Saturday, February 28, 2009

Unit 2: The declining Japanese economy

This depressing report from the BBC has one analyst saying the Japanese economy is in terminal decline!

a) Using the AD formula, explain what is happening in the Japanese economy
b) Using an AS/AD diagram and the multiplier concept, explain why Japan could be in terminal dacline

Unit 2: Inflation revision

From economics student blog comes this introduction to inflation with all the key definitions

Next, a description of how to measure inflation

From economics help, a brief post on the possible benefits of a low, stable rate of inflation

Then, how to interpret inflation data

Not forgetting, the consequences of inflation

...and the causes of inflation

Unit 2: GDP revision

From the new economics student blog comes this revision post on GDP

Monday, February 23, 2009

Unit 2: What can the government do to correct a large current account deficit ?

A clear Q&A post from tutor2u

a) Explain what is meant by a current account deficit
b) Is a current account deficit always a problem for an economy?
c) To what extent can the government be successful in reducing a current account deficit?

Sunday, February 22, 2009

Saturday, February 21, 2009

Unit 1: Opportunity cost

From the BBC via Economics teacher comes this graphic showing the cost to the government of the UK bank rescue far

a) Define opportunity cost
b) How can this graphic be used to illustrate the concept of opportunity cost?

Thursday, February 19, 2009

Unit 2: The effect of the recession on the govenment's budget

The BBC reports a sharp deterioration in government income fron tax revenues video article

More detail from this tutor2u powerpoint presentation,1,Recession

a) Why has government revenue from taxation decreased?
b) What will happen to govt expenditure during the recession?
c) What then is you prediction for the govt's finances as the economy experiences the worse of the recession?

Wednesday, February 18, 2009

Unit 2: Why macro policies might not work

You know how economic theory says an expansionary fiscal or monetary stimulus to the economy should work, but...........

a) Why does this Economics teacher post suggest the policy makers might not be successful?

PS If you have time, read the whole article via the link

Unit 2: Revision: Potential v actual growth

Are you clear on the difference? If not, this Economics teacher post should help

Unit 1: Packaging: A case for internalising the externality?

The BBC reports that campaigners are suggesting that supermarkets should pay for the cost of disposing of the packaging on their products

a) How is excessive packaging an example of market failure?
b) How would this proposal be an example of internalising the externality and making the polluter pay?
c) Using a S&D diagram discuss the extent to which such a policy would reduce the market failure

Unit 2: Declining inflation in the UK

The UK inflation rate (CPI) is now back within limits (2% +/-1%) at 3% reports the BBC, but RPI has fallen dramtically to just 0.1% article Ch4 video

a) Explain why CPI is now below the RPI as shown by the chart in the text having been above it in the recent past

Stuck? These post from Economics teacher and Economicshelp might help; click on the graphic in the top one

Unit 2: The Obama stimulus package

AP summarises the Obama stimulus package's major areas as

$240bn in tax breaks for individuals and businesses
$140bn for health care
$100bn for education
$48bn for transportation projects

a) What sort of policy would you catagorise this package as? Explain your answer

b) Explain, using an AD/AS diagram, how this package should effect the US economy in both the short and the long run

c) To what extent do you believe this package is likely to achieve its objectives?

Monday, February 16, 2009

Unit 2: Negative multiplier effects from UK car layoffs

Ch4 has this updated list of all the UK car producers layoffs

a) Using the information, explain, using a diagram, the negative multiplier effects on the local and national economies of these layoffs

Unit 1: Cannabis consumption as an example of market failure

The BBC has the latest govt advert to try and reduce cannabis consumption

a) In what catagory of market failure would you place cannabis consumption? Explain your answer
b) To what extent do you think adverts such as these will reduce the market failure

Unit 1: The price of oil and petrol

From A question of economics comes this interesting post on the rising price of petrol; the question to anser is part of the post (Hint: Think both supply and demand)

Unit 2: Japan in deep recession

Japan's economy contracted by over 3% in the last quater of 2008 according to the BBC video article

a) Using the AD formula and an AD/AS diagram, , explain the decline in the Japanese economy
b) What role would the multiplier effect have on explaining this sharp decline?

Unit 1: Food: Normal, inferior and superior goods

A nice clip from the BBC explaining food changes

Another from Ch4 (and BBC articles) explaining the expansion of KFC/Domino pizza in the UK in the recession Ch4 KFC article Domino pizza

a) Making sure you clearly explain your reasoning, to what extent can you catagorise any of the foods as
(i) Normal goods
(ii) Inferior goods
(iii) Superior goods

Sunday, February 15, 2009

Unit 2: Supply side policies powerpoint

From tutor2u comes this powerpoint on supply side policies with a printable version. p/point printable

Geoff Riley outlines the aim of supply side policies to be:

Increase the productive potential of the economy (ie shift AS to the right)
Improve incentives for people to work
Improve the skill level of workers
Increase the productivity of labour and capital inputs
Increase the occupational and geographical mobility of labour to reduce unemployment
Increase the level of capital investment and research and development spending by firms
Stimulate inflows of overseas capital investment
Increase business efficiency by promoting more competition within and between markets
Stimulate a faster pace of invention and innovation throughout the economy
Provide a platform for sustained non-inflationary growth of an economy

a) Do supply side policies have any other objectives? Hint: Think quantity and quality of the factors of production

Unit 2: The costs of Unemployment and a supply side approach to long term unemployment

Ch4 has this good video clip

a) What are the costs to the government of rising unemployment
b) What supply side policy to reduce long term unemployment does the video explain?
c) How likely is such a scheme to be successful?

Unit 2: Unemployment in the UK almost at 2m

Latest figures show a continued rise in both measures of unemployment in the UK. There is a useful graph at the bottom of the article and a video as well

Unit 2: How the recession is hitting the exporting economies

A series of articles explaining how the global recession is hitting the major exporting countries China exports USA imports Stephanomics

a) Using an AD/AS diagram, explain the likely effect of declining exports on the economies ofmajor exporting nations
b) Why might the effects not be as bad as the model suggests?

Unit 1: Negative externalities associated motorcycling

BBC Newsbeat has this interesting clip about airbag jackets for motorcyclists

a) What are the negative externalities asociated with motorcycling?

b) To what extent do you think legislation to make the wearing of airbag jackets by all motorcyclists would be successful?

Saturday, February 14, 2009

Tuesday, February 10, 2009

Unit 2: A fall in the UK balance of trade deficit

The BBC repors a fall in the UK balance of trade deficit

a) Define the balance of trade
b) To what extent do you think the fall in the value of the £ is responsible for this fall in the deficit as the UK heads in to recession?

nit 1: Saturated fats; an example of market failure?

The food standards agency has just launched a new campaign viewable via the bbc at

a) In what way might the consumption of saturated fats represent market failure in the form of a demerit good?
b) Using a diagram explain how this campaign might reduce the market failure

Unit 2: Pros and cons of devaluation

From Economicshelp comes this useful summary of some of the main pros and cons of devaluation

a) Using the article as a starting point: Discuss the extent to which a devaluation can help the government meet its macroeconomic objectives

Sunday, February 08, 2009

Unit 1: The price elasticity of demand for business/first class flights

Geoff Riley has this interesting article on price cutting by airlines hard hit by the recession

a) Identify 3 economic reasons why demand for these flights may have fallen (Remember they are business flights mainly)
b) On the basis of the article, do you think the airlines believe demand for these flights is price elastic or inelastic? Explain your answer

Friday, February 06, 2009

Unit 2: Interest rates cut to 1%: What effect will this have on the UK economy?

Economics help has this brief article explaining why the latest interest rate cut might have little effect on the economy

In contrast, this BBC clip has evidence that it might work

These clips show how borrowers and savers are effected differently by the interest rate cut

a) To what extent do you believe the rate cut may stimulate the economy (Hint: Think about the components of AD and the evidence regarding the effect on each component in the articles
b) Explain how Quantitative Easing might help stimulate the economy

Wednesday, February 04, 2009

Unit 2: The effect of the high Yen on Japenese exports

This BBC clip reports that the high value of theYen is having a detrimental effect on Japenese

a) What is meant by "the high value of the yen?"
b) How would this have a negative effect on the export of Panasonic products?
c) Assuming the Balance of trade/net exports worsens, explain using an AD/AS diagram what the effect will be on the Japanese economy
d) To what extent can the high value of the yen be blamed for the poor performance of Japanese exports?

Unit 1: The private and external costs of smoking

A clear summary of a favourite exam question on the private and external costs of smoking from economicshelp

Unit 2: The slowing Australian economy and the governments reponse

This brilliant clip (and article) from the BBC are jam packed full of economics video article

a)What is the AD formula?
b) Identify from the clip and article the elements of AD which are decreasing and explain why this is the case
c) What is meant by a government stimulus package and what sort of policy is this that the government is using?
d) What evidence is there of the Australian government using monetary policy as well?
e) Using an AD/AS diagram, discuss the likely success of the latest stimulus package and interest rate cuts in stopping the Australian economy going in to a recesion

Tuesday, February 03, 2009

Unit 2: What determines the level of consumer expenditure?

Economics help has this good revision summary of what determines the level of consumer expenditure

Unit 1: British holidays; are they inferior goods?

From A Question of Economics comes this article about rising demand for UK holidays in 2009

a) Are self-catering holidays in the UK and the other holidays referred to in the article examples of inferior goods? Think about the income elasticity of demand for such holidays.

Unit 2: Understanding Aggregate Supply

From Economics teacher comes this great summary of Aggregate Supply which could be very useful for revision