1.“Spending on education is to rise by £19bn over the next three years as part of the government's review of public spending.” I believe that this is a positive statement. It is a statement that can be measured however it does not have to be a correct statement it may also turn out to not be true in the future. In this statement there is no indication of approval or disproval. Positive statements can also be measured in this case we look at how much the spending on education is going to rise by.
Labour's General Election manifesto had promised to “raise the proportion of national income spent on education". This is a normative statement as looking at the facts the education bill for 1998-99 was £37bn and therefore the spending would have had to rise by £1.8bn a year. This is an opinion and therefore a normative statement.
2.A PPF [production possibility frontier] curve shows the different arrangement of economic goods which an economy can produce if all the inputting factors and resources are used. Economists do this by drawing the graph with two different goods on the two axis. Then the curve is drawn, and as it is a curve as one increases the other decreases. If we are near the line then it means that we are using up our resources efficiently and we are gaining the most we can. If we are underneath the line it means that we are producing the goods however we are producing them inefficiently and we are not using the resources to our best ability. It is not possible for us to be above the line as we do not have enough resources to be above the line otherwise the graph would have looked different. Therefore economists must try to find the point on the curve at which production of both types of goods is maximized.
3.“Real terms” is a measure of value of money without the effect of inflation. The chancellor means that when he stated on government spending on education that it would rise and therefore boost the value of money without taking inflation into account. Nominal value is the measure of value of money with the effect of inflation. And therefore the Chancellor uses Real terms to that he can state that they are gaining money and not just having money but that money is not worth anything.
4.
5.
6.If the new funding were to make the education system better, it would move the PPF graph into a more favorable position for our country. This is because our country would have better educated and skilled workforce and therefore we should be more efficient at making these goods. This should therefore make our economy a lot stronger as we are capable to produce more goods for greater demands. This will mean that our economy would be better and we will have even more money to spend on the likes of further education or transport systems.
7.Opportunity Cost is the principle stating the cost of one economic good in terms of the next best alternative forgone. In the economic world we know that we have unlimited wants and needs and also that everything available to us is only finite. As we spend money on education we spend less money elsewhere. In this case the benefits of increased spending on education against the opportunity cost from other options have both been weighed up. Other opportunity costs such as the Transport of London or the NHS have also been thought about. Gordan Brown thinks that the money is better of being spent on education than the other opportunities as he is looking into the future and he thinks that this money will suit or future better as it will make us a well educated country.
There have recently been concerns over the time patients spend waiting for treatment on the NHS. We could have spent money on the NHS so we could change it to either the same as the American health system in which health care is private. Here people can either choose to take health insurance to cover incidents or to take a risk and not have any insurance due to the high prices. We could also have a Social Insurance Fund which would require workers to part with a section of their salary. We could have also spent money on refurnishing the hospitals or making new hospitals so there are more bed spaces.
Another opportunity cost is the transport system. We need to look at how we can improve the system as in more buses without further delays and by not increasing the bus fares further as they have more than doubled in the last few years. A lot of the old buses have been stopped from running and new buses that are a lot more comfortable and passenger friendly have been introduced however there are still some lines that still use these old buses. This will make the country a lot more tourist friendly and therefore our countries economy may also increase.