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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.
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If I have to interview certain individuals in order to prove the exceptions to the law of demand ….. which questions should be appropriate enough in order to satisfy my need within 3-4 questions ?
Read the following write-up and answer the questions given below:
Economic Monitor
Shawn W. Crispin
Thailand, one of Asia’s fastest expanding econ¬omies in 2003, is showing signs of a slowdown. A series of economic shocks—including spik¬ing global oil prices, the re-emergence of bird flu and an unexpected new surge of non-performing loans in the banking system—have all hit business confidence.
The surge in fuel imports drove Thailand’s import bill up 37% year on year in August, and sagging global demand plunged the trade balance into deficit and put new pressure on recently replenished national coffers. Oil imports now account for between 8% and 9% of Thailand’s GDP, nearly double the recent historic moving average of around 4.6% of GDP, according to Phatra Securities research.
Those rising costs have hit manufacturing. Fac¬tory-usage rates fell from 71.3% to 66.7% between July and August. Production of electronics and food, two of Thailand’s largest export items, declined in line with slowing global demand and raw-materi¬als shortages, according to official statistics. A recent Bank of Thailand survey of top Thai executives showed that business confidence has fallen for five consecutive months to the end of August. The Stock Exchange of Thailand, which recently has rallied on foreign buying, is still down 12% so far this year, the worst performance in Asia.
Policymakers have endeavored to buffer the economy from rising global fuel prices through sub-sidies, which some economists project could cost the government as much as 70 billion baht ($1.63 billion) if global prices remain at or near the current $52 per barrel for the remainder of this year. Sub¬sidies have so far helped keep domestic consump¬tion buoyant. Domestic consumption grew 3.2% year on year in August, a notable jump up from July’s 2.2% growth. New vehicle sales jumped in August in response to new excise-tax cuts.
Some Bangkok-based economists doubt that the trend is sustainable. That’s because the government recently announced plans to scale back subsidies and allow fuel prices to float more freely in 2005. Kazi Matin, chief economist at the World Bank in Bangkok, estimates that rolling back subsidies will save 1% of Thailand’s GDP next year.
Prime Minister Thaksin Shinawatra has said that his government’s infrastructure-spending plans will buffer the economy against external shocks and spark new domestic growth begin-ning in 2005. His cabinet recently increased the amount it wants to spend on new roads, rail-ways and government buildings from 1.1 tril¬lion baht to 1.7 trillion baht over the next five years. Some independent economists, however, question whether Thailand has that much fiscal room to manoeuvre.
Economic officials say that part of the hoped-for 1.7 trillion baht will arise from private-sec¬tor sources and that new public investments will not significantly affect public debt, which is currently around 45% of GDP, according to official statistics.
Independent economists contend that if pri¬vate firms do agree to help finance low-yielding infrastructure projects, they will require the entice¬ment of government guarantees on their invest¬ments, which by international accounting stan¬dards would appear as new liabilities on the national ledger.
Questions:
1. What is the expected change in the net export of Thailand and explain its impact of Thailand economy using AD and AS curves? (10 Marks)
2. Other things being constant what is expected change in real GDP, due to changes in subsidies? (10 Marks)
3. What is the expected impact of fall the business confidence? Explain with suitable diagram(s). (10 Marks)
4. Will monetary policy help to increase the investment by private sector in the presence of fall in the business policy? Explain your answer. (10 marks)
5. “Prime Minister Thansin Shinawatra has said that his government infrastructure spending plains will buffer the economy against external shocks and spark new domestic growth beginning in 2005”. What type of macroeconomic policy the Thailand government has taken? Support the prime minister’s statement with the theoretical background of this statement and with suitable diagram. (10 Marks)
Hello Aaron
These are time consuming issues. I am enplaning only some of them
Free Trade Area-
Advantages- FTA boosts economic growth. It encourages industry and trade.
It create more competitive market. Consumers also have benefits from this. They can get goods at fair prices. It can also encourage economy of scale production.
Disadvantage- Biggest advantage is that it can destroy local industry and trade. Small business may has negative effects. It may create more unemployed in local areas as people will use other area ‘s production.
There are more advantages and disadvantages, but I have no time at the moment .
Ok
HAPPY NEW YEAR
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What are the advantages and disadvantages of the following levels of economic integration?
Free Trade Area (FTA)
Customs Union (CU)
Common Market (CM)
Economic Union (EMU)
Political Union
I don’t think this question will just be of benefit to me but to the majority of people that are taking the OCR F585 exam this February.
Thank-you for providing us with this site, I’ve found it invaluable and I’m sure I’m not the only one who has.
Thanks :)
Why Lower crude oil rates are not always beneficial
It is general considered that low rate of crude oil is an advantage to western economies.
Yes it is in short run , but there is also another side of coin. Rates are much lowered than natural rate. Rates do not represents its inner value. It just shows market value which is just result of willing of cheap oil . It is sure, one day will come when it will receive its true value like $300per barrel or more. Than it would be more difficult to adjust. This is political value of oil. Natural value of oil is like a thermometer which guide us what to do. If rate of oil is increased , it may encourage people to think other options.
If crude oil is $70per barrel it will discourage people to use other renewable resources. If crude oil is $90per barrel , there would be more investment in alternative resources. As price of oil increases it would be more profitable to invest in other energy sources.
Economics predicts that long run is most important period of performance.
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Hello connel wise
Not just UK but every country have Phenomena. One simple tool is always used. Interest rates are decreased. It is general concept that lower interest rates will boost investments and make more employment. This will also decrease opportunity cost of investment. There are also given some incentives to industry and exporters. Governments also try to help some failure institutions for surviving. It pumps more paper money into economy. [email protected]