Monday, June 8, 2009

Highly Possible Questions For Unit 6: UK In The Global Economy (GCE Edexcel)

I decided to write on this since I got overwhelming requests from my fellow students. Here it goes:

Part A (60 marks and 40 marks essay)

(1) Issues relevant to balance of payments: (90%)

(a) Why UK almost permanently experiencing a current account deficit?
(b) Policies to improve the competitiveness of UK’s goods
(c) Why some countries record large trade surpluses? (Haven’t been tested so far)

(2) Globalisation and trade (90%)

(a) Advantages and disadvantages of globalisation
(b) Advantage and disadvantages of protectionism
(c) How effective is WTO in promoting trade liberalisation?
(d) Does the establishment of trading blocs defeat the objective of WTO?

(3) Issues related to fiscal policy (80%)

(a) Implications of increase in government spending
(b) Implications of UK having unusually big national debt or continuous fiscal deficit

(4) Foreign investment (90%)

(a) Implications of adopting Euro currency
(b) Does UK’s withdrawal from Euro affect its inward investment?
(c) Reasons for UK being the largest recipient of FDI?

(5) Phillips curve (70%)

(a) Why unemployment and inflation can increase at the same time?
(b) Reasons for low inflation and low unemployment in UK?

Part B

(1) Questions that involve comparison between UK and Eurozone economies such as:

(a) Bank of England vs. European Central Bank
(b) Unemployment: UK vs. Euro
(c) Inflation: UK vs. Euro
(d) National debt: UK vs. Euro
(e) Interest rate: UK vs. Euro (why interest rate in UK higher than euro?)
(f) Government spending: UK vs. Euro (bring in growth and stability pact)

(2) Questions on protectionism:

(a) Do import tariffs and quotas save local industries and jobs?
(b) Trade retaliation
(c) Diagram of tariffs

Some reminders:
(1) I’m quite sure that this year there will be some questions closely related to balance of payments and globalisation or trading bloc. So to all students taking the exam, please CONCENTRATE on these two areas

(2) Many students generally face difficulty answering questions that are related to Phillips curve. I don’t know why. Probably is due to the difficulty of drawing the short run Phillips curve shifting upward or due to the concept of NAIRU. However, the last time it was tested was in June 03 and June 07. So I’m sort of 70% sure that it will make a comeback this year June 09

Please be sure that you are familiar with some common issues like:

(a) France, Germany and especially Italy having high level of national debt
(b) Unemployment in these three economies are much higher compared to UK, but is nothing compared to Spain
(c) Growth in the largest four economies in Eurozone are sluggish
(d) Euro economies are facing the problems of declining population in the long run. Italy is very synonymous with this
(e) Germany is the largest economy followed by France
(f) Germany is an export driven economy
(g) Both Ireland and Spain were experiencing property boom and bust

This is written as a guide. The questions MAY or MAY NOT appear in your real exam. It is to your best interest if you’re prepared in everything

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