Monday, September 29, 2008

Unit 1: How good are government actions to overcome information failure: Food labelling

This BBC report suggests that Government actions may not result in much of a reduction in market failure due to information failure

a) Using a S&D diagram, explain how the market for food fails
b) What form of action has the government taken to reduce the market failure?
c) Why is it failing to reduce the market failure as anticipated?

Unit 1: Actions to overcome information failure: Cigarette packets

The BBC reports the latest information campaign by government to reduce smoking

a) In what way does the market fail with smoking?
b) How is this campaign meant to reduce this market failure?
c) To what extent do you think the campaign is likely to succeed?

Wednesday, September 24, 2008

Unit 2: Interest rates: Should they rise or fall?

From the Economics Help blog comes this summary of the position the BoE currently finds itself in; to lower interest rates or not?

Unit 1: Price Elasticity of Demand and football fans

The Guardian reports away fans are facing huge rises in the aveerage cost of an away trip

a) Using the idea of Price Elasticity of Demand, evaluate the likely effect of this 21% rise in price for an away trip. You will lose marks if you mention Spurs are bottom of the league at the time of writing!

Unit 2 Changes in the types of output in the GDP

From Geoff Riley comes this interesting chart

a) Outline the changes that have occured in the relative importance of the identified components of GDP since 2000
b) Why do you think these changes may have occured?

Thursday, September 18, 2008

Unit 1: Demand for Microsoft's Xbox

The BBC reports a price cut for the Xbox

a) Using a demand diagram, explain the effect of the price cut
b) Explain how successful you think the price cut will be for Microsoft a) in the short run, b) in thelonger term

Unit 2: Rising unemployment in the UK

UK unemployment is rising according to this BBC clip

a) Why is the brick company laying off workers?
b) Using an AD/AS diagram, explain what is happening in the UK economy to cause this rise in unemployment
c) Suggest 3 different policy measures the government could use to reduce unemployment
d) Give one drawback of using each method

Unit 2: Pros and cons of inflation

From the Economics Help blog comes this great summary of why inflation is seen to be bad, but which also outlines the advantages of a low rate of inflation

Tuesday, September 16, 2008

Unit 2: Inflation rises to 4.7% so why doesn't the BoE respond by using Monetary Policy?

From the BBC comes this clip and article about why inflation continues to rise and what the BoE is doing to try and return it to it's target of 2%

Two other BBC video clips are at

This Ch4 video identifies another key reason for inflation, the fall in the value of the £

a) Explain what sort of inflation the UK seems to be suffering
b) What are the main reasons given for the rise in inflation?
c) Using the table at the bottom, explain how some prices can be falling if inflation is rising
d) How does the falling £ push up inflation (CH4 video)
e) To what extent do you think the BoE is capable of reducing the current inflation rate?

Want to calculate your own inflation rate? You can do it via the ONS calculator at

Monday, September 15, 2008

Unit 2: Government Expenditure in the UK

A great chart showing where Govt expenditure occurs in the UK economy

Unit 2: Economic growth and standard of living

From the Economics help blog comes this look at Economic growth and standard of living in China

a) Evaluate the extent to which Economic growth is beneficial to the average Chinese citizen

Sunday, September 14, 2008

Unit 1: The Economic Problem; a summary

A good summary of the introductory ideas from the AS syllabus from the Economics Help blog

Sunday, September 07, 2008

Unit 2: The effect of changing interest rates on the Australian economy (Monetary policy)

An interesting, short article from the BBC

The Australian govt seems to face the same dilemma as the UK govt does!
a) Using an AS/AD diagram, explain how the cut in interest rates may lead to increased economic growth with little additional inflation
b) Using an AS/AD diagram, explain how the cut in interest rates may lead to increased inflation with little additional growth

Saturday, September 06, 2008

Unit 2: The dilemma in setting interest rates (monetary policy)

A good clip from Ch4 on the dilemma facing the BoE in setting interest rates

a) Explain the dilemma faced by the BoE when setting interst rates in terms of conflicting macroeconomic objectives
b) Use AD/AS diagrams to in each case to explain how the BoE could use interest rates to resolve the problems

Unit 1: Falling disposable incomes and the effect on demand for cars and budget hotels

3 articles from the BBC showing the effect on the demand for cars and budget hotels of falling incomes in the UK Premier Inns Bentley cars New car sales

Use the concepts of normal/inferior goods to explain
a) The change in demand for Premier Inn rooms
b) The change in demand for Bentley cars
c) The change in demand for different types of cars. How does the idea of Complements also explain this change?

Unit 1: The demand for organic food

This BBC video clip reports a fall in demand for organic food

a) Using the theory of demand, give 2 reasons why demand for organic food has fallen
b) Draw a diagram to show what happens to demand in each case
c) What term would you use to describe organic food given the change in sales as consumer incomes fall

Monday, September 01, 2008

Unit 1: Charity shops - an example of inferior goods?

An interesting article from the BBC

a) Explain what is meant by an inferior good
b) What evidence is there in the article that charity shops are inferior goods?

Unit 1: Information failure: Perfume in pregnancy

This BBC article suggests possible information failure in the perfume market

a) How does information failure represent market failure?
b) Evaluate 2 possible methods the govt could use to reduce the market failure in this case

Unit 1: Negative externalities associated with binge drinking

This BBC article (including a video) clearly shows the negative externalities associated with binge drinking

a) What is a negative externality?
b) Why is binge drinking a negative externality?
c) How does the freee market fail in this case?
d) What actions can govt take to reduce this market failure?