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AS and A Level: UK, European & Global Economics
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How to evaluate effectively in economics
- 1 A significant proportion of marks are likely to be for evaluation. Trigger words include ‘assess’, ‘to what extent’ and ‘evaluate’. Evaluation can come during a piece as well as at the end. It includes any critical distance you add to your points.
- 2 Stating both sides of an argument or different points of view e.g. advantages and disadvantages will give you a start. Try to group them rather than a list of each. This will score more evaluation marks as you are linking the two arguments.
- 3 Discussing the long term versus the short term effects is a good method of evaluating. Don’t be frightened to acknowledge that it may even be too early to say with certainty what the outcome will be. An example of this is the impact of the UK not being in the Eurozone.
- 4 If you have made several points, you can gain evaluation marks for prioritising them or just saying which you believe is the most significant and why.
- 5 How significant will a particular point be and will it affect different groups of people in different ways. Discuss these for evaluation marks.
Five things to know about exchange rates
- 1 Most exchange rates are ‘floating’. This means that the value of one currency expressed in terms of another currency varies according to the demand and supply for and of each currency.
- 2 Factors affecting the demand for a country’s currency are the demand for the goods and services of it, the demand of its citizens for imported goods, relative interest rates and speculation. If for example, UK interest rates are relatively high, then people will buy pounds to save in UK banks. This will increase the value of the pound.
- 3 Exchange rates affect the competitiveness of a country’s products. Remember the acronym SPICED – Strong Pound Imports Cheaper Exports Dearer.
- 4 A strong pound will be worse for UK producers as they will struggle to compete with cheaper imports and UK exports will look relatively more expensive abroad. It will however be useful to reduce domestic inflation.
- 5 A weak pound will help UK producers for the opposite reason but may lead to inflation. It will help the balance of payments subject to the Marshall Lerner condition (learn this and use it for evaluation).
What is globalisation?
- 1 Globalisation refers to the increasing integration of the world’s economies meaning more international trade, increased international flows of capital, shifting patterns of consumption and production across countries e.g. outsourcing production.
- 2 Many reasons are put forward for its growth and it is hard to differentiate between its causes and effects. Is the growth of multinational companies and their desire for greater profits a cause of globalisation or its effect?
- 3 Other reasons put forward for globalisation are the reduction in trade restrictions, growth of the internet, cheaper international transport costs, opening up of China and the old communist countries. Again they could be cause or effect.
- 4 The effects of globalisation are debatable (more evaluation opportunities). Generally it is seen as increasing the level of wealth as countries specialise more in the products in which they have a comparative advantage.
- 5 Recent economic uncertainty has lead to some talk of de-globalisation where international trade declines due to increased protectionism (tariffs and quotas).
- Marked by Teachers essays 11
- Peer Reviewed essays 3
In other words, a globalized world is one in which social, economic and political events become more and more interconnected and where such events have more impact upon each other. Most people will agree that nowadays the world economy is more interdependent than ever. However, opinions clash when trying to come to a decision about whether or not it is a positive process or not. It is a subject which constantly draws fervent support and fervent opposition. Firstly, it is necessary to draw up some arguments in favour of globalization.
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The argument goes that free trade is the way to optimise world output and income levels in the long run. The problem is that it is possible that individual countries may still gain from protectionism of some sort, the government protects it's own industry through tariffs, the firms can then compete at a lower price in foreign markets and the government earns a handsome revenue from increased corporate profits and the tariffs on foreign goods in general. Even the USA are not immune to this temptation, the recent steel tariffs of 30% on foreign steel are a proof of that (though some tariffs have already been reduced again, thanks to WTO mediation)
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Analyse and Evaluate the significance of Fiscal Policy rules and Fiscal Policy targets and constraints in promoting Economic Growth, Economic Stability and International Competitiveness4 star(s)
and International Competitiveness. This causes an ? in AD, which can be good for an economy. For example if a Government ? interest rates, people will have an ? in disposable income, because payments on credit cards will ?, mortgage payments will ? and it is not worth saving due to the reduced rate of interest, meaning they have more to spend on goods and services, thus AD ?. L3. Monetary policies can promote economic growth and stability and international competitiveness as changes in the interest rate affects Domestic Demand (Consumer Expenditure, Investment and Government Spending)
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Any return of profits are small compared to these points. Export led growth brings structural change and diversification for LDCS, monoculture leads to stagnation, unstable earnings and 3rd world debt. True Globalisation should bring the advantages of free trade (make sure you know them) - competition, productive and allocative efficiency, comparative advantage and huge gains from specialization, economies of scale and consumer choice. It also should provide the 3rd world with desperately needed Western capital and technology while the West gains the world's poor migrants to meet their labour shortages.
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The company grew by constantly acquiring businesses that produce various consumer goods. Unilever has its own plants, factories, distribution networks and supply chains, all of these added to the uniqueness of the company as none of the others in the market manufactures and sells like Unilever does. The growth of emerging economies has made significantly impact to the growth of Unilever. They are growing so fast and dynamic. International trade analysts believe that these emerging economies will soon take up half of the world's total consumption of consumer goods. Being the world's second-largest consumer-goods company, Unilever operates in over 100 countries across the world and is experienced in starting businesses in emerging economies.
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International trade is also seen as a vital measure which can encourage growth for a nation's economy. The general belief of international trade is that based upon the idea of specialisation and exchange, which will lead to a general increase in world living standards. The guiding principle is that trade should be based on co-operation and any barriers to trade should be removed. There are numerous international organisations that are present which exist in order to promote free trade. A great advocate of this system of trade was Adam Smith (The Wealth of Nations 1776), he argued that nations should
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The economic welfare of a country will therefore increases if that country will export its good or service in which it has comparative advantage and imports other goods or services where they are relatively more efficient compared to its goods or services. At firm level, firms engage in international trade because of competitive advantages in order to make the most out of the arbitrage opportunities. In order to deliver international banking services to its customers, banks use one or more of the following different organizational forms: * Participation / Loan Syndication * Correspondent-Bank Relationships * International Department * Representative Offices
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This increases passenger numbers and there is more aggregate supply in the industry. There are a couple of advantages of deregulation. Less regulation means that fewer regulators need to be employed by the government or local councils. Also less regulation should encourage more competition. However, many rules affecting business were to stop exploitation: is this acceptable nowadays? Another disadvantage is that competition does not necessarily provide what society wants; it may only provide what is profitable. Privatisation is another supply side policy. This involves selling off state-run organisations and transferring them to the private sector.
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The euro has many effects on businesses and the consumers not only within the Euro zone but also out of it. Firstly I will discuss the advantages of the single currency inside and outside of Europe.4 star(s)
Secondly there will be greater price transparency, the single currency will make price differences in different countries in the euro zone more obvious. This may affect companies who charge different prices for their products in countries within the euro zone. On the other hand, companies buying from the euro zone will be able to compare prices more easily. Either way, this will sharpen competition The third advantage is that there will be stable exchange rates, the single currency will remove exchange rates between countries in the euro zone.
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However, if the country wants to stop WTO from implementing a decision issued by a WTO tribunal or authorizing permanent trade sanctions against countries that refuse to change their domestic's law to comply with a WTO decision, unanimous consensus are required. Apart from this, WTO's 12 free-standing agreements constrain government actions. They constrain both the goal a government seeks and the means it uses to obtain them. For example, in the food area, a government is not all allowed to have an environment goal, an animal welfare goal or a consumer information goal in setting up a standard that limits trade in food.
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Is a process of globalisation unifying the world around common interests or is it dividing the world into winners and losers?3 star(s)
Or is it curse that is dividing us all into winners and losers? The first part of this essay will focus on the question of unity. That is, is globalisation unifying the world around common interests? This question involves looking at the increase in technology and thus the increase in global mass media and communications alike. While the biggest transnational corporations (TNCs), such as General Motors and Ford, have revenues larger then many states, the Internet has allowed small businesses to also offer their services worldwide. Music tastes, and fashions shape life across borders, as do economic practices such as Fordism (mass production techniques plus mass consumption).
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and finally result in the inflation rate meeting the 2% target. The reason behind the interest rates being kept at 0.5% has also been an attempt to boost consumer spending as the public would be required to pay less in mortgage interest repayments, and therefore, have more money to spend. Moreover, they would also be less likely to keep the money in banks accounts due to the low interest rates and spend it on either consumer purchases or investments (both of which, are extremely important components of aggregate demand).
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Discuss the extent to which the use of trade barriers by developing economies is an appropriate policy for such economies.4 star(s)
This would therefore lead to an increase in aggregate demand. With the price of imported goods being higher than domestically produced ones, in the long run foreign suppliers are likely to decrease supply to those nations with tariffs, due to the lack of demand. Again this would stimulate growth in domestic businesses but efficient may start to occur due to lack of competition. Yet with the increase in employment their will be an increase in income and therefore disposable income will rise, presuming the cost of living does not rise extensively.
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This means that even if someone consumes or utilises this product, the supply for others will not be diminished. This is very relevant when it comes to defence as it is there to defend the whole of the country. Secondly, another characteristic of a public good is that it is non-excludable. Non-excludability is when the people that don't want to or can't pay for a product cannot be excluded form it as they are already using the product and its benefits. In the example of defence, if a certain person didn't want to get the benefits from defence it would be impossible to ensure that they didn't get those benefits while the rest of the country did.
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The purpose is to increase the quantity and quality of workforce. Being more educated enables an individual to work independently, more efficient and understand complex instructions. Productivity gap between UK and rival economies like France and Germany will narrow. Next, the government can further tame the trade unions. Although we have not seen strikes like those during the era of Margaret Thatcher, industrial dispute that takes place from time to time is still a major concern for many employers. Consider the recent strikes by cabin crews in British Airways, immigration officers in ISU (Immigration Service Union), HP workers and many more.
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Globalization is creating rapid and worldwide changes in communication, politics, and patterns of human migration
(World Economic Outlook 1997) Globalization also describes a world environment in which much freer international movement of goods, capital, people, information and ideas is making global market forces more important in the daily lives of the world's people relative to nation state political forces. But, the economic processes of globalization are not new. The period 1870-1914 was a time of very rapidly increasing free movement of goods, capital and people as the technology of the telegraph and the steamship made international communication and transportation much faster, easier and cheaper.
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An Argument on Restriction of Trade Should India be Easing Trade Restriction by force from the developed nations?
The meltdown in the U.S. economy in 2007 and in 2008 had shaped a new round of protectionist sentiment The United States, for example, used protectionist policies to limit the quantity of some foreign-produced goods coming into the United States. The effect of this policy was to reduce the supply of the good in the U.S. market and increase the price of the good. The Impact of Protectionist Policies Protectionist policies reduce the quantities of foreign good and services supplied to the country that imposes the restriction.
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GDP in Somalia: A result of Somalia's complex history is poor economical growth. Economic growth is defined as a long-term expansion of the productive potential of the economy6. Whilst sustained economic growth should, in theory, lead to higher living standards and rising employment, short term growth is measured by the annual change in real Gross Domestic Product (GDP). GDP is the value of all the goods and services produced by all sectors of the economy (agriculture, manufacturing, energy, construction, the service sector and the government) in the last three months7. The measure is used as the principal means of determining the health of an economy - sluggish GDP growth is considered harmful.
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The value of world trade has been growing at a faster rate than world GDP. a***s the factors which might explain this trend. Evaluate the disadvantages of further trade liberalisation to the UK.
The marginal costs of technology are now close to zero, and thus only fixed costs remain. The ease of communication also enables people to voluntarily cross national trade boundaries. Many multinationals have utilised the low communication costs to their advantage by offshoring more and more of their operations to countries with lower variable (labour) costs. Production teams may have been moved to China, a relatively new economy to the world of trade, since the cost of production is much lower there and ease of communication allows headquarters (which are usually based in an MEDC)
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The Economic Crisis. Right now in America, we are in an economic crisis that is slowly tearing the seams that holds the countrys banking system together. This recession affects everyone from single families to giant corporations b
In this paper I will discuss the causes of the economic crisis in depth, the key players in the implementing new policies to pull the United States from the recession, and the different policies that are now affecting not just the U.S. economy but the world economy as well. This crisis was years in the making, but because of the dot com assets many people were not noticing the downward spiral that had started before September 2001. Some of the key factors that caused the economic crisis are: a glut of savings from Asia, bad loans, boom and bust of the housing market, lack of capital reserves, and the reselling of bad loans.
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Economic Development of India. The CSO provides us the data of the economic growth of the states where a clear evidence of the emergence of the chronically poor states to the development is eminent. In the past the richest states often grew fastest and t
The states are now at par with the international standards growth benchmark of 7%. The states have emerged as the miraculous state or may be said as miraculous economies. Miracle growth is globally rare precisely because it is very difficult for countries to improve the productivity of a large proportion of population. When productivity improvement is widespread, individual productivity improvement adds up to fast growth with the help of all regions and people in those regions. In other words, fast growth does not trickle down it trickles up.
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The World Trade Organisation is a global entity that is responsible for creating and regulating different statutes and policies for trading of goods and services on international level.
In other words, political arguments now occur on a lesser level. An easygoing trade helps nations all around the globe to feel safe. People who are satisfied and successful with international trade are less likely to have fights and disagree with one and another, In other words, wars are less likely to happen between countries. Secondly, the trade system enables effective management and resolution of conflicts and disagreements on international level. In this regard, when trade increases around the world, there is an increase in the number of countries trading, subsequently, a rise in the production products, leading to healthy competition and lesser possibility of conflicts and disagreement to occur.
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The Economist article, Making The Desert Bloom, brings to light the condition that Mexico's economy is currently in, restricted by cartels, monopolies and its unfortunate situation with America.
Until the recession, Mexico was on schedule to have a reasonable decade but with personal income growth now at only 0.6% , some of the worst in the world, it doesn't look promising. Mexico's unemployment rate peaked at 6.4% in 2009 and is only slowly getting better. The foundation of Mexico's economy is based on its exports. With americans share of Mexico's exports falling from 89% to 78% and expecting to get worse, mexico has a problem on their hands.
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Also for the reasons above; if the price of oil rises too high then it might also DECREASE the demand for it i.e. if the price of oil increases, then the price of petrol will also increase, therefore making some people reluctant to use their cars and reverting to forms of transport such as buses/trains which Supply and demand doesn't just affect oil but any other commodity which is traded in large amounts. This is a graph showing the prices of crude oil during the last 12 months: (Source; CNN.com)
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Productivity: refers to the quantity of goods and services the economy can produce with a given amount of inputs such as capital and labour. Demand-Pull Inflation: occurs when AD or As is growing while the economy is still nearing its supply capacity, so that higher demand leads to higher process rather than more output. Cost-Pull Inflation: occurs when there is an increase in production costs that producers pass on in the form of higher prices this raising the rate of inflation.
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