Economics, Accounting & Business: Post your doubts here!

[Hassi123]

Wat is a J-curve mainly?
Just need a brief answer

Lets say you have a current account defecit, you try improving it by lowering your exchange rate (this will increase the demand by foreign countries), in j curve the ped is inelastic in the short term, and becomes elastic in the long term, so basicly when you lower price at first your defecit will worsen (increase in qd will be less than fall in price) and later the defecit will improve (increase in qd is greater than fall in price). The curve that forms is of the shape of the alphabet J.
Hope you get it

 

[Paradoxical]

in A the exports and imports both have an inelastic ped. there is a depreciation in currency of country x, making their imports more expensive than exports, since inelastic, demand of exports will fall greater than demand for imports, hence BOP defecit. option C is the exact opposite as the ped is elastic in that case.​

This is the only case where surplus is favourable. i hope you get it​

Ah yes, I got it now! THANKS!
I just hope I can do well tomorrow, getting quite worried now. :/

 

[shahz_h]

Lets say you have a current account defecit, you try improving it by lowering your exchange rate (this will increase the demand by foreign countries), in j curve the ped is inelastic in the short term, and becomes elastic in the long term, so basicly when you lower price at first your defecit will worsen (increase in qd will be less than fall in price) and later the defecit will improve (increase in qd is greater than fall in price). The curve that forms is of the shape of the alphabet J.
Hope you get it

Ya !! I got it !!Thanx a lot!!!

 

[shahz_h]

Could some1 pleeez solve my following doubts-
http://www.xtremepapers.com/papers/... AS Level/Economics (9708)/9708_w11_qp_12.pdf
Q.9 ans. is b
Q.11 ans is a
Q.23 ans. is a
Q.29 ans. is c
Q.30 ans is a
Thanx in advanc!!

 

[Hassi123]

Could some1 pleeez solve my following doubts-
http://www.xtremepapers.com/papers/... AS Level/Economics (9708)/9708_w11_qp_12.pdf
Q.9 ans. is b
Q.11 ans is a
Q.23 ans. is a
Q.29 ans. is c
Q.30 ans is a
Thanx in advanc!!

Q 30 because when you raise rate of tax, people have less money to spend, so they will import less and defecit will reduce.
Q29 as it says full extent so even though price of uk goods fall with depreciation but the company is raising its price so their earnings will stay constant
Q23 as it says proportion we can clearly see through percentage (96% in malaysia compared to 93.2 in india)
Q11 initial surplus was WPQ and the new one is WTV so the change would be PQVT
Q9 The producer takes in some money from the subsidy too after all they wanna make profit.
Hope i helped

 

[shahz_h]

Q 30 because when you raise rate of tax, people have less money to spend, so they will import less and defecit will reduce.
Q29 as it says full extent so even though price of uk goods fall with depreciation but the company is raising its price so their earnings will stay constant
Q23 as it says proportion we can clearly see through percentage (96% in malaysia compared to 93.2 in india)
Q11 initial surplus was WPQ and the new one is WTV so the change would be PQVT
Q9 The producer takes in some money from the subsidy too after all they wanna make profit.
Hope i helped

Ya it helped!!
THanx

 

[shahz_h]

Some more doubts!!
http://www.xtremepapers.com/papers/... AS Level/Economics (9708)/9708_w11_qp_13.pdf
Q. 9 ans is D
Q. 10 ans. is B
Q. 21 ans is A
Q.28 ans. is A

 

[Paradoxical]

http://www.xtremepapers.com/papers/CIE/Cambridge International A and AS Level/Economics (9708)/9708_s06_qp_1.pdf

Why is D the answer for question 27? How does buying more imports decrease inflation?

 

[Nibz]

http://www.xtremepapers.com/papers/CIE/Cambridge International A and AS Level/Economics (9708)/9708_s06_qp_1.pdf

Why is D the answer for question 27? How does buying more imports decrease inflation?

Worsened current account balance = More imports, less exports. More supply of goods from abroad, less goods sold abroad. The excess agg. demand frm 'demand-pull' inflation is met. Which reduces the 'demand-pull' inflation.

 

[Paradoxical]

Some more doubts!!
http://www.xtremepapers.com/papers/CIE/Cambridge International A and AS Level/Economics (9708)/9708_w11_qp_13.pdf
Q. 9 ans is D
Q. 10 ans. is B
Q. 21 ans is A
Q.28 ans. is A

In Question 9 all the supply curves start at the origin which means the PES will be unitary for all of them.

Question 28 is about the J-Curve. The J-Curve effect is when in some countries a fall in the exchange rate will actually worsen the balance of payments before it starts to improve it. If the price elasticity of demand for both imports and exports is very low, then people will still be purchasing about the same quantity but at a lower price - this will increase the deficit.

 

[Esme]

Some more doubts!!
http://www.xtremepapers.com/papers/CIE/Cambridge International A and AS Level/Economics (9708)/9708_w11_qp_13.pdf
Q. 9 ans is D
Q. 10 ans. is B
Q. 21 ans is A
Q.28 ans. is A

Q10 is B cuz a subsidy causes the supply curve to shift tot he right.

 

[Paradoxical]

http://www.xtremepapers.com/papers/...d AS Level/Economics (9708)/9708_s07_qp_1.pdf

I don't understand question 21 at all. I hate these kind of questions. :s How is the answer C?

 

[Mohammed Hassan]

I read some posts and realised that tomorrow is the economics paper...
Just wanted to say, best of luck to everyone

 

[Esme]

I read some posts and realised that tomorrow is the economics paper...
Just wanted to say, best of luck to everyone

thanks.
ur not giving eco ??

 

[Mohammed Hassan]

thanks.
ur not giving eco ??

Nope, Just accounting xP

 

[Esme]

http://www.xtremepapers.com/papers/CIE/Cambridge International A and AS Level/Economics (9708)/9708_s07_qp_1.pdf

I don't understand question 21 at all. I hate these kind of questions. :s How is the answer C?

just calculate the terms of trade index for each option and see for whch one you get 120.
im sure you knw the formula: index of export prices/index of import prices x 100.
so for he C option it will be 120/100 x 100 = 120.
120 cuz 100+20. and import prices will remain 100 cuz no change.

 

[Esme]

Nope, Just accounting xP

ookay. kinda unusual

 

[Paradoxical]

just calculate the terms of trade index for each option and see for whch one you get 120.
im sure you knw the formula: index of export prices/index of import prices x 100.
so for he C option it will be 120/100 x 100 = 120.
120 cuz 100+20. and import prices will remain 100 cuz no change.

Ah yea, I get it now - I was just confusing myself. :s
Best of luck for tomorrow, I'm sure you'll do very well judging by the amount of peoples' questions you've answered on here. ^_^

 

[Nibz]

http://www.xtremepapers.com/papers/CIE/Cambridge International A and AS Level/Economics (9708)/9708_s07_qp_1.pdf

I don't understand question 21 at all. I hate these kind of questions. :s How is the answer C?

It's simple. Really.
Terms of trade = Export Price Index/Import Price Index x 100
Since it has increased from 100 to 120. Which clearly means a 20% improvement. So export prices must have increased by 20% and import prices remained unchanged.

 

[shanky631]

Best of Luck everyone!!!