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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.
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Hello Julie
Real GDP is different from Nominal GDP. In calculating real GDP we have to take care of inflation or deflation. Some time real gdp does not rise but nominal gdp rises. Real GDP is based on purchasing power parity. In most cases real gdp remains less than nominal gdp because of inflation. Actually real GDP is better measurement for watching economics progress. Government ‘s spending may increase inflation, but this would not effect at the time of measurement of Real GDP.
sorry upon was for isadora
Hi Julie
Large government fiscal does not cause a large trade deficit. Trade deficits are different from it and causes of trade deficit are also different. Even government fiscal deficit do not contribute in current account of a country directly . Yes if government manages money from outside to fund its deficit, then it may increase current account deficit of a country. Japan has big government fiscal deficit, but has huge trade surplus.
Hi Allan
There are so many controversies in macro economics. In macro economics, production possibility frontier , generally it is assumed there are two outputs. But third and many other may be alternative to each other. Unlike in Physics, in Economics it is not possible to conduct experiment to prove any law. For finding its substitute, in economics we almost rely on historical events. Austrian school of economics does not agree with mathematical model of economics . And believe there is no need of Government ‘s participation in economy . But most other economist do not agree. Neoclassical macroeconomists do not agree with laws of Keynesian economics. Say’s law says that supply creates its own demand. Many economist had believed that there can not unemployment in free economy in long run. Most economists agree that nominal interest rates cannot fall below zero. However, some economists from the Chicago school reject the existence of a liquidity trap. There are many issues from small to big on witch economists do not agree with each other. But with time, old debates finish and new start.
How would investing in cash protect against rising interest rates? What is the downside of this approach?
what is merges and restrictions in economics