The Student Room Group

A2 Economics - F585 June 2013

Scroll to see replies

Original post by Hunarench95
Just a quick question - is there a particular reason as to why free floating currencies don't tend to come under speculative attack? - other than greater market forces act, increaseing demand for the 'undervalued' currency?


They automatically correct at their long-term equilibrium. If they're fixed, they can't do this. If traders think the currency isn't priced right, then they will either buy or sell until the market agrees it is priced right. This is a gradual process whereas when fixed, the currency can quite quickly become distorted relative to macroeconomic performance which results in speculative attacks.

Posted from TSR Mobile
Reply 221
Original post by LukeyJB
I'm feeling rather confident about extract 1 and 2, began doing essays on extract 3 and practicing. By the middle of next week I'm aiming to have all of the extracts under my belt and just keep practicing, updating my knowledge and looking at things further in depth... Here's some sample questions for everyone, I have no markschemes but they're good for practice and I can provide some model answers soon when my teacher gets some back to me that I've done.


Extract 1 & 2
- Distinguish between fixed and floating exchange rate systems (4)
- Distinguish between monetary convergence and fiscal convergence (4)
- Explain what is meant by capital flight (4)
- Analyse the reasons for capital flight (6)
- Analyse the reasons why meeting the convergence criteria is important for countries wishing to join the Eurozone (6)
- Analyse the benefits for CEE countries of FDI (6)
- Analyse how ERM II prepares countries for their adoption of the Euro (6)
- Analyse the benefits of participating in ERM II prior to joining the Eurozone (6)
- Comment on the possible effects of maintaining a fixed exchange rate during an economic recession (10)
- Comment on the advantages to Eurozone countries of adopting the Euro as a single currency (10)
- Comment on the impact of FDI on CEE economies (10)
- Comment on the effectiveness of ERM II as a means of preparing countries for their adoption of the Euro (10)

Extract 3
- Distinguish between growth and development (4)
- With reference to the data in Figure 3.1, comment on the possible effects of a volatile economic cycle (4)
- What is meant by a transition economy? (4)
- Analyse the impact of a high rate of long-term unemployment on a country's growth and development (6)
- Explain two possible reasons for the high rates of inflation in Estonia in 2006-2008 (6)
- Analyse the impact an increase in international trade and FDI will have on economic growth (6)
- Comment on the consequences of the high growth that Estonia experienced between 2000 and 2007 (10)
- Comment on the possible effects of a flat-tax rate system on Estonian growth and development (10)

Extract 4 & 5
- Analyse, using diagrams, the impact of EU's strategy on sustainable production and consumption (4)
- Comment on the policies that might improve ecological balance on the Estonian economy (10)
- Comment on the usefulness of the indicators used by Estonia in its sustainability strategy (10)
- Discuss the usefulness of the EU and Estonia's strategies in promoting sustainability (20)
- Discuss the impact of Estonia's high growth on sustainability (20)
- Discuss the view that sustained growth of GDP per capita will always lead to a rise in welfare & living standards (20)
- Discuss the view that sustainable development in Estonia requires slower economic growth (20)






- Analyse the reasons why meeting the convergence criteria is important for countries wishing to join the Eurozone (6)
:confused::confused:
Original post by Namraaaa
- Analyse the reasons why meeting the convergence criteria is important for countries wishing to join the Eurozone (6)
:confused::confused:


Talk about interest rates fitting all members, trade cycles, integration and maintaining a stable exchange rate with the rest of the world :smile:
Anyone got any last minute tips for doing well in this and recommend any topic areas we absolutely have to know in depth? I've been working real hard for this and ideally need an A*.

I feel like the last question will kill me off either because I run out of time or don't know what to do. Could anyone give a rough essay structure for a twenty marker on growth and sustainable development? One that hits all the assessment objectives? :smile:

Also we've been told for the twenty markers as the paper is synoptic we should include both a micro and macro diagram? Say, for example, AD/AS and consumer surplus. Does anyone know if this is absolutely necessary?

Posted from TSR Mobile
(edited 10 years ago)
Original post by physicso
Yeah i ****ing hate it, my essay structure is poor and i need 90%+ on both this and F583.

what grade do you need?


well I actually only need a highish U to get a A overall :colondollar: but I'd like an A*
Reply 225
Original post by Namraaaa
- Analyse the reasons why meeting the convergence criteria is important for countries wishing to join the Eurozone (6)
:confused::confused:


The Maastricht Convergence Criteria set out five criteria that must be met for countries who wish to koin the Eurozone;

a. The government budget deficit must be lower than 3% of GDP.
b. Total government debt must not be higher than 60% of GDP.
c. The inflation rate must be within 1.5% of the three EU countries with the lowest rate.
d. Long-term interest rates must be within 2% of the three lowest in the EU.
e. Exchange rates must be kept within normal fluctuation margins of Europe's Exchange Rate Mechanism (ERM).

The CC ease the transaction from their domestic currency to the Euro; before they join the Euro, the countries exchange rate is fixed against the Euro - it is only allowed to fluctuate between +/- 15% of the central rate. CC also mimics certain conditions such as not allowing countries to use currency devaluations in-order to increase competitiveness, this reduces the shock if they do join the Euro and the CC confirms sustainability of economic convergence and shows that the state can play a full role in the Euro area economy. It encourages control over fiscal policy so large debts are not run up, increasing the chance of future bail outs. Inflation must not be more than 1.5% higher than the average in the tree member countries with the best stability, which promotes price stability in the country wishing to join.
Original post by will2348
They automatically correct at their long-term equilibrium. If they're fixed, they can't do this. If traders think the currency isn't priced right, then they will either buy or sell until the market agrees it is priced right. This is a gradual process whereas when fixed, the currency can quite quickly become distorted relative to macroeconomic performance which results in speculative attacks.

Posted from TSR Mobile


Could it also be said that a fixed exchange rate cannot fall below a certain level so it is much less risky for the speculator. The speculator will know that the country will try and stabilise thier currency so its a case of "heads i win, tails i do not lose".
Reply 227
Original post by will2348
Anyone got any last minute tips for doing well in this and recommend any topic areas we absolutely have to know in depth? I've been working real hard for this and ideally need an A*.

I feel like the last question will kill me off either because I run out of time or don't know what to do. Could anyone give a rough essay structure for a twenty marker on growth and sustainable development? One that hits all the assessment objectives? :smile:

Also we've been told for the twenty markers as the paper is synoptic we should include both a micro and macro diagram? Say, for example, AD/AS and consumer surplus. Does anyone know if this is absolutely necessary?

Posted from TSR Mobile


You definately need to know sustainability inside-out as it's likely this will be the 20 marker. You also must know FDI, capital flight, ERM II, Convergence Criteria, economic growth etc etc and be able to evaluate and make criticisms.
Reply 228
I have no confidence for this unit whatsoever.
(edited 10 years ago)
Reply 229
Original post by Legend12
Guys, one quick revision tip.

I'm going through each extract (including introduction) and highlighting key points with questions that could be given on them. I've literally wrote "why" or "how does this..." on some of the paragraphs so I can be prepared for any questions.

I'm making a case study guide, though my teacher will produce one anyway, that has key definitions from each extract, key points and expanded analysis. For example, the introduction talks about a single currency, so I've made a page saying what it is, the benefits for and against etc...

If anyone would like a final copy of that, let me know. Hopefully I can complete it latest by 3 weeks. :smile:


Yes please... I too would like a copy... Everything little helps.
Reply 230
Original post by LukeyJB
The Maastricht Convergence Criteria set out five criteria that must be met for countries who wish to koin the Eurozone;

a. The government budget deficit must be lower than 3% of GDP.
b. Total government debt must not be higher than 60% of GDP.
c. The inflation rate must be within 1.5% of the three EU countries with the lowest rate.
d. Long-term interest rates must be within 2% of the three lowest in the EU.
e. Exchange rates must be kept within normal fluctuation margins of Europe's Exchange Rate Mechanism (ERM).

The CC ease the transaction from their domestic currency to the Euro; before they join the Euro, the countries exchange rate is fixed against the Euro - it is only allowed to fluctuate between +/- 15% of the central rate. CC also mimics certain conditions such as not allowing countries to use currency devaluations in-order to increase competitiveness, this reduces the shock if they do join the Euro and the CC confirms sustainability of economic convergence and shows that the state can play a full role in the Euro area economy. It encourages control over fiscal policy so large debts are not run up, increasing the chance of future bail outs. Inflation must not be more than 1.5% higher than the average in the tree member countries with the best stability, which promotes price stability in the country wishing to join.


Thankyou so much :h:
A few questions:

1) What is 'macroeconomic policy?' Is it jsut policies aimed at improving employment, real gdp, CA of BOP and inflation

2) Why did the global recession affect so many countries so badly? espeically the EU countries?

3) Why is FDI unsustainable for economic growth/development
Can someone explain to me how a hefty budget deficit has potential to boost/stimulate demand?
As seen here:http://www.tutor2u.net/blog/index.php/economics/comments/qa-government-deficit-and-current-account-ddeficits
thank you!
Reply 233
Hey peeps, 7 days to go for exam. If you want to get the ATP toolkit, pm me. I have reduced it to a fiver. :smile:
or email me at hmeghjee313(at)gmail(.)com
I reply to emails faster
Reply 234
Original post by mandem2k11
A few questions:

1) What is 'macroeconomic policy?' Is it jsut policies aimed at improving employment, real gdp, CA of BOP and inflation

2) Why did the global recession affect so many countries so badly? espeically the EU countries?

3) Why is FDI unsustainable for economic growth/development


1- macropolicies are fiscal and monetary which mainly focus on AD and then supply side which focuses on AS, as you said they focus on the 4 macro objectives
2- it started off in US as a banking crisis and basically because global banking is interlinked it spread to the EU and dried up lending leading to a prolonged UK and Eurozone recession. For Latvia and other CEE countries they had loans from the UK and western countries because they were engulfed in recession they stopped future loans and recalled ongoing ones. This meant that Latvia faced huge debt because as the loans were issued in say euros they had to be repaid in euros (and the lats currency was deprecating so more expensive) also because western economies in recession led to decreased demand in Latvia, raises u/e and gov spending (worsen debt)
3-fdi is unsustainable because comes from footloose tncs (move around), often comes with conditions such as interest so the capital inflow is much smaller than the outflow, sometimes the gains aren't as big as expected from the fdi, it may lead to environmental damage e.g. extraction minerals (just a few off top of my head plenty more !)
Hope this helps I'm no expert but been revising this :smile:
Reply 235
Original post by Helena'O
I have no confidence for the unit whatsoever. A C is looking pretty good to me for this unit at the point that if I even get a C -_-


Same :s-smilie: How many UMS do you need for a C?
Reply 236
Original post by cheese94
Same :s-smilie: How many UMS do you need for a C?


You usually need 60/100 UMS for a C but for this exam the boundaries are /usually/ a little lower so I'd say 55-60 :smile:


Posted from TSR Mobile
Reply 237
Original post by ebduff
You usually need 60/100 UMS for a C but for this exam the boundaries are /usually/ a little lower so I'd say 55-60 :smile:


Posted from TSR Mobile


Thanks! Seems so less yet so impossible! :confused:
Original post by ebduff
You usually need 60/100 UMS for a C but for this exam the boundaries are /usually/ a little lower so I'd say 55-60 :smile:


Posted from TSR Mobile


Original post by cheese94
Thanks! Seems so less yet so impossible! :confused:


It's always 60 UMS for a C, it's the raw mark needed to get 60 that changes.
Last June it you need 31/60 raw marks to get 60 UMS.
Reply 239
Original post by LukeyJB
I'm feeling rather confident about extract 1 and 2, began doing essays on extract 3 and practicing. By the middle of next week I'm aiming to have all of the extracts under my belt and just keep practicing, updating my knowledge and looking at things further in depth... Here's some sample questions for everyone, I have no markschemes but they're good for practice and I can provide some model answers soon when my teacher gets some back to me that I've done.


Extract 1 & 2
- Distinguish between fixed and floating exchange rate systems (4)
- Distinguish between monetary convergence and fiscal convergence (4)
- Explain what is meant by capital flight (4)
- Analyse the reasons for capital flight (6)
- Analyse the reasons why meeting the convergence criteria is important for countries wishing to join the Eurozone (6)
- Analyse the benefits for CEE countries of FDI (6)
- Analyse how ERM II prepares countries for their adoption of the Euro (6)
- Analyse the benefits of participating in ERM II prior to joining the Eurozone (6)
- Comment on the possible effects of maintaining a fixed exchange rate during an economic recession (10)
- Comment on the advantages to Eurozone countries of adopting the Euro as a single currency (10)
- Comment on the impact of FDI on CEE economies (10)
- Comment on the effectiveness of ERM II as a means of preparing countries for their adoption of the Euro (10)

Extract 3
- Distinguish between growth and development (4)
- With reference to the data in Figure 3.1, comment on the possible effects of a volatile economic cycle (4)
- What is meant by a transition economy? (4)
- Analyse the impact of a high rate of long-term unemployment on a country's growth and development (6)
- Explain two possible reasons for the high rates of inflation in Estonia in 2006-2008 (6)
- Analyse the impact an increase in international trade and FDI will have on economic growth (6)
- Comment on the consequences of the high growth that Estonia experienced between 2000 and 2007 (10)
- Comment on the possible effects of a flat-tax rate system on Estonian growth and development (10)

Extract 4 & 5
- Analyse, using diagrams, the impact of EU's strategy on sustainable production and consumption (4)
- Comment on the policies that might improve ecological balance on the Estonian economy (10)
- Comment on the usefulness of the indicators used by Estonia in its sustainability strategy (10)
- Discuss the usefulness of the EU and Estonia's strategies in promoting sustainability (20)
- Discuss the impact of Estonia's high growth on sustainability (20)
- Discuss the view that sustained growth of GDP per capita will always lead to a rise in welfare & living standards (20)
- Discuss the view that sustainable development in Estonia requires slower economic growth (20)



- Discuss the usefulness of the EU and Estonia's strategies in promoting sustainability (20):confused:

- Discuss the view that sustained growth of GDP per capita will always lead to a rise in welfare & living standards (20) :confused:

Really struggling to revise for extracts 4 and 5!!

Quick Reply

Latest

Trending

Trending