Readers Question: From my studies in economics I have always known that when there is a recession, there is a high tendency for people to borrow at a low interest rate since there is a fall in the mpc due to high unemployment right? In a recession, people tend to borrow less and save more. …
Readers Question: Is Real GDP per head a better indicator of living standards compared to growth of Real GDP? Why? Real GDP per capita shows the average income of a country. If Liechtenstein has 0% growth of Real GDP in 2008, average incomes will reamin $118,000. A country like India may have GDP per head …
Readers Questions: do you agree with bank bailouts why? or why not? I wrote here: Why we need to bailout the banks The Great Depression was so severe because of the scale of banks who went bankrupt. Banks may not deserve to be bailed out, but, it was a necessity. However, bailing out banks has …
Readers Question: Hey, what do you think are the implications of the 2009 Budget? The most striking feature was the realisation of how much the government was needing to borrow and the depth of the recession. The Large planned rise in borrowing means that there is little if any scope for further discretionary fiscal expansion. …
Readers Question: How do fashion retailer make profit when they offer high discounts during sales? Everyday I walk past a leading fashion clothing shop. It seems they are always very quiet except during sales periods. During sales, you can see prices discounted by 50% to 75%. How do they make profit? Firstly, the profit margin …
Readers Question why do cafes charge extra service tax when they remain open on public holidays? Firstly, cafes are likely to have to pay higher wages to staff to compensate for the inconvenience of working on a public holiday. Charging extra service tax is a way of paying for the increased wage costs. Secondly, on …
Readers Question: Why do the Government often fail to achieve its main objectives of high economic growth, price stability, and a surplus on the balance of payments. Other objectives worth adding are low unemployment, low government borrowing and maybe stable exchange rate. Looking at the current climate of the UK economy, the government is only …
Readers Question What are your predictions for us/Canadian dollar currency. Do you think they will reach par in 2009 ? Recently the Canadian dollar has been weak against the US dollar. This is because of the plunge in commodity prices which depress Canadian export revenues and decrease value of Canadian Dollar. Despite many problems in …