Readers Question: Greece has a current account deficit of almost 14% (!) of GDP and Greece is a member of the EU. How can it resolve the problem if it cannot devalue the currency ( the quick way out, which was used in the past when the greek drachma was around) and when productivity is …
Readers Question: Do you know if there is a link between an economic downturn and blood donation? Does more people unemployed mean people have more time to donate blood, are unemployed people under to much stress to donate blood or should governments pay for blood donars. First it depends whether blood donation is free (charitable …
Readers Question: You commented, “In the case of RBS they bought a stake in Amro a Dutch bank with heavy exposure to the US subprime market. Therefore RBS has had to write off a record £28bn and are now facing nationalisation” What exactly is nationalisation and is it a good or bad thing for a …
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 …
Has the internet made price discrimination more difficult or easier? Price discrimination is charging different prices to different groups of consumers for the same good. Price discrimination requires that firms Can separate markets into different distinct groups Groups have different elasticities of demand The firm can prevent resale The costs of separating markets are less …
It is difficult to predict the dollar because there are few different factors pulling the dollar in different directions. Firstly, the dollar has been surprisingly resilient since the US slipped into its worst recession and US interest rates tumbled to near 0%. The resilience of the dollar is not based on economic fundamentals but, a …
A pyramid investment scheme is one based on false accounting. It is one of the oldest tricks in the book. If you put money into an investment scheme they will take your money and invest it in a variety of shares / commodities / bonds e.t.c. The hope is that the investment fund will choose …
Readers Question. I was just reading the wiki page about Commercial Paper and I understand the gist of it; however, one thing that always confused me about it is: Since commercial paper is a cheaper alternative to a bank line of credit for companies to finance their daily operations, wouldn’t it make sense to just …