Economics Articles

Essays on topical issues, latest developments in UK and global economies, and answers to readers questions

Lump of labour fallacy – immigration

Posted on August 17, 2016

The lump of labour fallacy is the contention that the amount of work available in an economy is fixed.  But, most economists argue this belief there is a fixed number of jobs (or fixed number of hours) is usually incorrect. In summary Fallacy – “Immigrants take jobs of native workers.” Why this is a fallacy …


Why does capitalism cause monopoly?

Posted on August 5, 2016

Readers question: Firstly, I wholeheartedly praise the magnificent work done by you in exhibiting economic knowledge and demystifying it to us, the mediocre audience. I seriously question one fact that you presented about capitalism and how it “inevitably causes monopoly”. I grew really surprised and perplexed the moment I read that in “The problems of …


Relationship between the interest rate and saving ratio

Posted on

Is there any relationship between the base interest rate and the savings ratio? In theory, interest rate can affect the decision to save in two ways. Substitution effect of change in interest rate – lower interest rates reduce the incentive to save because of relatively poorer returns. There is a bigger incentive to spend rather …