Dear Lower Sixth
Hope the revision for unit 2 exam is going well. Tutor2u have a huge and growing number of revision presentations. The link to the AS Macro section of their blog is here. It is worth going through and making a few brief notes.
If you have any questions you would like me to answer on any unit 2 topic, please leave a comment on the blog and I shall get back to you.
11 comments:
I’m not exactly sure as to how I’m doing in terms of revision, but understandably I have a few queries on certain parts (great to ask questions four days before the exam eh?). I hope you don’t have any plans for tonight.
•Productivity is output per unit input, how does it differ from efficiency?
•Balance of payments current account deficits. Are they much of a problem? (Apart from the fact that there is leaked demand) I know of something to do with it having to be financed by the capital account or something but to be perfectly honest I still don’t know what that is, or the other components of the BoP (also whether or not I should know about them).
•Relating to the BoP, does an increase in interest rates lead to hot money inflows, hence a rise in the exchange rate (stronger pound?), hence imports more competitive (cheaper) and exports less so (dearer – SPICED)? Consequently, would a rise in interest rates favour AS due to imports of raw materials being cheaper? (Well, as an evaluation point when discussing the impact of interest rates on AS, I’m well aware of higher rates decreasing AS due to lack of investment)
•If a question asks you to examine merits of two measures of development, for instance, would GDP and GDP per capita be two distinct measures and hence could be used for the answer? What about GDP per capita and GDP per capita (PPP)? (Just curious, I’m unlikely to successfully write about the two together without vast overlapping).
•The 30 mark questions, any general advice on how to do well in them (especially for policies)?
By the way, some people successfully robbed my local Tesco.
There are different types of efficiency. Productive Efficiency is the same as productivity.
BoP deficits are a problem in that the economy is sucking in too many imports, which will weaken the exchange rate and suggest a lack of long term competitiveness. Still not a huge problem.
Logic correct for increase in interest rates, but impact on AS negligible: most of a firm's costs are labour costs.
Yes to question on measures.
General advice on doing well : write answers which are well-structured, include evaluation in each paragraph, make good use of data given and terminology and concepts, include a diagram wherever possible, back-up any assertions with lots of reasoning.
Those aren't 'some people', those are revolutionary heroes
Thanks.
Sir i was wondering if you could clarify between CPI, RPI and RPIX, what they take into account and do not, and what are the weaknesses of using each method of measuring inflation.
Also how detailed do we need to be in our knowledge of working out inflation using weightings and changes in price, could that be a question?
Cheers,
Stephen
I’m going to have to interrupt this:
“One problem with the CPI measure is that it does not include housing costs such as mortgage interest repayments or rent.”
– Revision guide, p20.
It also says the RPI is more inclusive. Not trying to be a smartarse, but one of us has made a small mistake.
Hi Stephen,
There is a very good summary at http://www.economicshelp.org/blog/inflation/difference-between-rpi-rpix-and-cpi/
Essentially RPI includes interest rates and housing costs, whereas CPI does not.
You will need to know that the surveys are based on a survey of households which takes into account different weightings, so fuel and food will have bigger weightings as we spend more of our total expenditure on them.
The main weakness is that they try to look at an average household and there is no such thing. Weightings only change once a year. Changes in quality might affect the price, so TVs are more expensive.
You will be expected to know what a weighting is and know that the items with bigger weightings affect the index more. You will definitely need to know what an index is. But fear not: you will not have to do any calculations, just interpretations
Thanks Tom. Corrected
Could you explain the conflict between Fiscal and Monetary policy?
I've read over the revision guide and the textbook and it's not really presented with great clarity so yeah...
And the supply side policy conflicts as well please to kill two bird with one stone.
Relating to that, could you argue that supply side policies are basically utilisations of what shifts AS to the right?
Thanks.
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