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Question spotting for F585 Economics The Global Economy OCR A level June 2011 watch

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    (Original post by nini27)
    Yes, but weren't the PIIGS already at that stage in 2008?
    No. All euro economies went through economic problem during 2008 which caused the deflation. Also even if the piigs were already there the deflation was in the whole euro area
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    (Original post by sarahharris)
    I'm looking at nominal gdp because the % fall is 8.1% nominal and the fall in 2008 (Q4) and 2009 (Q1) alone is more than 8.1%
    The percentage fall is real. There's a reason it says real gdp in the title of the table
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    (Original post by GiddensFTW)
    Hey guys. I know it's a bit late but I have a 100 slide powerpoint specifically written for my class for this years case by a well-established examiner. It's really useful, especially for the analysis and last minute revision!

    Quote/PM for the download link!

    Edit: It's actually excellent, because it tells you how to get the maximum marks with hints and tips.
    Could you send download link please?
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    (Original post by GiddensFTW)
    Hey guys. I know it's a bit late but I have a 100 slide powerpoint specifically written for my class for this years case by a well-established examiner. It's really useful, especially for the analysis and last minute revision!

    Quote/PM for the download link!

    Edit: It's actually excellent, because it tells you how to get the maximum marks with hints and tips.
    hey i would really appreciate if you could send it to me as well please
    good luck with the exam
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    whats everyone's plan for revisen today??
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    (Original post by nik2111)
    whats everyone's plan for revisen today??
    Learning key definitions
    I know none :/ lol
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    can some1 tell me what is freely floating and fixed exchange rate plz, and advantages n disadvantages of them?
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    yh and some 6 mark questions in the tutor 2 u tool kit can be a bit odd and ask anything whilst the 10 mark and 20 mark are predictable
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    (Original post by Mckenzie999)
    can some1 tell me what is freely floating and fixed exchange rate plz, and advantages n disadvantages of them?

    floating rates are when the exchange rate is made by market forces such as demand and supply

    fixed is when the government sets a specific rate and uses it reserves and monetary policy setting to keep it fixed , so if demand falls the government will intervene and counter that

    Fixed
    Good - less uncertainty business can predict what there exports and imports will cost them
    Bad- need foreign current reserves there is a opp cost that money can be used in education

    Floating
    good- it can change to current balance of payment problems
    Bad- there is uncertainty

    evaluation point 1- depends on the specific question
    evaluation point 2- semi fixed rates?
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    (Original post by loki276)
    The percentage fall is real. There's a reason it says real gdp in the title of the table
    So you're saying the REAL fall in GDP from peak to trough in Greece, say, 2008 - 2009 is 1.7%

    (Earlier in this thread someone opined the % fall was in nominal)

    In Slovakia in that time period there hasn't been a fall of 8.1% either.
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    Anyone wanna have a crack at this?

    Comment on the extent to which a fixed exchange rate rather than a floating exchange rate is a stimulus to inflows of FDI (10)
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    (Original post by 06hwhelpton)
    Anyone wanna have a crack at this?

    Comment on the extent to which a fixed exchange rate rather than a floating exchange rate is a stimulus to inflows of FDI (10)
    10 mark yh?

    1. yes it will due to uncertainty being eliminated firms will invest as they more or less know the price of there exports and imports
    2. maybe not, a floating exchange changes by it self to offset balance of payment problems this could be preferred for business's.

    evaluation
    it could be argued that business confidence is the key and not the exchange rate
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    (Original post by nik2111)
    10 mark yh?

    1. yes it will due to uncertainty being eliminated firms will invest as they more or less know the price of there exports and imports
    2. maybe not, a floating exchange changes by it self to offset balance of payment problems this could be preferred for business's.

    evaluation
    it could be argued that business confidence is the key and not the exchange rate
    Could a floating currency let a currency decline if its price are uncompetitive which then will lead to a depreciation in the currency making its exports cheaper and then becoming more competitive ?
    correct me if im wrong
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    (Original post by nik2111)
    10 mark yh?

    1. yes it will due to uncertainty being eliminated firms will invest as they more or less know the price of there exports and imports
    2. maybe not, a floating exchange changes by it self to offset balance of payment problems this could be preferred for business's.

    evaluation
    it could be argued that business confidence is the key and not the exchange rate

    Yeh 10 marker, Yeh that looks sweet - A floating ER diagram on the counter argument showing an increase in the value of the subject currency as well. Arguing the point of increased returns on investment.
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    (Original post by Tariq_3458)
    Could a floating currency let a currency decline if its price are uncompetitive which then will lead to a depreciation in the currency making its exports cheaper and then becoming more competitive ?
    correct me if im wrong

    Yes it could, but obviously not in the case of the Euro Zone. It is a sort of balance of payments automatic correction in the case of a country with a free floating ER.
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    (Original post by nik2111)
    floating rates are when the exchange rate is made by market forces such as demand and supply

    fixed is when the government sets a specific rate and uses it reserves and monetary policy setting to keep it fixed , so if demand falls the government will intervene and counter that

    Fixed
    Good - less uncertainty business can predict what there exports and imports will cost them
    Bad- need foreign current reserves there is a opp cost that money can be used in education

    Floating
    good- it can change to current balance of payment problems
    Bad- there is uncertainty

    evaluation point 1- depends on the specific question
    evaluation point 2- semi fixed rates?
    Thanks man!
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    (Original post by Mckenzie999)
    can some1 tell me what is freely floating and fixed exchange rate plz, and advantages n disadvantages of them?
    A currency that has an exchange rate which is set by the forces of demand and supply of its currency is a floating one
    A fixed exchange rate is one where a country sets its interest rates in order for their currency value to be fixed to another, so, for example, if China wanted their currency to be 1$ = 1.5 Yuan, but it is currently 1$ = 1.75 , the chinese government will increase their interest rate, so the demand for the Yuan will increase, therefore its value will rise, and eventually 1$ will equal 1.5Yuan.

    Advantages of a floating ER:
    - No speculation of the currency, investors know the 'true value' of the currency as it reflects the performance the economy
    - Monetary policy is more effective in controlling AD and inflation, as they don't use it to change their exchange rate
    - Balance of payments problems are corrected automaticaly (low exports = lower Exchange rate = increase in the demand of the currency as it is now cheaper = increase in exports)

    Disadvantages of a floating ER:
    - risks of exchange rate fluctuations, might not attract FDI as much as a fixed ER


    Advantages of fixed ER:
    - reduced ER uncertainty
    - reduced cost of trade, because their ER is fixed, if a foreign country buy their products, the currency of the fixed ER will not be affected.
    - incentive for domestic firms to be more efficient, as if the ER cannot depreciate, domestic firms will have to match the improvements made by foreign competitors

    Disadvantages of fixed ER:
    - countries with a fixed ER must keep high levels of foreign currency reserves to maintain their exchange rate
    - loss of control over domestic monetary policy, their interest rates is used to control the ER, so if the government wants to fuel the economy it will have no other option than using fiscal policy.
    Speculation over the currency as it doesn't reflect the economic performance of the country
    - Worsening of international relations, think of what happened to china when they fixed their exchnage rate to the dollar: america increased their Tariffs for chinese imports in order to limit the 'damages' caused to america because of the chinese export-led growth.
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    (Original post by GiddensFTW)
    Hey guys. I know it's a bit late but I have a 100 slide powerpoint specifically written for my class for this years case by a well-established examiner. It's really useful, especially for the analysis and last minute revision!

    Quote/PM for the download link!

    Edit: It's actually excellent, because it tells you how to get the maximum marks with hints and tips.
    Yes please If you could that would be great!
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    anyone know some pro's and cons of being in a monetary union? i know 1 or two but not really in depth
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    (Original post by Tariq_3458)
    Could a floating currency let a currency decline if its price are uncompetitive which then will lead to a depreciation in the currency making its exports cheaper and then becoming more competitive ?
    correct me if im wrong
    yh thats true but in the long run imports will go up and countries do need goods imported this rise could lead to cost pust inflation so yh your right devaulation does mean exports are cheaper but to evualate you can say that it also causes imports to be more expensive
 
 
 
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