No 125: Two very useful articles for Module 3

THESE two are really worth reading for those of you who are going to do the Module 3 exam.

Firstly, surprising news about poverty and the distribution of income:

Full article here.

Secondly, news that the EU carbon trading scheme is being threatened by the recession:

See here for the rest.

No 124: Some articles of interest

NOURIEL Roubini, Professor at New York University, is famous as one of the only economists to accurately predict the Credit Crunch.

Read this to see what he thinks will happen next:
http://www.telegraph.co.uk/finance/economics/7756684/Nouriel-Roubini-said-said-the-bubble-would-burst-and-it-did.-So-what-next.html

The UK is the 22nd most competitive country in the world. China has entered the top 20 for the first time. USA has dropped to 3rd, behind Singapore and Hong Kong.
http://business.timesonline.co.uk/tol/business/economics/article7132864.ece

Do the recently high rates of inflation mean that the monetary policy of the Bank of England is failing?
http://www.guardian.co.uk/business/2010/may/18/inflation-analysis-larry-elliott

Cutting budgets now, according to this article, risks plunging the world back into recession, just as Keynes warned 80 years ago.
http://www.guardian.co.uk/commentisfree/2010/may/17/keynes-danger-deficit-reduction

 

No 123: UK inflation hits 17-month high

ON THE CPI measure, inflation hit 3.7% - well above the target of 2% and the highest rate since November 2008.

On the RPI measure, which includes housing costs, inflation was up to 5.3% - its highest rate in 19 years.

This is a link to a tutor2u article about it, with some good graphs.

No 122: More tutor2u presentations

HERE they are as requested:

For both AS and A2 Macro
The Credit Crunch and possibilties of recovery
http://www.tutor2u.net/economics/presentations/workshops2010/AS3/player.html


AS Module 2
The balance of payments (note: needs to be downloaded into Powerpoint)
http://www.tutor2u.net/blog/index.php/economics/comments/as-economics-revision-the-balance-of-payments/?utm_source=feedburner&utm_medium=email&utm_campaign=Feed%3A+economics_news+%28tutor2u+Economics+Blog%29#When:17:12:00Z

A2 Module 3
Evaluation of the NMW
http://www.tutor2u.net/economics/presentations/a2economics/evaluation/nmw/player.html

Interdependent Behaviour in Oligopoly (a post not a presentation)
http://www.tutor2u.net/blog/index.php/economics/comments/a2-economics-revision-interdependent-behaviour-in-oligopoly/?utm_source=feedburner&utm_medium=email&utm_campaign=Feed%3A+economics_news+%28tutor2u+Economics+Blog%29#When:06:59:00Z

No 121: New economic indicators

RECENT changes to key economic figures:

Unemployment
Up to 2.51 million but rate remains 8%. The highest number of unemployed workers since Decemeber 1994.
http://news.bbc.co.uk/1/hi/business/10109965.stm

Balance of Trade
A deficit of £3.7 billion in March compared to £2.2 billion in February.
http://news.bbc.co.uk/1/hi/business/10113630.stm

Base Rate of Interest
Bank of England keeps it at 0.5% despite inflationary pressures. It has been at this level since March 2009.
http://news.bbc.co.uk/1/hi/business/10104900.stm

No 120: Tutor 2 U presentations

TUTOR2U has produced some very useful revision presentations. Here are links to some of them:

For AS Module 2

Supply side policies: http://www.tutor2u.net/economics/presentations/workshops2010/AS2/player.html 

Manging the economy: http://www.tutor2u.net/economics/presentations/workshops2010/AS4/player.html
(watch out for strange AD/AS diagrams!)

For A2 Module 4:

Protectionism: http://www.tutor2u.net/economics/presentations/workshops2010/A22/player.html 
(watch out for some anti-Chinese exchnage rate stuff!)

Global trade and investment: http://www.tutor2u.net/economics/presentations/workshops2010/A21/player.html


LET ME KNOW IF THESE ARE USEFUL AND WANT SOME MORE!

No 119: Exam Focus 1 - Externalities

IF YOU have looked through Module 1 past papers, you will notice this is the most common topic for essays, especially negative externalities.

Here are some important points to remember about externalities:

1) Essential to any definition is the idea that externalities describe effects on other people rather than either the producer or consumer of that particular good.

Some examples:

• consumers of cigarettes affecting people who are not smoking
• drinkers taking up hospital beds which could be used by cancer patients
• drivers of electic cars contributing to lower CO2 emisions for everyone else
• a chemical factory using techology to clean up its pollution into a river used by fishermen

2) Social costs are NOT the same as negative externalities (same with social benefits / positive externalities).

Consider......

Total chocolate bars you have = Galaxy bars you have + Snickers you have
Total chocolate bars is NOT only just how many Galaxy bars you have.

Total exams you take this year = Number of A level exams + Number of IELTS exams
Total number of exams is NOT only the number of A level exams

Total costs of something to society = All the costs affecting the producer and the consumer + All the costs affecting other people
Therefore, total costs to society are NOT only all the costs affecting other people

Since total costs of something to society are social costs
And all the costs affecting the producer and consumer are private costs
And all the costs affecting other people are negative externalities (also called external costs)

Social costs = Private costs + Negative externalities

3)  Problems with free market quantity of a good happen if it either has a very high amount of negative externalities or a very high amount of positive externalities.

All goods have some positive externalities and some negative externalities. However, if these are relatively small, the free market should be doing an acceptable job in providing the good.

4) Be careful what you call a "merit good" or "demerit good".

Trains are not a merit good. Why not? Well, while they do have a high amount of positive externalities (reduced road congestion for example), it seems like the free market is often able to provide enough trains.

Petrol is not a demerit good. Why not? Well, while it does cause a lot of negative externalities, it also has quite a lot of positive externalities - for example, allowing transportation of goods to shops or allowing the production of plastic.

Please let me know if this has been useful, and if there is another topic (micro or macro, AS or A2) that you would like me to write about.