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Edexcel Economics Unit 4 Global Economy Discussion Thread (10.June.2014)

This was a fairly tricky paper, question 5 was really weird.

For 1a)

I did 1) Bank bailouts in 2009 made the budget deficit high

2) automatic stabilisers back in 2009 made the deficit high, since then tax revenue has risen
eval: this was only ever a short run cause

3) austerity
eval:magnitude of deficit shrinking has been fairly small and they havent really reduced spending by much

For 1b)
1) Fall in tax revenues due to laffer curve
however: optimal tax rate varies for all countries - tax revenue might rise

2) Tax avoidance/tax evasion
Eval: evasion is illegal, and avoidance is deterred by naming and shaming people

3) Substitution effect - eceonomic growth falls
Eval: Income effect + government might spend revenues on education or w/e

4)Fall in inequality

For question 5:

A) - gave 2 examples of countries ranking,
- it's how good a country is at selling it's products abroad
- price/non price
- gave a few components of the index

B) - this really threw me off. I baisically just waffled about how economic growth has been negative since 07, and drew an AS/AD diagram with AD shifting

C) Unit labour costs have risen due to fall in productivity Eval: I don't remember, probs long run/short run BS

Unit labour costs ahve risen due to rise in regulation/ national insurance equivalents However: since 2007 countries have removed these in labour market policies

D)
Germany's surplus might have fallen due to british sterling's depreciation in 2008 Eval: germany's surplus only fell a tiny bit, and the eu remained relatively low compared to currencys other than the sterling

Greece's deficit has fallen due to contracted economic growth reducing marginal propensity to import Eval: This is only short run

E)
- trade union power reducing can remove wage price spiral eval: you need product market policies to compensate labour market

- remove nmw, reduces classical unemployment eval: exploitation

- education eval: time lag

Reply 861

TheHenri

OP

1

Original post by aminkaram

Do people really think this wasn't harder than last year? In my opinion it was the hardest paper set so far. The data responses both had a few tricky questions and the essays weren't as straightforward as last year. (Maybe with the exception of the fiscal policy one but that's not my cup of tea.

I found it harder but think i managed quite well, except i might have misread the 12m :frown:

rest of my class found it quite hard as well i think this paper had a big time constraint.

Reply 862

Fullycorporate

Original post by sheik96

I did question 1. A) I didn't particularly relate it to the UK or a specific country. I talked about an increase in corporation tax revenue, decrease in spending on unemployment benefits and Osborne's austerity cuts. Does not relating mean I won't get marks? My points were all theoretical not real-world...

B) I focused on the fact that it was an increase in income tax on high earners. So I talked about people moving abroad, decrease in disposable income etc. Did anyone else specifically relate it to high earners or did I do it wrong??

Yeah B was about high earners (top rate of income tax) so I related it to high earners. I talked about the disincentive effect, tax avoidance/evasion and then the macroeconomic effects on AD/AS, inflation, employment/unemployment, balance of payments, environmental problems etc

Reply 863

Nightw0lf07

1

Original post by Fullycorporate

Pretty much exactly, I quoted the same figures as well using 1998 instead of 1999 though

One more thing, for eval of (c) can you say that relative poverty is subjective and a normative concept? Could you also have said that more data is needed e.g. for absolute poverty or by other sources as Fig 2 doesn't give a full account? What do you think?

Reply 864

Fullycorporate

Original post by Nightw0lf07

One more thing, for eval of (c) can you say that relative poverty is subjective and a normative concept? Could you also have said that more data is needed e.g. for absolute poverty or by other sources as Fig 2 doesn't give a full account? What do you think?

Yeah poverty measures dont take into account other components that contribute to poverty (corruption, crime etc) It is pretty subjective because what one person thinks is poverty may not be what another person thinks is poverty. I think your points are valid evaluations

Reply 865

mhassan

11

I think it was a decent paper. The only questions that threw me off was the question about economic development and economic growth and the 10 marker on inequality. So disappointed strategies to promote didnt come up, would of killed that question. Everyone in my school found it hard so hopefully the grade boundaries are lowered maybe 66-68 for an A.

Reply 866

Nightw0lf07

1

Original post by Fullycorporate

Yeah poverty measures dont take into account other components that contribute to poverty (corruption, crime etc) It is pretty subjective because what one person thinks is poverty may not be what another person thinks is poverty. I think your points are valid evaluations

Ok, cheers man. Good luck with it all

Reply 867

Tobias888

S.O.S

Hey for question 5d does anyone remember the exact wording ?? were we supposed to say the likely reasons why they should reduce the trade imbalances or how they could of done it ?

Reply 868

TheHenri

OP

1

Original post by Tobias888

S.O.S

Hey for question 5d does anyone remember the exact wording ?? were we supposed to say the likely reasons why they should reduce the trade imbalances or how they could of done it ?

I understood why, but all people put what factors caused a rebalance...

Reply 869

Fullycorporate

Original post by Nightw0lf07

Ok, cheers man. Good luck with it all

thanks, you too :smile:

Reply 870

Kutie Karen

19

Original post by Dilzo999

I think it was on the lines of France, UK and Greece have had lower budget deficits from 2009 to 2013. Give reasons as to why the budget deficit has lowered in a country of your choice.

What evaluation points did people put down?

Reply 871

rathani278

Original post by TheHenri

I understood why, but all people put what factors caused a rebalance...

Ya the question stated 'the likely reasons for such imbalances'.. um pretty sure in this..

Reply 872

Kutie Karen

19

Original post by mhassan

I think it was a decent paper. The only questions that threw me off was the question about economic development and economic growth and the 10 marker on inequality. So disappointed strategies to promote didnt come up, would of killed that question. Everyone in my school found it hard so hopefully the grade boundaries are lowered maybe 66-68 for an A.

Last years paper was much easier than this years so hopefully the grade boundaries will be much lower. Some of the questions were a bit bizarre :confused:

though and people did find it hard with some running out of time. :frown:

Reply 873

Boy_wonder_95

15

Original post by Tobias888

S.O.S

Hey for question 5d does anyone remember the exact wording ?? were we supposed to say the likely reasons why they should reduce the trade imbalances or how they could of done it ?

It was the likely reasons on how they could have reduced the trade imbalances. If you looked at the Figure all the countries had reduced deficits whereas Germany had reduced surpluses.

Reply 874

Shah09

1

Feel free to correct me if I'm wrong, but I think the question was along the lines of, what could have caused a reduction in the trade imbalances and they asked you to also refer to one of the graphs.

Reply 875

sheik96

For the reduction in imbalances question in question 5, I talked about comparative advantage. Is that just completely wrong?

Reply 876

mhassan

11

Could you talk about natural disasters hindering supply for the oil and gas question.

Reply 877

rathani278

Original post by Boy_wonder_95

It was the likely reasons on how they could have reduced the trade imbalances. If you looked at the Figure all the countries had reduced deficits whereas Germany had reduced surpluses.

I only stated about how Greece has reduced it's deficit instead of talking about surplus.. will my mark be capped :frown:

Reply 878

TheHenri

OP

1

Original post by Boy_wonder_95

It was the likely reasons on how they could have reduced the trade imbalances. If you looked at the Figure all the countries had reduced deficits whereas Germany had reduced surpluses.

oh god 12 marks going down the drain :frown:

((
do you think I would still get some marks? like 2 Application and maybe saying that germany was reducing surplus and otehres reducing deficit? basically I outlined reasons for the reduction in imbalances of countries such as germany could then reduce inflation and greece achieve econ growth. oh the question was so easy, just misunderstood it :frown:

guess doing 2 MCQ stupidly wrong and now this this is costing me my A*

Reply 879

Jjames23

I did June 2013 last year and section A was so much more straight forward, also the sections B's in 2013 were straightforward. This one had much more complex wording to the question.
I found 3b difficult as who can think of 4 KAA to the savings gap:l
This is what a marker would've answered 3b) Several ways to answer the Savings gap question. My preference would be:

Intro: E/G - real GDP (AD) and Potential GDP (AS). State savings leak out therefore reducing AD but may provide funds for Investment.

Main 1: Provides funds for Investment. Link to Harrod Domar perhaps. State I increasing AD in SR and AS in LR. Diagram.

Main 2: Counter stating savings are a leakage. Reduce AD. Increasing Savings will reduce multiplier. Debate multiplier.

Savings can be compensated by FDI. Examine strings of FDI- positive

Tbh it was bloody hard paper. Grade boundaries should be lower than last year.

(edited 9 years ago)

Edexcel Economics Unit 4 Global Economy Discussion Thread (10.June.2014)

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