Readers Questions III

You are welcome to ask questions on Economics. However, due to volume of questions, I can no longer promise to answer all questions.

I will post the answer on this blog, for everyone to benefit from.

I shall try to answer the economics question and / or point to other resources but please bear in mind.

  1. The replies will be guidance and not for duplication. Your essays should be your own work.
  2. My speciality is economics for British A Level standard. My university economics is rusty in parts, because generally I don’t use it in teaching A level economics.
  3. I can’t guarantee to always give full answers it also depends on my time schedule.
  4. I will answer as a new post. Check home page of blog for new post. With question and answers
  5. Generally, I don’t answer questions, which involve mathematical calculations, they tend to be doing someone’s homework. however, I may give examples, of calculations, if I think it helps explain economics principles.

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.


If I answer your question, and you find it helpful, a donation is appreciated here for details on donating $2.

234 thoughts on “Readers Questions III”

  1. US will have committed more than a trillion dollars to the financial bailout,then the auto bailout and now the Economic stimulus package if it passes. Do you think if the US chooses to print the money it will turn into hyper inflation? Or will it cause countries around the world to dump dollars leaving the US with worthless money? Or will printing the money actually stop deflation? Instead of printing the money, if US chooses to issue more debt, who will buy it and what would it mean if foreign countries buy it up? And if US falls what does that mean to the rest of the world? Lots of questions, my apologies.

  2. Hi, i’m actually in uni, but i thought i’d ask you for help since you were so helpful for my a levels. anyway, i was wondering if you could explain to me the Chamberlain model (specifically the Hotelling’s location model). I have searched all over and the only notes i found were very brief, or very confusing and complicated…

    also, i would very much appreciate it if you could help me with this question;
    Suppose that a plot of land is suitable only for agriculture. Can it be true that the farming industry will experience financial distress if there is an increase in the price of that plot of land? how would your answer be affected if the land could also be used for housing?
    (i know that its somthing to do with rents and transfer earnings but not exactly sure – is it that when land is only suitable for farming,as land is fixed and has no alternative use, its supply will be perfectly inelastic, so any price it receives will be economic rent. thus farming industry wont be in distress coz land is fixed so even if price increases supply curve does not shift, as it does not have to compete with any other industry for this land. on the other hand, if land can be used for housing also, supply will now be more elastic, with money recieved divided into economic rent and tranfer earnings. if price of plot of land increases, supply curve will shift up as transfer earnings will now increase. so farming community faces less land and higher factor prices…?)

  3. Hi,

    Japan experienced a long period of low & zero interest rates in the 1990s/early 2000s. With UK & US interest rates approaching zero, what effect will this have on savers, borrowers and financial businesses?

    With zero returns on savings, is now, as Warren Buffett suggested recently, a good time to start investing in the mattress business?

    Any thoughts welcome,

    Den Cartlidge

    Ps – Excellent website by the way.


  4. Re – 0% Interest Rates Japan + UK Commentary

    Great summary with some very thought provoking stuff too.

    Thanks for taking the time to answer my query,



  5. Could you help me please with this question?

    What are the main demand and supply factors that tend to determine house prices in an economy?

    Thanks a lot, ilenia..

  6. Hi, I’ve read your posting from 2007 with regards to the effects of increased interest rates in UK Economy. I’d like to know what are the effects of a cut in interest rates will be on the UK economy as a whole. What will be the impact on companies such as British Airways and Marks & Spencer. Thank you.

  7. Formula for rate of return on investment in an economy?
    Do you know of a formula that ties together(or roughly ties together) the predicted long term rate of return on stocks accounting for technological increases(productivity) and inflation. I studied Finance in undergrad but don’t remember this equation(if there is one) and am interested in it given all the talk about the supposed devastating losses in markets. I guess the question is- What is a fair and reasonable rate of return over the long run for something like the S+P 500(real rate of return) and how do you calculate it using economics variables? It seems to me that over the long-run the stock market is still doing very well compared to inflation. This maybe more than one question-hope it makes sense. Thanks for your help

  8. I have to debate why multinational corporations are good for developing countries, and I know the arguments for them being bad are strong so are there any really good positive arguments I could use to smash the opposition? Thankyou so much

  9. Hello,
    Is there any other political influence on the falling rate of sterling, something like monetary policy or political uncertainty? And why did some news reports say inflation and weak sterling could be helpful to UK economy? Thanks.


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