economics paper 2

[RAMLA]

hello everyone i have doubt in AS level p2 m/j 2007  question 1a(i)

why is there a shift ? when u cannot buy more time in a day to produce more programs, it is unattainable! there will only be a movement. pls can i get the answer first 

[~cornelia~]

ummm..i had the same doubt!!

i think dasith is working on it!!
see here

https://studentforums.biz/commerce/economics-multiple-choice!!/15/

[Dasith]

@ ramala i jus posted da ans in the link posted by cornlia .u might wanna check it out

[RAMLA]

thanx dasith but i still can get it. 

[~cornelia~]

try this link again!!

https://studentforums.biz/commerce/economics-multiple-choice!!/15/

[Dasith]

thanx dasith but i still can get it. 

U can or cant get it ?

[RAMLA]

thanx dasith and cornelia i got it and understood...

[~cornelia~]

you welcome!

[RAMLA]

help me anyone in this questions
Q,explain the difficulties in measuring inflation accurately? pls list the points only<m/j 2003>
Q,discuss the effectiveness and desirability of imposing tarrifs to correct cuurent account deficit?<m/j 2008

[Azland]

1

- Inflation is measured by the retail price index or the CPI.
- A basket of goods needs to be chosen which represents consumer spending habits accurately. Some goods may not be included in this list and as such may produce a wrong rate of inflation.
- A weightage needs to be given to each type of good to represent consumer spending habits. Spending from some type of consumers may not be included in this list ( pensioners are an often quoted example ).
- The change in prices are compared with a base year. This does not take into account changes in quality and innovation.

2

- Tariffs impose a tax on an import and therefore reduce demand. A current account deficit would imply that the country imports a larger value of goods and a significantly lower value of exports.
- The tax would increase the price and reduce demand which would help the current account deficit to improve.
- The problem with this is that it assumes consumer demand would fall. If consumer confidence is high or the Demand Elasticity is very low this would only worsen the  current account deficit.
- Tarrifs may also provoke retaliation from other countries and damage future trade agreements.
- Your question suggests that the examiner wants you to provide other methods of improving the trade deficit. Quotas and Monetary policy may be more effective.
- A current account deficit may also imply that the country has a lack of competitiveness and so consumers are switching to products from other countries. This would be a more serious problem.