https://padlet.com/SSMsSha/S19 E-Learning Activity: To complete these activities within a week commencing from Term 2 Week 4. Deadline to post answers is 21 April 2016. en-us 2016-04-18 21:17:35 UTC 2025-10-10 03:50:12 UTC hello@padlet.com https://padlet-assets.storage.googleapis.com/portrait/pocketwatch.jpg SSMsSha https://padlet.com/SSMsSha/S19/wish/106416990 Before commencing the activities (Task 1 to 4 below) spend 3 minutes to think of this question:

You may have some initial ideas about Eurozone economy. In just a few sentences, I want you to write what it is that you used to think about Eurozone economy. Take a minute to think back and then post your response in the following format:

“ I used to think that Europe is ..........................

Each of you must post your response in the space below this box.]]> 2016-04-04 14:51:44 UTC https://padlet.com/SSMsSha/S19/wish/106416990 michelle_wong_nga_hui https://padlet.com/SSMsSha/S19/wish/106416991 2016-04-15 00:48:49 UTC https://padlet.com/SSMsSha/S19/wish/106416991 SSMsSha https://padlet.com/SSMsSha/S19/wish/106416992 As an economic advisor (group leader), your role is to recommend and justify whether the use of policies have been effective in tackling recent macroeconomic problems faced by your country. Your job is to discuss with a panel of ministers (your team members) to do research and to propose solutions (policies) to solve these problems. Thereafter, you need to evaluate if the use of these policies  are effective or appropriate for your country.]]> 2016-04-04 13:39:06 UTC https://padlet.com/SSMsSha/S19/wish/106416992 SSMsSha https://padlet.com/SSMsSha/S19/wish/106416993 You may wish to use specific judging criteria to assess the suitability of these policies.]]> 2016-04-04 14:46:56 UTC https://padlet.com/SSMsSha/S19/wish/106416993 SSMsSha https://padlet.com/SSMsSha/S19/wish/106416994 Videoclip on the Eurozone Economy]]> 2016-04-04 15:59:28 UTC https://padlet.com/SSMsSha/S19/wish/106416994 SSMsSha https://padlet.com/SSMsSha/S19/wish/106416995 Video Clip on Eurozone economy: Italy]]> 2016-04-04 14:21:35 UTC https://padlet.com/SSMsSha/S19/wish/106416995 SSMsSha https://padlet.com/SSMsSha/S19/wish/106416996 2016-04-04 14:30:33 UTC https://padlet.com/SSMsSha/S19/wish/106416996 SSMsSha https://padlet.com/SSMsSha/S19/wish/106416997 2016-04-04 15:46:22 UTC https://padlet.com/SSMsSha/S19/wish/106416997 SSMsSha https://padlet.com/SSMsSha/S19/wish/106416998 Please write your response here, or you may just add new post. Use economic analysis (for example ADAS analysis) in your answers where possible.]]> 2016-04-04 14:27:05 UTC https://padlet.com/SSMsSha/S19/wish/106416998 SSMsSha https://padlet.com/SSMsSha/S19/wish/106416999 For example, is it a small and open economy? Is it a large economy? Is the economy an export-driven economy? Is it undergoing any structural changes? Please upload the links here too.]]> 2016-04-04 14:37:37 UTC https://padlet.com/SSMsSha/S19/wish/106416999 SSMsSha https://padlet.com/SSMsSha/S19/wish/106417000 Explain and evaluate the use of 3 policies]]> 2016-04-04 14:45:26 UTC https://padlet.com/SSMsSha/S19/wish/106417000 SSMsSha https://padlet.com/SSMsSha/S19/wish/106417001 2016-04-04 14:58:49 UTC https://padlet.com/SSMsSha/S19/wish/106417001 SSMsSha https://padlet.com/SSMsSha/S19/wish/106417002 Now, I want you to think about how your ideas about Europe's economy has changed as a result of what your team has been discussing whilst completing the task above. Again in just a few sentences write down what you now think about  Europe's economy. Start your sentences with, 


“But now, I think…”

Each of you must post your response in the space below this box.]]> 2016-04-04 14:59:32 UTC https://padlet.com/SSMsSha/S19/wish/106417002 SSMsSha https://padlet.com/SSMsSha/S19/wish/106417003 2016-04-04 15:02:56 UTC https://padlet.com/SSMsSha/S19/wish/106417003 SSMsSha https://padlet.com/SSMsSha/S19/wish/106417004 2016-04-04 15:04:09 UTC https://padlet.com/SSMsSha/S19/wish/106417004 SSMsSha https://padlet.com/SSMsSha/S19/wish/106417005 2016-04-04 15:04:45 UTC https://padlet.com/SSMsSha/S19/wish/106417005 https://padlet.com/SSMsSha/S19/wish/107136961 I used to think that the European countries are all dependent on each other and the current economic situation is affecting all the countries in the Eurozone due to their geographic proximity to each other and their long history of trading with each other.]]> 2016-04-22 01:07:45 UTC https://padlet.com/SSMsSha/S19/wish/107136961 https://padlet.com/SSMsSha/S19/wish/107137684 I used to think that Europe was a thriving economy that was not straddled in dire debt.  However, I have come to realise that the economic problems they face are complex and very difficult to resolve completely.  In particular, the size of government debt acquired is rather distressing since European countries are mostly welfare states which support the citizens readily in terms of their financial needs.]]> 2016-04-22 01:15:07 UTC https://padlet.com/SSMsSha/S19/wish/107137684 https://padlet.com/SSMsSha/S19/wish/107137998 I used to think that European countries are rich countries and are experiencing stable economic growth. The people living in European countries have a high standard of living and income level. ]]> 2016-04-22 01:18:32 UTC https://padlet.com/SSMsSha/S19/wish/107137998 https://padlet.com/SSMsSha/S19/wish/107138002 I used to think that Europe had a stable economy and did not expect it to have such a large debt given that they comprise of many supposedly wealthy developed countries.]]> 2016-04-22 01:18:34 UTC https://padlet.com/SSMsSha/S19/wish/107138002 https://padlet.com/SSMsSha/S19/wish/107138013 I used to think that Europe has a rich economy as it is always consuming a large amount of imports and has a high material standard of living. ]]> 2016-04-22 01:18:41 UTC https://padlet.com/SSMsSha/S19/wish/107138013 https://padlet.com/SSMsSha/S19/wish/107142372 In terms of its share in global GDP, it is the world's third largest economy after the US and China.

The Eurozone is also one of the world’s largest economies in terms of population, with consists of an approximate of about 340 million people.

List of economic sectors with the largest share of total Eurozone output:
1. Service
2. Industrial
3. Agriculture / Fishing / Forestry]]> 2016-04-22 02:08:13 UTC https://padlet.com/SSMsSha/S19/wish/107142372 https://padlet.com/SSMsSha/S19/wish/107142813 The Euro is weakening due to insufficient economic activity. Despite cutting the interest rate to almost zero, inflation rate of the Euro zone has slipped to 0.3% and economists predict that inflation might just go into an outright decline the following year. This suggests that the outlook of the country is poor as cutting of the interest rate as a measure to stimulate AD has failed. 

Although the economy in the Eurozone was said to be improving slightly, the unemployment rate in the area remains at a stunningly high rate of 12% in August 2013, 0.5%  higher than that a year before. This shows that the economy is facing structural unemployment as there is insufficient jobs in the economy. Due to structural unemployment, disposable income of households fall, leading to a fall in purchasing power of households. This causes consumption to fall, causing insufficient economic activity in the region. ]]> 2016-04-22 02:12:06 UTC https://padlet.com/SSMsSha/S19/wish/107142813 https://padlet.com/SSMsSha/S19/wish/107142838 To solve the issue of slow growth due to a poor outlook on the economy, Europe has adopted Quantitative Easing, a form of Expansionary Monetary Policy in hopes of stimulating the economy to bring Europe out of recession. By purchasing sovereign bonds or other financial securities using the money of the central bank, Europe has been able to increase the amount of loanable funds in the economy and as a result, lowering interest rates. With lower interest rates, cost of borrowing is not lower and hence, it is less expensive to consume big ticket items and people will choose to consume in the current time period to avoid future higher costs. The consumption component of AD will increase. Firms will also have more incentive to invest as cost of borrowing is lower and expected rate of return will increase, causing investments to rise and as such, AD will increase. Being a large economy, Europe will have a large size of multiplier k. As such, AD will increase multiple times and the economy will experience economic growth.

However, outlook on the European economy may be bad as it is in recession. Thus, the increase in C and I will not be large and firms will borrow from European banks to invest in other counties with higher rate of returns and a more stable economy.


To combat the issue of high unemployment rates due to structural failure, the government can conduct interventionist supply side policies such as research and development. Upon successful research and development, comparative advantage can be regained. Opening up a new sunrise industry can provide more jobs for the people and other policies such as retraining and education will allow more people to find jobs and be more efficient. This will cause the productive capacity to increase as the economy becomes more efficient. This may attract foreign direct investment and improve the capital and financial account, improving its balance of payment.

Supply side policies take time to be effective and do not guarantee results. Research and development may not always be successful and education and retraining may not be effective as it depends on the receptiveness of the individual. In addition, it they are not successful, the large amount of money used would be gone to waste and may cause Europe to fall into a bigger debt.

In the short run, Europe can conduct expansionary fiscal policies to stimulate AD. With more government expenditure, AD will increase, ceteris peribus. An increase in government expenditure in terms of transfer payments will increase household purchasing power and stimulate an increase in consumption. and cause AD to rise. With an increase in AD, there will be an increase in national income and falling unemployment.

Too much government expenditure will lead to a budget deficit and the standard of living of future generations will be made worse as they would have to continue to repay the increasingly large debt.]]> 2016-04-22 02:12:20 UTC https://padlet.com/SSMsSha/S19/wish/107142838 https://padlet.com/SSMsSha/S19/wish/107142922 Lowering interest rates]]> 2016-04-22 02:13:14 UTC https://padlet.com/SSMsSha/S19/wish/107142922 https://padlet.com/SSMsSha/S19/wish/107149870 But now i think that even the richest of countries no matter how developed they may be can face macroeconomic problems such as recessions and debt if future economic activities are not carefully planned out and the government does not spend within its means as every country is susceptible to changes in demand and preferences which can affect economies largely.]]> 2016-04-22 03:47:32 UTC https://padlet.com/SSMsSha/S19/wish/107149870 https://padlet.com/SSMsSha/S19/wish/107266840 But now, I think and am more convinced that the Eurozone may continue to face deflationary fears in the near future.  This is because policies implemented may not be adopted in all member states since each state still possess some autonomy.  Since these policies can be negated, it will be a tough climb up to raise economic growth rates.  

However, if the right policies are taken up by each member state, the Eurozone can pull itself up from its economic disaster eventually. ]]> 2016-04-22 15:52:22 UTC https://padlet.com/SSMsSha/S19/wish/107266840 https://padlet.com/SSMsSha/S19/wish/107383076 But now I think that the European countries are likely to face even more severe macro economic challenges if the countries do not implement sound and effective policies. This is likely to be problematic as all countries in the European region are autonomous and are also facing their own problems. Domestic problems will undoubtedly be more pressing to the governments rather than regional issues since they would affect their citizens far more prominently. 

Hence, while it is certainly possible for the Eurozone to pull itself out of the crisis it is in, it will be difficult for  countries to cooperate with each other to benefit the region.]]> 2016-04-24 06:34:02 UTC https://padlet.com/SSMsSha/S19/wish/107383076 https://padlet.com/SSMsSha/S19/wish/107384695 But now i think that a rich country would not necessarily mean that it would have a stable economic growth. They are still prone to recession if there is a large outflow of hot money and when effective policies are not implemented.

However, it is possible that the Eurozone is able to pull itself out of the crisis it is in.  Effective policies are needed to curb this problem or else they would still face these problems in the long run and are unable to have a sustainable economic growth.]]> 2016-04-24 07:38:47 UTC https://padlet.com/SSMsSha/S19/wish/107384695 https://padlet.com/SSMsSha/S19/wish/107388331 But now, I think that if the countries remain divided in their efforts to strengthen or weaken the Euro, the exchange rate of the Euro would remain unstable and deter foreign direct investments and investments, which would be harmful to Europe.

In addition, I think that Europe should continue to implement more policies to address the macroeconomic issues they are facing so as to ensure a stronger growth in future.]]> 2016-04-24 09:25:43 UTC https://padlet.com/SSMsSha/S19/wish/107388331 https://padlet.com/SSMsSha/S19/wish/107388602 2016-04-24 09:33:17 UTC https://padlet.com/SSMsSha/S19/wish/107388602 https://padlet.com/SSMsSha/S19/wish/107389011 2016-04-24 09:44:11 UTC https://padlet.com/SSMsSha/S19/wish/107389011 https://padlet.com/SSMsSha/S19/wish/107389602 The ECB estimates that a 10 percent depreciation in the value of the euro gives annual gross domestic product (GDP) in the euro zone a roughly 0.4 percent boost and raises inflation by 0.6 percent. This suggests that there is n economic growth. That's good news for a region that has suffered lackluster growth for years and been at risk of deflation in recent months. UBS last week lifted its 2015 euro zone GDP growth forecasts to 1.6 percent from 1.2 percent.Meanwhile, data on Tuesday showed consumer prices in the euro area rose 0.6 percent on the month and fell 0.3 percent on the year in February—a decline less sharp than the 0.6 percent year-on-year fall seen in January.
Still, economists say there are some important caveats to consider when assessing the soft euro's impact.
Jonathan Loynes, chief European economist at Capital Economics, added that just because the euro was falling did not mean exports from the euro zone would rise. He points out that a fall in the euro in 2009 and 2012 did not prevent exports from slowing or falling, because demand globally was generally weak.]]> 2016-04-24 09:57:54 UTC https://padlet.com/SSMsSha/S19/wish/107389602 https://padlet.com/SSMsSha/S19/wish/107393783 There is a definite need for Europe to implement policies to tackle macro economic problems such as a weakening exchange rate, high unemployment and weak growth.

Engaging in quantitative easing (QE) should be a very last resort, since while it increase the availability of loanable funds in the economy, the increased supply of Euro will further drive its depreciation. The existing poor economic outlook would also mean that financial speculators are likely to use these funds and invest in other countries or regions that are more economically attractive. QE would therefore be harmful if used recklessly and for too long, hence it is only effective if used as an absolute last resort and for a short period of time.

Hence, implementing a combination of short run expansionary fiscal policy and long run supply side policies would theoretically yield a more favourable outcome, albeit with the downside of eating into a countries reserves.

However, with Europe's financial climate as it is, while this may be the best option for the region, it may not be a feasible one for some countries. Countries that are stricken with debt like Greece may not be capable of carrying out such a proposal, either due their lack of finances or because they are bound by contract from their creditors. Even countries that are doing well, such as Germany, may find themselves unable to carry out such policies to their full potential since the country's funds may be diverted elsewhere (eg. paying bail or to tackle the effects of ISIS terror attacks).

Thus, while it is important that Europe carries out policies to improve its current economic climate, such actions will not be easy and will be time consuming ergo limiting their overall effectiveness.]]> 2016-04-24 11:46:57 UTC https://padlet.com/SSMsSha/S19/wish/107393783