ESSAY PLANS Flashcards
explain the factors which might cause a decrease in international competitiveness in the UK
- decrease in productivity
- increase in inflation
- rise in exchange rate
evaluate the strategies which may be used by government to improve competitiveness
improve infrastructure - could be costly and wasteful
increase education and training - could lead to government failure
depreciating currency - not dealing with underlying problem of competitiveness
improving competitiveness cannot all be achieved by government
explain why recent UK governments have generally been concerned about high levels of public sector debt
- lack of confidence
- crowding out
- dependency
- negative effect on exchange rate
- higher interest rates
evaluate supply side reforms in reducing unemployment in the UK
increased education and training - eval: might increase demand for higher wages, government failure
subsidies - may invest in existing workforce
cut corporation tax - profits may be paid as dividends so there may be pressure to increase dividends
depends on the level of tax cuts
explain the policies to increase investment in the UK
fiscal tax cuts - cut in business tax
monetary policy - decrease in interest rates
supply side - technological improvements
discuss whether increase in investment is the most important factor increasing economic growth
should drive AD - eval: unless close to full employment
increase research and development
increase quantity of capital
government invest in infrastructure
investment needs to be in conjunction with policies , it is only one factor that effects growth
trade is better than aid, discuss whether this is true for raising economic growth
trade
allow LEDC to exploit comparative advantage - led to primary product dependency
free trade encourages competition - increase AD
could lead to FDI
aid education and training improve infrastructure could create aid dependant culture aid might not be evenly distributed
explain the difference between demand pull and cost push inflation
demand increase faster than supply and pushes the price above equilibrium
rising business costs pass it on to consumers with higher prices
discuss the view that policies to reduce inflation will increase unemployment
difficult to reduce cost push inflation without creating job losses
easier to reduce demand pull inflation without job losses
fiscal - high taxes - laffer curve creating unemployment
monetary - high interest rates
supply side policies - increase competition, which will reduce costs - lead to firms laying off workers
explain using an appropriate diagram why increase in income tax will be associated with rise or fall in budget deficit
laffer curve - less government revenue for higher income earners. but will have more chance increasing revenue as most people have to work
- lead to tax avoidance
- low income earners claim benefits instead of working
cutting national debt is more important than increasing government spending to promote economic growth
- crowding out debt is damaging
- damaging consumer confidence
- government spending - infrastructure and prompt FDI
explain factors that determine elasticises of demand and supply of labour
wages - wage costs are higher it would make more inelastic
elasticises for product
mobility of labour
evaluate the impact of statutory minimum wage
increase in government revenue reduce inequality might encourage people to enter workforce increase employment create cost push inflation
what are causes of current account deficit on the balance of payments
- increase currency
- increased inflation compared to other countries
- decline in export sector
- falling demand/ recession
to what extent should a government be concerned by a large CA deficit
dependency lack of AD lack of incentive to invest demonstrate lack of competitiveness cause a depreciation
