Evaluation for Exams

Readers Question: can you just write a paragraph on anything you like which is an example of your best evaluation (L4 AS standard) please. I would like to see your structure and technique and subsequently compare it to mine.

Alternatively could you list ways to evaluate?

Recently, the MPC cut interest rates from 5.25% to 5%. Lower interest rates usually increase consumer spending, investment, aggregate demand and therefore we can expect higher economic growth. (this is analysis Obviously it is not explained)

The Evaluation can include:

1. However, Commercial banks may not pass the base rate cut onto consumers. This is likely at the moment, because the credit crisis is causing a shortage of lending and banks are putting up inter bank lending. Therefore, even though the MPC have cut base rates, consumers may not notice lower interest rates (this is actually true)
2. Lower interest rates may not increase economic growth because other aspects of the economy are doing badly. For example, falling house prices are reducing spending therefore, the cut in rates is probably insufficient to boost spending given the problems in the housing market.
3. The cut is only very small. 0.25% is probably insufficient to have much effect especially given problems already mentioned. However, you could argue UK is sensitive to interest rates because of the number of variable mortgages. Even a 0.25% cut in rates can increase disposable income for people with large mortgages. (this is what you might call double evaluation, evaluation of the evaluation)
4. The cut will take time. A cut in interest rates will not boost spending immediately. For example, It will not effect people on fixed rate mortgages for about 2 years.
5. Lower rates may cause depreciation in the exchange rate which will help boost exports and therefore help growth more.

see also: Writing evaluative essays