exam technique

'It's quite simple really.
When you are doing the 12 mark question at the end, you have to make sure you pass through all the levels (1 to 4).
Generally this means:
Level 1 - Define all the terms in the question, and give some basic facts
Level 2 - Apply these facts to the question
Level 3 - Analyse critically the effects of this in relation to the question
Level 4 - Evaluate "to what extent" the statement in the question is true

Maybe that wasn't the best way of explaining it, so if we take 2883 January 2005 as an example.

Question (e) is:
"Discuss the effectiveness of supply-side policies in reducing unemployment." [12]

Using the above:
Level 1
- Define supply-side policies: any policy designed to affect aggregate supply in an economy
- Define unemployment: where people do not have a job, but are able to work and are looking for work
- Give some examples of supply-side policies: education and training, reducing the power of trade unions, increasing the incentives to work, making a more flexible workforce, privatisation, etc.
Level 2
- Explain how (in theory) supply-side policies reduces unemployment
- Draw a macroeconomic graph showing an outward shift in LRAS (long-run aggregate supply)
Level 3
- Choose a few supply-side policies to go through in detail, about a paragraph each
- Possibly draw the trade union wage rate labour market graph
- Analyse how the specific policies will (or will not) reduce unemployment; there really needs to be two sides to the discussion
Level 4
- Bring all this together in summary as an answer to the question; for example: "Overall, supply-side policies would appear to be very effective in reducing unemployment in the long run, especially through education and training. However, it is important that the spending in training is in the sectors of industry that require more trained workers (not declining sectors)..."
Make sure you talk about the "effectiveness", in other questions this would be "the extent" to which the policy would be successful.
- Consider and comment on other factors: short-run / long-run effects, other policy objects and possible trade-offs, the type of unemployment (if it is just cyclical or if it is structural), etc.
- A final conclusion that takes all of this into account (the "bottom-line"

Obviously it doesn't have to be as rigid as the above; many of the points would be better expanded to cover more than one level, but some level 4 points should be explicit to the examiner.'


from the student room

back to work?)

1.What are the consequences of sustained deflation?
First of all, we should understand the difference between 'bad deflation' and 'good deflation'
Good deflation means that the producers remain able to produce goods at lower prices by cutting the production costs, increase the productive efficiency. When the deflation becomes 'bad' it means that the businesses are no longer able to keep up with cost reductions.

So what are the consequences of this deflation?
It affect consumers behaviour. It may increase the consumers' purchasing power, as prices are falling.
But if the consumers expect even greater fall in prices later, it will stop them from buying goods = decrease their purchasing power. With the decline of aggregate demand, less goods will be produced which may also lead to unemployment in the long run.


How does deflation affect wealth?
The value of the householders' assets goes down, so householders' wealth decreases.



How does deflation affect debt?
Deflation increases all types of debt causing firm with large borrowings to fail.

!

Merry Christmas everyone!

wednesday revision

Today I just looked at some revision notes at tutor2u ( AS Markets and Market Systems).

Went to my High School and got some tasks and tests for me to pass the exams in June-July.

But they are so boring to do, so I moved on to listening business podcasts from SmallBizPod.

I find this one impressive - click

"Adam talks about what inspired him to launch his first business at the age of 16"

monday

Today I revised scarcity, the concept of opportunity cost, production possibility curve, types of goods and economics systems.

I'm home. I've already seen my friends.
Now I need to go to school on Monday and start my revision for exams.
So lazy to do it.)

pre-Budget report mindmap

another question

Bates makes wage demand warning


Leeds chairman Ken Bates believes that players leaving the Premiership need to be realistic in their wage demands.

Fulham captain Lee Clark, 32, had been in line for a move to Elland Road but failed to agree personal terms.

"I know of three players who have been asking for £12,000 a week. The average Championship wage this season is going to be around £3,000 to £4,000."

Leeds encountered major financial problems after their relegation from the top flight and Bates is keen to avoid any such worries in the future.

"We have also had one player, who will not even be fit for the start of the season, asking for £12,000 a week for a two-year deal and his agent wanted another £75,000," he added.

Source: BBC News 14th June 2005 (adapted)



Questions


1.What is the percentage difference between the £12,000 a week asked for and the average Championship wage?
between 300% and 200 %

2.Calculate the difference between the average Championship wage and that of a Head teacher.
Head Teacher average wage is £1,200. So the difference is 150%

3.What is the annual salary of someone on £12,000 a week?
£624,000

4.Calculate the tax payable on a salary of £12,000 a week.
£240,224 (38% from salary)

5.Calculate the hourly wage of someone on £3000 a week assuming a 24-hour day.
£18 approx.

6.Research the amount of hours a day a footballer actually ‘works’ and then re-calculate the hourly wage. Compare that to the ‘going rate’ to see privately a Consultant Surgeon at a local hospital.

number of hours - 7
hourly wage - £245
going rate is about £45, which is 18% from a footballer hourly wage.

question 30

Steadying energy prices helped to improve consumer sentiment in the US during January, according to the University of Michigan's index.

It rose for the third month in a row to 93.4 from December's final reading of 91.5, ahead of analysts' predictions.

Better job conditions and an optimistic outlook for US stocks during 2006 also helped push the index higher.

Consumer spending makes up two-thirds of US economic activity and is a key indicator of the health of the economy.

The dollar rose against the yen and firmed against the euro shortly after the report was issued on Friday.

Retail heating oil prices fell to a five-week low at $2.43 a gallon, down 1.7 cents from a week ago but up 46 cents from a year ago, EIA said.

On Thursday, the number of new jobless workers fell to 271,000 last week, its lowest level since April 2000, the Labor Department said.

Source: BBC News 20th Jan 2006 (adapted)



Questions:


1.What was the percentage increase in the index?
2% approx.

2.as the dollar rose against the yen this would make exports…(cheaper/more expensive)
more expensive

3.imports from Japan would now be…(cheaper/more expensive)
cheaper

4.If demand for imports is elastic, will the dollar’s rise be of great help/little help to Japanese exporters?

I think it will be of great help, because with dollar's rise, imports price for the US goes down. As price goes down, demand goes up ( assuming demand for imports is elastic), which will increase Japanese exports.

5.How much was retail heating oil a year ago?
$1.97

6.How much was retail heating oil a week ago?
$2.413

7.If demand for retail heating oil has not changed since a week ago, why would the price have fallen?
Retail price for oil is affected not only by demand. For instance, a change in availability and distance from supply, transportation costs causes change in price.

8.If a year ago demand for oil was 500,000 units and it is now 600,000 does this mean that the relationship between price and demand is direct, not inverse?
It is direct, but the numbers also prove that the demand for oil is inelastic. It means, that if price for oil rises, demand falls, but falls a little.

house prices

The article tells us about the predictions for house prices in the near future and explains the housing market structure and the causes of falling and rising prices.
Yolande Barnes also states 2 indicators of housing-market overheating which are:

1.the house price to income ratio
in 1970-80's it was about 4:1 or 3:1, which is relatively low, comparing to recent 6:1 or 7:1

2. the cost of mortgage servicing



Moreover, Yolande Barnes talks on the nature of the recent credit crunch. An imporant point, that he emphasises in his article is the difference in roots of the US and UK downturn and, therefore, the difference in the housing markets.

'in the US as many as one home-owning household in 16 has defaulted on its mortgage or faces repossession, compared with fewer than one in 200 in Britain.' .


At the end of the article Yolande Barnes gives his opinion on what the behaviour of investors is likely to be in the near future and gives a forecast for the house prices in 2009 and 2010: 'by the end of 2009, house prices will probably have fallen 25 per cent from their peak.
'

University Requirements

My main aim is to go to London School of Economics. I made some research on its admissions and what I have found out:

1. What is very important for me - age requirements. I'll be 17 when I finish my A-levels and i have heard that you can apply to the British universities only from the age of 18. But, luckily:

Age requirements

Admission to the School is based upon academic merit. As the School has a responsibility for safeguarding children under English Law, appropriate senior staff will be notified of an offer of admission made to anyone who will be younger than 18 years of age at the time of registration


2. UCAS Applications for the year 2010 are to be submit from September 2009 till (nearly) 15 January.

3. Also, the combination of subjects is important. The applicants with more than one 'soft subject' are not likely to get to the top universities.

Here are 'non-preferred' subjects for LSE :

Accounting
Art and Design
Business Studies
Communication Studies
Design and Technology
Drama/Theatre Studies*
Home Economics
Information and Communication Technology
Law
Media Studies
Music Technology
Sports Studies
Travel and Tourism

I study Further Maths, Economics and ICT, but I guess that ICT is considered as a 'soft subject' too.


4. A-level in Russian.

'Similarly, an A level or equivalent in your first language may not be counted' - that what LSE official website says. So is there a point in taking Russian A-level?

5. Competition

In 2007, we received 19,000 applications for 1,200 places. Competition for admission is particularly high in Accounting and Finance, Economics, Law and Management.


6. Interviews

Students are not usually invited for an interview to LSE, only those who have unusual qualifications or mature applicants may be asked for it.

7. Retakes

Competition for places at the School is intense, so it is important that you achieve consistently high grades throughout both years of your A level studies. Whilst grades can be improved by re-sitting modules, we prefer applicants who have achieved high grades in their AS and A2 examinations at their first attempt.

8. I'm not quite sure which course I want to apply for ( Economics, Management, Finance) but all these courses requirements are:
AAA or AAB grades ( including Maths).


9. I didn't see any information whether universities consider language A-level as 'preferred', but I'll find out.
I'd like to try to pass French AS-level in 2009.

When Markets Collide (review)

'When Markets Collide', a book written by on of the leading investors Mohamed El-Erian, is an essential reading for everyone how wants to deepen his knowledge of the modern global economy ( and especially investment market ).
This books mainly tells us about the transformation in the relationship of the economies and transformations in the emerging markets, so called 'noise'. El-Erian examines the drivers ( or the causes) of this 'noise' and usually refers to his own experience.

However, the book is primarily aimed at the experienced investors or people who are deal with this markets in their work life. So, he uses special terminology which sometimes require additional thinking ( or even looking up in the dictionary) for an unexperienced reader. He also gives some interesting insights for the way the investment market will be developing in future, which perhaps might be useful for planning investment strategies.

In the first part of the book El-Eriab gives us an approach to the important of 'noise'. This importance of the noise is usually under-estimated, it is considered as a temporary event. Investors should recognise the situations where this noise can be ignored and the situations that require interpreting the signals that this noise contain. El-Erian investigates the factors of the noise and 'missing signals'

As this book was published only this year, it contains the most recent information, such as the causes and consequences of the current financial crisis. It is an essential example to illustrate the transformation of the modern economy. However, El-Erian emphasizes that "the present turmoil is neither the beginning nor the end of the transformataion phase".

macroeconomic policy

Mohamed El-Erian

Mohamed El-Erian is Arabic, born in 1958. He graduated from the Cambridge University and got his master’s and doctorate degree in the University of Oxford (both in economics), which allowed him to become one of the world’s leading investing managers and earn a great reputation.

He has been working for the IMF (Investment Monetary Fund) for 15 years, got the rank of the deputy director and has had an experience working at the London Citibank, teaching at the Harvard Business School.

Mr. El-Erian also made a substantial contribution working for PIMCO (Pacific Investment Management Company), the world’s largest bond fund, which he joined in 1999, as one of the CEOs (Chief Executive Officers).

And, eventually, this successful investment professional became a head of the HMC ( Harvard Management Company). It is a huge company, that deals with managing the Harvard University’s capital and assets ( worth about 35 billion dollars) - which is considered to be the largest university’s endowment. He has been working there for 2 years, but then returned to PIMCO. By the June 2008 PIMCO had more than $829.5 billion in assets under control and more than 1000 people employed.

He is also well-known as a publisher on different economic and financial issues at the world’s famous newspapers and the author of the book ‘ When Markets Collide’, which won the Financial Times and Goldman Sachs Business Book of the Year Award 2008. The book tells about the structure of the modern capital markets - El-Erian shares with us his unique understanding of the global market and forecasts dramatic changes in the financial markets- essential information each investor should be aware of.

He also has made several hypotheses about the development of the world crisis. In his interview to Handelsblatt he predicted the seat of tension of the crisis to be in Share Markets and the Markets for inputs. His prediction about crisis has strong influence on the behavior of investors.