ON EVALUATING by liaoqinmei

VIEWS: 3 PAGES: 4

									                           ON EVALUATION
There are likely to be several places on your exam where you are asked to
evaluate something. One place is likely to be the last part-question on the data
response question and the other main one is in part (b) of the essay. It is also
possible to evaluate on Higher Level Paper 2, but it is more important on this
paper to present accurate theory with appropriate diagrams as quickly as
possible.

On the questions on HL3 and SL 2, the highest mark bands are reserved for
students who can illustrate the skill of evaluation.

What does evaluation mean?
Two dictionary definitions of evaluate are as follows:

      v: to examine and judge carefully; appraise
      v : place a value on; judge the worth of something

How can I accomplish evaluation?
It is not quite enough to simply finish a sentence that begins, “On the other hand
. . .” but it is a good start.

      Prioritise the arguments
       “The most important argument against protectionism in international
       trade is that it represents a global misallocation of resources.” or “The
       least effective argument for protectionism in international trade, in
       terms of economic reasoning, is that the industry is a strategic industry.”

      Long run vs. short run
       “In the short run, abnormal profits can be earned. However, in the
       long run this is not possible.” or “In the short run, it may be possible to
       justify the infant industry argument. However, the danger is that in the
       long run, the industry will remain inefficient.”

      Consider the issue from the points of view of different
       stakeholders.
       What is a stakeholder? One dictionary definition is as follows: a person or
       group that has an investment, share, or interest in something.

       In terms of economic theory, examples of stakeholders could be domestic
       producers, consumers, foreign producers, high income people, low income
       people, or the government.

       “A high exchange rate may be good for consumers because it makes
       imported goods less expensive and forces domestic producers to be more


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       efficient so that they compete with the less expensive imports. On the
       other hand, it is clearly a disadvantage for those domestic producers
       who suffer from the competition from imports which become less
       expensive with the higher value of the currency.” or “Supply side policies
       may be very good in terms of creating a more flexible labour force and
       achieving economic growth. However, it may lower the standards of
       living of workers who may suffer from deregulation of the labour laws.”

Practice
      The law of demand says that the higher the price of a good, the lower will be the
       quantity demanded. This accounts for the downward-sloping demand curve.
       However, there are exceptions to this law. Two exceptions to the law are
       ____________________________.

      There are several factors which cause a shift in the supply curve. These are ___
       and . . . The most important of these is _____ because ____ . . .

      Minimum prices are good for _______________ because_____ . . .. However,
       they can be considered to be negative for __________ because _______ . . . .

      Maximum prices are good for _______________ because_____ . . . However,
       they can be considered to be negative for __________ because ______ . . . .

      Subsidies are good for _____ because ___ . . However, . . .

      The answer to the question, “Should prices be increased?” depends on many
       things. It depends on ______ . . .

      One way to correct the market failure of negative externalities is to tax the
       producers of the good creating the negative externality. However, this is difficult
       because, _____ . . It is also a problems because _____ . . . ( Market failure is a
       topic which involves much evaluation. You have to be able to evaluate any of the
       solutions to any of the sources of market failure.)

      In the short run, a firm is only able to increase output up to a certain point. This
       is due to the law of ____. However, in the long run, all ____ . . . .

      The biggest advantage of perfect competition (although it is primarily a
       theoretical advantage as is it very unlikely that a real life market structure would
       follow all the assumptions of perfect competition) is that _____.               The
       disadvantage , however, would be that ____ . . (Assess the advantages and
       disadvantages of all the market structures, considering the different stakeholders
       - and using the terms producer and consumer sovereignty)

      Price discrimination can be considered to be negative because ______________
       . . . On the positive side, however, ______ . . .




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      There are four main central macroeconomic objectives which every government
       pursues. These are: ____ . . . The difficulty that governments face is that when
       they pursue one objective, it is highly likely that other objectives will come into
       conflict. For example, ___ . . (You can do this many times)

      In the short run, economists agree that the aggregate supply curve is upward
       sloping. There is considerable controversy over the likely shape of a country’s
       long run aggregate supply curve. Neo-Keynesians believe that ___ . . . Neo-
       classical economists, on the other hand, argue that ____ …. However,
       economists agree that the LRAS curve is vertical at the full employment level of
       output. (This writing would obviously be accompanied by several diagrams!)

      Increasing aggregate demand may be good when ___ . .              However, if the
       economy is __ . . . . .

      Demand management may be appropriate for solving ____ unemployment.
       However, if the unemployment is ___ . . then increasing AD is likely to ___ . . .

      In the short run, there may be a trade-off between inflation and unemployment.
       However, ___ . . . .

      If a government wants to increase its spending to stimulate the economy, it may
       have to run a budget deficit. The disadvantages of this are ___ . .

      The advantages and disadvantages of tariffs depend on the various stakeholders.
       The diagram showing the effect of a tariff is very useful for pointing out the
       various advantages and disadvantages. As can be seen in the diagram below,
       ___ . . .

      A country may decide to deal with a current account deficit by using expenditure
       reducing policies. These include __ . . . The problems with these are __ . . . An
       alternate policy would be expenditure switching. This can be done by ____ . .
       Disadvantages associated with these are ___ . . .

      A high value of a currency is good for ____ and . . . . because ___ . . .
       However, it can be very damaging for ___ . . . because _____ . . .

      A low value of a currency is good for ____ and . . . . because ___ . . . However,
       it can be very damaging for ___ . . . because _____ . . .

      Economic growth is highly desirable because ____ . . .          However, on the
       negative side, __ .. . .

     The principal difference between economic growth and economic development is
     that ______ . . . .

     When considering the advantages and disadvantages of foreign direct
     investment, it is important to look at the implications for both growth and
     development. In terms of achieving economic growth, FDI is very important




On evaluation                               3
     because ___ . . . However, when considering economic development, there are
     different arguments. For example, __ . .
     When considering the advantages and disadvantages of international trade to
     LDCs, it is important to look at the implications for both growth and development.
     In terms of achieving economic growth, trade is very important because ___ . . .
     However, when considering economic development, there are different arguments.
     For example, __ . ..

     When considering the advantages and disadvantages of foreign aid, it is
     important to look at the implications for both growth and development. In terms
     of achieving economic growth, aid can be very important in filling several gaps
     such as ___ . . However, the implications in terms of development are ___ . . .

     An outward-oriented strategy may be successful in terms of achieving _____.
     However, the disadvantages may be ___ . . . .

     The biggest disadvantage of an inward-oriented strategy is that ____ . .

ESSAY QUESTIONS
   Evaluate the solutions that a government might employ to correct the
     problems of market failure.

      Evaluate the effects of a rising interest rate on an economy.

      Evaluate the effects of a falling exchange rate on an economy.

      Evaluate the arguments in favour of MNC investment in LDCs.

      Evaluate the view that foreign aid is more of a disadvantage for LDCs than
       an advantage.

      Evaluate the measures that a government might use to reduce
       unemployment.

      Evaluate the measures that a government might use to reduce inflation.

      Evaluate the measures that a government might use to achieve economic
       growth.

      Evaluate the measures that a government might use to reduce a current
       account deficit.

Please note: The practice questions and essay titles above do not represent an
exhaustive list of all the questions you could be asked. Examiners do their best
to come up with original questions to test your knowledge and skills as an
economist!




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