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Reply 1580

A benefit of the informal sector in a LEDC- "Provides cheap inputs for the formal sector", would someone be able to explain this further please? Thanks!

Reply 1581

gangsta316

13

What are the good things about unemployment? All I can think of is that it can help to keep the wage rate down.

What are the good things about inflation?

Why does a country want balance of payments equilibrium and not balance of payments surplus?

What are the benefits of international trade? What are the benefits of firms facing increased competition from firms internationally?

What fiscal policies can be used to reduce unemployment? I can think of a cut in income tax (to push up aggregate demand and make more people want to work) and a cut in unemployment benefits (to make the voluntary unemployed people want to work). But are these really correct? The second one looks wrong and seems more like a supply-side policy.

Thanks for any help.

Reply 1582

narc

gangsta316

What are the benefits of international trade? What are the benefits of firms facing increased competition from firms internationally?

I've just gone through this in my revision ha.

International trade will encourage comparitive advantage- more efficient use of the world resources and countries specialise in which they are most relatively efficient at with the lowest opportunity cost, this should increase output and employment leading to better standards of living etc
It'll also lead to greater choice and possibly lower prices for the consumer.

International competition could act as a discipline on domestic firm perhaps? Encourages them to be more productively efficient.

Reply 1583

danny111

3

gangsta316

What are the good things about unemployment? All I can think of is that it can help to keep the wage rate down.

What are the good things about inflation?

Why does a country want balance of payments equilibrium and not balance of payments surplus?

What are the benefits of international trade? What are the benefits of firms facing increased competition from firms internationally?

What fiscal policies can be used to reduce unemployment? I can think of a cut in income tax (to push up aggregate demand and make more people want to work) and a cut in unemployment benefits (to make the voluntary unemployed people want to work). But are these really correct? The second one looks wrong and seems more like a supply-side policy.

Thanks for any help.

frictional unemployment is necessary for the economy as it ensures that the match between employer and employee is as good as possible. For example frictional unemployment is much higher for young people as they are still looking for the "right" job.

inflation helps fight wage rigidity. you may have a long term nominal wage contract. if the worker is not good you cant just lower his wage. so if there is inflation and you dont rais his nominal wage, then his real wage decreases. so in effect you are paying him less as you realised he is worth less.

hope that helps for those 2.

Reply 1584

Greg.

14

Hey. Quick question, how would one describe a diagram like this:

- Would you say equilibrium is at price P1 with Q1 demanded and supplied.
- Or equilibrium is at price 0P1 with 0Q1 demanded and supplied.

My economics teachers seem to keep saying it like the second version but I'd describe it like the first version. :eek3:

The textbook seems to use both. Are both versions OK?

Thanks.

Reply 1585

alex_hk90

19

Greg.

Hey. Quick question, how would one describe a diagram like this:

- Would you say equilibrium is at price P1 with Q1 demanded and supplied.
- Or equilibrium is at price 0P1 with 0Q1 demanded and supplied.

My economics teachers seem to keep saying it like the second version but I'd describe it like the first version. :eek3:

The textbook seems to use both. Are both versions OK?

Both are fine, and I also prefer the first one.

Reply 1586

Greg.

14

Thanks.

Reply 1587

gangsta316

13

Greg.

Hey. Quick question, how would one describe a diagram like this:

- Would you say equilibrium is at price P1 with Q1 demanded and supplied.
- Or equilibrium is at price 0P1 with 0Q1 demanded and supplied.

My economics teachers seem to keep saying it like the second version but I'd describe it like the first version. :eek3:

The textbook seems to use both. Are both versions OK?

Thanks.

I've also wondered this. My teacher also seems to say the second one. I think it should be the first one because they're co-ordinates, not position vectors.

Reply 1588

alex_hk90

19

gangsta316

I've also wondered this. My teacher also seems to say the second one. I think it should be the first one because they're co-ordinates, not position vectors.

The second one is used to indicate distance, so you can be consistent in notation while make comparisons with distances which don't start at the origin. But it really doesn't matter, just use which one you prefer.

Reply 1589

Jeester

14

Say the exchange rate rose between pounds and dollars...does that mean that the price to buy a dollar in pounds has increased or vice versa?

Reply 1590

Jeester

14

gangsta316

I've also wondered this. My teacher also seems to say the second one. I think it should be the first one because they're co-ordinates, not position vectors.

Someone's been revising their physics/maths mechanics!
:p:

Reply 1591

alex_hk90

19

Jeester

Say the exchange rate rose between pounds and dollars...does that mean that the price to buy a dollar in pounds has increased or vice versa?

It depends on how you define the exchange rate. To be clearer I would say that an appreciation meant that pounds bought more dollars, while a depreciation meant that pounds bought less dollars. I think at A-level you would define the exchange rate as foreign/home (i.e. $/£), so an increase would be an appreciation and a decrease would be a depreciation (which kind of makes more sense than the other way round).

Reply 1592

maltodextrin

5

Examine the significance of an ageing population for both the labour markets (flexibility) and governments (public expenditures).

So far i've got tha there'll be an increase in government expenditure on pensions and there'll be more pressure on state health care budgets. I could see more employers opting out of employer contributing pension schemes. I'm not really sure about any other effects, especially flexibilty. Some ideas would be much appreciated. Thanks in advance

Reply 1593

alex_hk90

19

maltodextrin

Examine the significance of an ageing population for both the labour markets (flexibility) and governments (public expenditures).

So far i've got tha there'll be an increase in government expenditure on pensions and there'll be more pressure on state health care budgets. I could see more employers opting out of employer contributing pension schemes. I'm not really sure about any other effects, especially flexibilty. Some ideas would be much appreciated. Thanks in advance

Perhaps an increase in labour supply as people living longer would also suggest some people working for longer, especially if the retirement age is increased (I'm pretty sure this has already / is being done).

Reply 1594

Sweet_poison

Where can i find info abt present unemployment level, inflation n interest rate and unemployment level of male and female?

And also why are females less likely to be unemployed and why is there a decrease in the no. of economically active men?

Thankyou

Reply 1595

danny111

3

bank of england website may be helpful.

Reply 1596

vinsta

12

With the aid of a diagram explain how the exchange rate is determined in a free market.

The mark scheme talks "both sides of the FOREX market" what is this?

Could you answer the question talking about interest rates, inflation and economic growth?
thanks

Reply 1597

alex_hk90

19

vinsta

With the aid of a diagram explain how the exchange rate is determined in a free market.

The mark scheme talks "both sides of the FOREX market" what is this?

Could you answer the question talking about interest rates, inflation and economic growth?

"FOREX market" = foreign exchange market, and by "both sides" I assume it means demand and supply. So it sounds like you'd draw the standard supply and demand diagram for the currency, than go on to discuss what might shift and supply and demand curves. Also by "free market" I would take that to mean floating exchange rates (as opposed to fixed).

Reply 1598

danny111

3

well the exchange rate depends on the supply and demand for the currency. the supply is given by S-I the level of savings and investment in the economy, so yes interest rates. and yes inflation, because you can talk about how real exchange rate = nominal *P/P1 where P1 is price in other countries, so relative inflation rates matter.

both sides i dont know what is meant with though. i guess what i just said, supply and demand of the currency on the forex.

also yes economic growth as maybe u et more competitive so u exports more competitive so more demand for currency.

Reply 1599

gangsta316

13

What are capital outflows? Why would a developing country have capital outflows? Is it because of debt? Are they good or bad?

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