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With the help of a diagram, explain why a trade-off between price stability and low unemployment might occur. (9 marks)

The objective of price stability is to maintain a sustainable level of inflation, with the target being 2% for the UK government. A low level of unemployment can be defined as a low number of economic age...

Answered by • Economics tutor

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What is price elastic demand?

The textbook definition of price elastic demand is when % change in quantity demanded (QD) is greater than the % change in price (P). This can be viewed in the formula for price elasticity of demand: %cha...

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What's the difference between PED, PES, YED, and XED?

PED stands for Price Elasticity of Demand. It refers to the percentage change of quantity demanded (Qd) of a product as a result of a change in price (P) of that product. It is calculated by dividing the ...

Answered by Joshua D. • Economics tutor

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Analyse the level of economic efficiency achieved [short run] in a monopolistically competitive transport market (15 marks)

Start by defining the relevant market (e.g. monopolistic competition). This should follow along the lines of: ‘a market structure where many firms operate providing slightly differentiated goods and servi...

Answered by Mark A. • Economics tutor

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In our macro-economic models, we always input a central bank interest rate. Yet, when I go to the bank to borrow money, I get a much higher interest rate. How does a higher or lower interest rate effect lending if I can't borrow at that rate anyway?

While this is not necessarily relevant for the IB exams, it is important to keep in mind that the interest rate that we use in the macro-economic models like the AD/AS model is an approximation of cost of...

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