The budget defecit is where government spending exceeds taxation. Therefore, increased government spending would mean more welfare payments (for example). This means people would have more money, so they would spend more, leading to a rise in consumption. A rise in consumption means demand for imports increase (as more people spend on overseas goods). The increased demand of imports leads to current account defecit as trade of imports exceeds trade of exports (Ceterius Paribus).
That is one point, there are other reasons too.
That is one point, there are other reasons too.
hi could you help me on this 12 mark question? it would be greatly appreciated
to what extent might an increase in the size of public expenditure as a proportion of gdp be likely to increase the rate of economic growth?
thank you
to what extent might an increase in the size of public expenditure as a proportion of gdp be likely to increase the rate of economic growth?
thank you
Original post by newfreshstart
hi could you help me on this 12 mark question? it would be greatly appreciated
to what extent might an increase in the size of public expenditure as a proportion of gdp be likely to increase the rate of economic growth?
thank you
to what extent might an increase in the size of public expenditure as a proportion of gdp be likely to increase the rate of economic growth?
thank you
As this is a twelve mark question, there is at least four marks available for evaluative points.
It depends on the type of government spending, as more welfare payments could discourage people to work, leading to a decrease in consumption, and net decrease in investment (as unemployment rates are high, due to few benefits from working). As consumption and investment are components of AD, if they fell, AD would fall, leading to reduced economic growth.
It depends on the state of the economy. You can draw the diagram of the business cycle, and say that in 2008, the UK was in a recession, so it had a lower GDP than usual, thus the proportion of government spending would be distorted as it is not an accurate portrayal of the UK economy in the long term.
Subsidies, (a form of government spending), would encourage small businesses to thrive, increasing motivation and thus productivity, leading to more economic growth, as more work is done in less time. Examples of subsidies include new machines to help the electric car industry. To evaluate this, you could say the technology used via the subsidy could make works unemployed, leading to reduced consumption and reduced economic growth. Therefore, it depends on the type of industry and what the subsidy actually is.
(edited 9 years ago)
Thank you SO SO MUCH!!!
"Evaluate the extent to which government spending on education is the best way to promote the rate of growth in the economy"
(30 marks)
how would i answer this? any help would be greatly appreciated
(30 marks)
how would i answer this? any help would be greatly appreciated
Original post by newfreshstart
"Evaluate the extent to which government spending on education is the best way to promote the rate of growth in the economy"
(30 marks)
how would i answer this? any help would be greatly appreciated
(30 marks)
how would i answer this? any help would be greatly appreciated
Well first talk about the effects education will have.
Then bring in some other policies - supply or demand side.
Original post by newfreshstart
"Evaluate the extent to which government spending on education is the best way to promote the rate of growth in the economy"
(30 marks)
how would i answer this? any help would be greatly appreciated
(30 marks)
how would i answer this? any help would be greatly appreciated
Depends on the examination board is this Edexcel?
Original post by keynes24
Depends on the examination board is this Edexcel?
Original post by newfreshstart
"Evaluate the extent to which government spending on education is the best way to promote the rate of growth in the economy"
(30 marks)
how would i answer this? any help would be greatly appreciated
(30 marks)
how would i answer this? any help would be greatly appreciated
It's always good to break the 30 marker down into two sections: 18 marks for KAA (Knowledge, Application and Analysis) and 12 marks for evaluation. You should have roughly 3 points with 2 evaluations for each. Use diagrams if it will bolster your analysis, otherwise don't use them as they could waste time if inappropriate to the question.
1) Your first point could discuss supply side policies used to increase aggregate supply in the economy and thus economic growth. An example would be an increase in Education & Training, say "building 1000 more schools" or offering more apprenticeships (something the Lib Dems are trying to implement: http://www.bbc.co.uk/news/election-2015-32364053). More education and training in the UK economy will mean students are better-skilled, and go on to gain better degrees at university, leading to highly paid jobs, leading to high levels of consumption (biggest component of AD) which in itself will lead to more economic growth; highly paid jobs means more income tax is paid, for example, meaning the government benefits from increased tax revenue, possibly reducing the budget deficit. Your evaluation for this question would be: There is a huge time-lag until the students start working. Also, in the short-term, the government loses out from increased tax if the students were to get basic jobs once leaving school. This point is great to use a LRAS/AD diagram, which can also be evaluated. On the diagram, have on your x axis, output, and on your y axis, price level. Draw your LRAS curve and draw up to four AD curves showing different economic situations from increased education and training. For example, if AD increased to AD1 this would cause an increase in inflation as P moves to P1. Moreover, increased AD reduces spare capacity in the economy as we get closer to YFE (full employment). Then to relate it back to the "promotion" aspect of the question, state how increased employment from increased education and skills will increase investment into the UK as the country is seen as being more stable then before and a lucrative nation to invest in; this will better the UK's reputation and advertise the new found increased economic growth the country is now experiencing.
Other evaluative points:
There is a high opportunity cost for the government, especially in the run up to the 2015 UK Election.
Also, we assume people who are educated more will get higher level jobs. However, this depends on what subjects they study, as some are notoriously more facilitating than others, so will render a higher-paid job.
Now you need points two and three, and evaluations for both, and you could be heading for a 28+ mark essay!
(edited 8 years ago)
Original post by A-LevelEconomist
It's always good to break the 30 marker down into two sections: 18 marks for KAA (Knowledge, Application and Analysis) and 12 marks for evaluation. You should have roughly 3 points with 2 evaluations for each. Use diagrams if it will bolster your analysis, otherwise don't use them as they could waste time if inappropriate to the question.
1) Your first point could discuss supply side policies used to increase aggregate supply in the economy and thus economic growth. An example would be an increase in Education & Training, say "building 1000 more schools" or offering more apprenticeships (something the Lib Dems are trying to implement: http://www.bbc.co.uk/news/election-2015-32364053). More education and training in the UK economy will mean students are better-skilled, and go on to gain better degrees at university, leading to highly paid jobs, leading to high levels of consumption (biggest component of AD) which in itself will lead to more economic growth; highly paid jobs means more income tax is paid, for example, meaning the government benefits from increased tax revenue, possibly reducing the budget deficit. Your evaluation for this question would be: There is a huge time-lag until the students start working. Also, in the short-term, the government loses out from increased tax if the students were to get basic jobs once leaving school. This point is great to use a LRAS/AD diagram, which can also be evaluated. On the diagram, have on your x axis, output, and on your y axis, price level. Draw your LRAS curve and draw up to four AD curves showing different economic situations from increased education and training. For example, if AD increased to AD1 this would cause an increase in inflation as P moves to P1. Moreover, increased AD reduces spare capacity in the economy as we get closer to YFE (full employment). Then to relate it back to the "promotion" aspect of the question, state how increased employment from increased education and skills will increase investment into the UK as the country is seen as being more stable then before and a lucrative nation to invest in; this will better the UK's reputation and advertise the new found increased economic growth the country is now experiencing.
Other evaluative points:
There is a high opportunity cost for the government, especially in the run up to the 2015 UK Election.
Also, we assume people who are educated more will get higher level jobs. However, this depends on what subjects they study, as some are notoriously more facilitating than others, so will render a higher-paid job.
Now you need points two and three, and evaluations for both, and you could be heading for a 28+ mark essay!
1) Your first point could discuss supply side policies used to increase aggregate supply in the economy and thus economic growth. An example would be an increase in Education & Training, say "building 1000 more schools" or offering more apprenticeships (something the Lib Dems are trying to implement: http://www.bbc.co.uk/news/election-2015-32364053). More education and training in the UK economy will mean students are better-skilled, and go on to gain better degrees at university, leading to highly paid jobs, leading to high levels of consumption (biggest component of AD) which in itself will lead to more economic growth; highly paid jobs means more income tax is paid, for example, meaning the government benefits from increased tax revenue, possibly reducing the budget deficit. Your evaluation for this question would be: There is a huge time-lag until the students start working. Also, in the short-term, the government loses out from increased tax if the students were to get basic jobs once leaving school. This point is great to use a LRAS/AD diagram, which can also be evaluated. On the diagram, have on your x axis, output, and on your y axis, price level. Draw your LRAS curve and draw up to four AD curves showing different economic situations from increased education and training. For example, if AD increased to AD1 this would cause an increase in inflation as P moves to P1. Moreover, increased AD reduces spare capacity in the economy as we get closer to YFE (full employment). Then to relate it back to the "promotion" aspect of the question, state how increased employment from increased education and skills will increase investment into the UK as the country is seen as being more stable then before and a lucrative nation to invest in; this will better the UK's reputation and advertise the new found increased economic growth the country is now experiencing.
Other evaluative points:
There is a high opportunity cost for the government, especially in the run up to the 2015 UK Election.
Also, we assume people who are educated more will get higher level jobs. However, this depends on what subjects they study, as some are notoriously more facilitating than others, so will render a higher-paid job.
Now you need points two and three, and evaluations for both, and you could be heading for a 28+ mark essay!
When developing education and training as a SSP you should not mention AD rising. There is a link between SSP and fiscal policy but that could be part of the evaluation not analysis. A separate analysis could be how a rise in expenditure on education and training is a fiscal Policy. it is 12 marks for analysis and 12 marks for evaluation, the first 6 marks is for definition, data reference, diagrams.
Original post by keynes24
When developing education and training as a SSP you should not mention AD rising. There is a link between SSP and fiscal policy but that could be part of the evaluation not analysis. A separate analysis could be how a rise in expenditure on education and training is a fiscal Policy. it is 12 marks for analysis and 12 marks for evaluation, the first 6 marks is for definition, data reference, diagrams.
Hence KAA being 18 marks (12 for analysis and 6 for knowledge and application).
Original post by A-LevelEconomist
Hence KAA being 18 marks (12 for analysis and 6 for knowledge and application).
That's correct but all that is not involved in answering the question. All the comments you make on the current economy are not required to get full marks. Students should be reminded to separate the analysis from definitions, there is a layout you need to follow answering 30 marks questions. Stating KAA doesn't doesn't clarify that.
As mentioned before
6 marks for definitions, data reference and diagram
12 marks for 3 analysis explaining the rise in economic growth
12 marks for 3 (or more evaluations) I would suggest developing only 3 extensively but that depends on time management. It is a good idea to use diagrams to support your answers.
Original post by A-LevelEconomist
It's always good to break the 30 marker down into two sections: 18 marks for KAA (Knowledge, Application and Analysis) and 12 marks for evaluation. You should have roughly 3 points with 2 evaluations for each. Use diagrams if it will bolster your analysis, otherwise don't use them as they could waste time if inappropriate to the question.
1) Your first point could discuss supply side policies used to increase aggregate supply in the economy and thus economic growth. An example would be an increase in Education & Training, say "building 1000 more schools" or offering more apprenticeships (something the Lib Dems are trying to implement: http://www.bbc.co.uk/news/election-2015-32364053). More education and training in the UK economy will mean students are better-skilled, and go on to gain better degrees at university, leading to highly paid jobs, leading to high levels of consumption (biggest component of AD) which in itself will lead to more economic growth; highly paid jobs means more income tax is paid, for example, meaning the government benefits from increased tax revenue, possibly reducing the budget deficit. Your evaluation for this question would be: There is a huge time-lag until the students start working. Also, in the short-term, the government loses out from increased tax if the students were to get basic jobs once leaving school. This point is great to use a LRAS/AD diagram, which can also be evaluated. On the diagram, have on your x axis, output, and on your y axis, price level. Draw your LRAS curve and draw up to four AD curves showing different economic situations from increased education and training. For example, if AD increased to AD1 this would cause an increase in inflation as P moves to P1. Moreover, increased AD reduces spare capacity in the economy as we get closer to YFE (full employment). Then to relate it back to the "promotion" aspect of the question, state how increased employment from increased education and skills will increase investment into the UK as the country is seen as being more stable then before and a lucrative nation to invest in; this will better the UK's reputation and advertise the new found increased economic growth the country is now experiencing.
Other evaluative points:
There is a high opportunity cost for the government, especially in the run up to the 2015 UK Election.
Also, we assume people who are educated more will get higher level jobs. However, this depends on what subjects they study, as some are notoriously more facilitating than others, so will render a higher-paid job.
Now you need points two and three, and evaluations for both, and you could be heading for a 28+ mark essay!
1) Your first point could discuss supply side policies used to increase aggregate supply in the economy and thus economic growth. An example would be an increase in Education & Training, say "building 1000 more schools" or offering more apprenticeships (something the Lib Dems are trying to implement: http://www.bbc.co.uk/news/election-2015-32364053). More education and training in the UK economy will mean students are better-skilled, and go on to gain better degrees at university, leading to highly paid jobs, leading to high levels of consumption (biggest component of AD) which in itself will lead to more economic growth; highly paid jobs means more income tax is paid, for example, meaning the government benefits from increased tax revenue, possibly reducing the budget deficit. Your evaluation for this question would be: There is a huge time-lag until the students start working. Also, in the short-term, the government loses out from increased tax if the students were to get basic jobs once leaving school. This point is great to use a LRAS/AD diagram, which can also be evaluated. On the diagram, have on your x axis, output, and on your y axis, price level. Draw your LRAS curve and draw up to four AD curves showing different economic situations from increased education and training. For example, if AD increased to AD1 this would cause an increase in inflation as P moves to P1. Moreover, increased AD reduces spare capacity in the economy as we get closer to YFE (full employment). Then to relate it back to the "promotion" aspect of the question, state how increased employment from increased education and skills will increase investment into the UK as the country is seen as being more stable then before and a lucrative nation to invest in; this will better the UK's reputation and advertise the new found increased economic growth the country is now experiencing.
Other evaluative points:
There is a high opportunity cost for the government, especially in the run up to the 2015 UK Election.
Also, we assume people who are educated more will get higher level jobs. However, this depends on what subjects they study, as some are notoriously more facilitating than others, so will render a higher-paid job.
Now you need points two and three, and evaluations for both, and you could be heading for a 28+ mark essay!
hello, thank you for this! did you read what i've written so far? should i change it?
thanks again
“Evaluate the extent to which government spending on education is the best way to promote the rate of growth in the economy”
Rate of growth is a measure of the rate of change that a nation's gdp goes through from one year to another. If the government spend more on Education and training this produces a more skilled workforce so employers will have a larger pool of workers to choose from and workers will be more productive, this could therefore in the future increase the productive potential of the country and cause an outward shift on the ppf.
In the short run, hiring teachers, building schools, buying books etc will boost the economy an reduce the unemployment rate. In the long run it will affect the supply side, shifting AS to the right because we have a more clever workforce. However, the rate of growth could be slow because of the time lag of education as the effects of higher government spending will take a long time to have an effect. Government spending is a component of AD so if they invest in educations it acts an injection in the circular flow of income and could start off the multiplier effect. This means the initial increase in government spending causes a bigger final increase in GDP. E.g. teachers have more to spend so others benefit.
There are also side effects because to spend more the government need to borrow and this could cause crowding out. This means the government spends more, but because the private sector lend money to the government they have less to spend themselves therefore AD doesn't actually increase.It also depends on how efficient the government spending is. Spending on education may not increase labour productivity
The effect of higher spending government spending depends on the state of the economy. For example, if the economy is in recession then an increase in AD will help to increase growth without causing inflation, but if the economy is at full capacity it will cause inflation
Rate of growth is a measure of the rate of change that a nation's gdp goes through from one year to another. If the government spend more on Education and training this produces a more skilled workforce so employers will have a larger pool of workers to choose from and workers will be more productive, this could therefore in the future increase the productive potential of the country and cause an outward shift on the ppf.
In the short run, hiring teachers, building schools, buying books etc will boost the economy an reduce the unemployment rate. In the long run it will affect the supply side, shifting AS to the right because we have a more clever workforce. However, the rate of growth could be slow because of the time lag of education as the effects of higher government spending will take a long time to have an effect. Government spending is a component of AD so if they invest in educations it acts an injection in the circular flow of income and could start off the multiplier effect. This means the initial increase in government spending causes a bigger final increase in GDP. E.g. teachers have more to spend so others benefit.
There are also side effects because to spend more the government need to borrow and this could cause crowding out. This means the government spends more, but because the private sector lend money to the government they have less to spend themselves therefore AD doesn't actually increase.It also depends on how efficient the government spending is. Spending on education may not increase labour productivity
The effect of higher spending government spending depends on the state of the economy. For example, if the economy is in recession then an increase in AD will help to increase growth without causing inflation, but if the economy is at full capacity it will cause inflation
Original post by BaronK
Excellent essay. 33/30.
but thank you, what else shall i add?
okay i will do, thanks for the help okay i will do thanks for the help!!
Original post by keynes24
I would define economic growth, distinguish between actual and potential growth. Keep the analysis and evaluation separated in different paragraphs and indicate that in the long run is a SSP and in the Short Run is an expansionary fiscal policy.
Original post by keynes24
I would define economic growth, distinguish between actual and potential growth. Keep the analysis and evaluation separated in different paragraphs and indicate that in the long run is a SSP and in the Short Run is an expansionary fiscal policy.
okay i will thanks!
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