Initial Thoughts 2888

This morning I have read through the introduction to this year’s stimulus material with my A2 set. Here are some of the topic areas that came up during our discussion.

Max/min price diagrams

Buffer stock diagram

The reasons behind food price inflation 2007/08 (increase demand for commodities, increased production of biofuels-limiting supply of crops for food production, increased demand for more luxury food items from high growth economies such as China)

Cost push inflation diagram (using SRAS)

Problems of ring cost push inflation- particularly for lower income consumers.

Ways to combat problems generated by cost push inflation- decrease tariffs, maximum prices, increased welfare spending on lower income consumers.

The ineffectiveness of interest rates to combat global food price rises.

Subsidies to biofuel manufacturers to promote the reduced negative externalities these fuels can bring. Problems with these subsidies for food producers Do biofuels really help reduce CO2 emissions?

Arguments for and against government intervention to correct the market failure caused by CO2 emissions.

Of course this list is not exhaustive and is simply a result of our first discussion as a class. All of these topics/issues plus many more will be covered in detail in the toolkit. See my blog post yesterday.