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Europe OCR tomorrow.

It is one hard question..just trying to make the ones tomorrow seem easier :frown:

Well in Extract 5 it does mention how Italy relied upon devaluation of the Lira, as a fast nominal adjustment to their BoP.
In terms of increasing price transparency, whichis what you get with the euro, it stimulaes trade and efficiency. I think this actually increased the over reliance on Textiles and clothing that the Italians face. I feel they would have been more diversifed without it, which basically links to extract 4.
I think fig 2.1 reinforces this.

I just mentioned how the Euro can increae trade and aid comparative advantage but it has increased reliance on T&C. Had Italy have not have been in the EMU fiscal policy woudl be better-to help with the structural U/E. Monetary policy wouldn't be restricted.

But the benefits of the euro at this times, such as the incentive for MNC's to invest is part of regional policy for Italy, and could save them from the structural unemployment they are going through.

Just about adjustment mechanisms really.

Reply 21

Sammy.B!

Also what would everyone put for the questions Crest gave us? It would be nice to see a range of responses..and helpful too!

Reply 22

BenOliver

OP

Mylittleralph

Also what would everyone put for the questions Crest gave us? It would be nice to see a range of responses..and helpful too!

I don't suppose you have MSN?
My computer and forums don't seem to agree...it'd be useful if we could bounce ideas off one another on MSN or something.

Reply 23

holdyourcolour

10

The Chief Exam Officer has said that they're not allowed to ask questions not based on stimulus material, and I haven't seen a reference to the EMU or Eurozone thus far...

Reply 24

gottapassthis

Hi, Crest!

Thank you for your questions! Could you send your answers please, I really worry about tmr exam. Thank you

Reply 25

gottapassthis

by the way,my email adress [email protected]

Reply 26

andy_1989

Hi people, I was just looking taxation and subsidy diagrams and was thinking, do you guys just use basic supply and demand diagrams to illustrate a subsidy or taxation, or do you use more complex diagrams? I looked at a mark scheme from 2882 and it says the 'a supply and demand diagram is acceptable to gain marks. This could also be expressed through a more complex costs and revenue diagram that illustrates the same principle.' So I take it you get no further marks if you use a more complex diagram? It doesn't say you do.

Reply 27

Crest

4

gottapassthis

Hi, Crest!

Thank you for your questions! Could you send your answers please, I really worry about tmr exam. Thank you

Sorry, I don't have any answers written up. It's a lot better to use the material along with notes anyway - the exact question is going to be different to the ones that I gave and it might even have a slightly different focus, but the content should be the same.

Do you have the Tutor2u toolkit for the stimulus material? That goes into detail about the thing that you know, based on what is in the stimulus material.

Reply 28

Sianey

I would definately one hundred percent use a S and D diagram. Firstly because I don't think I know any others, and secondly because whats the point in over complicating things!!

Reply 29

andy_1989

Yeah I agree with you Sianey, just wanted to make sure!

Reply 30

Crest

4

andy_1989

Hi people, I was just looking taxation and subsidy diagrams and was thinking, do you guys just use basic supply and demand diagrams to illustrate a subsidy or taxation, or do you use more complex diagrams? I looked at a mark scheme from 2882 and it says the 'a supply and demand diagram is acceptable to gain marks. This could also be expressed through a more complex costs and revenue diagram that illustrates the same principle.' So I take it you get no further marks if you use a more complex diagram? It doesn't say you do.

As long as the diagram makes sense, you'll get all the marks. However, in 2888 (Europe) you won't be asked to draw any diagrams. You could include them to get analysis marks, but you won't get marks exclusively for a diagram.

Personally, I'd just use a standard Supply/demand or AD/SRAS diagram (They're both the same diagram, but which labels you use depends on the question). They're a lot easier to use and you won't make mistakes like a lot of people do with the Keynesian LRAS diagram.

I doubt that we'll need to draw taxation or subsidy diagrams - the ones that I think we'll be able to slot in are: Economies of Scale (internal and external), externalities and AD/AS with AD shifting. Those will be the most useful, in my opinion.

Reply 31

Miss87

Does the infant industry is a relevent point on protectionism?

Reply 32

holdyourcolour

10

In context to protectionism on EU textiles, no, not at all, these industries have been around for decades and have been fully able to exploit economies of scale available to them

Generally however around the EU I'm sure it's applicable

Reply 33

Sammy.B!

holdyourcolour

The Chief Exam Officer has said that they're not allowed to ask questions not based on stimulus material, and I haven't seen a reference to the EMU or Eurozone thus far...

There's a weak reference to the Euro in Extract 5, about how Italy, in it's normal situation focused on devaluations of the Lira

Reply 34

physicist2

apart from subsidies, what other policies can be used to deal with positive externalities, in the context of clothing/textile production. (Rohmer process)

Does anyone know, i need help!!!!!!!!!!

Reply 35

aelred89

physicist2

apart from subsidies, what other policies can be used to deal with positive externalities, in the context of clothing/textile production. (Rohmer process)

Does anyone know, i need help!!!!!!!!!!

Extract 3 is likely to be the 9/10 mark question so i think 2 policies will be needed, 3 max. The ones i'm going to use if it comes up are;

- Polution tax (obvious)
- Tradeable Pollution permits (Encourages firms to become more eco friendly as they are able to sell any remaining pollution quota to another, less eco friendly, firm. Permits will be reduced over time.
- Subsidise eco friendly technologies (usually goes hand in hand with taxation)

This is what I think any way lol

EDIT: These are to deal with negative externalities, why would you want to "deal with" positive externalities?

Reply 36

BenOliver

OP

aelred89

EDIT: These are to deal with negative externalities, why would you want to "deal with" positive externalities?

.....Exactly what I was thinking...? Does he mean 'encourage' positive externalities, perhaps?

Reply 37

aelred89

Yeh perhaps, same policies apply though really

Reply 38

aelred89

So lets have a pro and a con of protectionism in relation to the Italian textile firms and hopefully we can compile a comprehensive list...

I'll start;

Pro - Protection from "import dumping". A foreign company may "dump" stock into a competing country and sell it below cost to force domestic companies out of business and potentially gain a monopoly. Once a monopoly has been established there is nothing stopping the foreign firm putting their prices back up.

Con - It has a regressive effect on the distribution of income. It is usually the case that higher prices that result from tariffs hit those on lower incomes harder because the tariffs are usually on essential goods (such as food, clothing and footware) which lower income familes spend a higher share of their income on.

Sorry for any bad grammar lol ^_^

Reply 39

BenOliver

OP

aelred89

So lets have a pro and a con of protectionism in relation to the Italian textile firms and hopefully we can compile a comprehensive list...

I'll start;

Pro - Protection from "import dumpuing". A foreign company may "dump" stock into a competing country and sell it below cost to but domestic companies out of business and potentially gain a monopoly. Once a monopoly is gained there is nothing stopping them putting the price back up.

Con - It has a regressive effect on the distribution of income. It is usually the case that higher prices that result from tariffs hit those on lower incomes harder because the tariffs are usually on essential goods (such as food, clothing and footware) which lower income familes spend a higher share of their income on.

Sorry for any bad grammar lol ^_^

PRO- Protect infant industries, allowing them to fully establish themselves in the market, gaining a fair market share, fostering the growth of domestic industry in the face of the threat of 'capital flight' from MNCs. The protection can be removed upon establishment.

CON- Protectionist measures might result in retaliation on the part of other nations, resulting in a 'price war', that essentially means the consumers of the world are paying!

Europe OCR tomorrow.

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