Essay Practice

Question 1

Eva if i r is lowered then AD will i

Answer 1

Decoupling

Question 2

Eva of QE

Answer 2

I creates Asset bubbles if I in housing not in fop

Question 3

AN of Ricardian equivalence (contractionary fiscal policy

Answer 3

Expectation that the gov will have to follow austerity measures in the future will cause C d and I d in advance of austerity measures

Question 4

AN of crowding out (exp fiscal

Answer 4

i D for loanable funds
i ir for bonds
Higher cob, higher return on the I on gov bonds
Less money left for I

Question 5

AN of wealth effect ( inequality

Answer 5

Equity withdrawal

Borrowing more against the higher value of their property

Question 6

Eva of infrastructure

Answer 6

Oppo cost: might d spending on edu

Question 7

Eva of protectionism on producers

Answer 7

Prod and compe (if the fall in competition makes firms complacent, leading to less incentive from firms to I in cap

Question 8

Eva of protectionism on gov

Answer 8

Retaliation leads to fall in x

Quota does not generate gov revenue

Question 9

Eva of debt

Answer 9

Structural v cyclical

Question 10

AN of retaliation

Answer 10

Protectionism might protect employment in some industries yet in others retaliation might reduce X, reducing MRP and tax receipts

Question 11

Eva of glob as a cause of inequality

Answer 11

Redistribution: Kuznet
Financial crisis
Trumps reshoring

Question 12

Probs of high gov expenditure

Answer 12

Crowding out: financial and resource
Debt =increase payment=less expenditure
Low efficiency

Question 13

eva of income tax

Answer 13

Laffer curve

Question 14

Eva of d ue as a benefit of protectionism

Answer 14

Retaliation

Question 15

Eva of increase in compe in developing countries

Answer 15

Increase wage

Question 16

Trickle down

Answer 16

Extra income to the rick is spent on domestically produced goods and services which generates job opportunities and extra income for the less rich

Question 17

Another Eva for cheaper pound encourages production/ increase inf pressures

Answer 17

The producers absorbs costs/maintain p rather than changing Px

Question 18

Fiscal déficit eva

Answer 18

Structural doesn’t go away even if operating at full potential

Question 19

eva envi damage incur cost so higher MSC and lower growth

Answer 19

Firms may invest in new machinery to reduce damage=>higher i higher E.G.

Question 20

whats the diff between a price fall and er d?

Answer 20

Eg Brazil currency depreciates, the primary producers revenue fall
But CA bop should increase

Question 21

AP what countries have trade surplus

Answer 21

Saudi Arabia

Question 22

AP death from fuel poverty

Answer 22

9000 pa

Question 23

AP U.K. Austerity

Answer 23

cut in gov spending for local authorities

Question 24

Eva acess to market

Answer 24

Depend on compe: are they infant industries?