Paper 2 context Flashcards
(28 cards)
What was the gini coefficient in Brazil in 2020?
- 0.535 2019
- 0.489 in 2020
What is an example of a TNC that has set up abroad?
eg globalisation
-Toyota has plants in 26 countries and sells in 140 countries.
What were some of the fiscal policies (government spending)
-Blank cheque to NHS- 192 billion
-Furlough schemes - up to 80% of incomes was paid by the government.
-universal credit
In total there was increased expenditure 410 billion from g
What were some of the fiscal policies (taxation)
- Tax cuts, VAT decreased from 20% to 5% in the hospitality sector.
- Business rate exemptions
What was the negative impact of the fiscal policies in UK?
- 2020-2021 Fiscal deficit of 14.5%
- National debt peaked at 100% of GDP and now 96%
- 85 to 90 billion on servicing government debt
What are examples of contractionary fiscal policy that is being used?
- Direct tax rate increases
- National insurance increasing by 1.25%
- Corporation tax 19% to 25% Apr 2023
What is an example of the UK government having expansionary fiscal policy?
Committed 600bn to next 5 years.
What are examples of the expansionary fiscal policies used during covid?
- Interest rates slashed to 0.1%
- QE of 450 billion
What is a real example for each branch of supply side policy?
- Increase incentives
- Super deduction tax incentives giving firms 125% tax allowance if they spend on capital stock.
- Reform the labour market
- Minimum wage up to 9.51 per hour
-Promote competition (Royal Mail 2016) and channel 4 has been proposed.
- spending on education and health
- Opened up 20 new institutes of technology, rolling out of T-levels.
- spending on infrastructure.
- Project gigabit, 5 billion spent to ensure digital connectivity and speeds to as many houses as possible.
- HS2 high speed railway from Manchester to London.
What is context of the multiplier?
-The IMF have calculated that it tends to be 1.6 in the long run for developing countries.
What are the causes of inequality in Brazil?
-Low levels of education and training 10.2% illiteracy rate.
Only 70% of 15-19 year olds were enrolled at any level of education.
- Rural urban divide
- North east of Brazil is mostly farming and south is more prosperous.
-Kuznets hypothesis-
From cocoa to aerospace manufacturing from the company embraer.
-H/E Bolsa de familia welfare system that transfers many from the rich to the poor with little conditions imposed.
- What is the UK annual growth 2021 GDP rate?
- What is the UK forecast growth 2022?
- What is the current UK budget deficit?
- What is the UK current national debt?
- What is the UK Gini coefficient?
2021 7.4%
2022 2%
5.6% GDP BD
96% of GDP
-0.363.
How has consumption been changed due to contextual events?
- Consumer spending was 5.1% in 2021 and forecasted to be 4.9% 2022
- Eat out to help out scheme in the UK increased consumption as there were 50% discounts.
- Covid pandemic as a whole decreased consumption as brick and mortar stores were closed down.
- Savings ratio was 25.9% in July 2020
How has investment changed due to contextual events?
- Increase investment
- VAT super deduction gives tax corporation savings.
- Belt and road initiative in china
-Since the referendum in 2016 Brexit has deterred investment from UK.
The no deal brexit has increased risk for investors which will prevent investment.
What are examples of macroeconomic policies to reduce deficits?
-2010 Uk used policy of austerity - 30 billion spending cuts
-1990 Sweden used spending cuts to reduce deficit.
1996 a spending ceiling was introduced.
What are examples of macroeconomic policies that reduced poverty?
- The economic growth in China since 1985 has lifted 450 million people out of poverty.
- Finland have a progressive tax system.
- UK used supply policy of NMW of 9.51
What are examples of macroeconomic policies that changed interest rate and money supply?
- During covid UK interest rate went to all time record of 0.1%
- 1% start of May
-QE 450 billion during covid.
What are the macroeconomic policies that can impact international competitiveness?
- India and Bangladesh have low unit costs
- Germany is competitive due to high quality.
- China has used currency manipulation.
-Red tape challenge and corporation tax from 21% to 2% in 2015.
What is an example of globalisation?
EU trade bloc.
The total output in 2014 accounted for 18.4 trillion.
-The EU works with WTO to remove trade obstacles between members.
What is an example of protectionist measures?
-Donald Trump put 25% tariff on steel and 10% tariff on aluminium. Covered 4.1% of exports.
what can be two countries that export two goods and have a comparative advantage.
- Italy and US
- Italy 5 cars and 10 motorbikes
- US 8 cars and 4 motorbikes
- Italy has comparative advantage in motorbikes and USA in cars.
What is an example of a transfer pricing scandal?
-2008 Dixons.
what is an example of asymmetric information in financial markets?
-GFC banks were buying sub-prime and prime mortgages that were packaged up as prime mortgages, they were taking on more risk than they knew.
What is an example of moral hazard in financial markets?
-Sellers of mortgages were taking higher risks and selling sub-prime mortgages even if they knew the risk as they would get bonuses.
