economics

Impact of Immigration on UK Economy

Impact of Immigration on UK Economy

In the past two decades, the UK has experienced a steady flow of net migrants into the economy. This net migration has had a wide-ranging impact on UK population, wages, productivity, economic growth and tax revenue. To what extent does net migration benefit the UK economy? International Migration ONS In 2016, Net long-term international migration was estimated to be +248,000 in 2016. Immigration was estimated to be 588,000 and emigration 339,000. 9,634…

Price controls – advantages and disadvantages

Price controls – advantages and disadvantages

Readers Question: what are the pros and cons of price control? Summary Price controls can take the form of maximum and minimum prices. They are a way to regulate prices and set either above or below the market equilibrium: Maximum prices can reduce the price of food to make it more affordable, but the drawback is a maximum price may lead to lower supply and a shortage. Minimum prices can increase the price producers receive. They have been used in agriculture to increase farmers income. However, minimum prices lead to over-supply…

Economic Growth UK

Economic Growth UK

Economic growth measures the change in real GDP (national income adjusted for inflation; ONS call it chained volume measure of GDP) In 2016 the UK economy grew by 1.8% –  (compared to 2.2% in 2015. In the first half of 2017, the economy has grown by just 0.5% (annualised growth of 1%) Q1 0.2% | Q2 0.3% The peak to trough fall of the economic downturn in 2008/2009 is now estimated to be 6.0% Figures for Q2 2017 show the economy is reliant on consumer spending, with…

Impact of Expansionary Fiscal Policy

Impact of Expansionary Fiscal Policy

Readers Question: what are the impacts of expansionary fiscal policy? Expansionary fiscal policy involves government attempts to increase aggregate demand. It will involve higher government spending and/or lower tax. In theory, higher government spending will increase aggregate demand AD=(C+I+G+X-M) and lead to higher economic growth.AD=(C+I+G+X-M) and lead to higher economic growth. Expansionary Fiscal Policy Lower taxes should increase the disposable income of consumers leading to higher levels of consumer spending. This should also…

Pros and Cons of Mergers

Pros and Cons of Mergers

A merger involves two firms combining to form one larger company; it can occur due to a takeover or mutual agreement. The pros and cons in summary: Advantages of mergers Economies of scale – bigger firms more efficient More profit enables more research and development. Struggling firms can benefit from new management. Disadvantages of mergers Increased market share can lead to monopoly power and higher prices for consumers A larger firm may experience diseconomies of scale – e.g. harder to communicate and coordinate. When looking at mergers it is important to look at…

Applying economics in everyday life

Applying economics in everyday life

At the start of the academic year, I always feel a little pressure to justify the study of economics. Students come up asking things like, should they do economics or history? It’s hard to know what to say, but to get people excited about economics, it’s good to try and think how economics can be applied in everyday life. Some of this is just common sense, but economics can put a theory behind our everyday actions. Buying goods which give the highest satisfaction for the price

Should the government intervene in the economy?

Should the government intervene in the economy?

One of the main issues in economics is the extent to which the government should intervene in the economy. Free market economists argue that government intervention should be strictly limited as government intervention tends to cause an inefficient allocation of resources. However, others argue there is a strong case for government intervention in different fields. This is a summary of whether should the government intervene in the economy. Arguments for government…

Policies for Economic Growth

Policies for Economic Growth

Government policies to increase economic growth are focused on trying to increase aggregate demand (demand side policies) or increase aggregate supply/productivity (supply side policies) Demand side policies include: Fiscal policy (cutting taxes/increasing government spending) Monetary policy (cutting interest rates) Supply side policies include: Privatisation, deregulation, tax cuts, free trade agreements (free market supply side policies) Improved education and training, improved infrastructure. (interventionist supply side policies) Demand side policies are important during a recession or period of economic stagnation. Supply side policies are relevant for improving the long run growth in…