Economic Questions V

You are welcome to ask questions on Economics. I am looking to explain economic principles / ideas/ recent developments in economics. Due to the volume of questions, I can no longer promise to answer. But, I will try if it meets below criteria.

I will post the answer on this blog, for everyone to benefit from. I never email individual answers

Please Bear In Mind

  1. Use google custom search (top right) to see if question has been asked. If I have already answered a question I don’t tend to repeat it.
  2. The replies will be guidance and not for duplication. Your essays should be your own work.
  3. Don’t ask me to do your coursework / assignment e.t.c. The answer will be published here where your teacher can see it.
  4. My speciality is economics for British A Level standard.
  5. I don’t answer university questions or maths calculations
  6. I am looking to explain economic principles / ideas/ recent developments in economics.
  7. I will answer as a new post. Check home page of blog for new post. With question and answers

I studied PPE at Lady Margaret Hall college, Oxford University, and currently work as an Economics A Level teacher. I have also examined several different economic units for Edexcel AS and A2.


By on November 18th, 2009

467 thoughts on “Economic Questions V

  1. hi,

    why might prolonged weak demand make temporary losses in output structural and permanent? (martin wolf’s views, financial times, 30 september 2010)

  2. Would you please explain how excessive speculation in futures trading leads to hoarding of commodity and subsequent price rise?


    1. There must be a reason for ‘excessive speculation’
      Possibly best information suggests that a genuine increase in demand is afoot and supply is in elastic
      Speculation does not necessarily cause ‘hoarding’ .Hoarding costs money
      The speculator anticipates the future and wishes to buy cheap in the present and then sell expensive in the future.
      If he hoards to further restrict supply. Then he could make even more money,dependent on storage costs and selling price.
      This can have a long term positive effect on the market because it will provide justification for others to organize future extra supply
      If then demand changes to normal – prices will fall.
      The speculator will have to speculate somewhere else

  3. In terms of people working for their incomes –I see them belong to one of the 3 following groups:
    1) Public sector workers-directly employed by the government
    2) Workers in the private sector who supply the public sector
    3) Workers in the private sector who do not supply the public sector.
    My question in relation to the UK with a population of 61.7 million is how many people are in each group 1, 2 , and 3 ?

  4. When any Commercial Bank makes a loan, it creates the money out of thin air. When the loan is payed back, the Bank only keeps the interest, the principle, the money created out of thin air, is retired, destroyed. This makes sense because money represents labour (we hope!)and cannot exist in two places at once. Given this fact, (well I hope it is) I would now like to ask a question of you-all. If I was to buy a US Treasury Bond, I would get back the principle of my loan, plus interest; WHAT ABOUT the FED, when they buy a US Treasury Bond with money they created out of thin air, they get interest, BUT what about the principle, is that money retired, destroyed, or do our generous benefactors get to keep it as well. Thank-you for your learned consideration of my question.

  5. 1.—How would you define ‘elastic’ and ‘inelastic’ demand in transport? (Can you also give example, because based on your note on this topic its too general)

    2.—The impact and its effects of cheaper air transport on the inland river and road transport systems.( inland river, I don’t quite understand, can you explain its for me.)


  6. Hi I would like to get some help on this question, if u can help me can u please send me the answer for this questions on my email, [email protected] i will be grateful if u could do that for me, the questions are bellow:

    • Definition of BOP

    o A recent summary of Ireland’s Balance of payments used to explain the following

    • Current account and its sub-components

    • Capital and Financial account and its sub-components

    • The need for balancing items

    • Reserves

    • Why the BOP must balance

    • Describe economic problems caused by deficits

    • Describe polices designed to correct a deficit

    Thank you

  7. Hi, I’m a last year student and I’m working at my thesis. I haven’t managed to collect all the data I need and I was wondering if you know where I can find data about capital injections in Europe. I’m doing an econometric analysis and I need data for every year from 2008 to 2012. Thanks!

  8. Hi I would like to get some help on this question, if u can help me can u please send me the answer for this questions on my email, [email protected] i will be grateful if u could do that for me, the questions are bellow:

    what type of market structures best describe domestic banking industry?.and give reasons for your answer.where might similar industry market structures exist in Australian economy?.outline the arguments for the answer.

  9. Its about microeconomics questions. There are questions and answers(TRUE OR FALSE). I want to know explanation how the answers come out. Thank you.

    This is it;
    Q. Pricing-to-market behavior is one reason for the J-curve effect.
    A. False

    Q. Multi-level distribution channels tend to make the depreciation of home currency more effective in improving trade balance.
    A. False

  10. For an inelastic good, if the firm wants to make more revenue, they should increase the price of the good because..

    However, if I increase price of my inelastic good by 100% from £5 to £10 and quantity demanded falls by 80% from 100 to 20, revenue doesn’t rise… it falls… but my product is still an inelastic good because PED = -0.8…

  11. Scarcity refers to the fact that the factors of production: natural resources, labor, capital, and entrepreneurial skill, are limited in their supply. There is a finite limit to the amount of natural resources available for production, such as land and fossil fuels. Labor is limited by population size, labor market skills and the willingness of the population to work. Capital is limited by the extent to which private individuals and firms, as well as governments, are willing to invest in capital, as well as the level of savings available for investment. The supply of entrepreneurial skill is limited by the size of the population, and the willingness of individuals to innovate and take risks.

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