Economic questions

Question 1

How would you evaluate the cost and benefits of electric vehicles

Answer 1

• What are they after appraisal or post evaluation? Make sure what they are after is clear – you can always ask for clarification during the interview. • Post evaluation - what are we evaluating? • What are the objectives? SMART objectives • Thinking about reasons for intervention - what are the market failures? Is there a distributional/inequality issue? Is it strategic/politically driven? (be able to give explain the characteristics of market failures and examples). o Monopolies o Externalities o Asymmetric information o Public good o Equity reasons • What is the policy mechanism? Standards/quotas, taxes/subsidies, regulation, bans, obligation, legality/property rights (esp for externalities), nudging techniques: more cycle lanes, encourage walking, etc. Product standards, public information/education campaigns. Link this back to the market failures. • What are the alternative options? Short-list of options? • Then think about stakeholders, cost and benefits for each • Are they real costs and benefits or transfers within society? e.g. taxes • Think about what evidence we have, data sources, can we monetise it or not? • Then go into one or two cost and benefits in more detail • Counterfactual? Appraisal period? • Risk • Sensitivities • Think about evaluation and evaluation plan - why do we want to do this? Ensure policy achieves objectives and is VfM

Question 2

Why should the UK increase investment in health care?

Answer 2

Reasons:

• Healthy workforce
• increased productivity
• more productive/growing economy

Reasons for intervening:

• Monopolies (in medication, vaccination, clinical trials etc)
• Externalities
• Asymmetric information
• Equity reasons - merit goods

Question 3

• Should the NHS be free?

Question 4

• Why do countries trade?

Question 5

• Is inflation a problem?

Question 6

What is the ROAMEF cycle?

Answer 6

Rationale

Objectives

Appraisal

Monitoring

Evaluation

Feedback

Question 7

1. What factors should the government consider when choosing whether to extend the business loan scheme?

Question 8

1. What is price elasticity of demand and what are its determinants?

Question 9

1. What factors do businesses take into account when looking to investing?

Question 10

Why give unemployment benefits?

Question 11

1. Why is X not provided by the market?

Question 12

Why does the government need to intervene for air pollution?

Question 13

1. How would you appraise the Eat-out-to-help-out scheme?

Question 14

1. Is education a public good?

Question 15

1. Three large pharmaceutical companies have recently announced that they’ve developed Covid 19 vaccines. How should these vaccines be distributed? Should the NHS be free?

Question 16

1. Using game theory, why is there political support for the trident nuclear system?

Question 17

1. Are Amazon/Facebook/Google too large and hindering competition?

Question 18

1. What is the effect of an increase/decrease in the price of oil?

Question 19

1. Explain currency appreciation, provide an example, and explain how a local currency appreciating in value may affect the balance of payments.

Question 20

1. What are the benefits of trade?

Question 21

1. What role does innovation have to play in the economy?

Question 22

1. What drives the productivity of a certain area?

Question 23

What are the impacts of EU exit/ leaving a trading block ?

Question 24

1. Why is uncertainty bad for the economy?

Question 25

1. Should the UK put tariffs on incoming goods?

Question 26

1. What is economic growth? How is it measured? What are the drivers of it?

Question 27

What is the effect of a depreciation of the currency on the economy?

Question 28

1. What are the effects of running a high government deficit on the economy?

Question 29

1. Can you explain why output per worker has flat-lined since 2008?

Question 30

1. After WW2, Germany experienced a period of hyperinflation. Can you explain the situation and potential remedies?

Question 31

1. Is inflation a problem?

Question 32

1. Can income inequality ever be a good thing?

Question 33

What are the different types of unemployment?

Question 34

1. Why do countries trade?

Question 35

Give examples of market failures that could justify governmetn intervention

Answer 35

* Market Structure/ Market Power – * Monopolies (Natural vs organised) * Barriers to entry * Types of good * Public goods – non-excludable vs non-rivalrous * Externalities – negative and positive * Nature of exchange * Transaction costs * Agency problems * Informational Asymmetries * Missing markets * Adverse Selection * Moral Hazard * Bounded rationality * Productive + allocative inefficiency * Merit and de-merit goods * Equity/equality concerns