is it true that due to relocating product outside EU both LRAS and AD shift in?
is it cz we look at it from the EU firms' point of view? or whose point of view?
the question about Czech invest and High value added services KEEPS coming up in this forum. i suggest if u want a greater understanding you take a brief look at the czechinvest website. its quite straight forward and will only take a couple of mins
it wants to attract things like financial services and research rather than depending on the car market.
I was confused why AD would shift inwards (saw it on that guys graphs) and i thought that it could be because the investment would be reduced in the EU, since firms are investing elsewhere. Also imports may increase becuase the cars are being manufactured outside the EU so need to be imported.
AD= C+ I(decreases)+G+ (X-M(increases))
Yeah I suppose in the LR after a time lag with investment gone jobs will be cut and those directly and indirectly would lose out meaning less consumption causing a shift in demand,
Does the tougher pollution standard necessarily lead to relocation of car plants outside the EU???
Anyone help !!!
I think Lizi was saying the Imports increase, not the whole bracket
I have a question which I'm getting slightly confused about.
Regulation - There is one method used by EU where the consequences are job losses, and the firms try to pass the increase costs to the consumers. Another method (or is it same?) where fixed costs change, but marginal costs are unaffected so there is no change in price for the consumers. What are these two different methods? I was thinking one is regulation/fines etc, the other is taxation, but what could then the EU tax in production?
Anyone have a guide to using diagrams for extract 5? I'm guessing there will need to AD/AS diagrams.
The first is taxation where jobs as lost and the second where MC is unaffected is regulation, AC rises because of research and development, this however could lead to jobs cut aswell so not too sure.
i seriously can't wait till exams are over, i've never been this worried