Economists of OcUk...?

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TNGL

TNGL

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Or even if you're not an economist, you can probably answer this AS level exam question.

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I said the answer is B, but somebody else who I know believes the answer is C (I can't see how).

Anyone else's thoughts?

P.S The mark scheme isn't out yet... hence why we're debating the answer.
 
Explain why you think it is B.

Looking at this question, I now remember why A-level economics was a joke.

If the world economy contracts then export demand falls.

World commodity demands fall in a recession -> look at what happened to oil prices in 2009 (but that was in dollars and so depends on the below).

Currency movements would be very difficult to predict. Therefore what happens to the value of exports/imports is difficult to predict (exports should go down though, appreciation of pound and fall in demand).
 
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muon said:
Explain why you think it is B.

Looking at this question, I now remember why A-level economics was a joke.
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The rationale behind my answer, is that if there's a recession in the world economy, then surely there'd be less demand for UK goods and services? So exports fall. Labour is derived demand, so if there's less demand for the UK's goods and services, there's less demand for labour, meaning unemployment increases.

May be completely wrong. I don't know.

--

As for A-Level economics being a complete joke, that's your opinion. But I find it fairly interesting, the essay based questions can be slightly challenging and it's quite a step up at A2 (apparently).
 
Tingle said:
As for A-Level economics being a complete joke, that's your opinion. But I find it fairly interesting, the essay based questions can be slightly challenging and it's quite a step up at A2 (apparently).
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Wait till you do it university. Apart from some of the microeconomics it is mostly completely useless.

I've added my answer above. I believe B would be the correct answer if I had to justify one.
 
muon said:
Wait till you do it university. Apart from some of the microeconomics it is mostly completely useless.

I've added my answer above. I believe B would be the correct answer if I had to justify one.
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I was under the impression that macro was more useful than micro. I found market failure in unit 1 (micro) a little boring compared to unit 2 (macro). But as for usefulness, I'll just have to see.

I've looked at your explanation; why would the pound appreciate?
 
Tingle said:
I was under the impression that macro was more useful than micro. I found market failure in unit 1 (micro) a little boring compared to unit 2 (macro). But as for usefulness, I'll just have to see.

I've looked at your explanation; why would the pound appreciate?
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If you thought of the world as 2 economies, the UK and the ROTW then it is possible to answer the question.

If the ROTW starts contracting then their currency "should" depreciate. That is a very difficult statement to make though considering everything at play.

The macroeconomics people find more interesting but it is rubbish. The micro at least you can't go that wrong with prices, supply and demand at a market level. In fact in your first year at university you will simply mathematically formalise the principles and bring in proper optimisation.

Macroeconomics is very difficult to dumb down, or to pick easier parts of.
 
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muon said:
If you thought of the world as 2 economies, the UK and the ROTW then it is possible to answer the question.

If the ROTW starts contracting then their currency "should" depreciate. That is a very difficult statement to make though considering everything at play.

The macroeconomics people find more interesting but it is rubbish. The micro at least you can't go that wrong with prices, supply and demand at a market level.
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I see. I'm presuming ROTW = rest of the world? Anyway, thanks for your help ;).

[FnG]magnolia;24302847 said:
Does the mark scheme indicate the rationale behind the answers because that is a very open and unclear question.
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No. When the mark scheme is released, it will just list the answer for each question; nothing more.
 
Surely the value of goods and services exported from the UK will rise, in comparison to the rest of the world, meaning that the rest of the world can't afford them, in turn leading to reduced business opportunities for UK companies and unemployment?

So I guess that ties into B, but it's badly worded...
 
I'm studying economics at university and that looks like one of the worst worded questions I've ever seen.

The typical answer would more than likely be B, however in real terms it could quite feasibly be all of the above or none of the above.
 
The fact that UK is in recession is not a direct contributory factor towards unemployment. Two quarters of negative growth will qualify the UK as being in recession. There are many factors that contribute to unemployment, but being in recession is not a significant factor in that regard and is more of a sympton than a cause. sorry for spelling on nexus 7 which tries to actively spell words incorrectly on purpose
 
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The wording of the question implies that the UK is separate from the rest of the world. Therefore, the only answer that is is "true", ceteris paribus is B. The other answers rely information not given.

It's not really economics question. It's a question of logic that requires some knowledge of economics.
 
I hate these sorts of ambiguous multiple choice questions and IMO really shows the uselessness of the format of modern academic exams that use multiple choice. the correct way to ask such a question would be to ask what impact on the UK economy would a global recession cause. in paragraph form. with multi choice they are not teaching how to think but how to remember . the "answers" then can be as propagandistic as they like and push whatever ideology that they like.
 
I would say B)

If there is less demand for goods and services from the UK, supply outstrips demand and price of said goods will therefore decrease. If prices decrease then then company profit margins are squeezed and workers will be laid off and production will reduce.

That is my take on it - far too simple to take in isolation like that but I think it will do for A level
 
I think it's B. C is the next most likely answer IMO.

There will be less demand for goods and services. Supply will outstrip demand and prices will fall as a result until production and therefore employment reduces.

C is a possibility, but with my exam head on it's too specific. To use a bad example off the top of my head it might apply if your a plastic factory (a good), not if your working in a call centre (a service).

That said ... its 15+ years since I did A-level economics.
 
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