Global Economy Revision

Here is our selection of questions for each extract. Use them to focus your revision and use me to clarify any of the issues that you may need help on. Remember at least three questions!

Extract 1:
a. Explain the economic cycle
b. Distinguish between an recession and a depression
c. Explain the causes of an economic recession
d. Analyse the multiplier and the accelerator
e. Explain the ways in which a recession may come to an end
f. Using an aggregate demand and supply (AD/AS) diagram explain what can cause an economy to experience a recession
g. Analyse two chosen macroeconomic policies to stimulate growth / recovery
h. Comment on the extent to which the Bank's policy of ultra-low interest rates has worked in stabilising the economy
i. Define quantitative easing
j. Explain how quantitative easing works
k. Analyse the likely effects of quantitative easing on the UK economy using aggregate demand and supply curves
l. Explanation how an economic recession can cause changes in government spending and tax revenues
m. Analyse the effects of a rise in the budget deficit on the economy using AD/AS and
n. If the UK had joined the euro, do you think the country would have fared better during the recession?


Extract 2
a. Explain two possible relationships between the macro objectives shown in Fig 2.1
b. Explain the difference between a cyclical and discretionary budget deficit
c. Explain the difference between a budget deficit and the national debt
d. Comment on the limitations of using very low interest rates as a way of helping an economy deep in recession
f. Analyse the possible “crowding-out” and “crowding-in” effects from higher government spending and borrowing
g. Comment on why the government has introduced fiscal rules such as the Golden Rule and Sustainable Investment Rule
h. To what extent have the UK and many other EU countries made the right decision in choosing to break their fiscal rules during this recession?
i. Analyse the methods by which countries with large fiscal deficits can bring their borrowing under control

Extract 3
a. Distinguish between fixed and floating exchange rates
b. Explain how exchange rates are determined in a floating exchange rate system
c. Explain the functions of the International Monetary Fund
d. Illustrate a depreciation of the pound on a supply and demand diagram. What are the factors that could cause this?
e. Using an aggregate demand and supply diagram, analyse the likely effect of a depreciation of the value of sterling against the dollar and the euro
f. Explain some of the possible benefits / problems of Euro membership for newer EU states such as Slovenia and Slovakia
g. Analyse why ‘fixers’ such as Latvia and Estonia had worse economic performance than ‘floaters’ such as Poland and the Czech Republic during the recession
h. Explain some of the causes and effects of BOP / current account problems that have affected countries such as Latvia and Lithuania

Extract 4
a. Explain what is meant by protectionism
b. Explain two different methods of protectionism
c. Explain the role of the World Trade Organisation
d. Explain what is meant by dumping
e. Analyse the effects on the Chinese economy of an import tariff on car parts
f. Who gains and who loses from protectionism?
g. How can reducing trade barriers and thereby reducing the price of imports help a developing country?
h. Analyse the possible effects of a revaluation of the Chinese yuan for (a) China and (b) China’s trading partners
i. Analyse (using AD/AS) and the possible consequences of ‘world trade falling by 15% during 2009’
j. “Tariffs and other forms of protectionism risk a country sacrificing medium-term growth opportunities for near-term economic interests” Do you agree with this statement?
k. Comment on the likely effects of a return to economic nationalism for the future performance of the world economy
l. Discuss the extent to which less developed countries and more developed countries should adopt policies to protect their domestic industry during a recession

Extract 5
a. Distinguish between economic growth and sustainable economic growth
b. Why might a rise in GDP result in a decline in human well-being?
c. Does it matter that the carbon price fluctuates with the business cycle?
d. Explain why the poorest African countries may find it difficult to finance investment in alternative energy supplies
e. Analyse the benefits that might occur if developed nations agree to increase funds for developing countries to investment in green technology
f. Discuss the methods that might be used to reduce carbon emissions
g. What incentives exist for countries to agree to tough pledges to reduce emissions?
h. Assess whether or not the EU emissions trading scheme has been a success so far
i. Compare the relative merits of a cap-and-trade scheme with carbon taxes
j. Why is tackling climate change politically difficult for (a) individual countries and (b) the world as a whole?
k. What other alternatives are there to cap and trade and carbon taxes as means of curbing emissions? Compare their relative merits
l. Comment on the decision by China to use investment in renewable energy to promote economic growth and sustainable economic development

We need to get cracking on this module. Read your packs I sent home in the post and ask some questions!