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    Can you say that the oppurtunity cost of buying a house is rented accomadation... as that is what the question was all about... but that's hardly anything for 8 marks! Yeah, oppurtinuty cost is the rented flat you coud have lived in... end of question..

    I swear I will scream out loud if we get such a stupidly unanswerable ambiguous question like that in our exam...
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    (Original post by mik1a)
    Can you say that the oppurtunity cost of buying a house is rented accomadation... as that is what the question was all about... but that's hardly anything for 8 marks! Yeah, oppurtinuty cost is the rented flat you coud have lived in... end of question..

    I swear I will scream out loud if we get such a stupidly unanswerable ambiguous question like that in our exam...
    Not really as rented accomodation is still accomodation You could be forgoing that porsche though...
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    guys are you all learning both lras of keynesian and classicists?
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    (Original post by TheWolf)
    guys are you all learning both lras of keynesian and classicists?
    You mean eras?
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    (Original post by Mysticmin)
    You mean eras?
    lras as in long run aggregate supply
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    I think he measn LRAS - long run aggregate supply - I always understand this better as potential GDP. If equilibrium is to the right of this, there is a(n unsustainable) positive output gap (too much aggregate demand) that will cause SRAS to shift left due to higher production costs, if equilibrium is to the left there is a negative output gap (not enough aggregate demand), and unemployed workers have to price themselves back into work.
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    (Original post by TheWolf)
    lras as in long run aggregate supply
    you don't get a chunk of classical and moentarist theories? pfft! They're fun, and fisher's money equation/
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    (Original post by mik1a)
    I think he measn LRAS - long run aggregate supply - I always understand this better as potential GDP. If equilibrium is to the right of this, there is a(n unsustainable) positive output gap (too much aggregate demand) that will cause SRAS to shift left due to higher production costs, if equilibrium is to the left there is a negative output gap (not enough aggregate demand), and unemployed workers have to price themselves back into work.
    thats the classical one, i dont like it personally :rolleyes:
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    Same here, personally I think that it is unrealistic to assume SRAS will always shift left when an economy is beyond its long run aggregate supply - surely if workers work harder, productivity is increased and productivity shifts the long run aggregate supply.. maybe it's me, but "workers doing overtime" is a stupid example of having a positive output gap - overtime is a rise in productivity surely!

    And workers don't relaistically demand higher wages when the economy is in a boom - workers have contracts! :confused:
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    (Original post by mik1a)
    Same here, personally I think that it is unrealistic to assume SRAS will always shift left when an economy is beyond its long run aggregate supply - surely if workers work harder, productivity is increased and productivity shifts the long run aggregate supply.. maybe it's me, but "workers doing overtime" is a stupid example of having a positive output gap - overtime is a rise in productivity surely!

    And workers don't relaistically demand higher wages when the economy is in a boom - workers have contracts! :confused:
    yes keynesian's one is cool, easy to use as well
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    guys have a look at this http://www.aqa.org.uk/over/stat_pdf/...-bound-M03.pdf

    for macro data, it says it only needed 14 out of 25 to get an a last year lol? :confused:
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    (Original post by Mysticmin)
    you don't get a chunk of classical and moentarist theories? pfft! They're fun, and fisher's money equation/
    Ya. You mean the the quantity theory of the money supply, with the constraint's of stable output and velocity of circulation applied?

    That is quite interesting, although well beyond the bounds of AS.

    If we discuss this, will we still get the marks? Because it most definitely will not be on the mark scheme.

    And for whoever knows... Would you discuss that in terms of the Fisher equation, or say that Monetarist's do actually accept that output varies, but will always return to a long run equilibrium level, and that velocity does infact vary too, but to a limited extent due to habitual institutions? Or maybe just both!

    I just think it could be a bit over the top, unless it is a big mark, open question near the end of the paper.

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    (Original post by Mysticmin)
    yup, inflation is measured using RPI-X, the (-X) relates to the mortgage rates being taken out. Although now the UK is switching to the consumer price index, which has a totally different scale...
    The UK has already switched to HICP...? For quite a long time now? :confused: The Harmonised Index of Consumer Prices. In the UK since December 2003 I think. Fondly known by me as hiccup.

    I'm pretty sure I'm not just making this up.
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    (Original post by deianra)
    The UK has already switched to HICP...? For quite a long time now? :confused: The Harmonised Index of Consumer Prices. In the UK since December 2003 I think. Fondly known by me as hiccup.

    I'm pretty sure I'm not just making this up.
    Yeah. The RPIX is no longer in use.
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    (Original post by TheWolf)
    guys are you all learning both lras of keynesian and classicists?
    No, it isn't needed, so don't learn it.

    And btw the reason the macro paper mark for an A was 14/25 last year is because if you look at the two questions one was a balance of payments question (which was easy, but everyone tends to shy away from BoP questions) and a consumption questions which on the surface seems easy (just as C is a compnent of AD and the effect of an AD rise on the economy) however, in reality it actually wanted you to talk about consumption and how the growth in consumption was unequal and this may cause problems - thus everyone got a low mark.
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    You really should know it, I think.
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    Macro is my strongest dfefinately. I get micro, but not as much - demerit goods etc. are easy, but some stuff in the exam is confusing, and housing ... err never done a paper in my life, just attempted them! But seriously, it's just macro and micro together I think--- they are like oil and water in my brain though because we're taught never to use AS/AD in micro, and never use D+S in macro etc... also we have different teachers and stuff. :cool:
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    doing the june2003 cigarettes ie micro database question no.2, has anyone written this before? what did you write about? according to the mark scheme its good idea to talk about incentive function of prices, how would you do so?
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    something ive written - abit out of time, + need to add a few diagrams too, and a conclusion...what else could i have written?

    Firstly, it is important that Tobacco is classified as a demerit good as it is overprovided by the market mechanism, and provides negative externalities

    Let us first have a look at the External and social costs of tobacco consumption.
    Social costs of tobacco consumption is the deterioration of the smoker’s health. Through increasing the tax on tobacco, the smoker could be put off by the increase in price, hence stops smoking, which leads to an improvement of the smoker’s health and life expectation, and hence quality of life. On the other hand, external costs out numbers social costs. Firstly, the increase in the price of cigarettes could well increase crime rates as smokers or need to find more money to buy the cigarettes. This is assuming that their price elasticity of demand is relatively inelastic ie. An increase of price after an increase in taxation results in a relatively small decrease in demand.

    After taxation of cigarettes, health spending by the government on NHS should decrease as a result of an increase of quitting smokers. This means that the government can spend more on improving other areas of the society. However, due to the fact that the price elasticity of demand of cigarettes is so low, it is unlikely that there will be huge reductions of government spending on the NHS. Furthermore, in fact, it has been suggested that an increase in taxation could cause greater health spending, mainly because as the smokers who have now quitted smoking, now have a longer life expectancy, and hence the NHS have to care for them longer.

    Furthermore, other positive externalities have been created through taxation through sustaining human economic resources, which would have been destroyed if the taxations were not enforced.

    There are other disadvantages that could counteract the advantages of a taxation on cigarettes. Firstly, a taxation on cigarettes would create market failure esp the creation inequality, as this increase of price would have a bigger impact on the poor than the rich. This creates allocative inefficiency. Furthermore, the effect on jobs in the tobacco and retailing industries could be crippled by this new tax, as the demand for the goods decrease. This causes unemployment, which in turn causes a vicious cycle as the unemployed have to reduce their spending, which means an overall smaller demand for goods, so shops have lower profits, which in turn, cannot afford to lay off staffs. Furthermore, due to the high price, there could well be black markets and an increase in imports, which would further worsen the domestic market and macroeconomy. Therefore by increasing taxation, government failure could play its part, ie Market distortion, where the government intervention to correct the market failure leads to a creation of far more serious market failures, such as the destruction of the retailing industry, and the increase in unemployment as shown above.
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    Oh... didn't see all that when I first posted!
 
 
 
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