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Reply 760

2

They are actually my class' notes, taken from the forum, without permission might I add.

If you want the full notes (Labour markets, or unit 2, 3, 4 and 6) pm me your email and I'll send them to you (they're based on the edexcel syllabus).

Reply 761

ayandutta

Was revising unit 5 (developing econ - edexcel)
i like to answer my own questions that i make in my head. but this question i got stuck on.
why is industrialization synonymous to development? Why do poor countries have to industrialize / increasing the manufacturing sector to develop?
these are my ideas:

-there are problems associated with primary products such as problems of over dependency (and how it is prone to weather, disease, price flux),
-income elasticity and how ppl demand higher value goods as income rises + the fall in primary product demand with increased wages
-supply elasticity

am i on the right track?
appreciate the help.

Reply 762

alex_hk90

19

ayandutta

Was revising unit 5 (developing econ - edexcel)
i like to answer my own questions that i make in my head. but this question i got stuck on.
why is industrialization synonymous to development? Why do poor countries have to industrialize / increasing the manufacturing sector to develop?
these are my ideas:

-there are problems associated with primary products such as problems of over dependency (and how it is prone to weather, disease, price flux),
-income elasticity and how ppl demand higher value goods as income rises + the fall in primary product demand with increased wages
-supply elasticity

am i on the right track?
appreciate the help.

You are on the right track, yes. You might also want to look up the Prebisch-Singer hypothesis (although you've covered most of it), and think about taking advantage of economies of scale and changing a country's comparative advantage. Maybe encouraging investment in infrastructure and local enterprise could be included as well.

Reply 763

The Sherminator

16

alex_hk90

You are on the right track, yes. You might also want to look up the Prebisch-Singer hypothesis (although you've covered most of it), and think about taking advantage of economies of scale and changing a country's comparative advantage. Maybe encouraging investment in infrastructure and local enterprise could be included as well.

Whats that about?

Reply 764

Apagg

13

That the terms of trade between raw materials and manuf. goods deteriorates over time. Based on the initial work by List, it basically suggests that the comparative advantage arguments put forward for free trade fail because they're static, not dynamic, comparisons.

Reply 765

The Sherminator

16

Apagg

That the terms of trade between raw materials and manuf. goods deteriorates over time. Based on the initial work by List, it basically suggests that the comparative advantage arguments put forward for free trade fail because they're static, not dynamic, comparisons.

Ah.. Sounds interesting. And yes, they are static situations we hold constant. Its also a similar arguement when using the Fisher equation right? I can't remember the economist now, but he said that when we take one of the variables to analyse it, it doesn't remain constant. Words to that effect.

Reply 766

ayandutta

alex_hk90

You are on the right track, yes. You might also want to look up the Prebisch-Singer hypothesis (although you've covered most of it), and think about taking advantage of economies of scale and changing a country's comparative advantage. Maybe encouraging investment in infrastructure and local enterprise could be included as well.

not quite sure about what you mean by econ of scale and comp advs. i know the argument, but im unsure on how ur applying it to the question :s-smilie:

and by investments into infra, are you saying the the process to industrialization will require investments into infrastructure, thus benefit the whole economy in terms on Standards of living?

any other 'must know' points im missing out?
thanks alex

Reply 767

Apagg

13

For industrialisation to work you need food supplies to the cities, which usually means developing road, rail or river links between country and city. Otherwise you can't support the increasing urban workforce. This also has the benefit of increasing geographical mobility of labour, and in general could indeed be viewed as improving the standard of living. Improved travel networks should also result in greater trade within the country, which again should lead to higher standards of living.

Reply 768

Wish

9

If inflationary expectations increase, why would this cause the Phillips curve to shift to the right?

I thought it would just shift to the left as inflation rises would be towards the front part of the Phillips curve. :s-smilie:

Reply 769

The Sherminator

16

The Phillips curve is measuring Inflation against unemployment. If the expectation increases, this is a forward shift in the curve, not along the curve. Inflation is expected to be higher at all employment levels now, hence its a rightward shift, not a leftward shift.

Reply 770

Wish

9

Thanks Shrayans. That clarified it. (I will rep you tommorow) :smile:

I also stuck on this question:
If the marginal tax rate on individual incomes falls, we would expect, other things constant, individuals to offer more hours of work and consume fewer hours of leisure.

Why is this? Surely if income tax falls, consumers will get the same amount of wages for working a lower hour hence enjoy more leisure.

Reply 771

The Sherminator

16

Opportunity cost of working falls I think. Because marginal tax falls, every extra hour worked, they can keep more of their income, hence the desire to work more. So they won't substitute work for leisure.

Reply 772

Wish

9

What is Fiscal Drag?...In brief words? The definitions I have seen are too complex.

Reply 773

The Sherminator

16

You understand the previous question though right?

I haven't heard of that concept before. Let me read some stuff and then try to explain. I think there might be a different word for it, which I know.

edit: Read this, http://en.wikipedia.org/wiki/Fiscal_drag
It should explain it. If not, come and ask again :smile:

Reply 774

Apagg

13

It's just when taxes aren't adjusted for inflation, and so there's a rise in tax revenues as a result.
I.e. People move into higher tax bands despite their earnings not being any higher in real terms

Reply 775

Wish

9

Yes, I understand the previous question. I've been doing past exam questions for unit 6 and for the answer, one was fiscal drag.

EDIT: Thanks Apagg, that makes sense. The question was about the future consequence of fiscal deficit and this would match as the government would need to rise tax revenue.

Reply 776

Wish

9

What happened between 1999-2001 regarding the pension fund? Forced to buy government bonds? What does that mean? :s-smilie:

Reply 777

MeAndBubbles

12

iRealGirl

What happened between 1999-2001 regarding the pension fund? Forced to buy government bonds? What does that mean? :s-smilie:

a big one this, Brown started taxing the pension funds I believe,

oh and the work/leisure thing depends on the indifference curve, personally I would choose leisure, but most would work more.

Reply 778

Wish

9

Did Brown tax the pension money that they received? How did he do that?

Reply 779

MeAndBubbles

12

no, i think the funds themselves directly, i don't know the details but it was billions of pounds, but the stockmarket went up so people still got there pensions probably.

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