OCR 2888: Economics in a European Context

i got a question: Why arent the benefits of lower production costs passed onto the consumers?

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

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?

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!.

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?

Does anyone else have this Tutor2u pack to revise from?

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