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    I just don't seem to get http://www.xtremepapers.com/papers/C...8_w02_qp_3.pdf

    question 14 ?
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    Question 14 from winter 2002 paper 3 CIE
    cant do it
    Assuming that all indexes have 1990 as 100, the national income figures for 2000 at 1990 prices
    may be obtained by multiplying 2000 national income at current prices by

    the answer is : index price for 1990/index price for 2000
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    (Original post by LeedsLad95)
    I'm doing OCR as economics (macro) I asked my teacher for a potential essay question on income redistribution ang got this
    '*
    Discuss the extent to which fiscal policy can be used to achieve income redistricution (18)'

    I don't really know how to answer it, any help please?
    Fiscal policy is government spending and taxation.
    Therefore you should talk about how the government has the ability to tax the higher income groups in order to redistribute it to the lower income groups using the benefits schemes in place.
    You could also talk about the reverse of this.
    Remember; a redistribution does not necessarily mean giving from rich to poor, it's just moving what COULD be done.


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    (Original post by Mouth)
    I have some questions.....
    Currently, are the MPC trying to increase growth rather then reduce inflation? The whole quantitative easing thing is confusing because i thought QE would increase growth but not necessarily reduce inflation?

    And how does 'hot money' work? Sorry it's quite broad, but I've never really understood it!
    The MPC is desperately trying to increase growth at the moment, however they are trying to do so whilst keeping inflation under control. This is why they are always so averse to using QE. As more money enters the economy each pound is effectively worth less and inflation occurs. Yet, I would say that growth is more important to them right now; they would accept a percent or slightly more in order to achieve strong real growth.

    Hot money is all about interest rates and inflation rates. If you leave your money in a savings account with interest<rate of inflation you are effectively losing money.
    Therefore, to try and combat this inflation spectators around the world move their money into high interest accounts in other counties. By doing do they affect currencies because in order to put money into a foreign account it must be in the right currency. They will sell all of their dollars for example to buy British pounds if Britain has the best interest rate. This means that the value of the dollar will fall and the value of the pound will rise due to basic supply and demand theory.
    You MUST remember the scale that this happens on, a smaller scale operation would not have the same effect.


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    (Original post by msokol)
    Hey,
    I need help with the following question in microeconomics:
    A consumer lives in a world of two goods: computers and money. Let x be the number of computers,the consumer can buy.
    x\epsilon [0,1,2,3]
    The consumer has the following preference relation: If the consumer has money and no computers, he is willing to spend at most half of his money on buying a single computer. If the consumer has 1 computer, he is willing to spend 1/3 of his money on buying a second computer. If the consumer has 2 computers, he is willing to spend 1/4 of his money on buying a third computer.

    A. Explain why  (0,M)~(1,\frac{M}{2})~(2,\frac{M}{3})~(3,\frac{M}{4})

    B.Explain why the consumer's preference relation can be represented the following utility function U(x,M)=(x+1)M.

    C.Prove that computer is not an inferior good

    I have managed to solve A,B , however I need help in C.
    An inferior good is defined by
    % change in QD / % change in Y = <0

    Therefore inferior goods are when this equation gives an answer that is negative. A rise in income leads to a fall in demand for the good.
    Such example include potatoes.

    If you put values into the equation I gave you, you should be able to do part C with ease!



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    Just for clarification, the PSBR is basically deficit financing by the UK gov right? And the grits they sell are, in it's essence, government bonds right?

    thanks in advance.
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    (Original post by Danf159)
    Just for clarification, the PSBR is basically deficit financing by the UK gov right? And the grits they sell are, in it's essence, government bonds right?

    thanks in advance.
    Gilts are (British) government bonds, yes. And yes, public sector borrowing requirement is essentially government borrowing (over a particular period, usually annual or quarterly).
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    Nvm, found the answer
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    Can someone explain why the foreign exchange gap is a constraint on development, and perhaps suggest some points to evaluate it?
    Thanks!
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    Does anyone properly understand Purchasing Power Parity and its relation to exchange rates? I can't seem to get my head around it.
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    Does Economics require a high understanding of Maths?
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    (Original post by Miss.someone)
    Does Economics require a high understanding of Maths?
    It depends what you mean by 'Economics'. The subject itself doesn't really but many papers these days do use rather a lot of Maths.
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    What are the purposes of taxing crude oil less than other types of fuel?
    Why to subsidise merit goods?
    What are the contestable markets?
    How does taxation and regulation affect PED of fuel?
    How does fuel povety cause unemployment trap?
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    (Original post by Miss.someone)
    Does Economics require a high understanding of Maths?
    At an undergraduate level, unless you take advanced theoretical econometrics, not at all. You're using mathematics as a tool, so you need to have a concrete grasp of how to use it to determine certain things, such as optimization, but you don't need to have a good understanding of the underlying mathematical theory behind calculus or have to deal with complex proofs in Hilbert spaces or anything.

    At a postgraduate level, the mathematics used becomes more complex, but invariably it is still being used as a tool rather than you needing to have a concrete understanding of the underlying theory.
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    (Original post by JacobW)
    Does anyone properly understand Purchasing Power Parity and its relation to exchange rates? I can't seem to get my head around it.
    1. What specifically are you struggling with?
    2. What level of economics are you studying?
    3. Do you have access to the textbook International Economics by Feenstra?
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    (Original post by .ACS.)
    1. What specifically are you struggling with?
    2. What level of economics are you studying?
    3. Do you have access to the textbook International Economics by Feenstra?
    Thanks for the reply, but I think I've got the hang of it now.
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    Hi, I am new to these forums but I hope someone can help me soon, I have a problem with two questions from my practice test, I have my test tommorow in the afternoon so hopefully someone can help me before then, but even if its 2 days later, how to solve this might still help me for the exam.

    Here are the questions I don't understand:

    A producer has a production function given by:y (L,K)=L^1/3 K^1/3 where y is the level of output and L and K are labour and capital that are employed their costs are wL and wK respectively.
    i) The total cost function is given by? (Answer is TC=2y^3/2(wLwK)^1/2)
    ii)Capital is fixed at K=216. If the price of labour is wL = 12, the firm;s marginal cost function is given by? (Answer is MC = .167y^2)

    I solved L* but I am not sure where to go from their (was the question before it) which I got and its right is L* = y^3/2(wK/wL)^1/2
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    (Original post by ak21)
    Hi, I am new to these forums but I hope someone can help me soon, I have a problem with two questions from my practice test, I have my test tommorow in the afternoon so hopefully someone can help me before then, but even if its 2 days later, how to solve this might still help me for the exam.

    Here are the questions I don't understand:

    A producer has a production function given by:y (L,K)=L^1/3 K^1/3 where y is the level of output and L and K are labour and capital that are employed their costs are wL and wK respectively.
    i) The total cost function is given by? (Answer is TC=2y^3/2(wLwK)^1/2)
    ii)Capital is fixed at K=216. If the price of labour is wL = 12, the firm;s marginal cost function is given by? (Answer is MC = .167y^2)

    I solved L* but I am not sure where to go from their (was the question before it) which I got and its right is L* = y^3/2(wK/wL)^1/2
    It's been a while since I did this kind of stuff but I'd guess:
    i) TC = wL* + wK*
    So solve for K* (in the same way as you did for L*), then plug into the above cost function.
    ii) Plug in given information (K=216, wL = 12) into TC, then differentiate to get MC.

    Hope this helps.
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    Thanks I realized this after and I ended up getting the right answer, for ii however I think I messed up somewhere because I still didn't end up getting the right answer. The test is already over and I believe I actually did great, still need to wait for my mark. However I will try to go to my TA to try to get help for ii, since that is the only one i still couldn't fully get the right answer.

    Again thanks for the help .
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    I'm confused, does income inequality ever benefit growth? I.e when a country is industrialising, income inequality widens but isn't this just a correlation? Thanks ^^
 
 
 
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