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

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    If it's not it'll be the first time it's happened. I don't think they'd do that to us.


    (Original post by Outsanity)
    Here's something interesting I just noticed, I'm not sure if it was ever actually confirmed that Q3 would be on the final extract besides past papers, but in the January 2011 Report it reads:

    "As on Questions 1(c) and 2(c), one developed judgement was sufficient for full marks to be awarded in Level 4, Band 3. It is worth centres reminding candidates that a good grasp of the economic concepts underlying the final extract is a necessary condition for good marks in Level 4."

    Does this confirm that it will be based around trade liberalisation? Sorry if it's been pointed out before
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    (Original post by mqt)
    Thanks! that was nice and quick and easy. Useful to use and write from lol! we went through that in class as well...and miss said terms of trade is very important... The last extract talks about trade agreements and the doha round. The doha round want to open up markets but so it benefits developing countries more than developed countries...so they need to reach an agreement/ get their terms of trade right!
    Nice.. Terms of trade is the comparison of the prices of exports against the prices of imports
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    (Original post by revisionnightmare)
    If it's not it'll be the first time it's happened. I don't think they'd do that to us.
    ITS A TRAP!!! :eek:.....the exam is going to be on sustainable development.....lol jk, its defo trade liberalisation


    but then again it is OCR, so I wouldn't be surprised if they do ask about something totally irrelevant to subject
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    What the hells dependency theory :/ !
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    (Original post by revisionnightmare)
    If it's not it'll be the first time it's happened. I don't think they'd do that to us.
    After falling victim to the 8 mark impossible question in D1, I no longer trust OCR with anything
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    zzz
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    (Original post by rahyahrah)
    Thank you!

    So does that mean, if you have to analyse a concept, you talk about the benefits and costs of it? Or does that count as evaluation?
    basically, if the question is worth more than 4 marks.....balanced argument
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    Comment on the limitations of the ECB maintaing a policy of low interest rates as away of helping the EU economy during a recession

    here is what i got demand-pull inflation due to consumption and investment rising = AD increase. However is AD near full capacity, this will only occur if AD is close to full capacity. Creates inflationary noise, so consumer confidence and firms confidence decreases due to mis allocation of resources. An increase in menu costs. Its more of a short-term thing

    Low rate of interest = Increases in consumption and investment due to availability of credit = this may cause demand-pull inflation = depends how close AD is to full employment
    This creates noise and therefore creates uncertainty = consumer and business confidence is reduced
    There is also a lack of convergence as some countries will be at different phases in the economic cycle = a low interest rate will have a different effect on each economy. Some will be experiencing high growth rates so a low rate of interest rates will accelerate inflation. Other countries may be experiencing slow growth, a drop in interest rate will therefore be beneficial as they will achieve higher GDP due to an increase in consumption and investment
    Setting Low interest rates for the EU as a whole depends where the countries is in the economic cycle, as changes in interest rate will effect each country differently
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    (Original post by ajayhp)
    Comment on the limitations of the ECB maintaing a policy of low interest rates as away of helping the EU economy during a recession

    here is what i got demand-pull inflation due to consumption and investment rising = AD increase. However is AD near full capacity, this will only occur if AD is close to full capacity. Creates inflationary noise, so consumer confidence and firms confidence decreases due to mis allocation of resources. An increase in menu costs. Its more of a short-term thing
    but it says near a recession, so it can't be close to full capacity
    i think they want you to introduce idea of the different sub eu economies, like how it effects germany and francem and how it effects piigs
    how its difficult to get right level of interest rates to effect them both. All at different business cycles, leaving low interest to long will lead to demand pull inflation eventually which will have damaging effects but will likely help piigs countries, etc
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    (Original post by viksta1000)
    ITS A TRAP!!! :eek:.....the exam is going to be on sustainable development.....lol jk, its defo trade liberalisation


    but then again it is OCR, so I wouldn't be surprised if they do ask about something totally irrelevant to subject
    Haha oh dear! If that happened I'd find myself writing a 8 page essay on the flaws of the exam system in this country, specifically commenting on OCR.
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    (Original post by ajayhp)
    Comment on the limitations of the ECB maintaing a policy of low interest rates as away of helping the EU economy during a recession

    here is what i got demand-pull inflation due to consumption and investment rising = AD increase. However is AD near full capacity, this will only occur if AD is close to full capacity.
    beautiful question, can conjure up a balanced argument

    most obvious one...lack of convergence
    some economies are experiencing a recession, whilst others are experiencing growth with high inflation, low interest rates may well increase AD in the 'bust economies' however it will be at the cost of simply increasing AD and inflationary pressure in the booming economies

    further more, low interest rates will make borrowing cheaper and hence increase domestic investment, this will increase AD and hence economic growth, it will also mean that paying back current account debts will be cheaper however low interest rates will deter foreign direct investment (FDI), low interest rates will also reduce the exchange rates as demand for the Euro will fall, this means that imports will be more expensive which can affect producers as raw material costs will rise and induce cost-push inflation thereby reducing competitiveness and making exports more expensive (even though they should theoretically be cheaper with a depreciated exchange rate)

    I dunno how many marks this question is, but there are numerous limitations to monetary policy/low interest rates

    hope this helps
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    (Original post by viksta1000)
    beautiful question, can conjure up a balanced argument

    most obvious one...lack of convergence
    some economies are experiencing a recession, whilst others are experiencing growth with high inflation, low interest rates may well increase AD in the 'bust economies' however it will be at the cost of simply increasing AD and inflationary pressure in the booming economies

    further more, low interest rates will make borrowing cheaper and hence increase domestic investment, this will increase AD and hence economic growth, it will also mean that paying back current account debts will be cheaper however low interest rates will deter foreign direct investment (FDI), low interest rates will also reduce the exchange rates as demand for the Euro will fall, this means that imports will be more expensive which can affect producers as raw material costs will rise and induce cost-push inflation thereby reducing competitiveness and making exports more expensive (even though they should theoretically be cheaper with a depreciated exchange rate)

    I dunno how many marks this question is, but there are numerous limitations to monetary policy/low interest rates

    hope this helps
    is the euro fixed or freely floating? how can you say that the interest rate will have an effect on the ER
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    whats an evaluation point to 'fixed is better for foreign direct investment'
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    (Original post by ajayhp)
    is the euro fixed or freely floating? how can you say that the interest rate will have an effect on the ER
    its freely floating

    because if you reduce interest, foreign investors are going to take there money to an economy with a high interest rate as the return on investment is better

    the demand for the Euro will fall with the lack of interest from foreign investors and hence exchange rate will fall

    This is by theory..in practice the ECB induced stable inflation in the Euro when it was launched, confidence in the Euro grew, so FDI into the Eurozone sky rocketted and foreign economies began using the Euro as a reserve currency due to its stability

    but examiners are not looking for your ability to point out reality, they want to see you analyse it from an economic theory perspective, then relate that to the Eurozone

    so they'd want you to write something along the lines of....low interest rates would reduce exchange rates...yadda yadda yadda....however the high level of foreign and domestic investment in the early establishment of the Euro meant that the Euro had gained strength and infact appreciated...this meant exports were more expensive adding to lack of competitiveness experienced by Eurozone economies...yadda yadda yadda'

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    (Original post by Elponchis_LOL)
    whats an evaluation point to 'fixed is better for foreign direct investment'
    Depends what value your currency is fixed at, if it was pegged at an over-valued level there would be little incentive to invest in your economy - too costly.

    Alternatively you could argue that even if your currency was pegged at the perfect value, with little business confidence in the economy, FDI would not be forthcoming.

    That's what came to mind anyway.
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    (Original post by Outsanity)
    Depends what value your currency is fixed at, if it was pegged at an over-valued level there would be little incentive to invest in your economy - too costly.

    Alternatively you could argue that even if your currency was pegged at the perfect value, with little business confidence in the economy, FDI would not be forthcoming.

    That's what came to mind anyway.
    cheers!
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    (Original post by ajayhp)
    Got a q
    Comment on the extent to which "positive impact of national stimulus packages is at best temporary

    I understand that weakening fiscal multiplier has something to do with it

    and

    Comment to the extent that Spain's dependence on the housing industry has led to a delay recovery

    I understand that 15% of unemployment is from the housing industry and then talk about AD and AS analysis on a fall in consumption and in the LR a fall in the labour force due to negative multiplier effects and negative accelerator effects. These directly affect the economic cycle and of course the gov finances on unemployment benefits which are very generous and contribute to the unemployment trap. The main cause is due to a brain drain which has been caused by highly skilled workers to leave, leaving a workforce who isn't productive and lower productivity means high unit labour costs which then get passed on the consumer, at which the consumer substitutes. This equals more job losses and less consumption and waste of resources. The dependence on the construction industry depends on the size of unemployment. Consumer and business confidence?


    what else does it depend on?
    Hey not sure if anyone replied yet, but for the national stimulus packages
    - Positive, as it increases AD
    - Temporary because, (using the keynesian curve) in a recession the national stimulus packages means that there's no inflationary pressures but in a recovery there is still inflation, but it's not that great. but in a boom period, (so long term when the economy starts booming), it just creates inflationary pressures rather than continuously stimulates economic growth.
    -Therefore, long term, it would create a lack of competition in the economy. it is pretty unsustainble to grow in this way really
    - Using national stimulus packages, so fiscal stimulus, creates an opportunity cost, and a big one
    - However, in the short term, a multiplier effect can be achieved as well as an accelerator effect. BUT! this also benefits in the long term as well, as fiscal stimulus, so for instance, increasing government spending is usually long term, and takes long to take effect, such as spending on education? (although, it would be pretty safe to say this is more of a supply side policy)
    -depends on how big the government spending increase is, how big the tax cut is, what is it spent on? As increasing govervnment spending for the sake of economic growth is bad, but investing it will help promote longer term effects..also, it can also depend on your viewpoint, as in a classical view, any fiscal stimulus will bring inflatonary pressures...


    for the second one,

    The construction one... i think that it's going to also depend on how flexible the workforce is...? maybe... Cause they may be dependant on the construction industry, but if the workforce was flexible enough to apply their skills, and even how mobile the workforce is...then the labour force could make sure themselves that they can have work instead of being stuck in recession?

    Erm..but what you said already seemed pretty straight forward and clear. I'm sure it won't be more than a 6 mark question anyways. So you've probably got enough there
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    People.. has the stimulus material toolkit got evrything u need to know init ?
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    (Original post by Tariq_3458)
    People.. has the stimulus material toolkit got evrything u need to know init ?
    Yeah pretty much. Top up your knowledge with this thread and give the Colin Bamford OCR a little read if you have it.
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    Help with this one please

    Analyse the factors that will affect the rate of recovery of the spanish economy? 6 marks

    I have the mark scheme for it but want other students ideas. Could anyone explain a few pointers of how an economy can recover from a reccession...what policies should be implemented. Obviously these are inhibted with the restictions of being an EU member. TA
 
 
 
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