Hey there! Sign in to join this conversationNew here? Join for free
    Offline

    11
    ReputationRep:
    (Original post by GGHarambe)
    QE is just an unconventional use of monetary policy, when instruments like the interest rate don't become so effective, like what happened in Japan. So the Bank of England just create money electronically and purchase government and privately owned assets, which injects money into the economy, increasing the money supply etc.

    Hope this helps
    Thank you thats so clear! How would you evaluate the use of it?
    Offline

    7
    ReputationRep:
    (Original post by physicsamor)
    Thank you thats so clear! How would you evaluate the use of it?
    I suppose you could say it's fairly new use of monetary policy so we don't really know the long term side effects. I'm sure there is probably a better evaluation point but I think it depends on the context of the question. Any ideas how you would evaluate it?
    Offline

    11
    ReputationRep:
    (Original post by GGHarambe)
    I suppose you could say it's fairly new use of monetary policy so we don't really know the long term side effects. I'm sure there is probably a better evaluation point but I think it depends on the context of the question. Any ideas how you would evaluate it?
    Inflation? I'm not sure
    Offline

    7
    ReputationRep:
    (Original post by physicsamor)
    Inflation? I'm not sure
    Yeah that seems fair and logical, I guess as long as we can justify what we say it shouldn't be an issue.
    Offline

    6
    ReputationRep:
    (Original post by physicsamor)
    Thank you thats so clear! How would you evaluate the use of it?
    Using the Fisher equation: MV=PQ

    Monetarists argue that V (the velocity of circulation of money) and Q (output) remain constant, or at least stable. Therefore any increase in M (the money supply) will only lead the a rise in P (the price level), hence any use of QE will be inflationary and won't increase real output.

    However Keynesian economists say that it is too strong of an assumption to say that V & Q are constant and thus QE can be used stimulate real growth
    Offline

    4
    ReputationRep:
    Hey guys, I tried to answer the "evaluate the view that inequality is good for us all" question. Can someone give me feedback please and give me an approximate mark? By the way I haven't seen the extract for this question, just answering the question. Also, can you let me know of some appropriate diagrams I can use? Thanks to whoever reads this

    Spoiler:
    Show


    "Evaluate the view that inequality is good for us all."

    Inequality refers to a gap between the highest income earners and lowest income earners and is a form of market failure. There are many disadvantages as well as advantages of inequality.

    One problem of inequality arises from monopsonists using their market power to employ workers at a wage below the competitive equilibrium. This means that the wage workers are paid will be lower than the marginal revenue product (MRP) of labour, leading to a clear unfair distribution of income for workers. This exploitation of consumers is an act that significantly increases inequality and thus market failure as employers/firms benefit a lot more than employees.
    A further disadvantage of monopsonist firms unfairly setting low wages is this may deter or stop workers from working there due to the feeling that they are not being paid enough for the amount of work that they do. This will lead to higher unemployment which is damaging to the economy. However, since monopsonist firms at which low wages are set are usually low skilled jobs, supply of labour is elastic and the firm can replace workers quickly, especially with migrant workers who would be satisified with the low wage level since it may be more than what they would receive in their country of origin, therefore fixing the problem of unemployment. However this would be more likely in the long run as elasticity of demand for labour is less elastic in the short run.

    Monopolist firms can similarly create problems of inequality towards the general population. Since monopolist firms are in a position to set higher prices to consumers, this power is often exploited and consumers are charged very high prices, which they are often forced to accept if the good/service they want is the only one in the market. This exploitation leads to unfair distribution of benefits between consumers and shareholders with shareholders of monopolies gaining a lot of revenue(*diagram below) whilst, consumers, particularly those from low-income backgrounds, pay a large percentage of income on the good/service, unlike higher-income people who won't be affected as much. This problem is worse if the demand for the good/service is inelastic.

    [*diagram showing consumer surplus turned into extra revenue for the seller*(?) : this lower consumer surplus will lead to less disposable income for the consumer, affecting economic growth. However the higher revenue of the seller can actually be a good thing as it can be used for more innovation/development/invention, further increasing consumption which will greatly benefit the economy.]

    A further argument against monopolists setting high prices and increasing inequality is this can create pressure/problems for the government as it will have to intervene and regulate monopolies which can be quite difficult and will deter the government's time and attention away from other areas/problems of the economy.

    Another problem of inequality is that it can lead to many problems within society such as social friction and division between different social classes.This can lead to higher crime levels as well as riots due to anger and resentment of the lower class towards the higher class(especially if this is due to inherited wealth). In this case all members of society will lose out and thus inequality certainly would not be "good for us all".

    However there are some credible arguments in favour of inequality. One of these is based on the idea that if someone works harder and as a result receives a higher wage, this is not market failure and is in fact an incentive encouraging people to work harder and be more productive in order to receive a higher wage. A boost to productivity leads to a higher national output therefore benefiting "all" within the country. Without this alleged 'inequality', there wouldn't be social and economic progression and people wouldn't be motivated to work harder and get to the next level. This meritocratic system by which people's income/wealth is dependent on their productivity is a fair and rational one as people who are good/productive at their job should be merited accordingly whilst people who are lazy and don't work productively should be paid less and this is certainly not market failure or inequality but is in fact a very fair system where every member of society receives what they deserve.

    However some argue that if inequality is due to inherited wealth, this implies genuine inequality issues. For example, rich pupils who attend private schools and are provided with high level education consequently are the pupils that top universities such as Oxford and Cambridge vastly accept and these students go on on obtain the best jobs and highest wages as a result of them being put on a financial pedestal since childhood that makes them more likely to ascend in society than students from less privileged backgrounds. Without this pedestal our society would be a lot more equal and every child would have equal opportunities and start from the same level.

    In counter-argument of the above point, some economists point to the 'Trickle Down Effect' as an advantage of inequality. This effect suggests that the benefits of the wealthy, whether inherited or not, pass down to the rest of society. For example, an investment by a rich entrepreneur in setting up a business may make him/her a millionaire however this business will also create jobs and provide incomes, therefore lowering unemployment and benefiting the economy. There will undoubtedly be a gap between the highest and the lowest earners but it can be argued that the lowest earners are still better off than without the entrepreneur. Therefore 'all' will indeed benefit.

    The view that "inequality is good for us all" is a controversial one and there are credible arguments on either side, however the strongest and most significant is the argument that inequality is good in that in encourages productivity due to people's desire for higher wages. Everyone has an 'equal' chance to work hard and consequently be rewarded in the same way that everyone has an 'equal' chance to not be so productive; individuals are not prevented from higher wages. It is this idea that creates the incentive for people to work harder and consequently be rewarded with higher wages or a higher position and this is greatly beneficial to the economy in terms of higher national output as a result of higher productivity. Therefore in this sense, inequality is indeed 'good', however if the inequality is a result of monopolists or monopsonists unfairly using their power to charge higher prices or to lower wages, then this is a form of inequality that needs to be fixed as these shareholders unfairly benefit a lot more than workers or consumers.

    Spoiler:
    Show




    Spoiler:
    Show


    I don't even know how good/bad this is. Did I even evaluate properly? Anwyay, thanks to whoever was bothered to read this.

    Offline

    6
    ReputationRep:
    (Original post by Nadine_08)
    Hey guys, I tried to answer the "evaluate the view that inequality is good for us all" question. Can someone give me feedback please and give me an approximate mark? By the way I haven't seen the extract for this question, just answering the question. Also, can you let me know of some appropriate diagrams I can use? Thanks to whoever reads this

    "Evaluate the view that inequality is good for us all."

    Inequality refers to a gap between the highest income earners and lowest income earners and is a form of market failure. There are many disadvantages as well as advantages of inequality.

    One problem of inequality arises from monopsonists using their market power to employ workers at a wage below the competitive equilibrium. This means that the wage workers are paid will be lower than the marginal revenue product (MRP) of labour, leading to a clear unfair distribution of income for workers. This exploitation of consumers is an act that significantly increases inequality and thus market failure as employers/firms benefit a lot more than employees.
    A further disadvantage of monopsonist firms unfairly setting low wages is this may deter or stop workers from working there due to the feeling that they are not being paid enough for the amount of work that they do. This will lead to higher unemployment which is damaging to the economy. However, since monopsonist firms at which low wages are set are usually low skilled jobs, supply of labour is elastic and the firm can replace workers quickly, especially with migrant workers who would be satisified with the low wage level since it may be more than what they would receive in their country of origin, therefore fixing the problem of unemployment. However this would be more likely in the long run as elasticity of demand for labour is less elastic in the short run.

    Monopolist firms can similarly create problems of inequality towards the general population. Since monopolist firms are in a position to set higher prices to consumers, this power is often exploited and consumers are charged very high prices, which they are often forced to accept if the good/service they want is the only one in the market. This exploitation leads to unfair distribution of benefits between consumers and shareholders with shareholders of monopolies gaining a lot of revenue(*diagram below) whilst, consumers, particularly those from low-income backgrounds, pay a large percentage of income on the good/service, unlike higher-income people who won't be affected as much. This problem is worse if the demand for the good/service is inelastic.

    [*diagram showing consumer surplus turned into extra revenue for the seller*(?) : this lower consumer surplus will lead to less disposable income for the consumer, affecting economic growth. However the higher revenue of the seller can actually be a good thing as it can be used for more innovation/development/invention, further increasing consumption which will greatly benefit the economy.]

    A further argument against monopolists setting high prices and increasing inequality is this can create pressure/problems for the government as it will have to intervene and regulate monopolies which can be quite difficult and will deter the government's time and attention away from other areas/problems of the economy.

    Another problem of inequality is that it can lead to many problems within society such as social friction and division between different social classes.This can lead to higher crime levels as well as riots due to anger and resentment of the lower class towards the higher class(especially if this is due to inherited wealth). In this case all members of society will lose out and thus inequality certainly would not be "good for us all".

    However there are some credible arguments in favour of inequality. One of these is based on the idea that if someone works harder and as a result receives a higher wage, this is not market failure and is in fact an incentive encouraging people to work harder and be more productive in order to receive a higher wage. A boost to productivity leads to a higher national output therefore benefiting "all" within the country. Without this alleged 'inequality', there wouldn't be social and economic progression and people wouldn't be motivated to work harder and get to the next level. This meritocratic system by which people's income/wealth is dependent on their productivity is a fair and rational one as people who are good/productive at their job should be merited accordingly whilst people who are lazy and don't work productively should be paid less and this is certainly not market failure or inequality but is in fact a very fair system where every member of society receives what they deserve.

    However some argue that if inequality is due to inherited wealth, this implies genuine inequality issues. For example, rich pupils who attend private schools and are provided with high level education consequently are the pupils that top universities such as Oxford and Cambridge vastly accept and these students go on on obtain the best jobs and highest wages as a result of them being put on a financial pedestal since childhood that makes them more likely to ascend in society than students from less privileged backgrounds. Without this pedestal our society would be a lot more equal and every child would have equal opportunities and start from the same level.

    In counter-argument of the above point, some economists point to the 'Trickle Down Effect' as an advantage of inequality. This effect suggests that the benefits of the wealthy, whether inherited or not, pass down to the rest of society. For example, an investment by a rich entrepreneur in setting up a business may make him/her a millionaire however this business will also create jobs and provide incomes, therefore lowering unemployment and benefiting the economy. There will undoubtedly be a gap between the highest and the lowest earners but it can be argued that the lowest earners are still better off than without the entrepreneur. Therefore 'all' will indeed benefit.

    The view that "inequality is good for us all" is a controversial one and there are credible arguments on either side, however the strongest and most significant is the argument that inequality is good in that in encourages productivity due to people's desire for higher wages. Everyone has an 'equal' chance to work hard and consequently be rewarded in the same way that everyone has an 'equal' chance to not be so productive; individuals are not prevented from higher wages. It is this idea that creates the incentive for people to work harder and consequently be rewarded with higher wages or a higher position and this is greatly beneficial to the economy in terms of higher national output as a result of higher productivity. Therefore in this sense, inequality is indeed 'good', however if the inequality is a result of monopolists or monopsonists unfairly using their power to charge higher prices or to lower wages, then this is a form of inequality that needs to be fixed as these shareholders unfairly benefit a lot more than workers or consumers.

    Spoiler:
    Show


    I don't even know how good/bad this is. Did I even evaluate properly? Anwyay, thanks to whoever was bothered to read this.

    It'd be kind of pointless giving you a mark without using the extract since you'll be severely lacking application
    The extract can be found here: http://filestore.aqa.org.uk/resource...-71361-SQP.PDF
    Offline

    18
    ReputationRep:
    (Original post by Nadine_08)
    Hey guys, I tried to answer the "evaluate the view that inequality is good for us all" question. Can someone give me feedback please and give me an approximate mark? By the way I haven't seen the extract for this question, just answering the question. Also, can you let me know of some appropriate diagrams I can use? Thanks to whoever reads this

    "Evaluate the view that inequality is good for us all."

    Inequality refers to a gap between the highest income earners and lowest income earners and is a form of market failure. There are many disadvantages as well as advantages of inequality.

    One problem of inequality arises from monopsonists using their market power to employ workers at a wage below the competitive equilibrium. This means that the wage workers are paid will be lower than the marginal revenue product (MRP) of labour, leading to a clear unfair distribution of income for workers. This exploitation of consumers is an act that significantly increases inequality and thus market failure as employers/firms benefit a lot more than employees.
    A further disadvantage of monopsonist firms unfairly setting low wages is this may deter or stop workers from working there due to the feeling that they are not being paid enough for the amount of work that they do. This will lead to higher unemployment which is damaging to the economy. However, since monopsonist firms at which low wages are set are usually low skilled jobs, supply of labour is elastic and the firm can replace workers quickly, especially with migrant workers who would be satisified with the low wage level since it may be more than what they would receive in their country of origin, therefore fixing the problem of unemployment. However this would be more likely in the long run as elasticity of demand for labour is less elastic in the short run.

    Monopolist firms can similarly create problems of inequality towards the general population. Since monopolist firms are in a position to set higher prices to consumers, this power is often exploited and consumers are charged very high prices, which they are often forced to accept if the good/service they want is the only one in the market. This exploitation leads to unfair distribution of benefits between consumers and shareholders with shareholders of monopolies gaining a lot of revenue(*diagram below) whilst, consumers, particularly those from low-income backgrounds, pay a large percentage of income on the good/service, unlike higher-income people who won't be affected as much. This problem is worse if the demand for the good/service is inelastic.

    [*diagram showing consumer surplus turned into extra revenue for the seller*(?) : this lower consumer surplus will lead to less disposable income for the consumer, affecting economic growth. However the higher revenue of the seller can actually be a good thing as it can be used for more innovation/development/invention, further increasing consumption which will greatly benefit the economy.]

    A further argument against monopolists setting high prices and increasing inequality is this can create pressure/problems for the government as it will have to intervene and regulate monopolies which can be quite difficult and will deter the government's time and attention away from other areas/problems of the economy.

    Another problem of inequality is that it can lead to many problems within society such as social friction and division between different social classes.This can lead to higher crime levels as well as riots due to anger and resentment of the lower class towards the higher class(especially if this is due to inherited wealth). In this case all members of society will lose out and thus inequality certainly would not be "good for us all".

    However there are some credible arguments in favour of inequality. One of these is based on the idea that if someone works harder and as a result receives a higher wage, this is not market failure and is in fact an incentive encouraging people to work harder and be more productive in order to receive a higher wage. A boost to productivity leads to a higher national output therefore benefiting "all" within the country. Without this alleged 'inequality', there wouldn't be social and economic progression and people wouldn't be motivated to work harder and get to the next level. This meritocratic system by which people's income/wealth is dependent on their productivity is a fair and rational one as people who are good/productive at their job should be merited accordingly whilst people who are lazy and don't work productively should be paid less and this is certainly not market failure or inequality but is in fact a very fair system where every member of society receives what they deserve.

    However some argue that if inequality is due to inherited wealth, this implies genuine inequality issues. For example, rich pupils who attend private schools and are provided with high level education consequently are the pupils that top universities such as Oxford and Cambridge vastly accept and these students go on on obtain the best jobs and highest wages as a result of them being put on a financial pedestal since childhood that makes them more likely to ascend in society than students from less privileged backgrounds. Without this pedestal our society would be a lot more equal and every child would have equal opportunities and start from the same level.

    In counter-argument of the above point, some economists point to the 'Trickle Down Effect' as an advantage of inequality. This effect suggests that the benefits of the wealthy, whether inherited or not, pass down to the rest of society. For example, an investment by a rich entrepreneur in setting up a business may make him/her a millionaire however this business will also create jobs and provide incomes, therefore lowering unemployment and benefiting the economy. There will undoubtedly be a gap between the highest and the lowest earners but it can be argued that the lowest earners are still better off than without the entrepreneur. Therefore 'all' will indeed benefit.

    The view that "inequality is good for us all" is a controversial one and there are credible arguments on either side, however the strongest and most significant is the argument that inequality is good in that in encourages productivity due to people's desire for higher wages. Everyone has an 'equal' chance to work hard and consequently be rewarded in the same way that everyone has an 'equal' chance to not be so productive; individuals are not prevented from higher wages. It is this idea that creates the incentive for people to work harder and consequently be rewarded with higher wages or a higher position and this is greatly beneficial to the economy in terms of higher national output as a result of higher productivity. Therefore in this sense, inequality is indeed 'good', however if the inequality is a result of monopolists or monopsonists unfairly using their power to charge higher prices or to lower wages, then this is a form of inequality that needs to be fixed as these shareholders unfairly benefit a lot more than workers or consumers.

    Spoiler:
    Show


    I don't even know how good/bad this is. Did I even evaluate properly? Anwyay, thanks to whoever was bothered to read this.

    Eval weak, you wrote too much, monopsonist piece pretty useless
    Offline

    4
    ReputationRep:
    (Original post by TonyStark98)
    It'd be kind of pointless giving you a mark without using the extract since you'll be severely lacking application
    The extract can be found here: http://filestore.aqa.org.uk/resource...-71361-SQP.PDF
    Of course I would add application in the exam, but just thought maybe someone could tell me approximately how many marks it would be judging by the rest of the content
    Offline

    4
    ReputationRep:
    (Original post by citibankrec)
    Eval weak, you wrote too much, monopsonist piece pretty useless
    Haha I'm aware it's too much, I kinda wanted to write everything I could just for revision. Definitely wouldn't write this much in the exam.

    Why is the monopsonist part useless?
    Offline

    6
    ReputationRep:
    (Original post by Nadine_08)
    Of course I would add application in the exam, but just thought maybe someone could tell me approximately how many marks it would be judging by the rest of the content
    Honestly I'd say level 2 maybe low level 3 at a push.
    You went into too much detail about monopsony buyers of labour when this wasn't the question being asked. Despite your analysis making sense, a lot of it not being relevant to the question will mean that you won't meet the criteria even for level 3: "Some reasonable analysis but generally unsupported evaluation that:
    focuses on issues that are relevant to the question"
    For your analysis you should 2 paragraphs on benefits of inequality with evaluation at the end of each paragraph. And then do the same for negative effects of inequality
    Offline

    11
    ReputationRep:
    I just don't get the benefits of nationalisation, why is it useful how is it better than letting private firms compete with each other( or would that be unlikely because most nationalised industries are natural monopolies anyways?) Do I even understand it? I'm just little stuck nationalisation within the financial market makes sense with the systemic risk and all that, but for example why would we nationalize railways?

    Sorry if I'm not making sense I think I'm going a little crazy trying to understand this Just think its hard to think I advantages that could be developed well
    Offline

    2
    ReputationRep:
    (Original post by physicsamor)
    I just don't get the benefits of nationalisation, why is it useful how is it better than letting private firms compete with each other( or would that be unlikely because most nationalised industries are natural monopolies anyways?) Do I even understand it? I'm just little stuck nationalisation within the financial market makes sense with the systemic risk and all that, but for example why would we nationalize railways?

    Sorry if I'm not making sense I think I'm going a little crazy trying to understand this Just think its hard to think I advantages that could be developed well
    Of course the case for nationalisation would depend on the context given but generally speaking the main benefits are that profits are more likely to go into investment (R&D) under government control than under private control as the government doesn't have shareholders to keep happy.

    Secondly, in the case of a natural monopoly, the large market the government could access would be of great benefit in terms of economies of scale, leading to lower costs, prices etc.... but of course if a natural monopoly industry was made contestable then scope for EOS goes, and arguably costs and thus prices will be higher.

    Hope this helps
    Offline

    2
    ReputationRep:
    (Original post by Certified)
    Has anyone got last year's AS paper? 2016
    http://filestore.aqa.org.uk/sample-p...1-QP-JUN16.PDF
    http://filestore.aqa.org.uk/sample-p...2-QP-JUN16.PDF
    Offline

    9
    ReputationRep:
    Has anyone got an essay regarding for and against government intervention? Context based. Really need to read it pls.
    Offline

    9
    ReputationRep:
    When mark schemes talk about decentralisation of using the free market what do they mean?
    Offline

    11
    ReputationRep:
    (Original post by AD490995)
    Of course the case for nationalisation would depend on the context given but generally speaking the main benefits are that profits are more likely to go into investment (R&D) under government control than under private control as the government doesn't have shareholders to keep happy.

    Secondly, in the case of a natural monopoly, the large market the government could access would be of great benefit in terms of economies of scale, leading to lower costs, prices etc.... but of course if a natural monopoly industry was made contestable then scope for EOS goes, and arguably costs and thus prices will be higher.

    Hope this helps
    Thank you this really cleared it up
    Can you explain the last bit on if the market is made more contestable.. how could that happen with nationalisation?
    Offline

    11
    ReputationRep:
    (Original post by TonyStark98)
    Using the Fisher equation: MV=PQ

    Monetarists argue that V (the velocity of circulation of money) and Q (output) remain constant, or at least stable. Therefore any increase in M (the money supply) will only lead the a rise in P (the price level), hence any use of QE will be inflationary and won't increase real output.

    However Keynesian economists say that it is too strong of an assumption to say that V & Q are constant and thus QE can be used stimulate real growth
    Ah I need to go over this, thanks for explaining it nicely
    Offline

    1
    ReputationRep:
    (Original post by physicsamor)
    I just don't get the benefits of nationalisation, why is it useful how is it better than letting private firms compete with each other( or would that be unlikely because most nationalised industries are natural monopolies anyways?) Do I even understand it? I'm just little stuck nationalisation within the financial market makes sense with the systemic risk and all that, but for example why would we nationalize railways?

    Sorry if I'm not making sense I think I'm going a little crazy trying to understand this Just think its hard to think I advantages that could be developed well
    You could say that they would produce at the socially optimal level, for example if there is a good or service being underproduce they will supply more of it because they are taking the positive externalities into account.
    Offline

    2
    ReputationRep:
    Any predictions as to what topics are going to come up in Paper 1?
 
 
 
  • See more of what you like on The Student Room

    You can personalise what you see on TSR. Tell us a little about yourself to get started.

  • Poll
    Would you like to hibernate through the winter months?
  • See more of what you like on The Student Room

    You can personalise what you see on TSR. Tell us a little about yourself to get started.

  • The Student Room, Get Revising and Marked by Teachers are trading names of The Student Room Group Ltd.

    Register Number: 04666380 (England and Wales), VAT No. 806 8067 22 Registered Office: International House, Queens Road, Brighton, BN1 3XE

    Quick reply
    Reputation gems: You get these gems as you gain rep from other members for making good contributions and giving helpful advice.