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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 bijesh12)
    are the govt. deficit and budget deficit the same ? in the toolkit both are different
    Budget deficit is when a gov spends more than it earns
    Gov deficit is debt
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    (Original post by loki276)
    Actually forgot to mention this before, but although there isn't a exchange rate for members to trade with one another. There is still a real exchange rate just no nominal one
    very very good point!!!

    this is true guys take note ^
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    I haven't done a single essay for this unit and yet I plan on getting 100% on it.

    Tomorrow will certainly be interesting...
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    okay, so whoever asked me for the Trade liberalisation essay plan, just send me your e-mails!
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    (Original post by viksta1000)
    very very good point!!!

    this is true guys take note ^
    Can you explain what that means? A nominal exchange rate?
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    (Original post by loki276)
    Actually forgot to mention this before, but although there isn't a exchange rate for members to trade with one another. There is still a real exchange rate just no nominal one
    Is this like how much you could purchase with a certain amount of money in each country?

    e.g in Euro area Ireland has higher inflation so you can purchase less compared to than in Germany?

    Is that even right what i just said :/
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    What's the difference between a real exchange rate and a nominal one?
    please
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    (Original post by viksta1000)
    very very good point!!!

    this is true guys take note ^
    To expand on that even more here's a brilliant article which should explain what I am talking about. http://www.economist.com/blogs/freee...uropes_economy
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    (Original post by nini27)
    What's the difference between a real exchange rate and a nominal one?
    please
    Real is adjusted for inflation, nominal isn't.
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    (Original post by NSolanki1)
    Can you explain what that means? A nominal exchange rate?
    nominal = not adjusted for inflation, so every member of the EU has the same nominal exchange rate as they all share the Euro

    REAL = adjusted for inflation, since each member has different levels of inflation (due to differing economic cycles), the REAL interest rates differ form member to member
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    (Original post by viksta1000)
    nominal = not adjusted for inflation, so every member of the EU has the same nominal exchange rate as they all share the Euro

    REAL = adjusted for inflation, since each member has different levels of inflation (due to differing economic cycles), the REAL interest rates differ form member to member

    (Original post by Doughnuts!!)
    Real is adjusted for inflation, nominal isn't.
    Thanks
    So does that mean that the Purchasing power parity of the euro differs in each EMU member country?
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    (Original post by viksta1000)
    nominal = not adjusted for inflation, so every member of the EU has the same nominal exchange rate as they all share the Euro

    REAL = adjusted for inflation, since each member has different levels of inflation (due to differing economic cycles), the REAL interest rates differ form member to member
    Don't you mean, real exchange rate differs between members? (Though yeah, real interest rates also do this - I just thought you'd introduced a new point )
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    (Original post by nini27)
    Thanks
    So does that mean that the Purchasing power parity of the euro differs in each EMU member country?
    Yes
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    (Original post by goldlock)
    Don't you mean, real exchange rate differs between members? (Though yeah, real interest rates also do this - I just thought you'd introduced a new point )
    that's exactly what I said lol


    (Original post by viksta1000)
    nominal = not adjusted for inflation, so every member of the EU has the same nominal exchange rate as they all share the Euro

    REAL = adjusted for inflation, since each member has different levels of inflation (due to differing economic cycles), the REAL interest rates differ from member to member
    see ^

    EDIT...my bad...yeah REAL exchange rates lol
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    Nominal and real interest rates ? plz
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    (Original post by Hits1)
    Hey I made a slight mistake, and the posts on the most recent page show why...

    basically the euro is 'fixed' against other members within the EU as they share the same currency hence it cannot appreciate/depreciate

    Whereas it is floating against other currencies such as the pound, dollar and so on!

    Sorry about that, confused myself also!
    oh i see..but if its floating against others outside the EU, how does that work? do yoou know thanks sorry haha
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    Why did the PIIGS become so uncompetitive? What factors caused there decrease in competitiveness?
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    (Original post by sewelly6)
    Why did the PIIGS become so uncompetitive? What factors caused there decrease in competitiveness?
    They all generally ran up huge deficits over the decade, and were living beyond their means. Unit labour costs (relative to other countries inside and outside the EMU) were very high, partly due to the wage-price spiral effect from the high rates of inflation that the PIIGS experienced, since monetary policy wasn't tight enough for them.

    Since higher unit labour costs usually translate as higher output prices (most producers will be unwilling to bear all of the increase in costs... or simply can't afford to) the output prices of the PIIGS were all high, relative to their competitors... and that's one of the reasons why they've become so uncompetitive!
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    General question:
    Would Greece's debt get written off if they left the EU, like they couldn't be forced to pay it?
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    (Original post by Ben F)
    They all generally ran up huge deficits over the decade, and were living beyond their means. Unit labour costs (relative to other countries inside and outside the EMU) were very high, partly due to the wage-price spiral effect from the high rates of inflation that the PIIGS experienced, since monetary policy wasn't tight enough for them.

    Since higher unit labour costs usually translate as higher output prices (most producers will be unwilling to bear all of the increase in costs... or simply can't afford to) the output prices of the PIIGS were all high, relative to their competitors... and that's one of the reasons why they've become so uncompetitive!
    what about there productivity doesnt that effect unit labour costs ?
 
 
 
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