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    (Original post by kris3332)
    Guys could someone help me with the structure for an essay like this?
    Discuss the effectiveness of reducing government spending in order to lower demand pull inflation?
    YES- Component of AD/reduces AD/reduces demand pull inflation.
    +May reduce employment/less multiplier/reduce AD/reduce D-P inflation

    However- depends on other components of AD/decrease in GS may be offset by increase in investment, consumer expenditure or exports--therefore overall AD may increase and inflation increased.

    Depends on extent of reduction in GS
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    (Original post by kris3332)
    Guys could someone help me with the structure for an essay like this?
    Discuss the effectiveness of reducing government spending in order to lower demand pull inflation?
    P1 - define demand-pull inflation

    P2 - Analysis on how reducing government spending does reduce it eg. it's a component of AD causing an inwards shift (shown on diagram). Explain the diagram.

    P3 - describe how consumption is reduced due to less Gov. Spending.

    P4 onwards - Evaluation
    -Depends on spare capacity because it would be most effective during full capacity.
    -Some government spending is inflexible so hard to cut.
    -Reduction in government spending can be offset by another component of AD increasing.
    -Could have adverse effect on macro-economics policies.
    -You could explain a more suitable alternative but you must explain why this is better.

    Conclusion - Don't repeat what you've said, but if you haven't done so throughout the question then answer the question directly eg. Reducing government spending does reduce demand-pull inflation.
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    So everyone thinks the 18 marker will be on employment. Please could someone me improve my answer to this question

    "discuss SSP in reducing unemployment" (i strongly believe this will be the question)

    1)define SSP +unemployment
    2)diagram showing right shift in AS and therefore unemployment
    3)YES
    -increase education increases productive capacity of economy as more skills increase productivity therefore shift AS right
    -privatization increases effeciceny therefore increases ammount that can be produced and therefore increase AS
    -increase assitance to new firms. New firms create jobs, therefore more new firms means more jobs.
    -reducing trade union power reduces wages back to equilibrium wage rate therefore more employed..

    4)However-depends on;

    -type of unemployment; if unemployment demand deficient it wont work
    -Also there is a time lag
    -amount of SSP used (only small increase in SSP wont have a big effect)
    -may not work.


    Please could someone tell me if this is allong the right lines. Thanks!
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    How have you come with that question?
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    (Original post by jordan6278)
    So everyone thinks the 18 marker will be on employment. Please could someone me improve my answer to this question

    "discuss SSP in reducing unemployment" (i strongly believe this will be the question)

    1)define SSP +unemployment
    2)diagram showing right shift in AS and therefore unemployment
    3)YES
    -increase education increases productive capacity of economy as more skills increase productivity therefore shift AS right
    -privatization increases effeciceny therefore increases ammount that can be produced and therefore increase AS
    -increase assitance to new firms. New firms create jobs, therefore more new firms means more jobs.
    -reducing trade union power reduces wages back to equilibrium wage rate therefore more employed..

    4)However-depends on;

    -type of unemployment; if unemployment demand deficient it wont work
    -Also there is a time lag
    -amount of SSP used (only small increase in SSP wont have a big effect)
    -may not work.


    Please could someone tell me if this is allong the right lines. Thanks!

    I am pretty sure that a similar question came up in Jan 09. 'Discuss the extent to which supply side policies can be effective in reducing inflation'.
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    My guess is 'Discuss whether a current account deficit always harms an economy'
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    (Original post by M.I.A)
    I cannot get a hold of the Jan 2013 paper, however, I did read the examiners report and yes a question came up on calculating CPI. Reading the report I could tell that it was a hard paper so fingers crossed that this ones going to be easier.
    I did the jan 2013 paper a mock and it was very difficult
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    Hi, would somebody be able to confirm that one of my points for the Essay Question Jan 2010 is valid? The question is:

    'Discuss the extent to which a reduction in the rate of interest can be effective in increasingconsumer expenditure and investment.'

    My Point:
    Increased FDI due to low interest rates may prove to reduce investment in firms that are large exporters, as an increase in FDI is likely to lead to an increase in the exchange rate, causing imports to be cheaper but exports to be more expensive - firms that are large exporters may loose revenue, reducing the possibility of investment. However, firms that will import capital goods as investment may be more likely to invest, as imports will be cheaper.
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    (Original post by humza-amjad786)
    I did the jan 2013 paper a mock and it was very difficult
    It was quite difficult as the CPI question caught me off guard! The grade boundaries were quite low ,hence, why it was 45 marks to get an A.
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    Wow that jan 2013 paper looked so easy -.-


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    I don't understand why but I always do better on F581 than F582 and I keep messing up in Unit 2's paper - any tips?
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    Finally found the thread .. Horayyy!


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    I am doing the 2011 january paper, the mark scheme just makes no sense to me
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    (Original post by willzumza)
    Hi, would somebody be able to confirm that one of my points for the Essay Question Jan 2010 is valid? The question is:

    'Discuss the extent to which a reduction in the rate of interest can be effective in increasingconsumer expenditure and investment.'

    My Point:
    Increased FDI due to low interest rates may prove to reduce investment in firms that are large exporters, as an increase in FDI is likely to lead to an increase in the exchange rate, causing imports to be cheaper but exports to be more expensive - firms that are large exporters may loose revenue, reducing the possibility of investment. However, firms that will import capital goods as investment may be more likely to invest, as imports will be cheaper.
    FDI would be more likely to decrease due to falling interest rates as foreign multinationals would rather save their money somewhere else where they could gain a higher reward for saving?
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    (Original post by lisa96)
    For this exam, do we need to know in detail how inflation is measured?
    We need to know about CPI and RPI
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    (Original post by willzumza)
    Hi, would somebody be able to confirm that one of my points for the Essay Question Jan 2010 is valid? The question is:

    'Discuss the extent to which a reduction in the rate of interest can be effective in increasingconsumer expenditure and investment.'

    My Point:
    Increased FDI due to low interest rates may prove to reduce investment in firms that are large exporters, as an increase in FDI is likely to lead to an increase in the exchange rate, causing imports to be cheaper but exports to be more expensive - firms that are large exporters may loose revenue, reducing the possibility of investment. However, firms that will import capital goods as investment may be more likely to invest, as imports will be cheaper.
    Reduction in Interest rate would reduce FDI- as there will be less reward for Saving, so foreigners will place their money elsewhere
    Therefore, demand for the currency will decrease, causing the currency to depreciate- this will make imports more expensive... which contradicts the increase in Investment & Consumption. (therefore DON'T talk about exchange rate)

    The argument you're supposed to use is that lower interest rates will reduce the costs of borrowing, therefore consumers will have more discretionary income, causing an increase in Consumer expenditure
    Also, lower Interest rate will reduce firms Costs of production, which will increase spending on Capital goods- Investment increases

    Obviously go into more depth when analysing for L3
    Then to evaluate talk about Consumer/firm Confidence, size of change in Interest rate, initial rate, other factors such as higher corporation tax may discourage investment ect ect.
 
 
 
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