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    Hi,

    I did my mock exam today, but i was wondering if i answered right. There were hree questions i was unsure on.

    10 Mark Question (Explain impact on the uk economy of rising oil prices).

    Point one - I talked about how firms won't supply as much in the short run, as costs of production have risen, causing potential economic decline.

    Evaluation one - I talked about how much they increased by, as over a three year period not that much, especially considering it being an unstable market.

    Point two - There will be less imports, as firms may switch to cheaper alternatives, which will improve the current account deficit.

    Evaluation two - It depends on the elasticity of demand for oil, it is relatively inelastic as it is seen as a neccessity and so a change in price won't cause much of a change in demand.

    6 Marks Question (Explain two global causes of the change in oil prices)

    I talked about the financial crisis of 2008 meaning that people were not as confident and so less people consumed and purchased goods like oil but when oil prices rose again economic growth encouraged it's purchase.

    For my second point i talked about global demand deficiency and people did not want it and so didn't buy it, Causing a significant decrease in price level and deflationary pressures in the economy.

    Have i answered these two questions correct? Also how do you calculate an index number using a base year?

    Responses and advice would be appreciated.
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    Examination board? you need to refer to macroeconomic issues. 1) you should refer to a fall in SRAS and a fall in economic growth 2) it is not correct, Rise in the price of oil is going to worsen the current account. The UK is a net importer of oil and PED for oil is inelastic, rise in the value of imports.
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    (Original post by keynes24)
    Examination board? you need to refer to macroeconomic issues. 1) you should refer to a fall in SRAS and a fall in economic growth 2) it is not correct, Rise in the price of oil is going to worsen the current account. The UK is a net importer of oil and PED for oil is inelastic, rise in the value of imports.
    Okay thanks i do edexcel, but when i did the exam it said nothing about the elasticity of imports, so i just assumed it was unitary elastic (that's how I've always been told to answer a question) but then i evaluated this by saying that the import for oil is inelastic and so the current account will worsen.

    Will it gain any credit?
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    (Original post by Bruce267099)
    Okay thanks i do edexcel, but when i did the exam it said nothing about the elasticity of imports, so i just assumed it was unitary elastic (that's how I've always been told to answer a question) but then i evaluated this by saying that the import for oil is inelastic and so the current account will improve.

    Will it gain any credit?
    you cannot assume it is unitary elastic. I wouldn't credit your answer on current account. You also have to keep in mind it is based on levels and just identifying the points will give you L1, weak development L2 and good chain of reasoning (usually with a diagram well explained) L3
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    (Original post by keynes24)
    you cannot assume it is unitary elastic. I wouldn't credit your answer on current account. You also have to keep in mind it is based on levels and just identifying the points will give you L1, weak development L2 and good chain of reasoning (usually with a diagram well explained) L3
    Thanks for your help, at least i know what to do next time.
    I should pick up a few marks for my graphs and mabye a few for my other point and evaluation.
 
 
 
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