Understanding Unemployment in The UK

 

Generative AI will go mainstream in 2024

 

Data-savvy firms will benefit first predicts The Economist

image: mariano pascual

Nov 13th 2023

By Guy Scriven

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When new technologies emerge they benefit different groups at different times. Generative artificial intelligence (ai) first helped software developers, who could use GitHub Copilot, a code-writing ai assistant, from 2021. The next year came other tools, such as Chatgpt and dall-e 2, which let all manner of consumers instantly produce words and pictures.

In 2023 tech giants gained, as investors grew more excited about the prospects of generative ai. An equally weighted share-price index of Alphabet, Amazon, Apple, Meta, Microsoft and Nvidia grew by nearly 80% (see chart). Tech firms benefited because they supply either the ai models themselves, or the infrastructure that powers and delivers them.

image: the economist

In 2024 the big beneficiaries will be companies outside the technology sector, as they adopt ai in earnest with the aim of cutting costs and boosting productivity. There are three reasons to expect enterprise adoption to take off.

First, large companies spent much of 2023 experimenting with generative ai. Plenty of firms are using it to write the first drafts of documents, from legal contracts to marketing material. JPMorgan Chase, a bank, used the technology to analyse Federal Reserve meetings to try to glean insights for its trading desk.

As the experimental phase winds down, firms are planning to deploy generative ai on a larger scale. That could mean using it to summarise recordings of meetings or supercharging research and development. A survey by kpmg, an audit firm, found that four-fifths of firms said they planned to increase their investment in it by over 50% by the middle of 2024.

Second, more ai products will hit the market. In late 2023 Microsoft rolled out an ai chatbot to assist users of its productivity software, such as Word and Excel. It launched the same thing for its Windows operating system. Google will follow suit, injecting ai into Google Docs and Sheets. Startups will pile in, too. In 2023 venture-capital investors poured over $36bn into generative ai, more than twice as much as in 2022.

The third reason is talent. ai gurus are still in high demand. PredictLeads, a research firm, says about two-thirds of s&p 500 firms have posted job adverts mentioning ai. For those companies, 5% of adverts now mention the technology, up from an average of 2.5% over the past three years. But the market is easing. A survey by McKinsey, a consultancy, found that in 2023 firms said it was getting easier to hire for ai-related roles.

Which firms will be the early adopters? Smaller ones will probably take the lead. That is what happened in previous waves of technology such as smartphones and the cloud. Tiddlers are usually more nimble and see technology as a way to gain an edge over bigger fish.

Among larger companies, data-centric firms, like those in health care and financial services, will be able to move fastest. That is because poor data management is a big risk for deploying ai. Managers worry about valuable data leaking out through ai tools. Firms without solid data management may have to reorganise their systems before it is feasible to deploy generative ai. Using the technology can feel like science fiction, but getting it to work safely is a much more humdrum affair. 

India is Broken: Dr. Ashoka Mody

 

A Level Economics: Practice Questions on Supply-side Policies

 MCQs

1. Supply side policies aim to improve the productive capacity of an economy by: a) Increasing government spending b) Controlling inflation c) Boosting aggregate demand d) Enhancing the quantity and quality of factors of production Solution: d) Enhancing the quantity and quality of factors of production

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3. Which of the following is an example of a supply side policy? a) Increasing government welfare programs b) Reducing interest rates c) Increasing taxes on luxury goods d) Promoting investment in human capital through education and training Solution: d) Promoting investment in human capital through education and training

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5. Supply side policies can lead to long-term economic growth by: a) Increasing short-term aggregate demand b) Reducing taxes for the wealthy c) Expanding the economy's productive potential d) Encouraging imports over exports Solution: c) Expanding the economy's productive potential

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7. How do supply side policies differ from demand side policies? a) Supply side policies focus on increasing government spending, while demand side policies focus on reducing taxes. b) Supply side policies aim to increase the quantity and quality of factors of production, while demand side policies focus on influencing aggregate demand. c) Supply side policies aim to control inflation, while demand side policies aim to reduce unemployment. d) Supply side policies are only relevant during economic recessions, while demand side policies are applicable during economic expansions. Solution: b) Supply side policies aim to increase the quantity and quality of factors of production, while demand side policies focus on influencing aggregate demand.

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9. Which of the following is a limitation of supply side policies? a) They can lead to high inflation. b) They may cause a decline in aggregate demand. c) They may exacerbate income inequality. d) They are only effective in the short run. Solution: c) They may exacerbate income inequality.

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11. A country's supply side policies include reducing regulations, investing in infrastructure, and promoting research and development. Which of the following is a likely outcome of these policies? a) Increased government budget deficit b) Reduced economic growth c) Higher productivity and innovation d) Increased trade barriers Solution: c) Higher productivity and innovation

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13. The "Marshall Lerner condition" states that a currency depreciation will improve the trade balance if: a) The sum of the price elasticities of demand for exports and imports is greater than one. b) The sum of the price elasticities of demand for exports and imports is equal to one. c) The sum of the price elasticities of demand for exports and imports is less than one. d) The sum of the price elasticities of demand for exports and imports is negative. Solution: a) The sum of the price elasticities of demand for exports and imports is greater than one.

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15. The "J curve effect" refers to: a) The long-term improvement of trade balance after a currency depreciation. b) The immediate improvement of trade balance after a currency depreciation. c) The short-term worsening of trade balance after a currency depreciation. d) The immediate improvement of trade balance after a currency appreciation. Solution: c) The short-term worsening of trade balance after a currency depreciation.

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17. How do supply side policies impact a country's production possibilities frontier (PPF)? a) They cause the PPF to shift inward, indicating reduced production capacity. b) They have no effect on the PPF. c) They shift the PPF outward, indicating increased production capacity. d) They cause the PPF to become a straight line instead of a curve. Solution: c) They shift the PPF outward, indicating increased production capacity.

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19. Which of the following is an advantage of holding exchange rates artificially low? a) Reduced export competitiveness b) Improved export competitiveness c) Increased imports and trade deficits d) Higher interest rates Solution: b) Improved export competitiveness

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Long Answer Questions

1. Analyze the historical context and economic challenges that led to the prominence of supply side policies during the 1980s in the United States and the United Kingdom, and evaluate the long-term impact of "Reaganomics" and "Thatcherism" on their respective economies.

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3. Evaluate the effectiveness of supply side policies in promoting economic growth and addressing income inequality, considering their impact on factors such as labor market reforms, investment in human and physical capital, and research and development incentives.

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5. Analyze the advantages and disadvantages of artificially managing exchange rates to improve export competitiveness. Assess the potential risks associated with holding exchange rates artificially low and its impact on inflation, import costs, and speculative activities.

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7. Discuss the concept of the "Marshall Lerner condition" and the "J curve effect" concerning exchange rate changes. Evaluate their relevance and implications for trade balances and the overall economic stability of a country.

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9. Considering the impact of supply side policies on the production possibilities frontier (PPF), aggregate demand (AD), and aggregate supply (AS), compare and contrast the effectiveness of supply side measures with demand side policies in achieving long-term economic growth and stability. Analyze their respective limitations and potential trade-offs.

A Level Economics 9: Specialisation and Productivity

 Define productivity and explain how it may be increased by the use of specialisation and other factors.

Productivity refers to the efficiency with which inputs, such as labor, capital, and resources, are utilized to produce goods or services. It measures the output generated per unit of input.

Specialization can increase productivity through various mechanisms:

1. Focus and Expertise: When individuals or firms specialize in specific tasks or industries, they can concentrate their efforts, time, and resources on developing specialized skills and knowledge. This focus allows them to become more proficient and efficient in their area of specialization, leading to higher productivity. For example, a factory worker who specializes in assembling a particular component of a product can become highly skilled and efficient in that specific task, leading to increased productivity.

2. Division of Labor: Specialization enables the division of labor, where different individuals or groups focus on specific tasks within the production process. This division allows for greater efficiency, as workers can become more specialized in their respective roles, eliminating the need to switch between various tasks. By specializing and dividing tasks, each worker can become highly skilled in their area, resulting in increased productivity for the overall production process.

3. Economies of Scale: Specialization can lead to economies of scale, which occur when larger quantities of goods or services are produced, resulting in lower average costs. Specialized firms can take advantage of efficiencies and streamlined processes specific to their area of expertise, allowing them to produce at a larger scale, reduce per-unit costs, and increase productivity.

Apart from specialization, other factors that can contribute to increased productivity include:

1. Technological Advancements: The adoption of advanced technologies, machinery, and automation can enhance productivity by improving efficiency, reducing errors, and increasing output. Technological advancements can streamline production processes, minimize waste, and optimize resource utilization, leading to higher productivity levels.

2. Human Capital Development: Investing in education, training, and skill development enhances the knowledge and capabilities of the workforce. A skilled and knowledgeable workforce can contribute to higher productivity levels by applying their expertise effectively in their respective roles. Continuous learning and upskilling can improve productivity by keeping workers updated with the latest practices and technologies.

3. Infrastructure and Access to Resources: Adequate infrastructure, including transportation networks, communication systems, and reliable access to resources, can support productivity growth. Efficient infrastructure reduces bottlenecks, allows for smoother operations, and facilitates the movement of goods and services. Access to necessary resources, such as raw materials or energy sources, enables uninterrupted production, contributing to increased productivity.

4. Effective Management Practices: Strong management practices, such as strategic planning, efficient coordination, and effective supervision, can positively impact productivity. Well-designed organizational structures, clear communication channels, and performance incentives can motivate employees and ensure smooth operations, enhancing productivity within a firm or organization.

In summary, productivity is increased through specialization by leveraging focus, expertise, division of labor, and economies of scale. Additionally, factors such as technological advancements, human capital development, infrastructure, and effective management practices also contribute to improved productivity levels in an economy or organization.