You are welcome to ask any questions on Economics. Though you might also like to try google custom search (top right) to see if the topic has been covered before.
I am looking to explain economic principles / ideas/ recent developments in economics. I can’t promise to answer, but will try if it meets the criteria below.
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- I aim to try and simplify economics; as a rough guide, I would aim at an understanding similar to a good British A Level student.
- I am looking to explain economic principles/ideas/ recent developments in economics.
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When money supply increase then what will be the effect on price and intrest rate
Depends on who you ask and where the economy is in relation to its productive capacity.
Monetarists would point to the Fisher Equation (MV=PQ, M=Money supply, V=velocity of circulation (frequency of transactions in other words), P= Price level (inflation) Q=real national output). Monetarists contend that V and Q remain pretty stable and don’t change that much. Hence an increase in M logically would see a rise in P. In other words, more money is chasing the same amount of output leading to higher prices as people will quickly spend any extra money in the economy. As a result monetarists say M should only increase when Q increases.
Keynesians would however criticise this theory in 3 ways:
1) in a recession V can fall if confidence is low and asset prices fall reducing the likelihood of spending (people would rather save than spend)
2) In a recession (negative output gap) M can rise resulting in a rise in Q rather than P due to spare capacity in the economy
3) Reverse Causation: a rise in P leads to a rise in M to facilitate the rise in prices rather than M causing P to rise
Conclusion: depends on who you side with, no definite answer.
what are the impacts of a maximum price in the oil market to increase equality in the UK?
Sir , i have to prepare an internship report on Interest rate and its impact on economic growth….
But i am very bad at economics… Please sir mention some articles from where i can get necessary information regarding my topic… Please sir don’t ignore my mail, i am helpless ..
Conventional theory suggests that a fall in interest rates leads to a rise in economic growth and a rise in interest rates leads to a fall in economic growth. Put simply: AD = Consumption + Investment + Government Spending + Net Exports. Let’s say interest rates fall, the central bank lowers the interest rates on loans given to banks who will then themselves lower the interest rates on loans in the market, in theory the following will happen:
*Consumption rises as the incentive to save falls, it is less costly to take out loans and those who are already indebted have less to pay back so real disposable income rises.
* Investment rises as it is less costly to take out loans
*Net exports increase as a fall in interest rates makes UK financial assets less profitable and attractive so demand for the pound falls, this makes imports more expensive to buy (so demand for imports falls) whilst UK exports become cheaper to buy from abroad so exports rises.
AD should therefore increase economic growth
However:
-If confidence in the economy is low, a fall in interest rates wont see a rise in C+I
– Commercial banks may not change the interest rates they offer on the market in response to a change in the bank rate.
-I may not increase if businesses have spare capacity so there is little need to invest more
Thus it may not always see a rise in economic growth and unconventional monetary policy may be needed (ie QE, Forward Guidance etc)
what’s the difference between fiat and token money?
Hi – please are you able to explain what is meant when politicians state that “Britain is a rich country”? I don’t mean in terms of consumption (GDP) or current living standards but income & assets, in a global world. As we now operate within a global economy, where money can flow easily beyond borders, surely wealth can change “home” very quickly, notably corporate wealth (which is of course ultimately owned by individuals). Does the statement “rich country” refer to the value of individuals, as British taxpayers, or British Companies paying tax in the UK, or both and what are the relative values? I assume that whilst the UK government is responsible for huge liabilities, which ultimately only citizens or UK businesses can fund, it holds no significant assets? Also, “UK assets” appear to be predominantly, residential property rather than wealth generating capital assets & infrastructure – is this in fact, true? It seems to me that the world has changed profoundly over the past 25-30 years and we might possibly be nearing the end of the first economic cycle in this unprecedented global “capital” market, after which a natural cycle will become established.
Many thanks in anticipation.
highlight clearly the differences between economic growth and development as related to nigeria
I love this website i learnt alot from it if possible i would like to get a friend from this site
I am very new to economics and currently studying a CIMA course from home but I am struggling to fully understand the following statement. ” A long-term trade surplus can cause significant inflationary pressures, leading ultimately to a loss in international confidence in the economy and a lack of international competitiveness.”
It maybe very basic but how can that sentence be simplified even more. I understand the general idea but not every aspect of it. Like how does a surplus lead to a loss in international confidence of a lack of competitiveness ? I searched online for some answers but can’t seem to find anything good enough.
Hey?.
I’m from pakistan nd want help about my thesis topic.. i’m doing my bacholrs .. so can u pls suggest me few economic topics related to pakistan’ s economy? Pls reply asap
hello sir
you notes have immensely helped me
but i have a doubt
why dont economies aim for 0% inflation. Why is low inflation considered advantageous.
Apart from inflation, what are other causes of economy instability?
Do you think government should intervene to deal with issues with the oil prices, if so why? What will be the likely outcome if the government intervenes?
Hi, I am very thankful toward this site since its very helpful toward my learning in economics studies,
Only one query I would like to ask kindly, and that is mainly on Allocative efficiency. My question is:-
How can you measure and calculate the allocative efficiency?
would anyone of you can give some examples to reflect the question I am posting,
Thank you
Regards
When wages of mining workers increase, what are the likely effects on market for mine workers?
Hello,
I dont see anywhere to ask you an economics question. In reference to the Big Mac Index and aside from things such as trade barriers and cost of living, how it the big mac so cheap in hong kong when hong kong is one of the most expensive cities in the world?