econ dal workshop

Question 1

what is the memory device used to remember non price factors for demand

Answer 1

Population
Advertising
Substitute
Income
Fashion/interests
Interest rates
Complementary good

Question 2

what is the memory device used to remember non price factors for supply

Answer 2

Productivity
Indirect tax
Number of firms in market
Technology
Subsidy
Weather
Cost of production

Question 3

what is the memory device for the price mechanism

Answer 3

Signals for more/lkess resources
Incentive to decrease/increase output
Rations via less/more demand
Allocative efficiency

Question 4

why is (Q,P) = Allocative Efficiency(2)

Answer 4

• maximising of society surplus
• maximising of net social benefit

Question 5

what are 3 characteristics of free market forces

Answer 5

• no surpluses/ shortages
• low prices , high quality/choice
• no gov. failure

Question 6

what is market failure

Answer 6

when the allocation of resources does not maximise social benefit

Question 7

what is government failure

Answer 7

when costs of intervention outweigh the benefits, worsening resource allocation

Question 8

what are the costs of government intervention

Answer 8

• costs
• unintended consequences
• imperfect information

Question 9

what is the UK inflation rate

Answer 9

3.4%

Question 10

what is the UK unemplyment rate

Answer 10

3.9%

Question 11

what is UK’s annual wage growth

Answer 11

5.6%

Question 12

what is the UK current account deficit as % of GDP

Answer 12

2.5%

Question 13

what is the goal of macroeconomic objectives

Answer 13

to be achieved at the same time

Question 14

how to show the multiplier effect on a graph

Answer 14

show further AD increase(AD1 -> AD2 -> AD3)

Question 15

what is the formula for the multiplier effect

Answer 15

1/mpw

Question 16

what are the determinants of the value of the multiplier

Answer 16

• savings
• imports
• taxation

Question 17

what is economic growth

Answer 17

an increase in real GDP via an increase in AD or LRAS

Question 18

how to measure capital

Answer 18

interest

Question 19

what are the drawbacks of using GDP to measure economic growth

Answer 19

• doesnt take into account informal activity
• environmental costs
• income inequality
• remittance is not recorded

Question 20

what are the benefits of economic growth(4)

Answer 20

• higher incomes
• jobs(less unempoyment -> derived demand)
• higher profits
• fiscal dividends

Question 21

what are the costs of economic growth(4)

Answer 21

• inflatin(demand pull)
• income inequality
• negative externalities
• current account deficit

Question 22

what is unemplyment

Answer 22

• working age
• willing and able to work
• actively seeking
• do not have a job

Question 23

what are disadvantages of using the labour force survey

Answer 23

• smapling errors(small amounts of people that are surveyed)
• costs(£)
• inactive groups(early retired)
• underemployed(1 million ppl on zero hour contracts)

Question 24

what is the percentage of 16-64 that are inactive

Answer 24

21.8%

Question 25

what is structural unemplyment

Answer 25

immobility of labour due to long term change of structure of an industry

Question 26

what are the reasons for occupational immobility

Answer 26

- technology advances( AI, amazon fresh) - poor education system - loss of comparative advantage( country less competitive)

Question 27

what 3 components make up monetary policy

Answer 27

- exchange rate - money supply(QE) - interest rates

Question 28

what are the aims of an expansionary demand side policy

Answer 28

- boost AD - reduce unemployment - increase inflation

Question 29

what are the aims of a contractionary demand side policy

Answer 29

- reduce inflation - improve Gov. finances - reduce debt, promote saving

Question 30

what happened during the Lizz Truss takeover

Answer 30

- broke the bond market(bond yield went up)

Question 31

what is the Ricardian Equivalence

Answer 31

when the income tax cut is saved rather than spent, in preparation for future tax rises

Question 32

what is the difference between interventionist and market based approach

Answer 32

- interventionist = more gov. intervention - market based = reduces role of gov.

Question 33

what is the crowding out effect

Answer 33

when increased government borrowing leads to HIGHER interest rates for businesses and the whole economy(govt. is competing for funds)

Question 34

what are the components of the financial account

Answer 34

- reserves(gold, foreign currency) - speculatory - FDI

Question 35

what are consequences of a current account deficit

Answer 35

- Exchange rate weakening(increased supply of currency) - Trade deficit(lower AD) - loss of investment confidence(increased borrowing)

Question 36

what is the full definition of development(Sen)

Answer 36

- process of improving well being and quality of life - through: - improvements in living standards - reduction in poverty - access to education and healthcare

Question 37

what is the definition of sustainable development

Answer 37

- meeting the needs of current generations without compromising ability for fututre generation to meet their needs

Question 38

why is GNI better than GDP

Answer 38

- it includes remittance and incomes earned from abroad

Question 39

what are the 3 components of HDI

Answer 39

- education - healthcare - incomes

Question 40

what is the technique to write development essays

Answer 40

- development factor - development indicator - refer to development definition(Sen)

Question 41

what is the definition for hot money

Answer 41

investor savings that chase the best interest rate internationally

Question 42

what are the factors that can affect the exchange rate

Answer 42

- high import demand - low interest rates/QE - speculations/pessimism(brexit/lizz truss 2022) - outward direct investment(increased S of pounds)

Question 43

what does the term capital flight mean

Answer 43

- money leaves a country because of a lack of confidence

Question 44

how much did the pound depreciate by during the brexit referendum

Answer 44

depreciated by 15%

Question 45

what are some evaluation points for exchange rates

Answer 45

- incomes abroad/home - marshall lerner condition - inflation

Question 46

why isnt dpreciation of pound effective in the SR according to the marshall lerner/J curve

Answer 46

firms are not able to buy UK exports until contracts end