Balance of Payments

Y11 Learning Objectives for today:

TO understand the main components of the Balance of Payments

To understand the impacts of a current account deficit and current account surplus.

What is the balance of payments? It is made up of the current account and capital account.

You need to know about the current account - which is made up off visible trade and invisible trade.

Your task today is to: Find out the top exports for 5 different countries

Find out what services are currently exported by the UK and US?

What is meant by the term current account deficit?

What are the impacts of the term current account deficit?

http://www.economicshelp.org/trade/benefits_free_trade.html

http://benefitof.net/benefits-of-free-trade/

http://www.wto.org/english/res_e/doload_e/10b_e.pdf

http://www.wto.org/english/thewto_e/whatis_e/10ben_e/10b00_e.htm#10benefit_menu

http://www.newyorker.com/talk/financial/2008/05/26/080526ta_talk_surowiecki

http://debatewise.org/debates/1053-poorer-countries-should-abandon-free-trade-agreements/

 

Homework

For homework - you also must make sure you have commented on the blog article on tariffs etc... You must then revise for your assessment next week!

Interesting reading- useful for revision

Read through this article on China and exporting...

http://www.guardian.co.uk/business/2009/aug/14/china-exports-christmas-toys

What macroeconomic issues does it bring it up?

Comment below!

Lesson today

You should have by now completed:

Two six mark questions (marked using the fronter markscheme)

Most of you are now answering the questions to the trade dispute casestudy on Tutor2u. You must post your answers on the blog!!

If you finish - you then need to use the time completing the past paper we have started and/or revising for the assessment next week.

A-Level Paper

To all the students who completed the A-Level Paper - here is the link: http://store.aqa.org.uk/qual/gce/pdf/AQA-ECON2-W-MS-JAN-12.PDF

Y11 Economics Task for today

Y11: Here are your learning aims for today!

1) You must mark the 6 mark answers from last lesson. The markscheme and questions are here:

https://fronter.com/taaleem/main.phtml

They are in the Y11 Economics room - Resources - Markscheme.

2) You then need to visit this blog post:

http://www.tutor2u.net/blog/index.php/gcse-economics/comments/the-problem-with-using-tariffs You need to answer the GCSE style questions after reading the article: 1. Explain two other protectionist policies available to the US. [4 Marks] 2. Explain why the US may have decided to impose a tariff. [4 Marks] 3. ‘Tariffs are the best way to protect a country from foreign competition.’ Do you agree with this statement? Give reasons for your answer. [6 Marks] You need to then post your answers on the comment section!

Exam Practice

Today we looked at exam style questions including 2,4 and 6 markers, these covered all of the topics we have been learning since the beginning of year 11.
Some of the things we found we needed to improve upon were some specific types of inflation, cost push and demand pull. Furthermore some students struggled with remembering specific monetary, fiscal and supply side policies and real world examples of these.

Trade Blocs

Trade blocs are types of intergovernmental agreements where regional barriers to trade are reduced or eliminated among the participating states. There are advantages and disadvantages to trade blocs.

Advantages:

1. Faster way to remove trade and investment barriers within trade blocs.
2. Increasing inter-dependency of neighbouring countries on one another. 
4. Wider range of goods available for consumers.
5. Makes movement of money and goods easier.

Disadvantages:

1. It could create over-dependency amongst member states.

2. Large investments into back-up funds.

3. Loss of benefits for non-members.

4. in-equal distribution of resources.

5. Less global free trade.

6. Financial costs to governments in short term.

Tariffs

A way to restricting trade is to apply a tariff on incoming goods, making the imports more expensive. The tariff is applied by the government where the demand for imports will reduce but increase the demand for domestic goods because they will be cheaper than imports. With the price of the good after the tariff is implied, making the product expensive, the demand for the product reduces from Qd to Qc but supply of the domestic goods increased from Qa to Qb. The blue section on the graph in the profit the government makes from the tariff.

Quotas

Quotas

A quota is physical limit on the amount of imports allowed into a country. This gives domestic producers less of a threat as they will have more of the market for themselves therefore they will have less competition.

Results in loss to domestic consumers, gain for domestic producers and a windfall profit to some overseas suppliers. No direct financial cost to government but will result in hostility from trading partners.

Subsidies

A subsidy is giving financial support to domestic producers to give them a competitive advantage over foreign producers, this can be in the form of grants or tax breaks. It will generally lowers prices for consumers.

The effect of a subsidy  as in shown in the above graph, is to lower supply costs, this will lead producers to increase supply. This is shown in the shift between S pre subsidy and S post subsidy (S-S1).
This increase of supply will decrease the price of the product to market (P1-P2) and thus increase quantity demanded by the market (Q1-Q2).

Welcome to your new IGCSE Economics Blog!

Dear Y11 Economists, This is your blog to post the latest news stories as well as revision questions to help each revise. Each week there will be a 2 or 3 students in charge of updating the blog with what students have been learning about as well as any other relevant data! This weeks focus is on protectionism and trade blocs!