Economics outcome2 guide.docx

Economics outcome2 guide.docx

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Economicsoutcome2guide

Assessmenttaskinstructions

TheUKeconomyismadeupofmillionsofpeopleandbillionsofeconomicactivities.Withintheseactivities,goodsandservicesarecreatedandexchanged.Itcanbecomplicatedattimesbutasimplemodelexplainingingeneraltermshowaneconomyisorganisedandhowthoseinvolvedinteractisagoodstart.

Question1

DrawadiagramshowingtheparticipantsoftheCircularFlowofIncomeandexplainhowitoperates.

Thesimplemodelissufficientforabeginning,butaneconomyismorecomplexandinvolvesexternalinfluences,whichcanraiseorlowereconomicactivity.

Question1

Acircularflowdiagramclearlyidentifyingthefollowingintheircorrectplaces:

Firms:

Households:

Marketsforfactorsofproduction:

Land,labour,capitalandwages,rent,profitandincome.

Question2

IdentifythreeinjectionsandthreewithdrawalsfromtheCircularFlowofIncome;giveexamplesofeach,andhowtheyaffectlevelsofeconomicactivity.

Inthefollowingtable,thereareexamplesofthegrowthrateofvariouscountriesovernineyears

Country

1994

1995

1996

1997

1998

1999

2000

2001

2002

UnitedKingdom

4.7

2.9

2.6

3.4

3.0

2.1

3.1

1.9

1.6

UnitedStates

4.0

2.7

3.6

4.4

4.3

4.1

3.8

0.3

2.4

Bulgaria

1.8

2.1

-9.4

-5.6

4.0

2.3

5.4

4.0

3.5

Switzerland

0.3

0.6

0.3

1.7

2.4

1.6

3.0

1.3

0.6

Question2

Injections:

InvestmentGovernmentspendingExports

Withdrawals:

SavingsTaxationImports

Appropriateexamples:

Investments:

Newfactorybeingbuilt

Governmentspending:

Newschoolbuildings/roads/hospitalsarebuilt.

Governmentspendingthatprovidescollectiveservicesandwelfarepaymentstothecommunityaninjectionintotheeconomycanbewhenthegovernmentredistributesthisincomeintheformofwelfarepayments,

Exports:

Supplyproductstotheforeignfirms

Savings:

Higherinterestratscanmakemorepeoplesave

Taxation:

Governmentincreaselevelofincometax

Imports:

Bringinanewmachine/productline

Question3（sampling）

Chooseanytwoofthefollowingquestions:

（a）ExplainatleastthreedifficultiesencounteredinmeasuringtheNationalIncomeofacountry.

Anythreefromthefollowing:

1.Errors/omissionsfromthedatagathered.

统计中不包括非市场交易活动，即一部分产品和劳务给漏掉了。

例如，家务劳动，自给自足的生产以及个人私自交易等Non-recordeditems,egDIY,housework,barter.

2Blackeconomy.不少地下交易，只是为了逃避税收，在这里，经济活动发生了，GNP统计中却得不到反映。

3.Itcannotreflecthowtheincomedistribute一国贫富严重不均，另一国收入分配均等，

4.国民收入只反映当期的收入，并没有反映累积的收入。

5Doublecounting.Stockappreciation

（b）Explain（usingatleastthreereasons）whyitisdifficulttocomparethegrowthratesofthecountriesinthetableabove.

Methodsmaychangeovertime.

Accuracyoffigures.

Inflationadjustments.

Socialconditions.

Workconditions.

Unequaldistributionofincome.

Spendingpatterns,egdefence.

（c）ExplainhowthemultipliereffectcouldsubstantiallyraisethelevelofNationalIncome.

eitherinwordsorthroughuseofalgebra.

aninitialinjectiontoNationalIncomeresultsinalargerlevelofNIthantheoriginalinjection.

Propensitytosaveandconsume.

（d）Explainthedifferencebetweenrealandnominalgrowthusingthetableabove.

Anexplanationofthedifferencebetweenrealandnominalgrowth,identifyingthatinrealtermsinflationistakenintoaccount.In1998thegrowthrateisshownas3%.Ifthisfigureisthenominalrateandinflationismeasuredat3.1%,thenthereisnorealgrowthintheeconomy.

Anysimilarexamplewillsuffice.

Assessmenttask

2

Outcome

covered

2

Suggestedsolutionandmakinganassessmentdecision

Question1

Acircularflowdiagramclearlyidentifyingthefollowingintheircorrectplaces:

Firms:

Households:

Marketsforfactorsofproduction:

Land,labour,capitalandwages,rent,profitandincome.

Question2

Injections:

InvestmentGovernmentspendingExports

Withdrawals:

SavingsTaxationImports

Appropriateexamples:

Investments:

Newfactorybeingbuilt

Governmentspending:

Newhospitalbeingbuilt（notPFIorPPP）

Exports:

Firmwinsordertosupplynewcomputerstoforeignfirm

Savings:

Highinterestratesresultinmoresavings

Taxation:

Governmentraiselevelofincometax

Imports:

Recordnumbersofholidaymakersgoonoverseasholidays

Question3

（a）Anythreefromthefollowing:

Errors/omissionsfromthedatagathered.

Blackeconomy.

Non-recordeditems,egDIY,housework,barter.

Transferincome.

Doublecounting.

（b）Methodsmaychangeovertime.

Accuracyoffigures.

Inflationadjustments.

Socialconditions.

Workconditions.

Unequaldistributionofincome.

Spendingpatterns,egdefence.

（c）Explanationofmultipliereitherinwordsorthroughuseofalgebra.

ExplanationshouldshowthataninitialinjectiontoNationalIncomeresultsinalargerlevelofNIthantheoriginalinjection.

Propensitytosaveandconsume.

（d）Anexplanationofthedifferencebetweenrealandnominalgrowth,identifyingthatinrealtermsinflationistakenintoaccount.In1998thegrowthrateisshownas3%.Ifthisfigureisthenominalrateandinflationismeasuredat3.1%,thenthereisnorealgrowthintheeconomy.

Anysimilarexamplewillsuffice.