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# F581/ F582 Economics June 2013 Watch

• View Poll Results: How hard did we find this exam ?
so hard i felt like crying through the exam
13
12.50%
very difficult , but one or two were alright
13
12.50%
fairly standard
33
31.73%
quite easy , with one or two hard ones
35
33.65%
so easy i felt like dancing throughout the exam
10
9.62%

1. (Original post by Fas)
have you tried drawing an LRAS Diagram ?
Thanks for replying , yes I have, I'm confused on the whole spare capacity bit, wouldn't it be more harmful if it was at spare capacity? and less harmful at full capacity? would I draw the AD curve towards the inelastic part of the LRAS curve?
2. (Original post by wolalala)
does anyone know what are all the calculations needed for the f582 exam?
you MAY be required to work out an aspect of the unemployment formula ( unemployed/ labour force ) x 100% = unemployment rate

and you could also be asked to work out real GDP / GDP per capita etc
3. (Original post by Fas)
you MAY be required to work out an aspect of the unemployment formula ( unemployed/ labour force ) x 100% = unemployment rate

and you could also be asked to work out real GDP / GDP per capita etc
okay Thank you
4. I'm bricking it for the monday exam on f582!

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5. I need some help, on just going over the whole balance of payments thing! Someone helpppppp

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6. does anyone have any good analysis and evaluation points about a current account deficit always being harmful? and what graph would you draw? Thank you in advance
7. (Original post by HeyMickey6)
Analyses
1)-decrease unemployment; businesses have more workers; increase the production of goods; output of the business increase; increase the productive capacity of the economy; thus long run economic growth

2) decrease unemployment; increase in real disposable income; increase ability to purchase more products; increase consumer expenditure; component of AD = c+I+G+(X-M) ; increase AD; increase in short run economic growth

Evaluation
- depends on how large the decrease in unemployment is
- depends if the economy is operating at full capacity or not
- multiplier effect
-depends on consumer confidence

i hope this helps and provides more of an understanding
This is a really good answer and yea I have understood the question a lot more now. Thanks a lot
8. (Original post by wolalala)
Thanks for replying , yes I have, I'm confused on the whole spare capacity bit, wouldn't it be more harmful if it was at spare capacity? and less harmful at full capacity? would I draw the AD curve towards the inelastic part of the LRAS curve?
i think its cos when the economy is operating with loads of spare capacity ( the AD line is well within the LRAS diagram if you know what i mean ) reducing AS won't really have an effect on the AD line ( if you draw it and have a go , that'll give you a better idea of what i mean )
9. Hey guys, has anyone got the mark scheme for F582 Jan 2013 mark scheme?
10. (Original post by wolalala)
does anyone have any good analysis and evaluation points about a current account deficit always being harmful? and what graph would you draw? Thank you in advance
yes it is:
- sign of uncompetitiveness
this will lead to a fall in economic growth and poorer prospects in the long run
- capital and financial flows into an economy "dry" up
mainly due to the depreciation of the value of the exchange rate and a fall in living standards.
- unbalanced economy
may lead to instability in the future

no it doesn't

- UK has been in deficit for several years and has still performed sound.
and performed better than other economies ie Japan
- Globalisation
more flow and capital into the economy, allowing the UK to operate with a large deficit
- Exchange rates
can depreciate it to try and and solve the deficit BUT it depends on whether the country has a FIXED EXCHANGE RATE or not
Greece, Ireland, Spain all apart of the Eurozone - Thus unable to control the exchange rate.
BUT UK is not!

11. (Original post by Fas)
yep - but i don't think you have to talk about any alternatives in detail , you can get the 18 marks just by saying why it will work and why it might not work

i could be wrong though haha thats just what my teacher told me
Haha, I always try to save up quite a bit of time for the essay, I try to discuss them in detail in the spare time I have just so that I get quite a few evaluative marks from them. I guess you could gather the marks up from just a long evaluation paragraph but I've just been taught to do it this way

(Original post by wolalala)
if AS was to decrease, the effect will depend on the initial level of economic activity. if there is initially considerable spare capacity, the effect will be less harmful than if the economy is operating at full capacity. <---- could someone explain that to me pleeease?? it doesn't seem to make sense on the graph to me, Thank you to whoever responds
If there is a considerable spare capacity and AS shifts left, then unemployment won't fall depending on where you drew your new equilibrium point between AS and AD, and inflation will likely remain constant (again depending on your new equilibrium point).

If the economy was operating at full capacity and AS shifted left, it may lead to a considerable increase in inflation depending on how large the shift is, as the AD curve would be intersecting further up the vertical part of the new AS curve, and would also lead to many job losses as a result of the fall in the productive capacity, since firms won't need as many workers working for them if they start producing less.
12. (Original post by 026neesh)

yes it is:
- sign of uncompetitiveness
this will lead to a fall in economic growth and poorer prospects in the long run
- capital and financial flows into an economy "dry" up
mainly due to the depreciation of the value of the exchange rate and a fall in living standards.
- unbalanced economy
may lead to instability in the future

no it doesn't

- UK has been in deficit for several years and has still performed sound.
and performed better than other economies ie Japan
- Globalisation
more flow and capital into the economy, allowing the UK to operate with a large deficit
- Exchange rates
can depreciate it to try and and solve the deficit BUT it depends on whether the country has a FIXED EXCHANGE RATE or not
Greece, Ireland, Spain all apart of the Eurozone - Thus unable to control the exchange rate.
BUT UK is not!

how would it lead to a fall in economic growth ?
13. (Original post by CTArsenal)

If there is a considerable spare capacity and AS shifts left, then unemployment won't fall depending on where you drew your new equilibrium point between AS and AD, and inflation will likely remain constant (again depending on your new equilibrium point).

If the economy was operating at full capacity and AS shifted left, it may lead to a considerable increase in inflation depending on how large the shift is, as the AD curve would be intersecting further up the vertical part of the new AS curve, and would also lead to many job losses as a result of the fall in the productive capacity, since firms won't need as many workers working for them if they start producing less.
oh I see now! for some reason I was intersecting AD not properly on the Vertical part. So as its more harmful at full capacity, would that be an increase in the negative output gap right? Thank you so much for replying, your explanation was very clear!
14. (Original post by Fas)
i think its cos when the economy is operating with loads of spare capacity ( the AD line is well within the LRAS diagram if you know what i mean ) reducing AS won't really have an effect on the AD line ( if you draw it and have a go , that'll give you a better idea of what i mean )
ahh yes, I have drawn it properly now , it makes much more sense! Thank you for replying
15. (Original post by 026neesh)

yes it is:
- sign of uncompetitiveness
this will lead to a fall in economic growth and poorer prospects in the long run
- capital and financial flows into an economy "dry" up
mainly due to the depreciation of the value of the exchange rate and a fall in living standards.
- unbalanced economy
may lead to instability in the future

no it doesn't

- UK has been in deficit for several years and has still performed sound.
and performed better than other economies ie Japan
- Globalisation
more flow and capital into the economy, allowing the UK to operate with a large deficit
- Exchange rates
can depreciate it to try and and solve the deficit BUT it depends on whether the country has a FIXED EXCHANGE RATE or not
Greece, Ireland, Spain all apart of the Eurozone - Thus unable to control the exchange rate.
BUT UK is not!

Thank you for replying! ohh okay, could you also argue that it may not be harmful, as the production of export goods may need raw material imports to enhance consumer choice etc... , so it doesn't matter if there is a deficit?
and could you also mention how despite the current account being in deficit the capital account may be in surplus, so not so harmful?
16. if that essay comes up ^^ " discuss whether a current account deficit is always harmful " im gonna really start having seizures in the exam hall hahahaha
17. (Original post by Fas)
if that essay comes up ^^ " discuss whether a current account deficit is always harmful " im gonna really start having seizures in the exam hall hahahaha
That will make two of us!

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18. (Original post by Misha2006)
That will make two of us!

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three!!!!
19. D you think anything with the marshal learner condition or the j curve effect will come up?

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20. four!

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