OCR 2888: Economics in a European Context Watch

steve2006
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#221
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#221
i got a question: Why arent the benefits of lower production costs passed onto the consumers?
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jeff_coates
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#222
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Hey guys. I've been reading your posts/ notes and they've all been really helpful but the only this i'm struggling with is the fiscal harmonisation thing. Can anyone give me a few points on how fiscal harmonisation leads to price convergence? thanks
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lizi100
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Hi guys, this forum is amazing and has answered loads of my questions, BUT i have a few more!
1) How can Czech invest attract FDI to Czech Republic from service industries? I think it means how can they attract other services so that the country is not dependant on the car industry?

2)Does an inflow of FDI increase AS or AD? I get confused becuase i would initially say AS, but then AD= C+G+I+(X-M), and so does it therefore increase AD becuase on investment?

3)Does the failure of the car manufacturers to reach their voluntary commitment target of 140g/km, represent market failure?

4) Is it necessary to draw diagrams in this exam? i will probably draw the negative externalities one and maybe a simple AS/AD, but will there be any need for more detailed diagrams?

5) I have done a little bit of background reading of articles on the net and i was wondering if i was to quote figures and stats from these other articles would i be credited or would it make no difference? Also would i have to quote where i got the information from?

FINALY...
6)Are there any tips for evaluation, this is always my downfall?

Sorry so many questions! Please help! im stressing over this exam soo much!
Thanks x
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lizi100
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#224
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#224
(Original post by steve2006)
i got a question: Why arent the benefits of lower production costs passed onto the consumers?
If u are refering to what i says in the introduction about how "it is not clear whether the benefits of low production costs in CEE economies have been passed through to consumers in the EU-15" -this could be due to a few reasons:
The firms that are accessing the lower production costs may choose not to lower their prices, and instead increase their profit margin. Firms are likely to keep prices higher in EU15 countries because they have higher GDP per capita in general and therefore consumers can afford to, and will pay higher prices.
-Also may be due to the high transport costs once the cars are produced to reach the EU15 countires,therefore cancelling out the lower production costs with higher transportation costs.
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lizi100
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#225
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(Original post by jeff_coates)
Hey guys. I've been reading your posts/ notes and they've all been really helpful but the only this i'm struggling with is the fiscal harmonisation thing. Can anyone give me a few points on how fiscal harmonisation leads to price convergence? thanks
I can try!...
what i undestand of fiscal harmonisation is the Centralisation of fiscal policy controls. Meaning tax rates converge and also tax revenue gained from a booming economy within the EU, will be injected into another economy that isnt doing so well. This helps prices converge because fiscal harmonisation is a deepening of integration which leads to a Monetary union (stage 5 of integration). Deeper integration leads to price convergence, maybe due to increased transparency, or the fact that the economies of the EU will be made closer together in terms of their level of growth and economic cycle.

not sure if that is 100% correct but it is what i understand of it!
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boyz123
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(Original post by lizi100)
2)Does an inflow of FDI increase AS or AD? I get confused becuase i would initially say AS, but then AD= C+G+I+(X-M), and so does it therefore increase AD becuase on investment?
the inflow of FDI increases both AD and AS in the long run .As investment is one component of AD, increase in investment cause the shift outward of AD .But in the long run , the higher inward investment will raise the productive capacity of the economy ,leading to shift outward of AS.
Hope that helps .
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lizi100
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#227
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#227
thanks! makes sense now.
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jeff_coates
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(Original post by lizi100)
I can try!...
what i undestand of fiscal harmonisation is the Centralisation of fiscal policy controls. Meaning tax rates converge and also tax revenue gained from a booming economy within the EU, will be injected into another economy that isnt doing so well. This helps prices converge because fiscal harmonisation is a deepening of integration which leads to a Monetary union (stage 5 of integration). Deeper integration leads to price convergence, maybe due to increased transparency, or the fact that the economies of the EU will be made closer together in terms of their level of growth and economic cycle.

not sure if that is 100% correct but it is what i understand of it!.
that's an amazing explaination. thanks so much.
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Alfchick60
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#229
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here are some ads/disads. that we came up with un class for fiscal harominsation:
ads:
1)economic efficiency - tax distorts price mechanism so if everyone has same rate there will be more competition. the barriers of different tax systems are removed
2) labour mobility - different income taxes act as barrier to mobility therefore barrier removed.
3) improve situation of 'fiscal dumping' - Different tax rates affect how FDI is attracted, some govs. reduce corporation tax to attract FDI
4) Reduce tax evasion/avoidance - wealthy cannot keep assets in area of low tax. (would mean increased gov. revenue whihc means more spending on health, education etc.)
5) reduces free riders - no movement to places of lowest environmental taxes - countries will have to consider effect of negative externalities

disads:
1) reduces ability of gov to manage econ - with harmonised monetary, fiscal & legislative policy not much left for govs. to use to control econ.
2) one size fits all approach - different countries at different levels of econ. cycle/development therefore require different treatment.
3) countries have different social priorities - ability to target inequalities, health/education programmes
4) different demographics - affects level of spending/revenue. eg ageing popn has increased spending but declining revenue.
5) different levels of income and income distribution
6) different levels of competitive advantage - 'poorer' countries use lower tax to attract FDI, which means less revenue for gov but they can claim for EU regional policy - 'unfair'??

These are what we found, some are less relevant than others but i though you guys might find it useful.
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taco23
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#230
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i thought the questions would come in order of extract ie. 6 marker and 9 will be on extract 1 and 2, then they get harder as the extracts go on so the 20 marker is always extract 5. am i wrong?
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bbc_18
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#231
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(Original post by taco23)
i thought the questions would come in order of extract ie. 6 marker and 9 will be on extract 1 and 2, then they get harder as the extracts go on so the 20 marker is always extract 5. am i wrong?
I don't think that that would necessarily be the case. Q1 will definaely mos certainly be on extract 1 because of the graphs but then the following questions are just what the examiners think they want to ask. However, i think that the final question will be on negative externality of CO2 emmissions and how the government could intervene to try and correct the market failure as this could have lot of evaluative points.
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luciiz
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#232
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#232
Does anyone else have this Tutor2u pack to revise from?
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lizi100
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#233
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#233
I think any of the questions can be on any of the extracts. the 20marker, since it is a longer question may involve a combination of extracts and be a more general question. But i dont think there is a rule to which question is on which extract. Can be any.
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bbc_18
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(Original post by luciiz)
Does anyone else have this Tutor2u pack to revise from?
Do you mean the toolkit?? Ifyou do, then yep, i've got it but i don't use it n e more. Well not at the moment anyway. When I went through the case study used the toolkit and then put annotations onto my case study which seemed relevent.
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lizi100
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#235
Yea, ive got the tutor2u toolkit thing
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lizi100
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#236
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#236
Anyone have any more answers to the questions i posted earlier?
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boyz123
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#237
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#237
(Original post by Alfchick60)
here are some ads/disads. that we came up with un class for fiscal harominsation:
ads:
1)economic efficiency - tax distorts price mechanism so if everyone has same rate there will be more competition. the barriers of different tax systems are removed
2) labour mobility - different income taxes act as barrier to mobility therefore barrier removed.
3) improve situation of 'fiscal dumping' - Different tax rates affect how FDI is attracted, some govs. reduce corporation tax to attract FDI
4) Reduce tax evasion/avoidance - wealthy cannot keep assets in area of low tax. (would mean increased gov. revenue whihc means more spending on health, education etc.)
5) reduces free riders - no movement to places of lowest environmental taxes - countries will have to consider effect of negative externalities

disads:
1) reduces ability of gov to manage econ - with harmonised monetary, fiscal & legislative policy not much left for govs. to use to control econ.
2) one size fits all approach - different countries at different levels of econ. cycle/development therefore require different treatment.
3) countries have different social priorities - ability to target inequalities, health/education programmes
4) different demographics - affects level of spending/revenue. eg ageing popn has increased spending but declining revenue.
5) different levels of income and income distribution
6) different levels of competitive advantage - 'poorer' countries use lower tax to attract FDI, which means less revenue for gov but they can claim for EU regional policy - 'unfair'??

These are what we found, some are less relevant than others but i though you guys might find it useful.
How is this concerned with the problems in the case study ??
I don't know why we need to know the fiscal harmonisation
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Lili!
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#238
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(Original post by boyz123)
How is this concerned with the problems in the case study ??
I don't know why we need to know the fiscal harmonisation
I agree! :confused:
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Keano_The_King
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#239
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#239
Has anybody got their worked out the best way (for them) to decide how long each question will be?.... I often go over the top on the 10 and 15 mark questions and then not enough on the 20 mark question.

Cheers
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ash911h
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#240
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#240
hi guys im sitting this exam in a few days, just wondering if anyone can send me a copy of the tutor2u toolkit just to rehash over my revision. id be forever greatful.
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