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    (Original post by tigerz)
    The accelerator theory suggests that the level of net investment will be determined by the rate of change of national income. If national income is growing at an increasing rate then net investment will also grow.

    The accelerator effect will tend to be high when:
    -The rate change of consumer income and spending is strongly positive
    -The amount of spare productive capacity for businesses is low
    -The available supply of investment funds is high

    Evaluation:
    One criticism of this simple accelerator model is that the capital stock of a business can rarely be adjusted immediately to its desired level because of ‘adjustment costs’ and ‘time lags’. Adjustment costs include the cost of lost business due to installation of new equipment or the financial cost of re-training workers.
    Thank you, although I think I'll avoid using the accelerator tomorrow as anaylsis , but you've helped me clear it up thanks. Your knowledge seems to be spot on, are you taking this exam tomorrow aswell?
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    (Original post by QwertyG)
    Increasing investment on education clashes with fiscal/ssp right? since government expenditure is required but AD and AS increases?
    well isn't it that in the short run the spending on education would shift AD hence it could act like an expansionary fiscal policy and according to the golden rule for fiscal policies, it should mainly be used for investment!!

    then in the long run the AS curve shifts outwards!

    I'm not sure if i understood your question...
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    (Original post by Boy_wonder_95)
    Thank you, although I think I'll avoid using the accelerator tomorrow as anaylsis , but you've helped me clear it up thanks. Your knowledge seems to be spot on, are you taking this exam tomorrow aswell?
    Haha yup as well as s1 in the morning, but its also very selective, so I know a lot about few things and i'm clueless about many! :P
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    I suggest you guys practice jan-june 2007 unit 3 and jan-June 2008 unit 3 it helps. Then start revising unit 2 from 2009-2012. Practice these 6 years and you will get an A
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    (Original post by tigerz)
    Haha yup as well as s1 in the morning, but its also very selective, so I know a lot about few things and i'm clueless about many! :P
    I got S1 in the morning too! I'm with Edexcel though. Good luck with both exams I guess! What stuff you clueless about? And I'll try to return the favour
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    for multiplier effect what i learnt was that an increase in one of the components in Ag would cause a more than proportionate increase in income!!
    but isn't income= output= spending???

    AND SPENDING is AD??
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    how does an increase in money supply cause inflation?? i never really got that...
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    (Original post by S.ahmed)
    I suggest you guys practice jan-june 2007 unit 3 and jan-June 2008 unit 3 it helps. Then start revising unit 2 from 2009-2012. Practice these 6 years and you will get an A
    22 hours before the exam and you're recommending we do all the past papers that exist for it? :laugh:





    (We did all of them weeks ago)
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    (Original post by AM_Broadcasts)
    for multiplier effect what i learnt was that an increase in one of the components in Ag would cause a more than proportionate increase in income!!
    but isn't income= output= spending???

    AND SPENDING is AD??
    It means that if for example government spending increased it would lead to a larger increase in output then expected and its because that spending leads to an increase in confidence and that leads to an increase in consumer leading to a ripple as if you we're to throw a rock a pool of water you get ripples going out wards... That's what I have been taught anyway


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    (Original post by Boy_wonder_95)
    I got S1 in the morning too! I'm with Edexcel though. Good luck with both exams I guess! What stuff you clueless about? And I'll try to return the favour
    yeah same! s1 edexcel morning and this in the afternoon. :afraid:

    I kind of understand it but don't know how to explain 'crowding out effect' and quantitative easing properly
    Same with hot money!

    Also when you have to define CPI and explain how inflation is calculated I find myself writing an essay and the mark schemes just says:
    weighting (1), basket of goods (1) etc !
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    I know a bit of the content required to learn, but I think it's going to be difficult for me to actually apply it to the data response at hand (just like unit 1 on monday for me)
    The 30 Marker seems to always revolve around macroeconomic objectives with policies. And the marks are usually obtained by
    *Diagram
    *Definitions
    *3 Policies
    *3 Evaluation points (almost always Time lags, Magnitude...)
    So if this is the case ^ then I think the 30 marker might be the easiest.

    What I'm unsure on is what happens when the value of the currency rises relative to other countries. I read about it in books, but my mind just goes fuzzy. Can someone please explain its impacts on other variables such as inflation, investment etc...
    Thank you in advance!
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    (Original post by tigerz)
    yeah same! s1 edexcel morning and this in the afternoon. :afraid:

    I kind of understand it but don't know how to explain 'crowding out effect' and quantitative easing properly
    Same with hot money!

    Also when you have to define CPI and explain how inflation is calculated I find myself writing an essay and the mark schemes just says:
    weighting (1), basket of goods (1) etc !
    Crowding out is when government will finance its spending through borrowing from private banks and hence pushing up the interest rates hence leading to higher interest for consumers.

    Quantitative easing is when the central banks starts to buy back the government bonds and debts that they'll sold to banks in order to increase the supply of money in the economy.

    And regarding CPI and the MS. You have to explain those key words. You can't just write cpi is weighting of basket of goods.
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    (Original post by dan94adibi)
    Crowding out is when government will finance its spending through borrowing from private banks and hence pushing up the interest rates hence leading to higher interest for consumers.

    Quantitative easing is when the central banks starts to buy back the government bonds and debts that they'll sold to banks in order to increase the supply of money in the economy.

    And regarding CPI and the MS. You have to explain those key words. You can't just write cpi is weighting of basket of goods.
    Can you define cpi?


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    (Original post by ljh950912)
    Can you define cpi?


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    An index used by the Bank of England to measure the rate of inflation in UK. It looks into over 600 products from different regions and outlets in the country and hence it looks at over 110,000 prices. These prices are average and weighted based on the level of income household spend on them! (4 marks)
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    (Original post by dan94adibi)
    Crowding out is when government will finance its spending through borrowing from private banks and hence pushing up the interest rates hence leading to higher interest for consumers.

    Quantitative easing is when the central banks starts to buy back the government bonds and debts that they'll sold to banks in order to increase the supply of money in the economy.

    And regarding CPI and the MS. You have to explain those key words. You can't just write cpi is weighting of basket of goods.
    OHH yup that a much easier way of explaining QE & crowding out!

    Ahh okay is it correct to say:
    A base year is the starting point when forming an index, and index is used to mark effective comparisons. First the food and expenditure survey is done to form a basket of goods which contain 650 of the most common items. A weighting is also given to show the importance of the item (i.e if 10% income spent on food, food is given a 10% rating). A price survey is also done monthly to check the prices of these items from various stores. The weighting x price increase will give the CPI, an increase in this is called inflation.

    I feel like the explanation is right but wrong :/
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    (Original post by tigerz)
    OHH yup that a much easier way of explaining QE & crowding out!

    Ahh okay is it correct to say:
    A base year is the starting point when forming an index, and index is used to mark effective comparisons. First the food and expenditure survey is done to form a basket of goods which contain 650 of the most common items. A weighting is also given to show the importance of the item (i.e if 10% income spent on food, food is given a 10% rating). A price survey is also done monthly to check the prices of these items from various stores. The weighting x price increase will give the CPI, an increase in this is called inflation.

    I feel like the explanation is right but wrong :/
    This is very good however " and index is used to mark effective comparisons" this part is not really needed. Just to save a bit of time.
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    (Original post by dan94adibi)
    This is very good however " and index is used to mark effective comparisons" this part is not really needed. Just to save a bit of time.
    YAY! :banana:

    Oh yeah if anyone wants a doc of all the past 30 markers
    Attached Files
  1. File Type: doc unit 2 economics 30 markers.doc (29.5 KB, 1931 views)
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    (Original post by tigerz)
    YAY! :banana:

    Oh yeah if anyone wants a doc of all the past 30 markers
    Cheers, I hope something like 2009 pops up!
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    Guys can you post me some of very nice economic phrases and words which can be included in the writing to get maximum marks..
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    Could anyone please explain to me what the actual difference between application and analysis is? I'm feeling good about my knowledge and evaluation, but up until now, I've been thinking these two were the same thing @[email protected]

    Also, how many evaluation points should be included in the essay? I'm guessing around three or four, but it's better to be safe than sorry I guess. Much appreciated!
 
 
 
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