Economics Articles

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

Causes of business cycle

Posted on September 21, 2017

The business or trade cycle relates to the volatility of economic growth, and the different periods the economy goes through (e.g. boom and bust), There are many different factors that cause the economic cycle – such as interest rates, confidence, the credit cycle and the multiplier effect. Some economists also point to supply side explanations, …


The effect of tax cuts

Posted on September 18, 2017

Lower income tax rates increase the spending power of consumers and can increase aggregate demand, leading to higher economic growth (and possibly inflation). On the supply side, income tax cuts may also increase incentives to work – leading to higher productivity. However, the effect of tax cuts depends on how the tax cut is financed, …


Clever ways for firms to increase prices

Posted on September 14, 2017

Supermarkets and other retailers often seek ways to increase the price without losing customers. They have a few different options, depending on the good and its price elasticity of demand. In recent months, many supermarkets have managed cost increases by shrinking the size of the packet. Prices stay the same, but the price per gram …