http://www.tutor2u.net/blog/index.php/economics/ en tutor2u.net Copyright 2012 2012-02-12T07:41:03+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/exam-advice-10-ideas-for-a-better-economics-paper http://www.tutor2u.net/blog/index.php/economics/comments/exam-advice-10-ideas-for-a-better-economics-paper#When:14:38:22Z Here are some thoughts on ways to improve your scores on your summer economics exam papers. They are in no particular order but I hope some of them might be useful Ten Thoughts on Improving Your Economics Papers Streamed presentation PDF handout version AS and A2 Specifications, Economics Q&A, Economics Exam Advice, A2 Macro, A2 Micro, AS Macro, AS Micro, Teaching of Economics, 2012-01-10T14:38:22+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/prezi-on-information-failures http://www.tutor2u.net/blog/index.php/economics/comments/prezi-on-information-failures#When:08:46:03Z Click below to open a new Prezi on aspects of information failures / gaps and market failure together with some of the interventions that might be used to address imfornation imperfections in many markets. AS and A2 Specifications, AQA Economics Unit 1, EdExcel Economics Unit 1, Economics Q&A, Q&A - Market Failure, A2 Micro, AS Micro, Government Intervention, Regulation, Market Failure, Information Failure, Merit & De-Merit Goods, Market Equilibrium and Price, Teaching of Economics, 2011-12-20T08:46:03+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/is-it-still-appropriate-to-use-the-term-black-market http://www.tutor2u.net/blog/index.php/economics/comments/is-it-still-appropriate-to-use-the-term-black-market#When:07:42:10Z I am in the process of updating my Tutor2u Q&A’s for 2013 editions due out in the summer next year. One of areas I am tightening up on is the distinction between the official, shadow informal and underground economies and the unintended consequence of high levels of indirect taxation in creating – now what term would you now use? Economics Q&A, Q&A - Markets, Teaching of Economics, 2011-12-11T07:42:10+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/last-minute-unit-1-exam-tips http://www.tutor2u.net/blog/index.php/economics/comments/last-minute-unit-1-exam-tips#When:20:52:00Z Our Year 12 economists are all departing on Friday for study leave, so I’ll be going through some key points they should bear in mind for their exams. Read on for a unit 1 tips sheet and other info… AS and A2 Specifications, EdExcel Economics Unit 1, Economics Q&A, Economics Exam Advice, Teaching of Economics, 2011-05-11T20:52:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/exam-advice-multiple-causation http://www.tutor2u.net/blog/index.php/economics/comments/exam-advice-multiple-causation#When:08:39:00Z No doubt you have found in your revision that many factors can influence the direction of a single economic variable. For most key issues there are many short-term and longer-term contributing factors and strong students are aware of multiple causation and can bring this explicitly into their answers. For example: *The causes of unemployment (demand and supply side causes): Presentation here *The causes of inflation (cost push and demand pull, domestic and external): Presentation here *Reasons behind changes in the exchange rate (trade, foreign direct investment, other capital flows, central bank intervention): Presentation here *The many factors that the Bank of England and other central banks take into account when setting policy interest rates: Presentation here *Causes of economic growth in both the short run and the long run (AD and LRAS causes): Presentation here *Multiple causes of market failure and of government failure: Presentation here:government failure *The reasons why producer cartels are often unstable: Presentation here *The factors driving globalisation (and more recently de-globalisation): Globalisation blogs here Examiners will always reward students who make an attempt to use relevant economic analysis and make it clear that several factors affect a particular economic variable (inflation, investment spending). Often we make use of the ceteris paribus assumption to isolate in theory the effects of one variable – but the real world does not allow this to happen! Challenging the ceteris paribus assumption can also add weight and value to your answer. AS and A2 Specifications, Economics Q&A, Economics Exam Advice, 2011-04-17T08:39:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/exam-advice-putting-things-in-context http://www.tutor2u.net/blog/index.php/economics/comments/exam-advice-putting-things-in-context#When:14:45:00Z High level economics students at AS and A2 seem to have a happy knack of putting issues and debates into a clear context and this certainly counts as evaluation and scores good marks in your papers. Here is a brief revision note on the importance of context! Economics Q&A, Economics Exam Advice, 2011-04-01T14:45:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/exam-advice-maintaining-balance-in-your-answers http://www.tutor2u.net/blog/index.php/economics/comments/exam-advice-maintaining-balance-in-your-answers#When:14:37:00Z In AS and A2 economics exams, especially in the essay questions that require evaluation, axaminers will always reward students who adopt a balanced approach and those who try to reason out and explain their arguments i.e. they demonstrate an awareness of different points of view / different schools of thought in Economics Examples might include: *Monetarist versus Keynesian views on the impact of fiscal and monetary policies as instruments of demand management during a recession *The arguments for and against the Coalition’s plans to eliminate the structural budget deficit over the next four years *Polluter-pays principle (carbon tax) versus tradable-permits (carbon trading) versus regulation as means of cutting emissions and addressing environmental market failure *The arguments for and against manipulation of currencies as an instrument of macroeconomic policy *Competing views on the relationship between economic growth and its long-term environmental impact. *Different schools of thought on the benefits of competition versus regulation in a market *Free market forces versus state intervention approaches to reducing child poverty or poverty in general Discussion of competing theories leads naturally into good evaluation – For example, you may be asked to evaluate how well the free-market performs and the circumstances in which there may be a case for non-market (state) provision of goods or services or other forms of government intervention. Maintaining a semblance of balance means avoiding extreme views or assertions that are never backed up with any evidence or examples. The final section of your essay answer does give you an opportunity to come to a reasoned conclusion that favours one side of an argument of another - but do this having considered a variety of arguments and perspectives rather than a narrow, blinkered approach! Economics Q&A, Economics Exam Advice, 2011-03-31T14:37:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/economics-qa-should-the-cap-be-scrapped http://www.tutor2u.net/blog/index.php/economics/comments/economics-qa-should-the-cap-be-scrapped#When:09:12:00Z The Common Agricultural Policy is a system of farm support that was set up by the EU to assist the agricultural sectors of its member states. The CAP accounts for nearly half of the EU’s budget, at approximately £48bn, and combines direct subsidy payments and price support schemes. Economic welfare is concerned with levels of human well-being, and can be achieved through an efficient allocation of resources, thereby maximising consumer and producer surplus. AS and A2 Specifications, AQA Economics Unit 1, AQA Economics Unit 4, EdExcel Economics Unit 4, Economics Q&A, Q&A - Market Failure, Q&A - Markets, A2 Macro, AS Micro, Agriculture, European Economy, EU Farming and Fishing, Government Intervention, Government Failure, Market Equilibrium and Price, Price Mechanism in Action, 2011-02-14T09:12:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/economics-qa-what-factors-help-to-explain-rising-food-prices http://www.tutor2u.net/blog/index.php/economics/comments/economics-qa-what-factors-help-to-explain-rising-food-prices#When:09:08:00Z Global food prices have risen on average by more than 135% over the last 5 years. While the price of food has been highly volatile, with a spike during 2008, there is clearly a trend pattern of a long term rise. This can be attributed to various root causes, both demand and supply side in nature. AS and A2 Specifications, AQA Economics Unit 4, Economics Q&A, Q&A - Markets, A2 Macro, AS Micro, Agriculture, Emerging Economies, Commodities Markets, Cycles and Shocks, Global Economy, Market Equilibrium and Price, Price Volatility, Inter-related Markets, 2011-02-14T09:08:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/carbon-taxes-the-best-hope-for-a-low-carbon-future-in-europe http://www.tutor2u.net/blog/index.php/economics/comments/carbon-taxes-the-best-hope-for-a-low-carbon-future-in-europe#When:10:03:00Z With EU carbon emissions market has closed since the middle of January after hackers stole €30m of permits the economics of a EU wide carbon tax has been given fresh prominence in recent weeks. Charles Hart evaluates the arguments for and against a tax on emissions in this super applied micro essay. After the essay there are some links to recent blog posts and other resources on carbon trading and carbon taxation. AS and A2 Specifications, AQA Economics Unit 3, EdExcel Economics Unit 3, Economics Q&A, Q&A - Market Failure, A2 Micro, AS Micro, Business Economics, Environmental Economics, European Economy, Single Market, Global Economy, Government Intervention, Indirect Taxes, Market Failure, Externalities, Information Failure, Market Equilibrium and Price, Price Mechanism in Action, Teaching of Economics, UK Economy, 2011-02-03T10:03:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/economics-qa-can-economics-provide-answers-to-the-crisis-of-collapsing-stoc http://www.tutor2u.net/blog/index.php/economics/comments/economics-qa-can-economics-provide-answers-to-the-crisis-of-collapsing-stoc#When:19:01:00Z The UK is one of many countries that now face a dilemma when it comes to fish stocks and their sustainability. In the UK we now consume over 385,000 tons of fish per year whilst on a global scale only 10% of large fish stocks that existed in the 1950s are still present today; this include both cod and tuna. Stock depletion has become a larger issue because of the increases in fishing technology – especially in long-line fishing which is the main technique used in Japan. As a result many of the once inaccessible fish reserves have become economically viable to fish as boats are more fuel efficient and require less labour. In a fully functioning market the decline in supply of the product would cause an increase in price and act as a disincentive for consumers to purchase the product meaning that the industry would reach a sustainable equilibrium. In this case however there has been a deep market failure resulting from the tragedy of the commons. The sea, and its fish, is a common resource either on a global scale or on a national scale within a country’s own territorial waters. There are very few established property rights over the sea meaning that rational economic agents have an incentive to plunder the seas resources causing the falling fish stock levels. AS and A2 Specifications, AQA Economics Unit 3, Economics Q&A, Q&A - Market Failure, Q&A - Markets, A2 Micro, Cost Benefit Analysis, Environmental Economics, European Economy, EU Farming and Fishing, Global Economy, Market Equilibrium and Price, Price Mechanism in Action, Teaching of Economics, 2011-01-19T19:01:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/economics-qa-how-can-the-tragedy-of-the-commons-lead-to-environmental-marke http://www.tutor2u.net/blog/index.php/economics/comments/economics-qa-how-can-the-tragedy-of-the-commons-lead-to-environmental-marke#When:22:09:00Z ‘The tragedy of the commons’, although created by Garrett Hardin, is a famous concept which can be traced back to Adam Smith. It refers to a situation where individuals or private economic agents exploit scarce and rival common environmental resources for their own rational, self-interested aims, leading to over-production and the possible permanent depletion of the resource for all. The essence of this problem stems from insufficient and poorly protected property rights. In other words, as consumers do not own these common goods, they have little incentive to take care of and maintain it, but rather an incentive to extract as much personal utility or benefit from it as possible at that particular time. Therefore, the provision of property rights over some grazing land may help to prevent it being permanently destroyed – instead allowing utility to be extracted from it at a sustainable rate. However, as the tragedy of the commons is a problem where one’s actions affect the benefits of others in the future, concerns for intergenerational equity usually end up being dominated by concerns for personal benefits. AS and A2 Specifications, AQA Economics Unit 3, EdExcel Economics Unit 3, Economics Q&A, Q&A - Market Failure, A2 Micro, Cost Benefit Analysis, Environmental Economics, Government Intervention, Market Failure, Externalities, Public Goods, Teaching of Economics, 2011-01-18T22:09:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/economics-qa-will-the-rise-in-vat-harm-the-uks-economic-performance http://www.tutor2u.net/blog/index.php/economics/comments/economics-qa-will-the-rise-in-vat-harm-the-uks-economic-performance#When:14:48:00Z On January 4th 2011, the standard rate of value added tax (VAT) jumped from 17.5% to 20%. For the first time, the UK VAT rate is now the same as the basic rate of income tax! Prime Minister David Cameron has stated publicly that the rise in VAT is likely to be permanent rather than temporary. The UK economy will thus have to adjust to this higher rate but what are some of the possible macroeconomic consequences? AS and A2 Specifications, AQA Economics Unit 2, AQA Economics Unit 4, EdExcel Economics Unit 2, EdExcel Economics Unit 4, Economics Q&A, Q&A - Macro, A2 Macro, AS Macro, Business Economics, Cycles and Shocks, Aggregate Demand, Government Intervention, Indirect Taxes, Macroeconomic Policies, Fiscal Policy, Teaching of Economics, UK Economy, Recession Watch, 2011-01-17T14:48:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/economics-qa-does-the-uk-economy-achieve-a-trade-surplus-in-anything http://www.tutor2u.net/blog/index.php/economics/comments/economics-qa-does-the-uk-economy-achieve-a-trade-surplus-in-anything#When:12:10:01Z The answer is yes! Although the British economy has overall run a large deficit in the balance of trade in goods and services for many years, if we look a little deeper underneath the trade statistics we can reveal a comparative advantage in a number of industries. Many of them are in the service sector which - as a whole - has generated sizeable and growing annual trade surpluses for the best part of two decades. AS and A2 Specifications, AQA Economics Unit 2, AQA Economics Unit 4, Economics Q&A, Q&A - Macro, A2 Macro, AS Macro, Balance of Payments, UK Economy, 2011-01-06T12:10:01+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/economics-qa-will-the-government-spending-cuts-affect-inflation http://www.tutor2u.net/blog/index.php/economics/comments/economics-qa-will-the-government-spending-cuts-affect-inflation#When:17:49:00Z In early July 2010 Chancellor George Osborne announced a tough government spending review designed to cut the size of the UK’s structural budget deficit and bring down managed state sector spending as a share of GDP. The UK is not alone in introducing fiscal austerity measures and they have prompted fierce debate not least among economists about the likely impact on economic performance. The spending squeeze brings to an end more than a decade of strong real terms increases in state spending. This question is really about causation and in this case we are asked to think about how the steep planned cuts in government spending may affect the annual rate of consumer price inflation in the next couple of years. AS and A2 Specifications, AQA Economics Unit 2, AQA Economics Unit 4, EdExcel Economics Unit 2, EdExcel Economics Unit 4, Economics Q&A, Q&A - Macro, A2 Macro, AS Macro, Cycles and Shocks, Aggregate Demand, Inflation and Deflation, Macroeconomic Policies, Fiscal Policy, Teaching of Economics, UK Economy, 2011-01-03T17:49:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/qa-what-do-we-need-to-know-about-output-gaps http://www.tutor2u.net/blog/index.php/economics/comments/qa-what-do-we-need-to-know-about-output-gaps#When:18:02:00Z Q&A: For AS macroeconomics, what do we need to know about output gaps? AS and A2 Specifications, AQA Economics Unit 2, EdExcel Economics Unit 2, Economics Q&A, Q&A - Macro, AS Macro, Cycles and Shocks, Aggregate Demand, UK Economy, Recession Watch, Credit Crunch, 2010-05-29T18:02:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/qa-does-a-positive-output-gap-always-mean-rising-inflation http://www.tutor2u.net/blog/index.php/economics/comments/qa-does-a-positive-output-gap-always-mean-rising-inflation#When:06:11:00Z A student asks “Does a positive output gap always mean rising inflation?” Economics Q&A, Q&A - Macro, A2 Micro, AS Micro, Cycles and Shocks, Aggregate Demand, Aggregate Supply, Inflation and Deflation, 2009-06-02T06:11:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/qa-size-of-state-sector-and-automatic-stabilisers http://www.tutor2u.net/blog/index.php/economics/comments/qa-size-of-state-sector-and-automatic-stabilisers#When:06:05:00Z A student asks: “how does having a large state sector allow automatic stabilizers to act in a downturn?” Economics Q&A, Q&A - Macro, A2 Macro, Cycles and Shocks, Macroeconomic Policies, Fiscal Policy, UK Economy, 2009-06-02T06:05:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/qa-what-is-hedging http://www.tutor2u.net/blog/index.php/economics/comments/qa-what-is-hedging#When:21:05:00Z Hedging is the process of protecting oneself against risk. Economics Q&A, Q&A - Markets, A2 Micro, AS Micro, Business Economics, 2009-06-01T21:05:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/qa-current-and-capital-account http://www.tutor2u.net/blog/index.php/economics/comments/qa-current-and-capital-account#When:20:26:00Z Q: Please explain the difference between the current and the capital account on the balance of payments Economics Q&A, Q&A - Macro, A2 Macro, Balance of Payments, 2009-06-01T20:26:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/qa-ad-and-inflationary-pressures http://www.tutor2u.net/blog/index.php/economics/comments/qa-ad-and-inflationary-pressures#When:17:38:00Z A student asks: Will a rise in AD will only cause cost-push inflation if there is a positive output gap? Economics Q&A, Q&A - Macro, AS Macro, Cycles and Shocks, Aggregate Demand, Aggregate Supply, Inflation and Deflation, 2009-06-01T17:38:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/qa-what-is-the-productivity-gap http://www.tutor2u.net/blog/index.php/economics/comments/qa-what-is-the-productivity-gap#When:17:23:00Z The productivity gap is a phrase to describe a sustained difference in measured output per worker (or GDP per person employed) between one country and another. Economics Q&A, Q&A - Macro, AS Macro, Cycles and Shocks, Aggregate Supply, Economic Growth, Macroeconomic Policies, Supply-side policies, UK Economy, 2009-06-01T17:23:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/qa-demerit-goods-and-negative-production-externalities http://www.tutor2u.net/blog/index.php/economics/comments/qa-demerit-goods-and-negative-production-externalities#When:21:16:00Z Question: I was wondering what the difference between a demerit good and a good that has negative externalities in production was? Economics Q&A, Q&A - Market Failure, AS Micro, Government Intervention, Market Failure, Externalities, Information Failure, Merit & De-Merit Goods, 2009-05-31T21:16:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/qa-how-the-pff-might-be-used-in-assessing-a-countrys-economic-performance http://www.tutor2u.net/blog/index.php/economics/comments/qa-how-the-pff-might-be-used-in-assessing-a-countrys-economic-performance#When:17:33:00Z A production possibility frontier (PPF) is a boundary which shows the combinations of two or more goods and services that can be produced whilst using all available factor resources efficiently. Economics Q&A, Q&A - Markets, Introductory Economics, 2009-05-02T17:33:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/qa-changes-in-pattern-of-national-output http://www.tutor2u.net/blog/index.php/economics/comments/qa-changes-in-pattern-of-national-output#When:08:29:00Z A student posts this question: Sectoral contribution to the national income and employment have changed over a period. Explain in context of structural changes in economy. Thanks for just posting an exam question! How imaginative! Briefly here are my thoughts: Economics Q&A, Q&A - Macro, AS Macro, Economic Growth, Development Economics, 2009-04-28T08:29:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/qa-why-do-cartels-often-collapse http://www.tutor2u.net/blog/index.php/economics/comments/qa-why-do-cartels-often-collapse#When:09:36:00Z Recent business history both here in the UK and in international markets is littered with examples of cartel-behaviour by businesses that seem to have come unstuck. Just type price-fixing into Google news and see what comes up! Even on the day I am writing this blog answer, the FT reports that three cargo airlines have agreed to pay fines totalling $214m for their roles in a global conspiracy to fix prices for air freight. Bloomberg reports that a former sales executive at Hitachi Displays Ltd. has been charged with participating in a global conspiracy to fix prices for liquid crystal displays sold to Dell Inc. And in Ireland, a former director of a Dublin car company has been given a 15-month suspended prison sentence and fined €160,000 after pleading guilty to charges of price-fixing. Economics Q&A, Q&A - Market Failure, Q&A - Markets, A2 Micro, AS Micro, Business Economics, Monopoly, Oligopoly, Competition Policy, Government Intervention, Market Failure, Market Equilibrium and Price, Price Mechanism in Action, 2009-04-14T09:36:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/qa-are-there-countries-not-in-recession-this-year http://www.tutor2u.net/blog/index.php/economics/comments/qa-are-there-countries-not-in-recession-this-year#When:09:58:00Z The simple answer is yes! Although the world economy is forecast to experience a recession this year (Deutsche Bank have pencilled in a 1.9% contraction in global GDP for 2009 and the G7 nations will see output slump by 4.5%), there will always be countries at different stages of the business cycle and those who for one reason or another manage to avoid the worst of the fall out from the global financial and economic crisis. Using forecasts for 2009 from the economics team at Deutsche Bank here are some of the countries expected to avoid a full-blown recession: Economics Q&A, Q&A - Macro, A2 Macro, AS Macro, Emerging Economies, Brazil Economy, China Economy, Indian economy, Russia Economy, Cycles and Shocks, Economic Growth, GCSE Economics, Global Economy, Credit Crunch, UK Economy, Recession Watch, 2009-04-13T09:58:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/qa-what-is-a-scrappage-subsidy-and-will-it-work-in-the-uk http://www.tutor2u.net/blog/index.php/economics/comments/qa-what-is-a-scrappage-subsidy-and-will-it-work-in-the-uk#When:18:33:00Z A scrappage subsidy is a “pay-to-scrap” scheme where a government offers a financial incentive to car buyers if they scrap a car that has reached a specified age and in its place they are offered a payment towards the cost of a new vehicle. Germany and France both offer scrappage subsidies to consumers and there is a growing number of voices from inside the UK business community and motor vehicle industry clamouring for one to be launched in the UK. The Retail Motor Industry Federation and the Society of Motor Manufacturers and Traders (SMMT) are at the head of the queue lobbying for a scrappage scheme to be introduced as soon as possible. Economics Q&A, Q&A - Market Failure, Q&A - Markets, AS Macro, AS Micro, Cycles and Shocks, Aggregate Demand, Consumer Spending, Government Intervention, Subsidies, Manufacturing Industry, Market Equilibrium and Price, Nature of Demand, Transport Economics, UK Economy, 2009-04-07T18:33:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/qa-what-is-fiscal-retrenchment http://www.tutor2u.net/blog/index.php/economics/comments/qa-what-is-fiscal-retrenchment#When:09:46:01Z Fiscal retrenchment means that a government has to introduce deflationary fiscal measures designed to reduce the amount of borrowing and debt that has been run up during the downturn and economic/financial crisis. Economics Q&A, Q&A - Macro, A2 Macro, AS Macro, Macroeconomic Policies, Fiscal Policy, UK Economy, 2009-04-07T09:46:01+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/qa-which-indirect-taxes-give-the-government-to-most-revenue http://www.tutor2u.net/blog/index.php/economics/comments/qa-which-indirect-taxes-give-the-government-to-most-revenue#When:14:07:00Z Which indirect taxes give the government to most revenue? For the UK government value added tax provides the biggest source of revenue. In November 2008, VAT was cut from 17.5% to 15% on a temporary basis in a move by the government designed to stimulate consumer spending – the decision was said to be worth around £12 billion of lost tax revenue for the UK Treasury. There are many other indirect taxes and our chart below highlights six of them. As you can see the flow of tax revenue from indirect taxes on tobacco provides a very important source of money for the UK government. Together these six indirect taxes add nearly £20 billion annually into the government’s coffers. In a recession where consumer spending is falling and where there is a chance of a period of persistent price deflation, the UK government will see a fall in revenue from indirect taxes. More revision notes on indirect taxes can be found here Economics Q&A, Q&A - Market Failure, Q&A - Markets, AS Micro, Government Intervention, Indirect Taxes, Market Equilibrium and Price, Nature of Supply, Fiscal Policy, 2009-04-05T14:07:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/qa-what-is-a-positive-sum-game http://www.tutor2u.net/blog/index.php/economics/comments/qa-what-is-a-positive-sum-game#When:13:23:00Z A positive sum game refers to the outcome of a decision or a policy or a negotiation involving at least one agent. And in this outcome a positive sum game occurs when no one wins at someone else’s expense - indeed the sum of positives and negatives (wins and losses) is positive. A good example of this are the mutually beneficial gains from trade in goods and services between nations. If businesses or (more generally) countries can find a terms of trade in which both parties benefit then specialisation and trade can lead to an overall improvement in the economic welfare of both countries. Many environmental campaigners believe that countries should do more to recognise the benefits of cooperation in designing policies and incentives to mitigate the impact of climate change. Surely there are positive sum games from agreement on strategies to lower C02 emissions for example by promoting innovation and the diffusion of technological change? At a micro economic level positive sum games might be discussed in the context of negotiations between employees and employers or businesses in an oligopoly recognising their mutual interdependence and agreeing to cooperate in ways such as joint research projects (legal under EU competition law). Joint ventures are good examples of businesses understanding the power of collabborrative ventures. A good recent example of this is the joint venture agreed by O2 and Vodafone to build and share new network sites together. They will share the masts, antennas, cabinets and power supply, as well as consolidate their existing G and 3G masts. Economics Q&A, Q&A - Macro, Q&A - Market Failure, Q&A - Markets, 2009-04-04T13:23:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/qa-what-is-the-difference-between-a-depression-and-a-recession http://www.tutor2u.net/blog/index.php/economics/comments/qa-what-is-the-difference-between-a-depression-and-a-recession#When:10:34:00Z This is a good question and you wont be surprised to hear that economists have different views on the distinction between the two! My answer is that the difference is a matter of degree both about the duration of an economic downturn and also the severity.   Economics Q&A, Q&A - Macro, A2 Macro, AS Macro, UK Economy, Credit Crunch, 2009-04-02T10:34:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/qa-full-employment-and-inflation http://www.tutor2u.net/blog/index.php/economics/comments/qa-full-employment-and-inflation#When:15:49:01Z When the economy is at full employment, what measure is most effective in reducing inflation in the short run? This question hints at the possible trade-off between two macroeconomic objectives - namely high employment and stable prices. Economics Q&A, Q&A - Macro, A2 Macro, AS Macro, Inflation and Deflation, Unemployment, 2009-04-01T15:49:01+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/qa-what-is-the-easterlin-paradox http://www.tutor2u.net/blog/index.php/economics/comments/qa-what-is-the-easterlin-paradox#When:11:12:00Z The Easterlin Paradox concerns whether we are happier and more contented as our living standards improve. In the mid 1970s Richard Easterlin drew attention to studies that showed that, although successive generations are usually more affluent that their parents or grandparents, people seemed to be no happier with their lives? It is an interesting paradox to study when you are writing about measuring economic welfare and the standard of living. Economics Q&A, Q&A - Market Failure, Behavioural Economics, 2009-04-01T11:12:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/qa-will-the-uk-economys-ppf-shift-inwards-because-of-the-recession http://www.tutor2u.net/blog/index.php/economics/comments/qa-will-the-uk-economys-ppf-shift-inwards-because-of-the-recession#When:12:16:00Z Will the UK economy’s PPF shift inwards because of the recession? This is an interesting question and hints that a deep recession that lasts longer than we expect can have a damaging effect on the UK economy’s supply-side performance and productive potential. Economics Q&A, Q&A - Macro, A2 Macro, AS Macro, Cycles and Shocks, Aggregate Supply, Introductory Economics, UK Economy, Unemployment, 2009-03-31T12:16:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/qa-government-deficit-and-current-account-deficit http://www.tutor2u.net/blog/index.php/economics/comments/qa-government-deficit-and-current-account-deficit#When:14:49:00Z What is Current Account Deficit and Government Deficit and do they have any effect on Aggregate Demand or Supply This question flags up what seems to be a frequent confusion among students - the difference between a current account deficit and a government fiscal deficit Economics Q&A, Q&A - Macro, AS Macro, Balance of Payments, Cycles and Shocks, Aggregate Demand, Fiscal Policy, 2009-03-30T14:49:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/qa-what-is-crowding-out http://www.tutor2u.net/blog/index.php/economics/comments/qa-what-is-crowding-out#When:11:21:00Z Crowding out is an idea often used by fiscal conservatives to suggest that a strategy of using fiscal policy to stimulate demand during an economic recession might not be particularly effective. Economics Q&A, Q&A - Macro, A2 Macro, AS Macro, Cycles and Shocks, UK Economy, Credit Crunch, Fiscal Policy, Keynesian Economics, 2009-03-30T11:21:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/calling-all-economics-students http://www.tutor2u.net/blog/index.php/economics/comments/calling-all-economics-students#When:10:22:00Z I expect that many of you have or are just about to head off for your revision packed Easter break before your final AS and A2 exams in early June. The Economics blogging team at Tutor2u would very much like the material found on the blog over the coming weeks to be driven by you. If you want some help with past paper questions or theory content from the syllabus then do drop us a line, we can then produce relevant material to your revision needs. We are very keen to develop the Q&A sections of the blog Q&A Macro Q&A Markets Q&A Market Failure If you have a revision question that we can consider blogging about please submit your form here Good luck with your revision! Economics Q&A, 2009-03-30T10:22:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/qa-what-is-a-reserve-currency http://www.tutor2u.net/blog/index.php/economics/comments/qa-what-is-a-reserve-currency#When:11:07:00Z This question is in the news at the moment. The Chinese central bank has proposed replacing the US dollar as the world’s reserve currency with a new hybrid currency controlled by a beefed up International Monetary Fund. Economics Q&A, Q&A - Macro, A2 Macro, Emerging Economies, European Economy, Exchange Rates, Global Economy, US Economy, 2009-03-29T11:07:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/qa-is-capital-investment-always-more-profitable-in-inflationary-times http://www.tutor2u.net/blog/index.php/economics/comments/qa-is-capital-investment-always-more-profitable-in-inflationary-times#When:11:52:00Z Is capital investment are always more profitable in inflationary times? One way of measuring the profitability of an investment project is as a rate of return on capital employed. The real return makes an adjustment for the effects of inflation and it is the expected real return that should drive investment decisions. Economics Q&A, Q&A - Macro, Cycles and Shocks, Aggregate Demand, Capital Investment, 2009-03-28T11:52:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/qa-suggest-and-evaluate-policies-that-the-uk-government-can-use-to-tackle-t http://www.tutor2u.net/blog/index.php/economics/comments/qa-suggest-and-evaluate-policies-that-the-uk-government-can-use-to-tackle-t#When:11:29:00Z Suggest and evaluate policies that the UK government can use to tackle the present recession? This sounds a bit like a homework essay to me! So I won’t write a detailed answer to it but instead offer some links to recent blogs and other articles on this topic. Economics Q&A, Q&A - Macro, 2009-03-27T11:29:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/qa-externalities-and-external-costs-and-benefits http://www.tutor2u.net/blog/index.php/economics/comments/qa-externalities-and-external-costs-and-benefits#When:11:16:00Z Could you please explain the meaning of externalities in relation to marginal social cost, marginal social benefit? Externalities are third party effects arising from production and consumption of goods and services for which no appropriate compensation is paid. Externalities occur outside of the market i.e. they affect people not directly involved in the production and/or consumption of a good or service. They are also known as spill-over effects. Economics Q&A, Q&A - Market Failure, AS Micro, Market Failure, Externalities, 2009-03-26T11:16:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/qa-what-is-a-keynesian-stimulus-and-will-it-work http://www.tutor2u.net/blog/index.php/economics/comments/qa-what-is-a-keynesian-stimulus-and-will-it-work#When:10:12:00Z A Keynesian–style stimulus happens when policy-makers deliberately seek to stimulate one or more of the components of aggregate demand to boost output, jobs and incomes during an economic recession. Economics Q&A, Q&A - Macro, A2 Macro, AS Macro, Cycles and Shocks, Aggregate Demand, GCSE Economics, Macroeconomic Policies, Fiscal Policy, Keynesian Economics, UK Economy, Unemployment, 2009-03-25T10:12:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/qa-why-is-youth-unemployment-so-high http://www.tutor2u.net/blog/index.php/economics/comments/qa-why-is-youth-unemployment-so-high#When:08:13:01Z Youth unemployment rates are typically higher than for the rest of the working population. Nearly 4 people out of 10 who are unemployed are aged between 16 and 24. And as our chart shows over 100,000 young people have been out of work for over a year, a figure that has doubled since 2002 although it is much lower than it was when the UK economy was coming out of recession in the early 1990s. Economics Q&A, Q&A - Macro, A2 Macro, AS Macro, Government Intervention, Market Failure, Factor Immobility, UK Economy, Unemployment, 2009-03-24T08:13:01+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/qa-is-roadbuilding-an-effective-way-of-reducing-unemployment http://www.tutor2u.net/blog/index.php/economics/comments/qa-is-roadbuilding-an-effective-way-of-reducing-unemployment#When:16:17:00Z Q&A: To what extent would a major road building project by the government be an effective way for the government to tackle unemployment? Road to recovery or bridge to nowhere? Road-building projects would count as capital investment spending and (if financed by borrowing) a net injection of demand into the circular flow of income and spending. The question mentions a major programme hinting at projects that together could amount to many millions of pounds. The question also invites the student to focus on whether this is an effective way to tackle unemployment and so a good answer will go back to the main causes of people being out of work and address how a spending programme might tackle this. Economics Q&A, Q&A - Macro, A2 Macro, AS Macro, Cycles and Shocks, Aggregate Demand, GCSE Economics, Transport Economics, UK Economy, Unemployment, Keynesian Economics, 2009-02-28T16:17:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/qa-why-might-a-country-have-a-sustained-surplus-on-their-current-account http://www.tutor2u.net/blog/index.php/economics/comments/qa-why-might-a-country-have-a-sustained-surplus-on-their-current-account#When:12:54:00Z Why might a country have a sustained surplus on their current account? The current account of the balance of payments is the sum of four separate balances: • Net trade in goods • Net trade in services • Net investment income from overseas assets • Net transfers 4/5ths of the trade surpluses in the world economy can be found in China, Japan, Germany and the oil-exporting nations of the gulf.  According to Martin Wolf (FT, December 2008) “As a share of gross domestic product, China’s current account surplus is forecast at an astonishing 9.5 per cent, Germany’s at 7.3 per cent and Japan’s at 4 per cent. “ Economics Q&A, Q&A - Macro, A2 Macro, AS Macro, Balance of Payments, Emerging Economies, Cycles and Shocks, Aggregate Demand, Exchange Rates, Global Economy, 2009-02-26T12:54:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/qa-to-correct-a-large-current-account-deficit-what-can-the-government-do http://www.tutor2u.net/blog/index.php/economics/comments/qa-to-correct-a-large-current-account-deficit-what-can-the-government-do#When:19:59:00Z To correct a large balance of payments current account deficit what can the government do? Current account deficits are back in the news again as trade imbalances within the world economy have widened in recent years. Spain for example has run a current account deficit of more than 10% of her GDP in 2008.  There are many options open to the government should it decide that the current account deficit needs to be reduced. Economics Q&A, Q&A - Macro, A2 Macro, AS Macro, Balance of Payments, 2009-02-23T19:59:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/qa-why-when-base-rates-change-does-it-cause-other-interest-rates-to-also-ch http://www.tutor2u.net/blog/index.php/economics/comments/qa-why-when-base-rates-change-does-it-cause-other-interest-rates-to-also-ch#When:17:07:00Z Q&A: Why when base rates change does it cause other interest rates to also change? The concise answer is that the Bank of England acts as the nation’s central bank and it can use its daily operations in the money markets to nudge other interest rates higher or lower. Economics Q&A, Q&A - Macro, A2 Macro, AS Macro, UK Economy, Monetary Policy, 2009-02-23T17:07:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/qa-what-is-the-accelerator-effect http://www.tutor2u.net/blog/index.php/economics/comments/qa-what-is-the-accelerator-effect#When:15:44:00Z What is the accelerator effect? The accelerator effect describes a principle where how much a business chooses to spend on capital investment will be influenced by how quickly demand is growing for their products. Economics Q&A, Q&A - Macro, A2 Macro, AS Macro, Cycles and Shocks, Aggregate Demand, Capital Investment, Aggregate Supply, Economic Growth, GCSE Economics, 2009-02-22T15:44:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/qa-in-what-type-of-market-does-the-ipod-operate-in http://www.tutor2u.net/blog/index.php/economics/comments/qa-in-what-type-of-market-does-the-ipod-operate-in#When:15:10:00Z Q&A: iPod and Market Structure: In what type of market does the iPod operate in? In this answer I will assume that we are discussing the market for personal digital audio and video media players. Keep in mind that music can be downloaded (legally and illegally) in numerous ways such as the iPod, smart phones and standard laptops. Economics Q&A, Q&A - Markets, A2 Micro, AS Micro, Business Economics, Monopoly, Oligopoly, GCSE Economics, Market Equilibrium and Price, Nature of Demand, 2009-02-22T15:10:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/introducing-economics-qa-online-help-for-economics-students http://www.tutor2u.net/blog/index.php/economics/comments/introducing-economics-qa-online-help-for-economics-students#When:00:10:00Z Economics Q&A is a new resource on the tutor2u Economics Blog. - Are your students reluctant to ask something in class? - Would it help for them to find a simple but authoritative explanation for something they really need to know? - Are they confused about an economics term, concept or policy - but won’t admit it? - Would a second opinion, a relevant example or a different perspective help to build understanding? Thats the idea of Economics Q&A.  Students pose the questions, and our team of Economics Blog authors have a go at replying. To keep things concise and focused, we’ve nicked an idea from Twitter.  Each question has a maximum of 140 characters. Each day we’ll pick out at least one question and write a short, punchy answer. Questions can be submitted to Economics Q&A here. You can read some of our answers here Q&A Markets Q&A Macro Economics Q&A, 2009-02-22T00:10:00+00:00