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    Hi there, I would like to ask for your help on answering this question. What do you think are the key points that I have to include?



    Discuss the role of money in :


    • allocation of scarce resources




    • improving living standards of a country

    (12 marks)
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    (Original post by iSaaCiMaCiPC)
    Hi there, I would like to ask for your help on answering this question. What do you think are the key points that I have to include?



    Discuss the role of money in :


    • allocation of scarce resources




    • improving living standards of a country

    (12 marks)
    I would look at what a scares rescource is, define that, then look at how money is a scares resource and the fact there is an oppertunity cost to it, as in, once you have spent money on one thing, you can not spend it else where. With oppertunity cost, money allocation may affect what a government or a consumer may use their money for. If its cheaper to Improve health than education, then they may pick health.

    Money also effects the F.O.P in the fact that if the Factors of production become too expensive then products being produced become more expensive. This causes less demand and can lower the SOL for people and also increase oppertunity costs on peoples needs and wants.

    To do with SOL you could look at higher wages and more disposable income improves a countires SOL as they can now afford more. However if wages are lower and taxes higher then SOL goes down. Money leads to better services, more demand of needs and wants and being able to please the people, or the electorate.

    But this all depends upon the amount of money you are talking about, larger the sum of money the higher the SOL, and the lower the oppertunity cost, smaller amounts of money will cause the opposite.

    Not sure if I am on the right lines with this answer, but hope it could help somehow.
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    (Original post by DarkRoast)
    I would look at what a scares rescource is, define that, then look at how money is a scares resource and the fact there is an oppertunity cost to it, as in, once you have spent money on one thing, you can not spend it else where. With oppertunity cost, money allocation may affect what a government or a consumer may use their money for. If its cheaper to Improve health than education, then they may pick health.

    Money also effects the F.O.P in the fact that if the Factors of production become too expensive then products being produced become more expensive. This causes less demand and can lower the SOL for people and also increase oppertunity costs on peoples needs and wants.

    To do with SOL you could look at higher wages and more disposable income improves a countires SOL as they can now afford more. However if wages are lower and taxes higher then SOL goes down. Money leads to better services, more demand of needs and wants and being able to please the people, or the electorate.

    But this all depends upon the amount of money you are talking about, larger the sum of money the higher the SOL, and the lower the oppertunity cost, smaller amounts of money will cause the opposite.

    Not sure if I am on the right lines with this answer, but hope it could help somehow.
    Thank you very much. You gave me an idea on how they are related.
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    You have to give the definition of money - unit of account, store of value, medium of exchange. Then look how those 3 points interact with the 2 bullet points. That would be a good start.
 
 
 
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