Capital controls are government measures to limit the flow of financial capital and financial assets. Capital controls include limits on foreign currency exchange, limits on the purchase of assets and taxes on financial transfers. Some economists argue that capital controls can help limit destabilising capital flows which cause banking crisis and economic booms and busts. …
Food prices are typically fairly stable in a recession. If the recession is very deep and it leads to a period of deflation (fall in the general price level) then food prices may fall by a similar amount. US Deflation 1929-33 For example, in the great depression (1929-33), we saw a prolonged fall in prices. …
Furlough schemes involve the government paying the wages of workers who would otherwise have been laid off. In the UK, the government pay 80% of wages up to £2,500 a month. Over 7.5 million jobs are now covered by the scheme. It is costing £8bn a month and has helped avoid a surge in unemployment. …
The Renminbi (RMB) is the name of the Chinese Currency. Renminbi roughly translates as ‘people’s currency’ The Yuan refers to its unit of account. So for example, we might use the following sentences The Renminbi is the 6th largest traded currency in 2006. The Chinese government issues a 100 Yuan note. In practice, they can …
Sometimes governments may wish to reduce the value of their currency. A depreciation in the value of a currency would make exports cheaper, imports more expensive and can provide a boost to domestic demand. If the economy is stuck in recession or unemployment rising, reducing the value of a currency can help increase economic growth …
What is the digital economy? The digital economy refers to economic activity that uses electronic communication and digital technologies to provide goods and services. The main building blocks of the digital economy are The internet. This enables firms to offer goods for sale and enables consumers to browse for goods that they need. E-mail. Electronic …
The multiplier effect occurs when an initial injection into the circular flow causes a bigger final increase in output. For example, an increase in government spending of £1 billion leading to an increase in national output of £1.5 billion. (giving multiplier effect of 1.5) The wealth multiplier effect refers to how the ownership of wealth …
The Coronavirus has already led to disruption in manufacturing output, foreign travel and consumer demand. If the virus spreads and becomes a pandemic, what will be the likely economic effects? In short, a global pandemic will have a serious supply-side impact – especially on foreign travel, manufacturing and investment. The uncertainty and decline in travel …