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    How was the paper guys? Did you guys do context 1 or 2? Also how hard would you rate the multiple choice questions?
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    I did context one because it looked easier. And i quite liked the multiple choice none were particularly tricky.
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    (Original post by Sophiegraceb)
    I did context one because it looked easier. And i quite liked the multiple choice none were particularly tricky.
    Hey. What did you guys put for the graph question. I shifted AD out and showed the effects on the price and quantity.
    Also for the def i put cost of borrowing or reward for saving. Would that get 3 marms?
    Also for thr 10M i talked about interest rates and also the house prices and if house prices rise it could mean demand for borrowing falls as people cannot borrow the amount they need bu it could also means that demand for borrowing increases as it will increase peoples long term wealth of assets. I drew one graph to explain the exchange rates.

    What did people put for the essah Q?
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    (Original post by AtiMo)
    How was the paper guys? Did you guys do context 1 or 2? Also how hard would you rate the multiple choice questions?
    Could you please tell me the questions for 10 marks and 25 marks both on context A and B please? if u still remember the questions... thx
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    K
    (Original post by Katie Moore_007)
    Could you please tell me the questions for 10 marks and 25 marks both on context A and B please? if u still remember the questions... thx
    Context A 10M question= describe 2 factors which influence household borrowing. Essay 25M was something like describe the extent to which fiscal and monetary policy will create sustained growth
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    (Original post by MilenaKaterina)
    Hey. What did you guys put for the graph question. I shifted AD out and showed the effects on the price and quantity.
    Also for the def i put cost of borrowing or reward for saving. Would that get 3 marms?
    Also for thr 10M i talked about interest rates and also the house prices and if house prices rise it could mean demand for borrowing falls as people cannot borrow the amount they need bu it could also means that demand for borrowing increases as it will increase peoples long term wealth of assets. I drew one graph to explain the exchange rates.

    What did people put for the essah Q?
    Could you please tell me the questions for 10 marks and 25 marks both on context A and B please? if u still remember the questions... thx
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    (Original post by MilenaKaterina)
    K


    Context A 10M question= describe 2 factors which influence household borrowing. Essay 25M was something like describe the extent to which fiscal and monetary policy will create sustained growth
    OMG, thank you so much cus I think my teacher will use this paper for my upcoming mocks, btw did you still remember the questions for context B if possible...
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    25 marker:

    Expansionary fiscal policy - intends to increase AD through lower taxes and more government spending. Injection into the circular flow of income, so national income and AD increases. Recession - negative output gap - economy performing under trend rate of growth - on the shallow/elastic part of the AS curve, so increases in AD will lead to a greater proportionate increase in output than in price level and may lead to no increase in price level if it is on the horizontal part of the AS curve - no demand-pull inflation pressure. So, there is a reflationary effect in the policy. However, due to the multiplier effect - AD may shift multiple times leading to it eventually leading to demand-pull inflation as the economy nears full employment and normal capacity (longer term). Hence, it may not be sustainable in the long term. Furthermore, there are time lags in the policy working - people may take time to respond to lower taxes and also during a recession - animal spirits (business and consumer confidence) is low and pessimism increases in businesses and consumers, leading to possibly no effect or smaller effects in AD as consumption may not rise as much as expected, so the policy may be ineffective. Another evaluation point is the increasing government budget deficit also shown in the extract - shows that eventually the government will need to borrow more money and may tighten the fiscal policy in the future to get rid of the budget deficit so it is not sustainable in the long term (however, this could easily be evaluated again that economic growth means increased incomes for workers and therefore increased tax revenue in the future may reduce the budget deficit itself). The increases in AD lead to lower unemployment levels as labour is derived demand and producing the output requires workers. Another evaluation for this policy is that in the long-term, when economies grow, this may lead to inflationary pressures due to confidence rising and demand-pull inflation occurs. This will lead to the UK's domestically produced goods (exports) seem relatively more expensive compared to its trading partners and imports cheaper in comparison to their domestically produced goods, so the balance of trade worsens and a deficit may increase which is a recurring problem for the UK which has a bad and unstable balance of payments on the current account. Also, the fact that the UK has a high marginal propensity to import may reinforce this issue as when the economy and real income grows, the MPM will incease and more people will import leading to a worsening of the balance of payments on the current account. Therefore, the policy does not meet all the macroeconomic objectives and though it may help the economy out of a recession, it will not be sustainable in the future. It can be well argued that the demand-pull inflation fixes itself through more imports as the price level rises, so AD shifts to the left again - however this remains ceterius paribus and is not likely to occur as consumption will be rising and it takes around 2/3 of the aggregate demand, being the largest component so it will offset any decreases in AD caused by increased imports.

    Expansionay monetary policy - decreasing interest rates. Decreasing interest rates means that the cost of borrowing is less and the reward for saving is lower. Therefore, rational consumers within the economy will take this advantage to borrow money now and spend it on goods and services before the interest rates increase again. This is also likely to cause firms to invest in capital goods to improve their productivity and international competitiveness, helping the consumers in the economy through the form of lower prices as the SRAS shifts to the right. The initial increase in investment and consumption can lead to a multiplier effect, again leading to demand-pull inflation eventually, however this can be offset by the decrease in price level caused by the SRAS shifting to the right. However, this requires early investment (in the early stages of the recession) which is unlikely as in the recession, the economy is currently operating under its trend rate of growth and in a negative output gap, there is a lot of unemployed labou and capital, therefore there is tons of spare capacity in the economy - which may deter businesses from investing in capital as they will want to produce the output using the spare capacity, instead of wasting it or using it later - especially in the case of workers as this could lead to boredom and de-skilling, which would decrease their productivity. Furthermore, workers cost less than capital-intensive machines and therefore they are the cheaper method to produce output, especially in a recession when businesses are making losses. In addition, as in a recession - there is a lot of unutilised labour - the labour market is loose - there is excess supply of labour and therefore the businesses can push down wages reducing the power of trade unions and lead to lower costs of production, shifting the SRAS to the right, again reducing inflationary pressures. However, in the longer-term when the business and consumer confidences increase, the sustainable economic growth and rises in national income may lead to the accelerator effect taking place as the national income may lead to a proportionately larger rise in investment by firms, hoping to make profits in the long-term and increasing the productive potential of the economy which will lead to further decreases in price level and make the economy more internationally competitive. So, unemployment is massively reduced and excess supply and labour is absorbed in the process of short-run economic growth, and the underlying trend rate of growth may increase (above 2.5% which is currently its rate of growth in the UK). It would also lead to price stability and possibly the balance of payments improving due to increases in the international competitiveness. However, this would require all exogenous factors remaining constant and no demand/supply-side shocks hitting the economy, as all of these events 'may' happen in the long term and it all depends on consumer and business confidence - the animal spirits determine what happens in the economy and as economics is a social science - policy may not have their intended effects as consumers don't always follow traditional economic theory. In addition, in a recession sometimes - due to low animal spirits, reducing interest rates do not always work - for example in the case of the liquidity trap where interest rates were dropped to zero with not as much demand stimulated as expected, leading to a large opportunity cost in the policy. Also, there are time lags with every policy and the monetary policy may take 18-24 months to work and the economy may have already recovered from the recession by then!

    Another option of the monetary policy is to change the exchange rate - through depreciation. The depreciation of the exchange rate reduces the price level of the UK's goods and services, making them more internationally competitive. This makes their exports more cheaper relative to trading partners and imports more expensive relative to their domestically produced goods. This may lead to an increase in net exports and therefore aggregate demand and export-led growth for the UK, however this depends on the Marshall-Lerner condition and will only work if the sum of the elasticities for the UK's exports and imports are greater than 1 - so if they are both elastic to changes in the price level. Otherwise, the total value of exports and imports may not increase and decrease as wanted.
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    (Original post by Chittesh14)
    25 marker:

    Expansionary fiscal policy - intends to increase AD through lower taxes and more government spending. Injection into the circular flow of income, so national income and AD increases. Recession - negative output gap - economy performing under trend rate of growth - on the shallow/elastic part of the AS curve, so increases in AD will lead to a greater proportionate increase in output than in price level and may lead to no increase in price level if it is on the horizontal part of the AS curve - no demand-pull inflation pressure. So, there is a reflationary effect in the policy. However, due to the multiplier effect - AD may shift multiple times leading to it eventually leading to demand-pull inflation as the economy nears full employment and normal capacity (longer term). Hence, it may not be sustainable in the long term. Furthermore, there are time lags in the policy working - people may take time to respond to lower taxes and also during a recession - animal spirits (business and consumer confidence) is low and pessimism increases in businesses and consumers, leading to possibly no effect or smaller effects in AD as consumption may not rise as much as expected, so the policy may be ineffective. Another evaluation point is the increasing government budget deficit also shown in the extract - shows that eventually the government will need to borrow more money and may tighten the fiscal policy in the future to get rid of the budget deficit so it is not sustainable in the long term (however, this could easily be evaluated again that economic growth means increased incomes for workers and therefore increased tax revenue in the future may reduce the budget deficit itself). The increases in AD lead to lower unemployment levels as labour is derived demand and producing the output requires workers. Another evaluation for this policy is that in the long-term, when economies grow, this may lead to inflationary pressures due to confidence rising and demand-pull inflation occurs. This will lead to the UK's domestically produced goods (exports) seem relatively more expensive compared to its trading partners and imports cheaper in comparison to their domestically produced goods, so the balance of trade worsens and a deficit may increase which is a recurring problem for the UK which has a bad and unstable balance of payments on the current account. Also, the fact that the UK has a high marginal propensity to import may reinforce this issue as when the economy and real income grows, the MPM will incease and more people will import leading to a worsening of the balance of payments on the current account. Therefore, the policy does not meet all the macroeconomic objectives and though it may help the economy out of a recession, it will not be sustainable in the future. It can be well argued that the demand-pull inflation fixes itself through more imports as the price level rises, so AD shifts to the left again - however this remains ceterius paribus and is not likely to occur as consumption will be rising and it takes around 2/3 of the aggregate demand, being the largest component so it will offset any decreases in AD caused by increased imports.

    Expansionay monetary policy - decreasing interest rates. Decreasing interest rates means that the cost of borrowing is less and the reward for saving is lower. Therefore, rational consumers within the economy will take this advantage to borrow money now and spend it on goods and services before the interest rates increase again. This is also likely to cause firms to invest in capital goods to improve their productivity and international competitiveness, helping the consumers in the economy through the form of lower prices as the SRAS shifts to the right. The initial increase in investment and consumption can lead to a multiplier effect, again leading to demand-pull inflation eventually, however this can be offset by the decrease in price level caused by the SRAS shifting to the right. However, this requires early investment (in the early stages of the recession) which is unlikely as in the recession, the economy is currently operating under its trend rate of growth and in a negative output gap, there is a lot of unemployed labou and capital, therefore there is tons of spare capacity in the economy - which may deter businesses from investing in capital as they will want to produce the output using the spare capacity, instead of wasting it or using it later - especially in the case of workers as this could lead to boredom and de-skilling, which would decrease their productivity. Furthermore, workers cost less than capital-intensive machines and therefore they are the cheaper method to produce output, especially in a recession when businesses are making losses. In addition, as in a recession - there is a lot of unutilised labour - the labour market is loose - there is excess supply of labour and therefore the businesses can push down wages reducing the power of trade unions and lead to lower costs of production, shifting the SRAS to the right, again reducing inflationary pressures. However, in the longer-term when the business and consumer confidences increase, the sustainable economic growth and rises in national income may lead to the accelerator effect taking place as the national income may lead to a proportionately larger rise in investment by firms, hoping to make profits in the long-term and increasing the productive potential of the economy which will lead to further decreases in price level and make the economy more internationally competitive. So, unemployment is massively reduced and excess supply and labour is absorbed in the process of short-run economic growth, and the underlying trend rate of growth may increase (above 2.5% which is currently its rate of growth in the UK). It would also lead to price stability and possibly the balance of payments improving due to increases in the international competitiveness. However, this would require all exogenous factors remaining constant and no demand/supply-side shocks hitting the economy, as all of these events 'may' happen in the long term and it all depends on consumer and business confidence - the animal spirits determine what happens in the economy and as economics is a social science - policy may not have their intended effects as consumers don't always follow traditional economic theory. In addition, in a recession sometimes - due to low animal spirits, reducing interest rates do not always work - for example in the case of the liquidity trap where interest rates were dropped to zero with not as much demand stimulated as expected, leading to a large opportunity cost in the policy. Also, there are time lags with every policy and the monetary policy may take 18-24 months to work and the economy may have already recovered from the recession by then!

    Another option of the monetary policy is to change the exchange rate - through depreciation. The depreciation of the exchange rate reduces the price level of the UK's goods and services, making them more internationally competitive. This makes their exports more cheaper relative to trading partners and imports more expensive relative to their domestically produced goods. This may lead to an increase in net exports and therefore aggregate demand and export-led growth for the UK, however this depends on the Marshall-Lerner condition and will only work if the sum of the elasticities for the UK's exports and imports are greater than 1 - so if they are both elastic to changes in the price level. Otherwise, the total value of exports and imports may not increase and decrease as wanted.
    Was it not tightening fiscal policy? Meaning contractionary?
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    (Original post by Jesse2106)
    Was it not tightening fiscal policy? Meaning contractionary?
    Yes it was, the aim of the essay was to assess the impacts of monetry and fiscal policy on an economy such as the UK during a recovery period. In the extracts it mentioned how the government was using tighter fiscal policy, it was introducing austerity measures but was dialling back taxation, and kind of just increasing cuts to government spending. What were your conclusions? I concluded that monetary policy, if coupled with supply side policies, could be very effective in sustaining growth throughout this period, since it tackles the demand and supply side of the economy to promote growth. Additionally, monetary policy should lead to increased business confidence and employment, which would lead to increased tax revenue by governments, this in turn could be used to finance supply side policies. Moreover, even though their is time lag in the use of supply side policies, the economic cycle fluctuates over periods of 4-12 years, so periods are long lasting anyway.
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    (Original post by Jesse2106)
    Was it not tightening fiscal policy? Meaning contractionary?
    Yes, but it said fiscal and monetary policy - not specifically contractionary policy lol. So, I was thinking that I separated them and talked about them individually - tbh I didn't read the question so I may have done it all wrong lol, but w/e.
    Either you could read the question in that way how the tightening fiscal policy and expansionary monetary policy would work together to bring the economy out of recession, but I don't see how tightening would make any sense - but it made sense with the extract as budget deficits rose etc. I guess it's how you interpreted the question, I also felt I interpreted it incorrectly lol but I did talk about monetary and supply side policies in my conclusion too.
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    I did context 1 because it looked generally easier and he 25 marker fit with the type i had been practising. Overall I found the multiple choice really easy with 3 harder questions but I can't remember them
    (Original post by AtiMo)
    How was the paper guys? Did you guys do context 1 or 2? Also how hard would you rate the multiple choice questions?
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    (Original post by ZeviS123)
    I did context 1 because it looked generally easier and he 25 marker fit with the type i had been practising. Overall I found the multiple choice really easy with 3 harder questions but I can't remember them
    Did you also take the micro one last week? Did you remember the questions for 10M and 25M for monopoly one?
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    Did anyone remember the micro questions for 10M and 25M for monopoly one? Urgent!!
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    (Original post by Chittesh14)
    25 marker:

    Expansionary fiscal policy - intends to increase AD through lower taxes and more government spending. Injection into the circular flow of income, so national income and AD increases. Recession - negative output gap - economy performing under trend rate of growth - on the shallow/elastic part of the AS curve, so increases in AD will lead to a greater proportionate increase in output than in price level and may lead to no increase in price level if it is on the horizontal part of the AS curve - no demand-pull inflation pressure. So, there is a reflationary effect in the policy. However, due to the multiplier effect - AD may shift multiple times leading to it eventually leading to demand-pull inflation as the economy nears full employment and normal capacity (longer term). Hence, it may not be sustainable in the long term. Furthermore, there are time lags in the policy working - people may take time to respond to lower taxes and also during a recession - animal spirits (business and consumer confidence) is low and pessimism increases in businesses and consumers, leading to possibly no effect or smaller effects in AD as consumption may not rise as much as expected, so the policy may be ineffective. Another evaluation point is the increasing government budget deficit also shown in the extract - shows that eventually the government will need to borrow more money and may tighten the fiscal policy in the future to get rid of the budget deficit so it is not sustainable in the long term (however, this could easily be evaluated again that economic growth means increased incomes for workers and therefore increased tax revenue in the future may reduce the budget deficit itself). The increases in AD lead to lower unemployment levels as labour is derived demand and producing the output requires workers. Another evaluation for this policy is that in the long-term, when economies grow, this may lead to inflationary pressures due to confidence rising and demand-pull inflation occurs. This will lead to the UK's domestically produced goods (exports) seem relatively more expensive compared to its trading partners and imports cheaper in comparison to their domestically produced goods, so the balance of trade worsens and a deficit may increase which is a recurring problem for the UK which has a bad and unstable balance of payments on the current account. Also, the fact that the UK has a high marginal propensity to import may reinforce this issue as when the economy and real income grows, the MPM will incease and more people will import leading to a worsening of the balance of payments on the current account. Therefore, the policy does not meet all the macroeconomic objectives and though it may help the economy out of a recession, it will not be sustainable in the future. It can be well argued that the demand-pull inflation fixes itself through more imports as the price level rises, so AD shifts to the left again - however this remains ceterius paribus and is not likely to occur as consumption will be rising and it takes around 2/3 of the aggregate demand, being the largest component so it will offset any decreases in AD caused by increased imports.

    Expansionay monetary policy - decreasing interest rates. Decreasing interest rates means that the cost of borrowing is less and the reward for saving is lower. Therefore, rational consumers within the economy will take this advantage to borrow money now and spend it on goods and services before the interest rates increase again. This is also likely to cause firms to invest in capital goods to improve their productivity and international competitiveness, helping the consumers in the economy through the form of lower prices as the SRAS shifts to the right. The initial increase in investment and consumption can lead to a multiplier effect, again leading to demand-pull inflation eventually, however this can be offset by the decrease in price level caused by the SRAS shifting to the right. However, this requires early investment (in the early stages of the recession) which is unlikely as in the recession, the economy is currently operating under its trend rate of growth and in a negative output gap, there is a lot of unemployed labou and capital, therefore there is tons of spare capacity in the economy - which may deter businesses from investing in capital as they will want to produce the output using the spare capacity, instead of wasting it or using it later - especially in the case of workers as this could lead to boredom and de-skilling, which would decrease their productivity. Furthermore, workers cost less than capital-intensive machines and therefore they are the cheaper method to produce output, especially in a recession when businesses are making losses. In addition, as in a recession - there is a lot of unutilised labour - the labour market is loose - there is excess supply of labour and therefore the businesses can push down wages reducing the power of trade unions and lead to lower costs of production, shifting the SRAS to the right, again reducing inflationary pressures. However, in the longer-term when the business and consumer confidences increase, the sustainable economic growth and rises in national income may lead to the accelerator effect taking place as the national income may lead to a proportionately larger rise in investment by firms, hoping to make profits in the long-term and increasing the productive potential of the economy which will lead to further decreases in price level and make the economy more internationally competitive. So, unemployment is massively reduced and excess supply and labour is absorbed in the process of short-run economic growth, and the underlying trend rate of growth may increase (above 2.5% which is currently its rate of growth in the UK). It would also lead to price stability and possibly the balance of payments improving due to increases in the international competitiveness. However, this would require all exogenous factors remaining constant and no demand/supply-side shocks hitting the economy, as all of these events 'may' happen in the long term and it all depends on consumer and business confidence - the animal spirits determine what happens in the economy and as economics is a social science - policy may not have their intended effects as consumers don't always follow traditional economic theory. In addition, in a recession sometimes - due to low animal spirits, reducing interest rates do not always work - for example in the case of the liquidity trap where interest rates were dropped to zero with not as much demand stimulated as expected, leading to a large opportunity cost in the policy. Also, there are time lags with every policy and the monetary policy may take 18-24 months to work and the economy may have already recovered from the recession by then!

    Another option of the monetary policy is to change the exchange rate - through depreciation. The depreciation of the exchange rate reduces the price level of the UK's goods and services, making them more internationally competitive. This makes their exports more cheaper relative to trading partners and imports more expensive relative to their domestically produced goods. This may lead to an increase in net exports and therefore aggregate demand and export-led growth for the UK, however this depends on the Marshall-Lerner condition and will only work if the sum of the elasticities for the UK's exports and imports are greater than 1 - so if they are both elastic to changes in the price level. Otherwise, the total value of exports and imports may not increase and decrease as wanted.
    Was this the 2017 or 2016 paper?
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    (Original post by kspread)
    Was this the 2017 or 2016 paper?
    2017
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    what came up in the micro paper?
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    anyone remember any multiple choice questions at all? any would be appreciated
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    His that contex B or A?
 
 
 

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