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AQA AS Economics May 2014 *OFFICIAL THREAD*

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Original post by Economicsgirl08
What relevance does interest rates have with investment, I am really confused do more businesses invest when interest rates are high?


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Businesses often borrow money to invest. They're more likely to invest when interest rates are low as they have to back pay less interest.

Interest rates low - investment high
Interest rates high - investment low
Original post by Economicsgirl08
What relevance does interest rates have with investment, I am really confused do more businesses invest when interest rates are high?


Posted from TSR Mobile


Less will invest as it is more expensive to borrow money from banks, which most businesses will have to do in order to be able to invest
Can someone please explain structure of the 25 markers?
Original post by aw2105
Can someone please explain structure of the 25 markers?


Search bar in the top right....this has been asked at least a few times a day every day for the last 2-3 weeks.....
Could someone please write the fiscal, monetary and supplyside policies and their advantages and weaknesses.
Reply 1585
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R2D2.
5
Original post by samboJ
Businesses often borrow money to invest. They're more likely to invest when interest rates are low as they have to back pay less interest.

Interest rates low - investment high
Interest rates high - investment low


But foreign investment is high when interest rate is high. Other people put more money in your bank... Which is why I'm confused.

Also short run monetary policies and fiscal policies may change as or AD. Since it increases the cost of production as well.

And is any expansionary policy one that wants to boost AD? If so is an expansionary supply side policy one that increase lras?


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How do you guys organise your time with the last written part of the exam? Do you do any planning for the 25 marker? (in the Unit 1 exam I freaked out about the time and completely messed up my essay :s-smilie: )
Reply 1587
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Maxeth
Original post by R2D2.
But foreign investment is high when interest rate is high. Other people put more money in your bank... Which is why I'm confused.

Also short run monetary policies and fiscal policies may change as or AD. Since it increases the cost of production as well.

And is any expansionary policy one that wants to boost AD? If so is an expansionary supply side policy one that increase lras?


Posted from TSR Mobile


People putting money in your bank is saving, not investment. The searching for better interest rates and trading and such is discussed more in Unit 4 I think, with it being referred to has 'hot money'.

Yes boosting AD is expansionary, but I think increasing of the supply side policy is just called a 'supply side policy'. At least that's what it says in the textbook.
Reply 1588
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Fifi96
Original post by R2D2.
But foreign investment is high when interest rate is high. Other people put more money in your bank... Which is why I'm confused.

Also short run monetary policies and fiscal policies may change as or AD. Since it increases the cost of production as well.

And is any expansionary policy one that wants to boost AD? If so is an expansionary supply side policy one that increase lras?


Posted from TSR Mobile


Foreign investment (hot money) is high when interest rates are high because they are putting their money into banks, not businesses.
Reply 1589
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R2D2.
5
Can someone confirm?

If interest rates go up. Foreign investors keep money in uk bank so exchange rate of £ increases. And this is example of contractionary monetary policy?
And this could lead to further decrease in AD due to x-m


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Reply 1590
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R2D2.
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Original post by Maxeth
People putting money in your bank is saving, not investment. The searching for better interest rates and trading and such is discussed more in Unit 4 I think, with it being referred to has 'hot money'.

Yes boosting AD is expansionary, but I think increasing of the supply side policy is just called a 'supply side policy'. At least that's what it says in the textbook.


And is there a problem of supply side policies increase lras too much? So a large spare capacity?


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Reply 1591
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R2D2.
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Original post by Fifi96
Foreign investment (hot money) is high when interest rates are high because they are putting their money into banks, not businesses.


Thanks. I get it now.


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Reply 1592
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Fifi96
Original post by dani_97
How do you guys organise your time with the last written part of the exam? Do you do any planning for the 25 marker? (in the Unit 1 exam I freaked out about the time and completely messed up my essay :s-smilie: )


I always read the 25 marker before anything so its processing while i do the multiple choice, and a plan is a good way to get everything on the page so you dont get muddled when you start to write it- it keeps you on track. It also allows the examiner to see what is going through your head at the time, they like to see that you are organised and strategic.
Original post by R2D2.
Can someone confirm?

If interest rates go up. Foreign investors keep money in uk bank so exchange rate of £ increases. And this is example of contractionary monetary policy?
And this could lead to further decrease in AD due to x-m


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Yes that's true because overseas prices of imports appear cheaper and UK goods appear more expensive to other countries, so a decrease in exports, causing AD to decrease. And yes, increasing interest rates is an example of contractionary monetary policy.
Original post by Fifi96
I always read the 25 marker before anything so its processing while i do the multiple choice, and a plan is a good way to get everything on the page so you dont get muddled when you start to write it- it keeps you on track. It also allows the examiner to see what is going through your head at the time, they like to see that you are organised and strategic.

Thank you! But aren't you supposed to plan (write rough work) in the question booklet rather than the answer booklet meaning the examiner won't see it?
Reply 1595
Avatar for Fifi96
Fifi96
Original post by R2D2.
Can someone confirm?

If interest rates go up. Foreign investors keep money in uk bank so exchange rate of £ increases. And this is example of contractionary monetary policy?
And this could lead to further decrease in AD due to x-m


Posted from TSR Mobile


When demand for the pound increases it gets stronger so yes the exchange rates goes up. SPICED. Strong Pound Imports Cheap Exports Dear.

Yep, contractionary monetary is when interest rates go up to slow spending and investment, increase saving and slow down inflation. Thats why current interest rates are so low.

AD, C+I+G+(X-M) will be lowered because Investment and Consumer spending decreases.
Reply 1596
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Doob
I find the strucutres for 25 marks too complicated that some of you give here.

will this structure i have devised suffice?

- 3 paragraphs, each revolving around an idea, with a diagram, analysed and evaluated
- 2 definitions minimum
- 1 final paragraph evaluating the best option out of those 3 ideas and why it should be chosen
Reply 1597
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Fifi96
Original post by dani_97
Thank you! But aren't you supposed to plan (write rough work) in the question booklet rather than the answer booklet meaning the examiner won't see it?



I always write working ect in answer booklets, but always write PLAN over it and draw a line under it so the examiner knows its not part of my answer.
Also for the significant feature questions, examiners like to see workings- especially if you come up with the wrong answer, they might credit you for how you worked it out because you may have written a 7 instead of a 1 and not realised if you get my drift.

If you dont feel comfortable doing that, or have been taught otherwise dont do it. But an examiner wouldn't take marks away for it :smile:
Reply 1598
Avatar for Fifi96
Fifi96
Original post by Doob
I find the strucutres for 25 marks too complicated that some of you give here.

will this structure i have devised suffice?

- 3 paragraphs, each revolving around an idea, with a diagram, analysed and evaluated
- 2 definitions minimum
- 1 final paragraph evaluating the best option out of those 3 ideas and why it should be chosen


You might find it helpful to look at a few mark schemes instead of how others structure their answers on here, we have all been taught differently. Examiners reports are actually really good for getting inside the brain of an examiner and knowing exactly what they are looking for. All on the AQA website :smile:
Reply 1599
Avatar for Doob
Doob
Original post by Fifi96
You might find it helpful to look at a few mark schemes instead of how others structure their answers on here, we have all been taught differently. Examiners reports are actually really good for getting inside the brain of an examiner and knowing exactly what they are looking for. All on the AQA website :smile:


ive been doing past papers, apparently you dont get marks for writing nonsense like the introductions etc, which are a waste of time if you dont get marks for them.

Surely 3 paragraphs, each one with a chain of reasoning revolving around one idea, a diagram and evaluation is good enough? i found myself hard pushed for time in the exam on the 25 markers

my teacher hasnt really taught me anything to be honest...
(edited 9 years ago)

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