increase in the LRAS (Then illustrate the LRAS curve.), then discuss how this effects employment and relate the positive multiplier effect etc. etc.
    Offline

    5
    ReputationRep:
    Multiple choice tips


    Posted from TSR Mobile
    Offline

    5
    ReputationRep:
    Would it be right in saying that inflation at the current state of the economy may be beneficial as currently it is below target of 0% and causes negative effects and such?
    Offline

    3
    ReputationRep:
    (Original post by ozzie2)
    Would it be right in saying that inflation at the current state of the economy may be beneficial as currently it is below target of 0% and causes negative effects and such?
    The Government target is 2%, therefore it is below target and not hitting the optimal desirability for the economy.

    One of the negatives is that consumers may delay purchases in hope that something may become cheaper later, therefore decreasing aggregate demand and increasing savings.

    One of the pros of the current state is that the cause of these falls in inflation can largely be attributed to the cost of oil, which is beneficial to the UK economy as it imports a lot of oil and the economy is vastly dependent on it, and many products are linked with transport which can now be cheaper. As a result this may increase living standards and lower the price level. (rightward shift of AS)

    Low inflation means our goods may become more competitive abroad and therefore close our BoP deficit as well as presenting a lack of cost-push (supply-side) inflation, which means there is a bigger incentive to invest and take risk.
    Offline

    5
    (Original post by Supermanxxxxxx)
    Multiple choice tips


    Posted from TSR Mobile
    RTFQ
    Offline

    3
    ReputationRep:
    Could increased Fdi be used as a reason for an increase in UK exports as this could lead a better use of and improvement in quality of factors of production. This would make the UK more competitive blah blah. Could this point be used? And yhh I know a fall in exchange rates could be used as well.

    Posted from TSR Mobile
    Offline

    3
    ReputationRep:
    (Original post by jimgordan)
    Does an increase in GDP mean that AD and LRAS shifts to the right?
    Not sure you understood the concept of GDP. It's essentially the same thing as AD, post inflation.

    A rightward shift of Aggregate demand causes a new equilibrium and the bottom axis (Real GDP) to move to the right, meaning Real GDP has increased.

    GDP is the value of all goods and services produced. That means AS is also the GDP. LRAS is the potential GDP.
    Offline

    3
    ReputationRep:
    (Original post by SotonianOne)
    The Government target is 2%, therefore it is below target and not hitting the optimal desirability for the economy.

    One of the negatives is that consumers may delay purchases in hope that something may become cheaper later, therefore decreasing aggregate demand and increasing savings.

    One of the pros of the current state is that the cause of these falls in inflation can largely be attributed to the cost of oil, which is beneficial to the UK economy as it imports a lot of oil and the economy is vastly dependent on it, and many products are linked with transport which can now be cheaper. As a result this may increase living standards.

    Low inflation means our goods may become more competitive abroad and therefore close our BoP deficit as well as presenting a lack of cost-push (supply-side) inflation, which means there is a bigger incentive to invest and take risk.
    Also there are external factors such as oil prices which have contributed to the lower prices, this is something that the government cannot control
    Offline

    0
    ReputationRep:
    Same thing happened to me but i had about 3 different teachers before i got a permanent one.
    Offline

    12
    ReputationRep:
    Good luck for tomorrow everyone!!!
    Offline

    0
    ReputationRep:
    (Original post by ozzie2)
    Hey guys why is the answer to this Question A, I thought it was D?
    The answer is A because deflation is the fall in the rate of inflation which as result leads to lower prices, if there is lower prices consumers would rather wait till the price goes further down and buy the goods and services then. I think that is the reason
    Offline

    3
    ReputationRep:
    Can someone answer my question from earlier
    Offline

    3
    ReputationRep:
    "Evaluate the economic consequences of quantitative easing in Eurozone on the UK economy."

    If I was to bet on any 25 mark question, it would be the above.
    Offline

    3
    ReputationRep:
    (Original post by Dahir123)
    Could increased Fdi be used as a reason for an increase in UK exports as this could lead a better use of and improvement in quality of factors of production. This would make the UK more competitive blah blah. Could this point be used? And yhh I know a fall in exchange rates could be used as well.

    Posted from TSR Mobile
    There is no direct link between FDI and exports (or imports) as far as I know.

    If you wanted to develop a chain of reasoning it would be something along the lines of increase of investments mean an increase of capital goods which may raise productivity and therefore raise wages, which leads to a rise in imports and an increase in the current account deficit.

    Also, I don't think "FDI" is recognised in the AQA scheme so you might want to avoid it and just simply say "investment". You won't gain any extra marks for your knowledge but you might lose some if an examiner is pedantic.
    Offline

    0
    ReputationRep:
    (Original post by Dahir123)
    Could increased Fdi be used as a reason for an increase in UK exports as this could lead a better use of and improvement in quality of factors of production. This would make the UK more competitive blah blah. Could this point be used? And yhh I know a fall in exchange rates could be used as well.

    Posted from TSR Mobile
    I think this point could be used as FDI result in the employment of labour so it would increase the GDP of the country and the product capacity , however why would this lead to improvements in the factors of production ?
    I think you'd have to break it down step by step so the examiner knows how one thing leads to another,although it would make the country more internationally competitive.
    Offline

    1
    ReputationRep:
    (Original post by SotonianOne)
    "Evaluate the economic consequences of quantitative easing in Eurozone on the UK economy."

    If I was to bet on any 25 mark question, it would be the above.
    (Original post by SotonianOne)
    "Evaluate the economic consequences of quantitative easing in Eurozone on the UK economy."

    If I was to bet on any 25 mark question, it would be the above.
    How would you answer that though?
    Offline

    1
    ReputationRep:
    (Original post by SotonianOne)
    There is no direct link between FDI and exports (or imports) as far as I know.

    If you wanted to develop a chain of reasoning it would be something along the lines of increase of investments mean an increase of capital goods which may raise productivity and therefore raise wages, which leads to a rise in imports and an increase in the current account deficit.

    Also, I don't think "FDI" is recognised in the AQA scheme so you might want to avoid it and just simply say "investment". You won't gain any extra marks for your knowledge but you might lose some if an examiner is pedantic.
    You may be able to mention how an increase investments in factors such as Capital may imporve LRAS, which shall prevent significant level of inflation due to the demand pulll inlfaiton (Excess demadn /increas ecompetion), and therefore thi swill help keep the exchange at a low level which shall help increase the BoP
    Offline

    2
    ReputationRep:
    (Original post by SotonianOne)
    "Evaluate the economic consequences of quantitative easing in Eurozone on the UK economy."

    If I was to bet on any 25 mark question, it would be the above.
    I don't even think quantitative easing is on the AQA AS specification so its extremely unlikely, if not impossible for it to come up.
    Although it is a monetary policy and there's no harm in discussing it in essays, it would never come up as an essay.
    Offline

    2
    ReputationRep:
    And that question seems to be more international economics related, ECON 2 is only national economy.
 
 
 
Poll
Do you think parents should charge rent?

The Student Room, Get Revising and Marked by Teachers are trading names of The Student Room Group Ltd.

Register Number: 04666380 (England and Wales), VAT No. 806 8067 22 Registered Office: International House, Queens Road, Brighton, BN1 3XE

Write a reply...
Reply
Hide
Reputation gems: You get these gems as you gain rep from other members for making good contributions and giving helpful advice.