AS Level Economics 9708/22 Problems discussion

[Deadpunk.mr]

Ok people post your problems right here and lets see how many people we can help before the exam starts.

 

[Machikne]

what is inflation

 

[Deadpunk.mr]

what is inflation

It is a persistent and generalized increase in the level of prices of goods and services in a country. Or to simply put it....it means an increase in prices of the products in a country.

 

[thunderbolt]

what do we need for inflation??

 

[Lostsoul]

What determines the demand and supply of a currency in a foreign market?

 

[Deadpunk.mr]

what do we need for inflation??

we dont need anything for inflation.. but if your asking how to control inflation then its just by increasing the interest rates so people save more and borrow less.....also by increasing income tax so that there is money flow in the economy and therefore less jobs will be created and unemployment will occur and eentually inflation will subside do let me know if further help is needed.

 

[Deadpunk.mr]

What determines the demand and supply of a currency in a foreign market?

it depends upon many factors my friend... for example, the need for the currency depends upon the exports coming from that country, if the export is something important then the demand is high and so the currency has a high value

It can also depend on the rate of interest of the country because high interest rates would encourage people to save in the banks and demand is affected with it.

Lastly the supply of foreign currency and the domestic currency has a great effect...lower the supply of the currency the greater the price and the greater the supply the less the price of the currency.

as always do let me know if there's more problem

 

[thunderbolt]

we dont need anything for inflation.. but if your asking how to control inflation then its just by increasing the interest rates so people save more and borrow less.....also by increasing income tax so that there is money flow in the economy and therefore less jobs will be created and unemployment will occur and eentually inflation will subside do let me know if further help is needed.

hmmm but dont we need to know how to calculate inflation??that is a part which is really tricky for me?and which calculations(like weighted price index and simple price index)....do you do business studies by any chance?

 

[Deadpunk.mr]

hmmm but dont we need to know how to calculate inflation??that is a part which is really tricky for me?and which calculations(like weighted price index and simple price index)....do you do business studies by any chance?

no my friend..not business studies...but anyway yes inflation is calculated in one main way.

By selecting a special year in which no special event has occurred and then giving a base number hundred and the the change in index shows the amount of inflation. Like 100 ===> 105 means 5% inflation. And yes some baskets of goods bought by regular households are taken and added weight in accordance to how much of their income they spend on those goods and then their weights are averaged to give the final result of inflation.

And also the need to measure inflation is important as GOV needs to know what measure to use next and can plan production next year with those stats...

 

[Lostsoul]

it depends upon many factors my friend... for example, the need for the currency depends upon the exports coming from that country, if the export is something important then the demand is high and so the currency has a high value

It can also depend on the rate of interest of the country because high interest rates would encourage people to save in the banks and demand is affected with it.

Lastly the supply of foreign currency and the domestic currency has a great effect...lower the supply of the currency the greater the price and the greater the supply the less the price of the currency.

as always do let me know if there's more problem

Haha thanks, more elaboration pls

 

[student92]

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[SalmanPakRocks]

what do we need for inflation??

We need inflation, mild or very mild to encourage investments, as it promises better rate of return to producers.

 

[SalmanPakRocks]

What determines the demand and supply of a currency in a foreign market?

Demand and supply for currency is determined by the volume of imports and exports.
Incase of imports, the locals supply the currency and demand foreign currency while export includes foreigns demanding local currency and supply theirs.
You can support this by the graph. Also, the determination of the demand and supply of the currency in the forex market depends upon the level of inflation in the economy, if the economy is inflated, the people would lose confidence in the local currency and start demanding the foreign currency. Moreover, interest rate (monetary policy) is directly linked with the demand and supply of the local currency. In case of high interest rate, economy would be injected with, 'hot inflow of money' which in our case would result in demand of local currency.
The governments, who follow 'dirty floating' exchange rate also have to monitor the boundaries set for the exchange rate, in case of appreciation or depreciation above or below the boundaries defined by the government, the government has to intervene in the forex market and either sell out foreign exchange reserves or buy back foreign exchange reserves.
I hope that answers it.

 

[SalmanPakRocks]

hmmm but dont we need to know how to calculate inflation??that is a part which is really tricky for me?and which calculations(like weighted price index and simple price index)....do you do business studies by any chance?

Inflation is calculated in many ways including CPI and RPI which are one of the two main methods.
When referring to CPI (consumer price index), a survey is conducted to find the consumer spending over certain products. The result of these surveys are categorized and assigned weights. Then, the price level is multiplied by the weights.
http://www.tutor2u.net/economics/revision-notes/a2-macro-measuring-inflation.html
Read this article, it explains in detail how inflation is calculated.

 

[Lostsoul]

SalmanPakRocks I believe you are a champ sir!

 

[Nimaay]

Exam in 3hrs
goodluck people
contact me after you finish the paper via Facebook for any doubts

 

[3fatak]

anyone who gave economics variant 1??