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    (Original post by TonyStark98)
    During a negative output gap the government's spending on unemployment benefits go up and the tax revenue collected from incomes and profits fall. This causes AD to shift right increasing GDP
    The opposite is true during a positive output gap
    So when it says in a period of high economic growth automatic stabilisers will help to reduce growth, how?
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    (Original post by BintM)
    So when it says in a period of high economic growth automatic stabilisers will help to reduce growth, how?
    Government spending on benefits fall, AD falls (C + I + G + (X - M))
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    (Original post by SWISH99)
    how do you think it could be used in an essay?
    You could use it to evaluate active use of fiscal policy, arguing that automatic stabilizers will ensure that growth won't be unsustainable and that intervention may not be necessary
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    could you say that trade diversion would lead to a left shift of SRAS?
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    I dont understand 2 things can you help=

    BOP deficit fall in X-M leads to a fall in AD. How does this make sense? How would i put that into writing in an exam. If a bop deficit exports are cheaper surely due to the falling exchange rate so wouldn't AD rise?

    If i had a worsening of BOP- and i showed exchange rate falling what diagram would I use? I couldn't show an increase in demand for the pound but surely a fall in the exchange rate leads to an increase in demand for pound and a fall in supply?? Im confused
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    (Original post by junky27)
    I dont understand 2 things can you help=

    BOP deficit fall in X-M leads to a fall in AD. How does this make sense? How would i put that into writing in an exam. If a bop deficit exports are cheaper surely due to the falling exchange rate so wouldn't AD rise?

    If i had a worsening of BOP- and i showed exchange rate falling what diagram would I use? I couldn't show an increase in demand for the pound but surely a fall in the exchange rate leads to an increase in demand for pound and a fall in supply?? Im confused
    1. A balance of payments deficit means that imports are greater than exports. AD= (exports-imports) So as your imports are larger, you ad will be lower/decrease.

    Decreasing the exchange rate, can be used to decrease the deficit, as your exports will become cheaper which will lead to a rise in the AD. But I guess theres a lag indicator? Not really sure, hopefully someone else can help.

    2. As for the diagram im not sure? I would probably just go with what you said. Im not sure how to explain it though.
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    (Original post by junky27)
    I dont understand 2 things can you help=

    BOP deficit fall in X-M leads to a fall in AD. How does this make sense? How would i put that into writing in an exam. If a bop deficit exports are cheaper surely due to the falling exchange rate so wouldn't AD rise?

    If i had a worsening of BOP- and i showed exchange rate falling what diagram would I use? I couldn't show an increase in demand for the pound but surely a fall in the exchange rate leads to an increase in demand for pound and a fall in supply?? Im confused
    You would show an increase in supply for the pound.This would be becuase when theres a current account deficit consumers are importing more and to import they need to swap their pounds for another currency which would cause supply of the pound to shift outwards
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    Basically guys Ive had loads of other exams from other subjects and therefore haven't really had much time to revise macro... obviously I have little time so what would you recommend I go over in this short time? Please help..
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    (Original post by mo501)
    Basically guys Ive had loads of other exams from other subjects and therefore haven't really had much time to revise macro... obviously I have little time so what would you recommend I go over in this short time? Please help..
    Lol I have exams the day after this macro one it's hard to balance it all. So even im struggling.
    I would revise
    Balance of Payments
    Pros and Cons of globalisation/free trade
    Diagrams
    Fiscal policy/austerity
    And if you have time
    Barriers to development
    Policies to improve development
    Andd there's that financial market stuff too but that's up to you
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    (Original post by physicsamor)
    Lol I have exams the day after this macro one it's hard to balance it all. So even im struggling.
    I would revise
    Balance of Payments
    Pros and Cons of globalisation/free trade
    Diagrams
    Fiscal policy/austerity
    And if you have time
    Barriers to development
    Policies to improve development
    Andd there's that financial market stuff too but that's up to you
    Trust this dude, some good advise. Obviously make sure you know your key terms i.e. expansionary monetary / fiscal policy

    screw financial markets pick other context & no problem.
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    (Original post by luciferhf)
    Trust this dude, some good advise. Obviously make sure you know your key terms i.e. expansionary monetary / fiscal policy

    screw financial markets pick other context & no problem.
    Lol trust I'm avoiding financial markets ill learn it for paper 3 though
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    (Original post by physicsamor)
    Lol I have exams the day after this macro one it's hard to balance it all. So even im struggling.
    I would revise
    Balance of Payments
    Pros and Cons of globalisation/free trade
    Diagrams
    Fiscal policy/austerity
    And if you have time
    Barriers to development
    Policies to improve development
    Andd there's that financial market stuff too but that's up to you
    Thanks! - didn't realise barriers to development and policies to improve development were topics? :/ awk
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    Anyone think a question on on the weak £ will come up? If so, what would you say are the costs and benefits to fill up 25 marks :/?
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    Also does anyone think a question on fixed Vs floating exchange rates will come up?
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    (Original post by ayyboss)
    Also does anyone think a question on fixed Vs floating exchange rates w
    haven't really seen any recent questions on them so theres a chance
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    (Original post by mo501)
    Thanks! - didn't realise barriers to development and policies to improve development were topics? :/ awk
    You are doing aqa right? It's part of the development economics bit.
    Here's a brief overview
    Econ development - the process of improving people's economic well being and quality of life
    In many ledcs there are often barriers to development due to things like
    -The savings gaps, savings are needed to finance investment, but extreme poverty, lack of proper financial services means people don't save, this limits capital investment, potential stunt on growth
    - leds have a primary product dependency problem
    - corruption / political conflict
    - exploited by mncs (cost of globalisation)
    Policies:
    Intervention based:
    Import substitution
    Currency manipulation
    Aid
    Market based:
    Deregulation
    FDI
    Microfinances
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    (Original post by ayyboss)
    Anyone think a question on on the weak £ will come up? If so, what would you say are the costs and benefits to fill up 25 marks :/?
    Weak pound - depreciation of the exchange rate
    Weak pound, exports cheaper, imports dearer woo, demand for x increases, export sales increase import sales decrease wooo perhaps improves current account deficit, export-led growth multiplier effect, employment increases, sr economic growth could lead to long run econ growth but depends on elasticity of x and m, mpc, mmarshall learner condition/ j curve and demand pull inflation, inflation at 2.3% above target level. Could lead to stagflation but we are in a negative output gap so there is spare capacity

    And if imports are dearer, cost push inflation we've seen in the Uk economy. We import a large % of raw materials and food stuff, arguably bad for the economy because we risk imported inflation and all the negative effects of that

    We have had long periods of a weak pound, low interest rates and yet we haven't seen a massive improvment in exports, even if exports are cheaper would it really do anything? Because it's been ineffective into bringing anything good.
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    Anyone else feel like crying about tomorrows exam?
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    (Original post by AindowJ)
    Anyone else feel like crying about tomorrows exam?
    Yep
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    Lol I think I'm going to call an early night and head off to sleep, I however feel unprepared but honestly can't wait to do it.
    Mental note to self: (nneed to makesure I know this)
    What is the presbisch-singer hypothesis?
    Pros and Cons of aid.
    Eval of one nterventionist and one market policy
    What is the Harrod domar model
    Types of supply side policies
    globalisation to the UK
    Costs of globalisation to ledcs
    Reasons for the UK CAD
    Effects of QE
    Comparative advantages and benefits of free trade
    Benefits of the single market
    Benefits of a monetary union
    Floating/fixed exchange rates

    I basically have the whole course rip but hopefully I'll go over these tomorrow 😊
 
 
 
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