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    viksta, ill pay your £10000000 if you do the exam thursday, and write my name, canidate number and the other number i cant even think of cause my brain is fried!
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    (Original post by sarahharris)
    They are there, yes, but how were they calculated? Looking at 2008 and 2009, those figures peak to trough do not give the stated figures. If you look back over ten years then the peak to trough figures do not match those percentages - the highest growth of Greece to the biggest recession is certainly not 1.7% so where are the figures from i.e. how were they calculated?

    Thanks!
    I wish i knew
    soz lol
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    (Original post by sarahharris)
    So, to take Greece as an example, over a period of 10 years its nominal GDP varies by 1.7%

    Also Slovakia, from peak to trough was only 8.1% and yet after adjusting for inflation, in one quarter alone it varies by 0.6 + 8.1% = 8.7% (after inflation) and presumably before inflation a larger amount?
    huh? :confused:

    nominal GDP is a better way of comparing GDP between economies, but REAL GDP is better for understanding the standards of living within an economy

    for example, if nominal GDP rose by 2% but inflation was 5% then REAL GDP would have contracted, so people would be 'worse off'...however this takes away the fact that the economy actually grew by 2%

    I think the reason they've left it as nominal GDP in the table is because the inflation rate varies from country to country according to their AD/AS position and fiscal policy, so it wouldn't really be 'fair' to compare REAL GDP
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    Hey guys, I'm just wondering here... on a handout my teacher gave me, it listed one of the disadvantages to a monetary union was 'deflationary bias' i.e. in order to establish the new currency as a strong one, the central bank will keep interest rates high in order to have low and stable inflation and encourage external countries to purchase it for reserves etc. ...The disadvantage being that certain countries may struggle under such high rates of interest and aggregate demand will be relatively low.

    However I'm pretty sure the stimulus package was on about monetary policy being too 'loose' for the PIIGS, and infact real rates of interest were negative... which is why there was so much FDI in the peripheral countries like Ireland etc.

    Would I include 'deflationary bias' as a point in one of the cons of the eurozone, or only to monetary unions in general? (If the question was about 'monetary unions' rather than the eurozone specifically.
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    (Original post by Elponchis_LOL)
    viksta, ill pay your £10000000 if you do the exam thursday, and write my name, canidate number and the other number i cant even think of cause my brain is fried!
    You got that sort of money then forget about the exam
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    (Original post by nik2111)
    arguably before the recession EU track record was not that bad it did control inflation and manged to be a strong currency im not saying its good i think its worth considering, economy's like Greece had bad policy and governments spending too much , and perhaps it was the fault of the private sector such as banks which lead to the creation of PIIGS which had a bigger influence than bad EU policy making?
    arguably yes, in reality though not really, inflation was stable but consistenly above the 2% target set by the ECB, and due to it being a asymmetric target it lacked the flexibility

    Furthermore, economies like greece simply hid there fiscal deficits, in actual fact they've been breaking the Growth and Stability Pact before they even joined the EU, upon joining they gained greater access to finance, were irresponsible and just invested racking up debts that totally 150% of their GDP when the GSP only allows 60%...the GSP went kaput, other countries though hey ho, if Greece broke it so can we, so now you've got the PIIGS all with debts amounting to near their GDP amounts

    The reason the the Euro was strong was because of the high nominal interest rate set by the ECB, this high interest rate meant inflation was stable and the value grew stronger...however the hidden debt became more expensive to finance and countries became less competitive with rising costs. Exchange rates sky rocketed, imports became more expensive, the PIIGS became even more uncompetitive and BAM! Eurozone Finance Crisis 2008 goes down in history and gets a page on wikipedia
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    (Original post by Ben F)
    Hey guys, I'm just wondering here... on a handout my teacher gave me, it listed one of the disadvantages to a monetary union was 'deflationary bias' i.e. in order to establish the new currency as a strong one, the central bank will keep interest rates high in order to have low and stable inflation and encourage countries to purchase it for reserves etc. ...The disadvantage being that certain countries may struggle under such high rates of interest and aggregate demand will be relatively low.

    However I'm pretty sure the stimulus package was on about monetary policy being too 'loose' for the PIIGS, and infact real rates of interest were negative... which is why there was so much FDI in the peripheral countries like Ireland etc.

    Would I include 'deflationary bias' as a point in one of the cons of the eurozone, or only to monetary unions in general? (If the question was about 'monetary unions' rather than the eurozone specifically.
    hi sorry, this doesn't answer your question, but how does loose monetary policy an attraction for FDI? thanks...i
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    've been revising d1 today but thought i'd have a look at this thread just to read a few things and it's like expanded SOO much lol...lots of catching up to do tomorrow! and lots of responses to make :P
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    (Original post by viksta1000)
    huh? :confused:

    nominal GDP is a better way of comparing GDP between economies, but REAL GDP is better for understanding the standards of living within an economy

    for example, if nominal GDP rose by 2% but inflation was 5% then REAL GDP would have contracted, so people would be 'worse off'...however this takes away the fact that the economy actually grew by 2%

    I think the reason they've left it as nominal GDP in the table is because the inflation rate varies from country to country according to their AD/AS position and fiscal policy, so it wouldn't really be 'fair' to compare REAL GDP
    If you look at Slovakia 2008 (Q4) it grew in real terms by 0.6%. In 2009 (Q1) in real terms it fell by 8.1%. It dramatically recovered in 2009 (Q2) to show a growth of 1.2%. That's quite an achievement.

    Back to nominal GDP. Taking Greece as an example are you saying that nominal GDP varied by only 1.7% in 10 years?
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    (Original post by viksta1000)
    arguably yes, in reality though not really, inflation was stable but consistenly above the 2% target set by the ECB, and due to it being a asymmetric target it lacked the flexibility

    Furthermore, economies like greece simply hid there fiscal deficits, in actual fact they've been breaking the Growth and Stability Pact before they even joined the EU, upon joining they gained greater access to finance, were irresponsible and just invested racking up debts that totally 150% of their GDP when the GSP only allows 60%...the GSP went kaput, other countries though hey ho, if Greece broke it so can we, so now you've got the PIIGS all with debts amounting to near their GDP amounts

    The reason the the Euro was strong was because of the high nominal interest rate set by the ECB, this high interest rate meant inflation was stable and the value grew stronger...however the hidden debt became more expensive to finance and countries became less competitive with rising costs. Exchange rates sky rocketed, imports became more expensive, the PIIGS became even more uncompetitive and BAM! Eurozone Finance Crisis 2008 goes down in history and gets a page on wikipedia

    Fair enough also taking recent issues into account and Greece having to take more money from IMF and promise more government spending cuts (which i dontthink is even possible unless they want a war against there own people ) is it worth them being in the euro at all? In a way does Greece keep to the EURO or leave either way problems will occur whatever they choose.
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    (Original post by mqt)
    hi sorry, this doesn't answer your question, but how does loose monetary policy an attraction for FDI? thanks...i
    Hey! 'Loose' monetary policy means expansionary monetary policy... or in simple terms.. interest rates are low. Because interest rates are effectively the 'cost of borrowing', many foreigners will wish to invest in a country where the cost of borrowing is low. For some of the countries, real rates of interest were actually negative, where in effect you're 'earning money' for investing, because the rate of inflation is higher than the interest rate.
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    ".however the hidden debt became more expensive to finance and countries became less competitive with rising costs. Exchange rates sky rocketed, imports became more expensive, the PIIGS became even more uncompetitive"

    Do you mean the exchange rate from other countries? in which case imports to Euro-land would rise in price BUT this would make PIIGS more domestically competitive?
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    Oh and by the way, can anybody run me through purchasing power parity? I'm finding it hard to find a simple definition online or in my textbook... and my teacher said he can't really describe it to us... lol.
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    (Original post by Ben F)
    Oh and by the way, can anybody run me through purchasing power parity? I'm finding it hard to find a simple definition online or in my textbook... and my teacher said he can't really describe it to us... lol.
    It measures how much the currency is actually worth, how much the currency can buy in the economy. So for example you can buy much more with 10 yen in china than 10 pounds in england.
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    (Original post by Ben F)
    Oh and by the way, can anybody run me through purchasing power parity? I'm finding it hard to find a simple definition online or in my textbook... and my teacher said he can't really describe it to us... lol.
    Purchasing power parity - what a unit of currency can buy in terms of goods and services
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    with regard to 10 mark questions i reckon
    1) fixed/floating soft current or devaluation + competitiveness
    2) ECB and its singe monetary union
    3) unemployment and Fiscal policy
    4) stimulus packages and the effectiveness

    two of the above

    20 mark questio
    Trade libirasation linked with development or Doha round

    Fair assumption to make?
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    (Original post by Ben F)
    Hey! 'Loose' monetary policy means expansionary monetary policy... or in simple terms.. interest rates are low. Because interest rates are effectively the 'cost of borrowing', many foreigners will wish to invest in a country where the cost of borrowing is low. For some of the countries, real rates of interest were actually negative, where in effect you're 'earning money' for investing, because the rate of inflation is higher than the interest rate.
    they operated a loose monetary policy because of deflation in CPI in 2009, they wanted to reach their target of 2%
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    Hello

    Can someone help find the benefits of Spain's generous welfare system please .
    Apart from high Consumption, I cannot find anything! :s
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    (Original post by nini27)
    Hello

    Can someone help find the benefits of Spain's generous welfare system please .
    Apart from high Consumption, I cannot find anything! :s
    good standard of living?
    not that much inequality socio- economic factors less poverty
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    (Original post by ajayhp)
    they operated a loose monetary policy because of deflation in CPI in 2009, they wanted to reach their target of 2%
    I thought this was before then too? I remember reading somewhere in the stimulus material that this was a general policy over the past decade (I think? Although I may be wrong on that one)

    Oh, and thanks both
    (Original post by Tariq_3458)
    Purchasing power parity - what a unit of currency can buy in terms of goods and services
    (Original post by nini27)
    It measures how much the currency is actually worth, how much the currency can buy in the economy. So for example you can buy much more with 10 yen in china than 10 pounds in england.
 
 
 
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