Essay Plans for your A Level Macro Economics Exams paper
8 views 0 purchase
Course
Macro & Micro Economics
Institution
PEARSON (PEARSON)
Essay Plans for a large number of questions which are likely to come up in the A Level Economics Exam papers, document for Macro, micro and macro combined. The plans have all been checked by my teacher, who has a doctorate.
Definitions: Maximum wage is a legal limit on how much income an individual can earn,
either as a set figure or more likely a multiple of the median salary in a given firm. (Jeremy
Corbny suggested it in 2017.)
Micro Negative:
K = “brain drain”
A = Max wage → removes incentive to work harder to earn higher salaries → encourage
workers to leave UK labour market in search of higher pay → as are highly skilled so
internationally mobile → scarcity of skilled workers in UK → loss of dynamic efficiency in LR
→ causing UK firm to become x-inefficient → ↓productivity same num of workers producing
less output → ↑LR ATC → ↓profits → reduce in finance reinvested in specialist capital
→ ↓Q&Q → ↓share prices → company may enter shut down conditions
A = after Ebola outbreak in Africa in 2014, many Cuban doctors emigrated to Africa due to
↑D for doctors → wages for doctors in Africa higher than in Cuba which has a maximum
wage
Ev =
• Max wage helps bring equity to labour market → reducing Y inequality gap whilst
↑productivity → as large gap between top & bottom wage within firm harms
performance by building up resentment → highest earning workers are often earning
a surplus (economic rent) as impossible to know their MRP
o Dan Price paid all workers wage of $70,000 in his company ‘Gravity
Payments’ → ↑their productivity causing them to grow by 15% per year
• PED & PES of workers in high range is very inelastic → so max wage has little
impact on excess D
• ↑productivity → ↑SNP → more money to invest in specialist capital → ↑in R&D →
↑dynamic efficiency → ↓LRAC
Macro Negative:
K = fall in FDI
A = as companies are making less profits they are less attractive to FDI → ↓I → ↓AD →
leftward shift → output of firm falls as can't afford to produce same Q of gs → need to cut
costs → ↑unemployment → ↓disposable Y nationally → ↓CS → ↓AD → can't afford luxury
gs → ↓LS → ↓inequality → welfare loss → (cyclical nature, less D for gs → ↓em → ↓FDI)
A = Cuba ranks among one of the last countries in the world in terms of the volume of FDI
inflows
Ev =
• Persistently high Y inequality can damage econ growth → max wage can be
beneficial as more equal wage can ↑incentive & productivity
o John Lewis have successfully used share-ownership schemes throughout
their workforce to spread more widely the profits made. This sustains more
consumption and aggregate demand.
• Max wage means CEOs no longer gain surplus wage → cuts costs → > finance
available for employing more workers → ↑employment → ↑disposable Y → gov
spending on benefits↓ as UK workforce has grown → ↑LS → ↓gov spending on
benefits allows gov to spend more on other development indicators (eg. health →
↑LS) or could reduce budget deficit
The benefits of buying summaries with Stuvia:
Guaranteed quality through customer reviews
Stuvia customers have reviewed more than 700,000 summaries. This how you know that you are buying the best documents.
Quick and easy check-out
You can quickly pay through credit card or Stuvia-credit for the summaries. There is no membership needed.
Focus on what matters
Your fellow students write the study notes themselves, which is why the documents are always reliable and up-to-date. This ensures you quickly get to the core!
Frequently asked questions
What do I get when I buy this document?
You get a PDF, available immediately after your purchase. The purchased document is accessible anytime, anywhere and indefinitely through your profile.
Satisfaction guarantee: how does it work?
Our satisfaction guarantee ensures that you always find a study document that suits you well. You fill out a form, and our customer service team takes care of the rest.
Who am I buying these notes from?
Stuvia is a marketplace, so you are not buying this document from us, but from seller abbydolbear02. Stuvia facilitates payment to the seller.
Will I be stuck with a subscription?
No, you only buy these notes for $22.55. You're not tied to anything after your purchase.
