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    (Original post by 02mik_e)
    Ok so... i think i have got it. A rise in inflation would mean a fall in the exchange rate, True? and how would i put this into a diagram?

    Ok, what's cause the inflation? Decide between a demand shock or supply shock, draw the AD-AS diagram,

    ok, just checked, draw an IS-LM-BP diargram with a monetary shock shifting the LM cuve as real money balance fall, this then moves a point along the AD curve. Where the IS curve cuts the intersection of LM and BP determines the real terms of trade. You show this in a terms of trade curve, x-axis income. I think when the IS curve shifts it has a knew exchange rate.

    hope that helps
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    Hi, I was reading this BBC article today (here) and I'm confused by the US bit...surely cutting interest rates would cause greater inflation?
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    "But the Bank signalled that it was unlikely to cut rates as sharply as the US Federal Reserve - which has slashed borrowing costs to 3% - because of fears over inflationary pressures."

    The BofE won't be following the Fed rate cut because doing so would cause (possibly) inflation
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    (Original post by Apagg)
    "But the Bank signalled that it was unlikely to cut rates as sharply as the US Federal Reserve - which has slashed borrowing costs to 3% - because of fears over inflationary pressures."

    The BofE won't be following the Fed rate cut because doing so would cause (possibly) inflation
    Ohhhhhhhhhh, phew, I thought I had a bit of an economic crisis there
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    Q-Why Might labour productivity differ between countries?
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    1. explain how negative externalities arise from traffic congestion.

    4. what is road pricing?

    9. explain the circumstances in which road pricing would have a significant effect on traffic cong?

    10. how does a road pricing approach compare with other
    solutions?

    12. 'traffic congestion is already costing the country an estimated equivalent of £1.5 billion a year.' explain briefly how this figure might have been calculated and discuss the implications of this estimate for the thai economy.



    thanks!!!
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    (Original post by Inquilaab)
    Q-Why Might labour productivity differ between countries?
    Different levels of:
    -education and training
    -capital
    -technology
    -health

    Not an exhaustive list
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    (Original post by coolduck)
    1. explain how negative externalities arise from traffic congestion.

    4. what is road pricing?

    9. explain the circumstances in which road pricing would have a significant effect on traffic cong?

    10. how does a road pricing approach compare with other
    solutions?

    12. 'traffic congestion is already costing the country an estimated equivalent of £1.5 billion a year.' explain briefly how this figure might have been calculated and discuss the implications of this estimate for the thai economy.



    thanks!!!
    Do you have any ideas yourself? No one's going to give you model answers for all of those - is there something in particular you don't understand?
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    1. explain how negative externalities arise from traffic congestion.
    firs say what negative externalities are, then say how traffic congestion creates negative externalities examples are, time wasted, takes longer to complete journey therefore more fuel consumption, opportunity costs, forgoing choices etc

    4. what is road pricing?
    as the questions says it, charging drivers that drive on certain roads and at certain times , eg congestion charge

    9. explain the circumstances in which road pricing would have a significant effect on traffic cong?
    obviously lowers congestion as people do not wish to pay extra but it will depend on the elasticity of using that road and the price of the road and also the number of available alternative transport methods such as buses or rail.

    10. how does a road pricing approach compare with other
    solutions?

    think of another solution which could be used to lower congestion and compare it with road pricing, other approaches could be policies favouring other methods of transport such as buses, increasing bus lanes or decreasing fare prices.

    12. 'traffic congestion is already costing the country an estimated equivalent of £1.5 billion a year.' explain briefly how this figure might have been calculated and discuss the implications of this estimate for the thai economy.
    Look and talk about CBA(cost benefit analysis) --this probably how it was estimated and calculated.
    how will it then effect that country---talk about opportunity cost, what that money could be used for.
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    Describe 2 situations when defensive open market operations are used.
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    If the penny were to be abolished, how much do you expect inflation would go up? (since things that were £5.99 would be rounded up to £6)
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    (Original post by kimoso)
    If the penny were to be abolished, how much do you expect inflation would go up? (since things that were £5.99 would be rounded up to £6)
    Nothing really.

    A supermaket, pricing say 5.99 to 6.00, will also move other prices from say 5.49 to 5.45.

    It's possible inflation could go down, paradoxically. Some people may not buy because they are fooled into thinking 6.00 is so much higher than 5.99. May have a small impact on demand. You'd have to do a physcological experiment. In any case if they didn't buy one item, they surely would buy another item that was 5.95 say.

    So the effect would only be a micro effect at most, not macro/inflation.
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    (Original post by well_tempered)
    Nothing really.

    A supermaket, pricing say 5.99 to 6.00, will also move other prices from say 5.49 to 5.45.
    Huh? Wouldn't they just move it to 5.50?
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    (Original post by kimoso)
    Huh? Wouldn't they just move it to 5.50?
    No, because it's competitive business, they'll lower some prices. It would depend on the effect on business of going from 5.99 to 6.00. Is this a real exam question, lol.
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    (Original post by well_tempered)
    No, because it's competitive business, they'll lower some prices. It would depend on the effect on business of going from 5.99 to 6.00. Is this a real exam question, lol.
    Ooh o_o I didn't know it had to be an exam question. It's just my friend is doing a debate on why the penny should be kept and I was trying to think of some economic argument but it seems really impossible. Sorry! I should have read the first post! >_< Ignore my question haha :P
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    If we assume that all goods costing £x.99 were to increase by 1p, this means, at most, a one off increase in the price level of less than 1%. Inflation, being an ongoing monetary phenomenon, would not be affected.
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    (Original post by kimoso)
    Ooh o_o I didn't know it had to be an exam question. It's just my friend is doing a debate on why the penny should be kept and I was trying to think of some economic argument but it seems really impossible. Sorry! I should have read the first post! >_< Ignore my question haha :P
    Oh hiya!

    some tight people give to charity, like a penny, and there are other cases of people of give a penny, like 'penny for the blind'.
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    Tanusha-Tomsk
    I need your urgent help...i have been giiven dis question and i dont know how is best way to structure it.

    Explain the possible economic reasons behind the following contrasting positions on income taxes. i) Income taxes have a negative effect on labour supply ii) Income taxes have a positive effect on labour supply B) For each view consider the effect of an income tax cut on the labour market equilibrium, on the short AD curve, on the short AS curve (SAS) and on the short run macroeconomic equilibrium?



    PLEASE PLEASE PLEASE DO HELP i would be really grateful.. thank you!
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    what exactly is a Giffen good? Can someone give me some examples please
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    (Original post by cool beans)
    what exactly is a Giffen good? Can someone give me some examples please
    Demand for a giffen good rises when incomes go down, and vice versa as opposed to a normal good. Potatoes are a nice example, got no money? they're cheap and filling (good student food too). Generally giffen goods tends to be cheap tat that people "upgrade" from when their incomes increase, rather then purchase more of as a general guide.
 
 
 
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