Summary – impact of devaluation in Yuan If the Yuan falls in value, Chinese exports will become cheaper compared to other countries (e.g. US, India, EU) A falling Yuan will increase demand for Chinese goods contributing to higher growth in China. However, a fall in the Yuan will make US and Indian goods relatively more …
Government intervene in labour markets to overcome market failure, protect workers health and safety and to reduce inequality. Government labour market regulations include. Maximum working weeks Statutory minimum wages Legislation to prohibit discrimination Protection against unfair dismissal. Health and safety legislation Right to join trade unions Legislation to auto-enroll workers in private pensions Regulations about …
The Covid recession is very expensive for governments. Not only are we experiencing the usual cyclical fall in tax receipts, but there has been unprecedented government spending – such as the furlough scheme for workers, loans for business and a large rise in welfare payments. Government borrowing will increase to record peacetime levels. In April …
Read moreWill Covid recession lead to a new era of austerity?
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 …