The political map of the US increasingly represents a divided America, and this political divide has roots in an increasing economic divide.
In brief – rural areas tend to have lower average incomes (though also cheaper rent) higher rates of unemployment, declining population, reliance on one major employer and more concentrated on the primary sector – farming, mining and commodity extraction.
By contrast, metropolitan urban areas have seen faster rates of population growth,…
The catch-up effect (or convergence theory) suggests that poorer countries will experience a higher rate of economic growth and, over time, get closer to the income levels of the developed world.
In other words, there will be a reduction in the…
Readers Question: Is a strong economy generally accompanied by a strong currency?
In short, a strong economy is generally characterised by a strong currency. When the economy is doing well, and at a boom period of the economic cycle it implies higher interest rates to keep inflation low. These higher interest rates will attract hot money flows and more demand for the currency. A strong economy will also increase confidence in holding that currency. A strong economy may also imply that in the long-term the economy is becoming more…
An entrepreneur is an individual who sets up and grows a business. They combine different factors of production (such as – land, labour and capital) to try and create a new profitable business venture. Entrepreneurs are themselves an important ‘factor of production.’ and an essential aspect of a functioning free market economy.
Importance of entrepreneurs Free market evolution. Entrepreneurs are important in a free market because they help the market respond to changing prices and consumer preferences. For example, with the rise in…
Readers Question: In the U.S. I have noticed that most restaurants and fast food places have window signs advertising for workers. Would these minimum wage workers, as a collective, be considered a monopsony or a monopoly?
To answer your question, these minimum wage workers would be considered neither a monopoly or monopsony. The fact that unemployment is very low, but wages are not rising, suggests it is the firms who have a degree of monopsony power.
If the minimum wage workers were able to organise and form a trade…
Readers Question: Why is debt related to GDP?
Debt to GDP shows how significant the debt is relative to the size of the economy. This is important because it affects
The size of debt compared to tax revenues.
For example in 2018, the gross level of US public debt was $21 trillion. But, with a large economy, this only accounts for 77% of US debt.
At current interest rates, the cost of servicing debt is manageable for the US government.
For example, if total government debt stayed exactly the same, but GDP fell. It…
Readers Question: how to evaluate the reliability of economic data?
This is a good question. In brief, some issues to consider Is there a political angle? – Political leanings of media/think tank
In what context is the data presented? How to interpret the data. Should we look at nominal data, real data or as a percentage of GDP – each stat will give a different impression
Is the data being used to support a particular opinion? – Is the publisher looking for…
A look at the economic and social impact of Mrs Thatcher’s economic policies.
Summary of Thatcher’s Economic policies Belief in the desirability of free markets over government intervention. E.g. pursuing policies of privatisation and deregulation.
The pursuit of supply-side policies to increase efficiency and productivity.
Reducing the power of trades unions and increased labour market flexibility.
Financial deregulation, e.g. building societies becoming profit-making banks.
Reducing higher rates of marginal income tax to increase incentives to work.
Ending state subsidies for major manufacturing companies.
Encouraging home ownership and share…
