economics application

Question 1

examples of national debt effect on economy

Answer 1

Greece-higher unemployment
Zimbabwe-hyperinflation

Question 2

example of tariffs

Answer 2

EU 39.7% tariffs on Chinese titanium oxide- helped domestic titanium oxide producers, but hurt domestic paint producers

Question 3

examples of factors that lead to an increase in international trade

Answer 3

specialisation:
Saudi Arabia-oil-increase
china-textiles-decrease

Question 4

examples of devaluation increasing competitiveness

Answer 4

Japan:
weaker yen led to an increased competitiveness in the Japanese automobile industry

Argentina:
peso allowed to float freely which led to devaluation which, whilst initially it made Argentinian exports more competitive, in the long run it caused rampant inflation which increased the price of exports

Question 5

examples of increased investment in infrastructure increasing FDI

Answer 5

United States -
Infrastructure Investment and Jobs Act

Argentina’s Transport Infrastructure-
has invested in improving its transport infrastructure, However, the country’s volatile economic conditions have limited the potential effectiveness of such infrastructure investments in bringing significant foreign capital. Investors remain cautious due to the risks associated with political and economic instability.

Question 6

“quantitative easing caused more good than bad”-asses

Answer 6

quantitative easing is a monetary policy used by central banks to stimulate the economy when standard monetary policy tools have become ineffective.

One effect that quantitative easing may have is increasing money supply.
an example of this is when During the global financial crisis, the Federal Reserve initiated several rounds of quantitative easing, which significantly increased the Federal Reserve’s balance sheet, from around $900 billion in pre-crisis 2007 to over $4.5 trillion by the end of 2014.
However, it can also be argued to increase wealth inequality.
for example when the United States used quantitative easing in 2008 the benefits of QE disproportionately favoured wealthy individuals and large corporations while failing to stimulate broad-based economic growth, leading to concerns about long-term economic instability.

another effect that quantitative easing may have is improving economic growth.
an example of this is the Bank of Japan’s engaging in quantitative easing for many years, especially to combat deflation and stimulate economic growth.
However, this can lead to inflation.
an example of this is when Zimbabwe’s government engaged in aggressive money printing in the early 2000s to finance deficits, leading to hyperinflation.

Question 7

give two supply side policies that could be used to reduce inflation

Answer 7

Supply-side policies are designed to increase the productive capacity of the economy, thereby improving supply and potentially reducing inflationary pressures.

one supply side policy is investment in education.
One example of this happening is Finland which has invested heavily in its education sector, focusing on teacher training and providing access to quality education, the result has been a highly educated populace capable of adapting to changing economic conditions and contributing to a stable economy. By ensuring a steady supply of skilled workers, Finland can better meet the demands of its economy, helping alleviate upward pressure on prices.

However, investment in education could also increase the price of labour.
One example of this happening was ### 1. United States

• Higher Education Expansion: The U.S. has seen significant increases in educational attainment over the decades. Federal and state investments in public universities and community colleges have helped millions earn degrees. For example, studies show that individuals with a bachelor’s degree can earn significantly more—over $1 million more over their lifetime—than those with only a high school diploma. Furthermore, states like California and Texas have invested heavily in the California Community Colleges and Texas Higher Education Coordinating Board initiatives, leading to increased degree completions and, subsequently, higher wages for graduates in areas such as technology and healthcare.

6. Promoting Free Trade

• Reducing Tariffs: Lowering tariffs and trade barriers can increase competition and allow consumers access to cheaper imports, which can help prevent domestic price inflation.
• Trade Agreements: Entering into trade agreements with other countries can expand markets for domestic producers and reduce costs through competition.