Economics, Accounting & Business: Post your doubts here!

[Layla..]

*Somebody, please explain how imposing tariffs will make price of imports fall? I thought tariffs raised import price, thus discouraging people to buy foreign products. :/
*And why government may gain from inflation?
*What is the correlation between inflation and exchange rate?
**Help much appreciated!**

Tarrif reduces the volume/amount of imports not the prices.
Since government is the biggest borrower in the country thus it will benefit from inflation as the amount it borrows will be worth more than it pays back in real terms
If inflation increases this means prices are increasing, when prices will increase, demand for the goods of services of that country will fall which will lead to a fall in it's exchange rate i.e depreciation and vice versa.

 

[Fahadcm5596]

Any guesses for the Eco Paper?

 

[unique111]

Any guesses for the Eco Paper?

https://www.xtremepapers.com/community/threads/a-level-economics.18771/page-80#post-785761

 

[unique111]

omg. thanks! can you explain the government and inflation more?

Tarrif reduces the volume/amount of imports not the prices.
Since government is the biggest borrower in the country thus it will benefit from inflation as the amount it borrows will be worth more than it pays back in real terms
If inflation increases this means prices are increasing, when prices will increase, demand for the goods of services of that country will fall which will lead to a fall in it's exchange rate i.e depreciation and vice versa.

 

[Layla..]

omg. thanks! can you explain the government and inflation more?

Government is the largest borrower in a country. As inflation proceeds, the real value of money falls, that is it will buy less and less goods and services. So when government borrows money, and it has to repay back in a period of inflation, the money it borrowed was more (in real terms) than what it is repaying back.
Example: Government borrows money $150,000 and purchases 5 hospital buildings. Inflation increases and now government has to pay back the debt. Those 150,000 dollars will now be only able to purchase 3 hospital buildings as real value of money has reduced. That is why the borrower gains at the expense of the lender.
I hope it's clear now...I tried to explain as best I can

 

[unique111]

Government is the largest borrower in a country. As inflation proceeds, the real value of money falls, that is it will buy less and less goods and services. So when government borrows money, and it has to repay back in a period of inflation, the money it borrowed was more (in real terms) than what it is repaying back.
Example: Government borrows money $150,000 and purchases 5 hospital buildings. Inflation increases and now government has to pay back the debt. Those 150,000 dollars will now be only able to purchase 3 hospital buildings as real value of money has reduced. That is why the borrower gains at the expense of the lender.
I hope it's clear now...I tried to explain as best I can

yes! You've explained it perfectly! THANKS!

 

[Hasa321]

Can any1 help hw to do the question 3?
Answer is A
http://papers.xtremepapers.com/CIE/... AS Level/Accounting (9706)/9706_s06_qp_3.pdf

 

[Sarah Paul]

appreciation i read in ms .. have to check more .. not 100% sure how to write it :/

Yah i got it explained the Marshell Learner Condition can be explained fr bth Appreciation and Depreciation

 

[Sana Javed]

Can anyone help with these questions? I know the answers I need explanations.

 

[David Hussey]

Government is the largest borrower in a country. As inflation proceeds, the real value of money falls, that is it will buy less and less goods and services. So when government borrows money, and it has to repay back in a period of inflation, the money it borrowed was more (in real terms) than what it is repaying back.
Example: Government borrows money $150,000 and purchases 5 hospital buildings. Inflation increases and now government has to pay back the debt. Those 150,000 dollars will now be only able to purchase 3 hospital buildings as real value of money has reduced. That is why the borrower gains at the expense of the lender.
I hope it's clear now...I tried to explain as best I can

woah nice explanation

 

[Fahadcm5596]

https://www.xtremepapers.com/community/threads/a-level-economics.18771/page-80#post-785761

Thanks Bro!!

 

[rackstagryan]

Tarrif reduces the volume/amount of imports not the prices.
Since government is the biggest borrower in the country thus it will benefit from inflation as the amount it borrows will be worth more than it pays back in real terms
If inflation increases this means prices are increasing, when prices will increase, demand for the goods of services of that country will fall which will lead to a fall in it's exchange rate i.e depreciation and vice versa.

its the quota that reduces the volume and not the tariff right! tariff is just another type of tax and it will increase the price of imports!

 

[Crimson-Saint]

for inflation....how does govt expenditure affect it? like increase or decrease in govt expenditure...can someone explain? thx

 

[:: A^]

for inflation....how does govt expenditure affect it? like increase or decrease in govt expenditure...can someone explain? thx

are you referring to Fiscal policy?

 

[Crimson-Saint]

are you referring to Fiscal policy?

yes... i dont quite understand it

 

[Sarah Paul]

yes... i dont quite understand it

Fiscal policy is where the government increases taxes and decreases expenditure

 

[Layla..]

its the quota that reduces the volume and not the tariff right! tariff is just another type of tax and it will increase the price of imports!

Tarrif increases the price of imports and according to the law of demand, demand decreases as prices increase, thus it will lead to lower volume of imports!

 

[Layla..]

for inflation....how does govt expenditure affect it? like increase or decrease in govt expenditure...can someone explain? thx

If you are referring to fiscal policy that is using govt expenditure and taxation, then it will influence inflation by influencing the level of demand in the economy.
Contractionary fiscal policy will reduce AD and thus help reduce level of inflation
Expansionary policy will increase AD and boots prices, increasing the level of inflation.

 

[Crimson-Saint]

If you are referring to fiscal policy that is using govt expenditure and taxation, then it will influence inflation by influencing the level of demand in the economy.
Contractionary fiscal policy will reduce AD and thus help reduce level of inflation
Expansionary policy will increase AD and boots prices, increasing the level of inflation.

thaankx

 

[Sarah Paul]

Can anyone give me points for reasons against tariffs and explain them, 3 points