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Economics Unit 2 Edexcel - Managing the UK economy Tuesday 19th May 2015 (PM) Watch

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    Decrease income tax (disp income to spend)

    Increase govt spending ( better for uk like health care etc)

    Decrease corporation tax

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    (Original post by Rubberduckiller)
    how does a decrease in interest rates affect balance of payment... what wud ur analysis n evaluation be for this thnx in advance!!!
    Decrease in interest rates means there will be a depreciation in sterling pound (less foreigners save in UK banks due to lower return -> demand for pound decrease -> price of pound decrease).
    Export then become cheaper, import is more expensive -> more export and less import.
    For evaluation, address PED. Inelastic PED means not dramatic effect on current account and vice versa.
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    I think the 30 marker will be on fiscal on one this year, was monetary and supply side last year


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    (Original post by yaya sanogo)
    Firstly you wanna talk about expansionary ofc, so.. deacreasing consumer and prod. tax whilst increasing govt. spending.Then you can suggest what govt. can spend on to imrprove standard of living e.g. Hospitals, education, benefits etc.After describe how decreasing taxes will improve, simply more disposable income for consumer spending/firms investment therefore circular flow increase and AD increases blah blahThen depending on how many marks say growth may only be beneficial to high earners and those on lowest income may suffer as prices rise causing increase in income inequality
    Cheers
    (Original post by falloutboyyy)
    Decrease income tax (disp income to spend)

    Increase govt spending ( better for uk like health care etc)

    Decrease corporation tax

    Posted from TSR Mobile
    So decrease in corporation tax is both in supply side and fiscal policy?
    Thank you anyways
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    (Original post by anushkagupta4)
    Assess the policies that might be used to prevent deflation in the UK?
    Would the policies be increased G and tax cuts so an expansionary fiscal policy as well as monetary policy reducing interest rates to increase spending as well as quantitative easing to increase supply of money to further reduce interest rates
    what would the eval points be
    not sure about QE, never got my head round it but the other 2 points are right, just say how it will conflict with B.o.P, Stimulate econ growth, reduce unemployment but Increase budget deficit
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    Can anyone explain in detail about the effects/consequences of deflation?

    I know that profits will fall and it will be hard to recover and keep the economy growing.

    But I want explicit detail and more points. Thanks ^^
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    What is austerity?
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    (Original post by yaya sanogo)
    not sure about QE, never got my head round it but the other 2 points are right, just say how it will conflict with B.o.P, Stimulate econ growth, reduce unemployment but Increase budget deficit
    why would it conflict with BOP?
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    (Original post by anushkagupta4)
    why would it conflict with BOP?
    because you're increasing AD, people are more wealthy and as a result of britains high marginal propensity to import, imports will increase. Also, if the price level increases the pound gets stronger, meaning our exports become dearer and less foreign countries will opt to buy from us
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    (Original post by bl1910)
    What is austerity?
    Cuts in government spending essentially
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    (Original post by yaya sanogo)
    because you're increasing AD, people are more wealthy and as a result of britains high marginal propensity to import, imports will increase. Also, if the price level increases the pound gets stronger, meaning our exports become dearer and less foreign countries will opt to buy from us
    Thank you
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    (Original post by bl1910)
    What is austerity?
    Reduction in government expenditure to reduce budget deficit
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    Any idea as to why UK Competitiveness will increase productivity? I understand that if markets have more competition, then there is an incentive to be more efficient and productive. But the revision guide implies that If a firm is more internationally competitive, they will produce more/be more productive.

    Anyone know the reason for this?
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    (Original post by prepdream)
    High inflation will worsen the current account. This is because inflation causes price level to rise, therefore export becomes more expensive and import becomes cheaper. There will be less export and more import, so worsen current account.
    Thanks
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    Can someone give me a brief overview of privatisiation.
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    (Original post by TeddyBearMike)
    Can someone give me a brief overview of privatisiation.
    Privatisation is a supply side policy that involves selling state owned assets to the private sector. It is argued that the private sector is more efficient in running businesses because they have a profit motive to reduce costs and develop better services.
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    is expansionary monetary policy the same thing as a loose monetary policy
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    (Original post by anushkagupta4)
    is expansionary monetary policy the same thing as a loose monetary policy
    Yes, both are the same thing (a decrease in interest rates to increase AD)
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    What are the economics effects of the sterling apprecaiting against the euro?
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    (Original post by AJC1997)
    Privatisation is a supply side policy that involves selling state owned assets to the private sector. It is argued that the private sector is more efficient in running businesses because they have a profit motive to reduce costs and develop better services.
    So im guessing a couple EVA points could be that it could potentially lead to monoplies,inequality etc......
 
 
 
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