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    Explain two possible reasons for high rates of inflation in Estonia in 2006-08

    I can think of high FDI....increases employment....multiplier...incre ase in AD

    cant think of second reason...would it just be high exports?
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    (Original post by jordan6278)
    Explain two possible reasons for high rates of inflation in Estonia in 2006-08

    I can think of high FDI....increases employment....multiplier...incre ase in AD

    cant think of second reason...would it just be high exports?
    Other reasons include:

    Imported inflation
    Cost push inflation (this is link with imported inflation)
    Capital flight leading to a reduction in LRAS
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    (Original post by Meghjinho)
    What you need to revise and what I think will come up.
    what is meant my sustianable development? (2)
    Define what is meant by competitive devaluation (2)
    Analyse the reason for fdi for a country like Estonia (6)
    Comment on whether Latvia should join then euros single currency(10)
    What is meant by a fiscal convergance (4)
    Using a diagram, analyse why Estonia suffered from high inflation (6)
    Comment on whether fdi was the sole reason for estonias impressive economic growth and development (10)
    Discuss the extent to which Estonia has progressed to sustainable development (20)

    If these questions came up...I would be so happy....but i reckon their going to be different...because those are the obvious questions which every 1 who takes this exam would have revised...so they wont do that..
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    (Original post by Alexdoble)
    Other reasons include:

    Imported inflation
    Cost push inflation (this is link with imported inflation)
    Capital flight leading to a reduction in LRAS

    Capital flight...and cost push inflation did not occur though in Estonia....
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    Explain two possible reasons for high rates of GROWTH in Estonia in 2006-08
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    (Original post by jordan6278)
    Capital flight...and cost push inflation did not occur though in Estonia....
    Wow just trying to help...

    And how do you know capital flight didn't occur? it was in the middle of a Financial Economic crisis and multinational companies left many high risk countries which Estonia is, you can't prove that it didnt happen and there is clearly evidence to suggest that it did...
    Name:  CRB%20Commodity%20Index062212.png
Views: 74
Size:  11.1 KBand do you even know what imported inflation is? this is a prime example of it. as you can see, the price of primary commodities went sky high in 2009, an increase in raw materials means companies costs increase... this means that they either take losses or put the extra cost onto their prices, ohh that causes an increase in the general level of prices.

    Anything else you want to comment on?
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    yep...Explain two possible reasons for high rates of GROWTH in Estonia in 2006-08
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    (Original post by jordan6278)
    yep...Explain two possible reasons for high rates of GROWTH in Estonia in 2006-08
    There's a number of factors which could have contributed to the growth cause as we know aggregate demand is made up of Consumption, Investment, Governement spending and Net exports. So if any of these factors increase then its gonna lead to economic growth.

    Now the most likely of these in Estonia would have been due to its opennes to international trade and FDI. As stated in Extract 3, Estonia's international trade was 155% of GDP in 2009. And this was after the economic crisis so we can expect it to be higher before that.

    Therefore the main causes of growth in estonia are likely to be driven by FDI which is investment which has an inital impact as it is a factor of AD and an increase in Net Exports which again is a factor of AD.



    Some other factors to consider are the age structure of its population, the skills and education of its labour force, its geographical position and its infrastructure.


    This is all listed in extract 3. Just make the links with the theory...


    A simple thanks would be nice, cause im the one up at 10 to 12 helping you because you look as though your gonna fail your exam, so before you start getting all cocky, know your stuff first.
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    (Original post by jordan6278)
    yep...Explain two possible reasons for high rates of GROWTH in Estonia in 2006-08
    This is how I'd answer it:

    Price stability -> better investment in technology or capital due to better expectations -> increase in output -> increase in AS (or exports for AD - export led growth) - economic growth

    Skills and education improvement -> better trained staff/better educated -> more knowledge of work/techniques -> specialised -> higher output per worker hour -> increase in AS -> economic growth due to increase in AS
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    (Original post by Alexdoble)
    There's a number of factors which could have contributed to the growth cause as we know aggregate demand is made up of Consumption, Investment, Governement spending and Net exports. So if any of these factors increase then its gonna lead to economic growth.

    Now the most likely of these in Estonia would have been due to its opennes to international trade and FDI. As stated in Extract 3, Estonia's international trade was 155% of GDP in 2009. And this was after the economic crisis so we can expect it to be higher before that.

    Therefore the main causes of growth in estonia are likely to be driven by FDI which is investment which has an inital impact as it is a factor of AD and an increase in Net Exports which again is a factor of AD.



    Some other factors to consider are the age structure of its population, the skills and education of its labour force, its geographical position and its infrastructure.


    This is all listed in extract 3. Just make the links with the theory...


    A simple thanks would be nice, cause im the one up at 10 to 12 helping you because you look as though your gonna fail your exam, so before you start getting all cocky, know your stuff first.

    shut the **** up who the **** do you think you are. First, i will not fail, i assure you i got be As results then you, but no i will not state them as indeed i am not being cocky...second...it is your choice to be on here, you are not doing me a favour, the question is to everyone on here...

    Third....get a life.. i feel sorry for u, that ur life has come to trying to start beef on student room...tbh..its rather cute.
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    (Original post by Alexdoble)
    Yeah ive looked at how economic growth can help achieve each of the goals, but then you think of the policies to promote development which are:

    -import substitution
    -export promotion
    -washington consensus
    -filling the savings gap with aid

    and estonia can't import substitute because of EU law and the washington consensus is for really underdeveloped countries which only really leaves export promotion as a viable way of promoting development which does make sense, but i don't understand how that will help them achieve their 4 goals of development
    Remember, it's not just development but, sustainable development.
    Just go through each goal and see what they Estonia is not doing well in terms of. For example, in reducing income inequality (To achieve a coherent society) the government can subsidies firms to move into rural areas. And for an ecological balance, they could use tradable permits.

    Obviously, evaluate each policy you state by stating the downsides of it..
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    (Original post by will2348)
    We got told to use a tax and subsidy diagram on this question in order to achieve I think it's ecological balance. But basically, they don't have much renewable energy so draw negative externality diagram with tax applied and then subsidise the renewable forms of energy. That's one part of analysis/evaluation

    Posted from TSR Mobile
    We weren't really advised to use those diagrams but sure! The question is quite flexible in the sense that, you can think of a lot policies to tackle the problems Estonia has and evaluating them is not so hard.
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    what would be policies to enhance cultural viability....

    for ecological balance you could have tax on pollution, tradeable permits
    Coherent society you could have progressive taxation, increase education, NMW...
    Welfare..would that just be like spending on health and education, to increase the quality of life of individuals..
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    (Original post by jordan6278)
    shut the **** up who the **** do you think you are. First, i will not fail, i assure you i got be As results then you, but no i will not state them as indeed i am not being cocky...second...it is your choice to be on here, you are not doing me a favour, the question is to everyone on here...

    Third....get a life.. i feel sorry for u, that ur life has come to trying to start beef on student room...tbh..its rather cute.
    Wow beginning to swear, you can say what you want, and im sure you got better AS results, i wouldn't really care.

    Your the one asking the simple questions, which if you just thought about it for a second, makes you look dumb, and i never started the beef, you clearly questioned my answer and i proved you wrong which has angered you that someone is actually better than you.

    Its pathetic that your escalating this, im the one that was only trying to help, its a sick world we live in with people like you.
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    love you too
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    (Original post by zubhav)
    Remember, it's not just development but, sustainable development.
    Just go through each goal and see what they Estonia is not doing well in terms of. For example, in reducing income inequality (To achieve a coherent society) the government can subsidies firms to move into rural areas. And for an ecological balance, they could use tradable permits.

    Obviously, evaluate each policy you state by stating the downsides of it..
    Yeah that sustainable part is catching me out.

    Its the smaller scale policies that we are looking for then like changes in subsidies and taxes ect..
    Still unsure to how that will create sustainability though? :')
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    Could anyone explain why Managed/Fixed exchange rates are subject to speculative attacks?
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    (Original post by Alexdoble)
    Yeah that sustainable part is catching me out.

    Its the smaller scale policies that we are looking for then like changes in subsidies and taxes ect..
    Still unsure to how that will create sustainability though? :')
    Yea, but it doesn't have to be changes, it can be completely new policies too.

    So for example, to achieve growth in welfare, the government could provide a national healthcare service - this would improve health of the current generation and prevent diseases from passing on to the future generation. < there's the sustainability. And for evaluation, you can say anything like 'opportunity cost of implementing it' lol
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    Yeah makes sense, that's we're I've been going wrong as I've been looking at those policies of structural change but thanks that helps


    Posted from TSR Mobile
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    Generally in terms of exchange rates the ones that come under speculative attack are fixed ones. Often a govt my deliberately set it ex rate low to provide a price comptetitve advantage to its domestic exporters and raise their international competitiveness. So on and so forth. But to the point.... A fixed ex rate will be set by the govt or central bank and has a much greater chance of being over or undervalued and therefore can come under the attack of speculators. Who if they feel is overvalued for example. Will choose to sell off their excess reserves of that currency. Increasing its suplly and thereby lowering its value in terms of ex rates. Its all about the point at whuch the ex rate is. For floati g ex rates you do not see that much if any attack due to the fact that these ex rates are generally thought to find their real value in the lr. And so.... Reflect their ppp. So speculators wont worry too much abiut floating ones. As far as managed the same goes with fixed. If the band in which the ex rate can fluctuate is set too high attack may occur. I hope i have helped and if anything is wrong eaze let me know :awesome:

    Posted from TSR Mobile
 
 
 
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