Ask Economics Question

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You are welcome to ask questions on Economics.

I will post the answer on this blog, for everyone to benefit from.

I shall try to answer the economics question and / or point to other resources but please bear in mind.

  1. The replies will be guidance and not for duplication. Your essays should always be your own work.
  2. My speciality is economics for British A Level standard. My university economics is rusty in parts, because generally I don’t use it in teaching A level economics.
  3. I can’t guarantee to always give answers it also depends on my time schedule.
  4. The aim is not to do people’s homework for them, but, help in the understanding of economic concepts.
  5. The answers will not necessarily be complete. I know several of my essays on this site could be improved.
  6. Please Write the Questions clearly and with proper spelling. Some questions I have not answered because they were not clear what was meant.
  7. I will answer as a new post. Check home page of blog for new post. With question and answers

I studied PPE at Lady Margaret Hall college, Oxford University, and currently work as an Economics A Level teacher. I have also examined several different economic units for Edexcel AS and A2.

If you find the information useful, you are welcome to buy me a coffee 🙂

579 thoughts on “Ask Economics Question”

  1. What will stop the Fed from printing money? Essentially, even if it suffers losses on its balance sheet, it can write off debt, and start a new with essentially no cost to it.

    Essentially, inflation will not be a problem because the losses are just being replaced by its new money.

  2. I have to write a paper on the topic: Can Germany afford renewable energies?
    this paper is for Financial management in the public sector. How can I analyse whether germany can afford it or not. Should I think of the cost and benefit analysis in this case. I have a hard time with the plan of the paper? I would appreciate any help

  3. As a country with a persistent large account deficit, should it do devaluation and liberalization to cure the persistent large account deficit? I would like to know about a persistent large account deficit too. Please, answer my question with a case study as an example.

  4. Hello,
    I am wondering why the 75 billion of quantitative easing that the Bank of England anounced today to be “injected into the economy” isn’t spent on infrastructural projects? Why spend those funds on government bonds? This doesn’t seem to be the best way of using these funds. Many thanks.

  5. If the Federal Reserves buys shares, gold and property, instead of bonds, is debt created?
    In this situation does this cause inflation or deflation?

    Can they do this?

  6. What causes the Federal Reserve to fail? Is this possible? Why were the previous central banks abolished?

  8. Jen is currently maximizing utility by consuming 7 units of A, and 8 units of B. If the price of A is 3 and the price of B is 15, then what is the value of MUB/MUA?

  9. 1. Explain the difference between wealth and income and explain one factor which causes wealth inequality.

    2. ‘Society may come to the view that too much inequality is unacceptable or undesirable’ Analyse how the existence of inequality can cause economic problems, such as market failure.

    3. Evaluate the view that the most effective way to reduce poverty is to increase significantly the state pension.

  11. Consider a world with two countries, England and Portugal, each of which has an endowment of 100 units of labour. There are two sectors, Wine and Cloth, and technology is different across countries such that output of Wine and Cloth per worker differs across the two countries. Output per worker across sectors and countries is given in Table 1 below.

    Table 1: Output per worker

    Output/worker England Portugal
    Wine 6 8
    Cloth 12 4

    (a) Define the concept of ‘absolute advantage’. Based on table 1, is it true that England has an absolute advantage over Portugal in every sector?

    (b) Draw the PPF of England and Portugal in two separate diagrams, placing Wine on the x-axis and Cloth on the y-axis. What is the opportunity cost of producing Wine in England? How about in Portugal?

    (c) Define the concept of ‘comparative advantage’. Which good does Portugal have a comparative advantage in, and why? What about England?

    (d) Suppose that from an initial situation of no trade, England and Portugal sign a Free Trade Agreement that allows them to trade freely with each other. Further assume that the goods are traded internationally one-for-one (the terms of trade); that is 1 unit of Cloth would be exchanged for 1 unit of Wine. Show that Portugal would gain if it were to export 2 unit of Wine to England in exchange for Cloth, rather than producing the Cloth domestically. Similarly, show that England would gain if it were to export 2 unit of Cloth to Portugal in exchange for Wine, rather than producing the Wine domestically.

    (e) The terms of trade between England and Portugal were assumed to be one-for-one in part (d). Suppose instead we do not know the terms of trade between England and Portugal. Identify the range within which the terms of trade must lie in order for trade between England and Portugal to be mutually advantageous, and explain why the terms of trade cannot lie outside this range.

  12. You are working for Coca Cola as marketing head. The company is planning to float a new
    drink which is white in color. What lessons from the concept of elasticity can you draw while fixing the price for this new drink?

  15. a) Explain how a perfect market responds to changes in consumer demand (50%) and identify and explain the important differences between a perfect market and a market with which you are familar(50%), referring to the products competing in that market and their prices

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