economics

Why is UK Debt Rising?

Why is UK Debt Rising?

The graph below show that UK debt is rising as a % of GDP    Net Debt refers to the total amount of money the Government owes to the private sector. If the Government spends more than it receives in tax then it runs an annual budget deficit; this means it has to borrow from the private sector, by selling bonds and gilts. The National Debt is the cumulative amount of debt the government has. Since 2003, the UK economy has been growing at 2.5%…

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Problems with US Economy

I wrote a lengthy essay on the US economy and why it is facing many economic problems. What went wrong with the US Economy? The Main Problems with the US Economy are Twin Deficits – Current account deficit and budget deficit Housing Market Crisis Rising Inequality Falling Dollar and falling confidence Impending Recession High Levels of Debt and Growing debt default Another Problem with the US economy might be: The economics of the Presidential Candidates  My Other Blog Economics Essays I use for writing longer essay, it is updated perhaps once a day. If you find…

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Monopoly Suppliers of Milk and Electricity

IS THE PUBLIC INTEREST BETTER SERVED BY A MONOPOLY OR BY SIGNIFICANT COMPETITION BETWEEN SUPPLIERS? 1. If a supplier has monopoly power then it will be able to charge higher prices to the seller (retailer). For example, in the case of electricity, the supply is dominated by the firm who run the national grid. Therefore, they are able to set higher prices to the retailers of electricity. 2. However, the supply of electricity is a natural monopoly. This means the most efficient number of firms is one due to very high…

Average Incomes in UK

Average Incomes in UK

There are different ways of measuring average incomes in the UK. Average Household Incomes – combined income of a family. This may include 2 or 3 salaries Average Individual Incomes – average income of individual earner. Gross Income – Original income before tax and benefits Disposable Income – Final income after subtracting tax and adding benefits. Median Average Incomes Mean Average Incomes Graph Showing Inequality in Average Income The graph below shows the distribution of average incomes. The top 20% households earn 16 times more than the bottom 20%, although this is significantly lessened by the impact…

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Economics of Fear and Hysteria

I wrote an article here about the economics of fear. Basically, it looks at how economic decisions are often based on factors other than rational decision making. Quite often in economics we see behaviour known as ‘herding’. What this involves is people making decisions dependent on what other people are doing. Therefore, when economic confidence falls this can have far reaching implications as the negative attitudes affect many people. There are a lot of economic decisions taken where people seek to avoid the worst outcome, basically this is the…

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The Size of the Black Economy

The black or underground economy is the economic activity which is not measured by government statistics. This can include a range of different economic activities not measurable by the government. It includes: Selling goods illegally e.g. criminal goods Selling goods / services and not declaring income earnt. Self sufficiency. If a farmer grows his own food, he will not appear to have any income, his sustenance comes from his own produce, but, there is no buying and selling. Problems of Black Economy Economic activity which is not recorded can create a real problem for…

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Prospects for Commodities

The Outlook for commodities in 2008 suggests that prices could continue to rise. Commodities such as precious metals, provide a good investment alternative to volatile financial markets. With problems in credit markets predicted to continue, metals will provide an alternative for global investors increasingly looking to diversify. The price of agricultural commodities have risen after decades of real price falls. This in part reflects constraints on supply and growing demand. Environmental factors have caused desertification and falling crop yields; these factors have helped to push up prices. Demand has also been rising…

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Will the US economy enter into Recession in 2008?

Back in March I wrote this essay – Is the US heading towards recession? According to some doom mongers the US is already in recession. They point to the ‘collapsing’ housing market and the rise in ‘repossessions’ The irony is that US economic growth has remained unexpectedly high at 4.9% in 3rd quarter of 2007. Growth has averaged over 2.1% since 2001 (US economic snapshots) Unemployment remains at 4.5%, although this masks some disguised unemployment, – it is hardly the sign of a full blow recession. Nevertheless there are several warning…