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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 sarahharris)
    More stuff!
    Thaaaaaanks !
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    im tempted to look at them but i feel i may get worried as its too late now
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    you could look at the revision docs...
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    Well this is my last exam and my most important!

    I'm hoping/guessing there will be questions on:
    - Competitiveness and policies to promote
    - Is the eurozone an optimal currency area
    - 20 marker on trade liberalisation, probably the effects of this on developing countries

    I could be completely wrong though!

    GOOD LUCK to all I'm revising from now until the exam!
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    How would u answer the Q if it was
    'Is the Eurozone an optimal currency area'

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    (Original post by Iram0105)
    How would u answer the Q if it was
    'Is the Eurozone an optimal currency area'


    An optimal currency area refers the condition which need to be met to avoid the costs of a monetary union. This would involve flexible labour markets, high degree of capital and labour mobility and a mechanism to redistribute money.

    These requirements smooth out the differences in economic performances, combating the problems of convergence. Convergence refers to the process by which economic conditions in different countries become similar. There are two types of convergence: monetary and real. Monetary convergence refers to similarities in inflation and interest rates and real convergence refers to similarities in the structure of economies.

    As made evident by the different lengths and severity of the recessions of the PIIGS economies, it is clear that there is a lack of convergence. They do however have monetary convergence as they all have a common monetary policy as this is a requirement for membership of the euro zone, but the structure of the economies differs, for example, Spain is more heavily reliant on its construction industry. If the euro zone was an optimal currency area, the policies required to smooth out the economic cycle would be similar, yet this is not the case. The only way to overcome the recession is for individual countries to pay focus to their individual circumstances and adopt fiscal/supply-side policies as they see fit. Thus the euro zone is not an optimal currency area.
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    More revision - Slovakia
    Attached Files
  1. File Type: doc revision7.doc (38.5 KB, 125 views)
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    guuuud luk everyoneeeee
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    (Original post by boliver228)
    With regards to the Trade Liberalisation theme, It can be summarised like this:

    WTO talks about how the financial crisis has contracted world trade as major economies aggregate demand has fallen. The WTO argue that whilst developed countries try and use fiscal policies to recover, this is only a short term solution, and that to sustain long term growth countries need to focus on world trade. During a financial crisis, countries tend to become very protectionist in order to preserve their own economies. However this protectionism adversely affects world trade.

    Protectionist methods include Tarriffs, Domestic Subsidies, Non-Tarriff Measures and Anti-Dumping Actions.

    Advantages of protectionism are that it can protect senile and infant industries, preserve domestic jobs, prevent dumping, and protect from cheap labour.

    However the disadvantages of protectionism is that you lose the benefit of specialisation and economies of scale, which leads to lower prices. Consumers also have reduced choice, it can lead to a lack of innovation and also it can lead to retaliation.

    The WTO argue trade barriers should be reduced and that world trade should be liberalised and made free. This would increase the level of trade on an international scale.

    The benefits of increased world trade are access to larger markets, increased allocative, productive and dynamic efficiency due to competiton. Also access to new technology, and the trading of ideas which can lead to further information. Finally increased trade can raise living standards, as evidence has shown that countries which are more open to trade grow faster over the long run that those who remain closed. And increased trade means countries can grow beyond their domestic maximum capacity, therefore increasing their income per head.

    There are of course drawbacks to increased trade which need to be considered. These include the danger to infant and senile industries which may not be able to compete on an international level. Also increased specialisation can lead to countries relying too much on specific industries, which can cause problems if demand suddenly drops. Also, trade can lead to dumping. Another drawback is that as countries open up more to trade, their economies performance becomes more reliant on foreign performance, so they are more vulnerable to external shocks.

    However, the advantages of increased world trade outweigh the disadvantages. International Trade liberalisation is vital for the long term recovery of world economies.

    This is the point where I get stuck, because I do not have any evaluative points, and I know the 20 mark question requires a lot of evaluation. Please provide some evaluation points to finish this essay.
    That is reallly good... i think you have enoug there to evaluate... i read this examiners thing that says for top marks you want to evaulate throughout the whole thing... So take a good point of free trade, then ue a counter argument which links... throughout the whole thing use however, however, however, on the other hand,.... should be good... and make sur eyou get some economic theories explained in there too, hey love that!
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    (Original post by Wasnerello)
    Well this is my last exam and my most important!

    I'm hoping/guessing there will be questions on:
    - Competitiveness and policies to promote
    - Is the eurozone an optimal currency area
    - 20 marker on trade liberalisation, probably the effects of this on developing countries

    I could be completely wrong though!

    GOOD LUCK to all I'm revising from now until the exam!
    Agree

    except I think it might be comment on the whether a MU needs to be a OCA
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    (Original post by turn and fall)
    Agree

    except I think it might be comment on the whether a MU needs to be a OCA
    also a fiscal stimulus question might come up i.e does it help euro areas come out of a reccision or something

    something on unemployment will come up cos 1 whole extract is about wether competiviness or the goverments spending on good benefits which one is the bigger factor for unemployment spain felt.

    extract 1 talks about soft curreny so i rekon something on devaluation
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    Anybody got any notes about OCA? I can't find any of mine *panics*
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    (Original post by kateibbo)
    Anybody got any notes about OCA? I can't find any of mine *panics*
    what does that stand for?
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    (Original post by nik2111)
    what does that stand for?
    Optimal Currency Area
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    (Original post by kateibbo)
    Optimal Currency Area
    so thats like pros and cons of being in the EU
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    I reckon the two ten markers will be on fiscal stimulus, and then the PIIGS and competitiveness.

    20 Markers almost guarenteed to be to do with trade liberalisation, trade, protectionism or globalisation
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    for the 20 mark question i got this essay plan is it any good?
    trade libersiation

    pros

    1. it can create trade creation (diagram)

    2.economies of scale

    3.exports going up

    4. higher growth for developing countries

    bad

    1 trade diversion

    2. common external tariffs

    3. develping countries can over rely on argiculture which will mean they wont get that much out of free trade

    evaulation

    1. unequal wealth distribution

    2. curently the doha round is failing

    3. high GDP doesnt mean development will occur
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    PS Helper
    Evaluative point for the effect of trade liberalisation on developing countries?

    They'll end up depending far too much on exports of primary commodities, therefore they'll end up in a development trap due to Prebisch-Singer hypothesis?
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    (Original post by boliver228)
    I reckon the two ten markers will be on fiscal stimulus, and then the PIIGS and competitiveness.

    20 Markers almost guarenteed to be to do with trade liberalisation, trade, protectionism or globalisation
    Yes i think this is what will come up
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    (Original post by Doughnuts!!)
    Evaluative point for the effect of trade liberalisation on developing countries?

    They'll end up depending far too much on exports of primary commodities, therefore they'll end up in a development trap due to Prebisch-Singer hypothesis?
    yeeeeep
 
 
 
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