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    Does anyone know how to stop the Boom and Bust cycle? thanks
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    To whomever negged my post. Would you like me to explain the exchange rate to you? As I can only assume you negged it because you don't want it to come up.
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    (Original post by Skilled)
    Does anyone know how to stop the Boom and Bust cycle? thanks
    Fiscal policy used to be the general approach to stabilising the economic cycle but now it is generally accepted that monetary policy is the right move. In a boom when the economy is overheating, the BoE raises interest rates to contract AD. In contrast, in a recession the BoE cuts interest rates to boost AD. To get top marks when including this in an answer it is important to realise that correct timing is the key to successfully stabilising the cycle. Bad timing can make the economic cycle more volatile, causing longer-term investments to be abandoned in favour of less risky short-term projects. Also unexpected interest rate changes may affect competitiveness and long-term growth adversely.
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    Yes please!

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    (Original post by dani robin)
    Yes please!

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    What is it in particular you find difficult and I will do my best to help
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    Does anybody have any resources they can send me? I find the book very boring to read.
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    (Original post by charlie7wright)
    Fiscal policy used to be the general approach to stabilising the economic cycle but now it is generally accepted that monetary policy is the right move. In a boom when the economy is overheating, the BoE raises interest rates to contract AD. In contrast, in a recession the BoE cuts interest rates to boost AD. To get top marks when including this in an answer it is important to realise that correct timing is the key to successfully stabilising the cycle. Bad timing can make the economic cycle more volatile, causing longer-term investments to be abandoned in favour of less risky short-term projects. Also unexpected interest rate changes may affect competitiveness and long-term growth adversely.
    Thanks, I would have given u rep but it doesn't let me
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    Things I am struggling are the fixed exchange rates and the floating, the cost and benefits part of it, it'll be very kind if you could help me out
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    How can i upload Word or PPF files?
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    (Original post by charlie7wright)
    Fiscal policy used to be the general approach to stabilising the economic cycle but now it is generally accepted that monetary policy is the right move. In a boom when the economy is overheating, the BoE raises interest rates to contract AD. In contrast, in a recession the BoE cuts interest rates to boost AD. To get top marks when including this in an answer it is important to realise that correct timing is the key to successfully stabilising the cycle. Bad timing can make the economic cycle more volatile, causing longer-term investments to be abandoned in favour of less risky short-term projects. Also unexpected interest rate changes may affect competitiveness and long-term growth adversely.
    And this is what Gordon Brown did, and look at the fantastic run of stability we had in the economy when the management of the interest rate was handed over to the Monetary Policy Committee! Good answer too, Charlie!
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    (Original post by kelbel1)
    And this is what Gordon Brown did, and look at the fantastic run of stability we had in the economy when the management of the interest rate was handed over to the Monetary Policy Committee! Good answer too, Charlie!
    Rarely say this to anyone

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    (Original post by dani robin)
    Things I am struggling are the fixed exchange rates and the floating, the cost and benefits part of it, it'll be very kind if you could help me out
    Assuming you know the details of each system (quote me if you do not) then:

    one advantage of a Fixed exchange rate = Reduced risk in international trade - Meaning that by maintaining a fixed rate, buyers and sellers of goods internationally can agree a price and not be subject to the risk of changes in the exchange rate before contracts are settled. This greater level of certainty should encourage investment.

    one advantage of a floating/flexible exchange rate = Macroeconomic variables (eg. interest rates) can be determined without having to worry about the exchange rate.

    one disadvantage of a fixed exchange rate = It can conflict with other macroeconomic objectives. For example if a government intervenes and increases interest rates in order to raise the external value of a currency this could negatively impact on AD and economic growth and create unemployment.

    one disadvantage of a floating exchange rate = Higher levels of uncertainty about a country's exchange rate tends to decrease the level of trade and inward investment.


    I hope this helped
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    (Original post by SimpleTom)
    Rarely say this to anyone

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    hahaha, that's very nice of you if you're talking about me! but I don't understand why!
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    Can someone help me out with this question, from June 2010?

    Extract D (lines 32-33) concludes that ‘UK adoption of the euro at such an economically unstable time remains highly unlikely, whatever the potential benefits’.
    Using the data and your economic knowledge, to what extent do you agree with the view that the UK economy would benefit if the euro were to be adopted by the UK at some point in the future?
    (25 marks)

    I know that they will have to be a part of the ECB with the same interest, but what are the effects of that? - They will be unable to influence to influence/ discourage short term flows to weaker or strengthen the ER. It will also be better in terms if trade and balance of payments as there will be less uncertainty from the floating exchange rate - but thats all I got
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    (Original post by charlie7wright)
    Assuming you know the details of each system (quote me if you do not) then:

    one advantage of a Fixed exchange rate = Reduced risk in international trade - Meaning that by maintaining a fixed rate, buyers and sellers of goods internationally can agree a price and not be subject to the risk of changes in the exchange rate before contracts are settled. This greater level of certainty should encourage investment.

    one advantage of a floating/flexible exchange rate = Macroeconomic variables (eg. interest rates) can be determined without having to worry about the exchange rate.

    one disadvantage of a fixed exchange rate = It can conflict with other macroeconomic objectives. For example if a government intervenes and increases interest rates in order to raise the external value of a currency this could negatively impact on AD and economic growth and create unemployment.

    one disadvantage of a floating exchange rate = Higher levels of uncertainty about a country's exchange rate tends to decrease the level of trade and inward investment.


    I hope this helped
    Helped a lot, thank you very much I know that floating is determined by demand and supply but I don't understand how fixed rates works

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    Regarding evaluation for unit 4, does anybody have any evaluative points that they pretty much make every time regardless of the question?

    For example in unit 3 mine were: it depends upon the objective of the firm, how efficiently the resources are allocated and has consumer/producer welfare been increased.

    For this unit I usually use: Depends upon the state of the economy, depends upon the governments ability to identify the causes of the problem (eg. unemployment, inflation).

    Just looking to see if anybody else uses anything else so I can add it to my mental list
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    (Original post by dani robin)
    Helped a lot, thank you very much I know that floating is determined by demand and supply but I don't understand how fixed rates works

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    Fixed rate basically means the value of one currency will be set at a fixed value against another. Usually the US Dollar. It basically means that the value of your currency is not allowed to vary against the currency you have fixed it to by more than a few %. For example in 1990 when the UK joined the ERM the pound was not allowed to vary by more than 6% either side of the target DM2.95.
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    (Original post by charlie7wright)
    Regarding evaluation for unit 4, does anybody have any evaluative points that they pretty much make every time regardless of the question?

    For example in unit 3 mine were: it depends upon the objective of the firm, how efficiently the resources are allocated and has consumer/producer welfare been increased.

    For this unit I usually use: Depends upon the state of the economy, depends upon the governments ability to identify the causes of the problem (eg. unemployment, inflation).

    Just looking to see if anybody else uses anything else so I can add it to my mental list
    The ones you've said you're using for this unit, I'm using those too. Also links to the macroeconomic objectives all the time, long run and short run effects, and effects of other countries in the EU and world - all evaluation points. Try and add in some real life context, like what is happening at the moment in the economy and what effects it would have currently, as this sort of application got me 100/100 on the Econ Unit 3 exam.. for example, would the fact that Barack Obama has recently threatened the UK will lose out on £10 billion worth of FDI if it exits the EU have an impact on Government thoughts about leaving the EU? This would have massive repercussions for us currently, FDI in order to improve our economic state is vital at the moment.. things like this really impress the examiner, with figures
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    (Original post by kelbel1)
    The ones you've said you're using for this unit, I'm using those too. Also links to the macroeconomic objectives all the time, long run and short run effects, and effects of other countries in the EU and world - all evaluation points. Try and add in some real life context, like what is happening at the moment in the economy and what effects it would have currently, as this sort of application got me 100/100 on the Econ Unit 3 exam.. for example, would the fact that Barack Obama has recently threatened the UK will lose out on £10 billion worth of FDI if it exits the EU have an impact on Government thoughts about leaving the EU? This would have massive repercussions for us currently, FDI in order to improve our economic state is vital at the moment.. things like this really impress the examiner, with figures
    Ah yeah my teacher gave me an article on a review of the 2012 UK economy and everything that has happened so I will be sure to have that all memorised for the exam. Short and long run is a good idea though I try to include that as much as possible. Thanks!
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    (Original post by Ecomax)
    How can i upload Word or PPF files?
    Do you have revision notes?

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