Economics help blog – Page 228

Tesco as an Employer

29 December 20206 May 2010 by Tejvan Pettinger

In 1945, 500,000 people worked as coal miners in the UK. Today that figure is a fraction. Maybe 1% of the half million are still employed as coal miners. By contrast Tesco now employs 500,000 people across Europe – making it the biggest employer in the EU. In 1945, the first supermarkets were yet to …

What Would Happen if Greece Defaults on Debt?

18 November 201729 April 2010 by Tejvan Pettinger

Greece is facing a very difficult situation with it’s bond market reduced to ‘junk bond status’ Interest rate on two year Greek bonds have an interest rate of 18%. See: European Fiscal Crisis Countries have experienced higher levels of government debt as a % of GDP. However, in the case of Greece, there appears a …

Impact of Interest Rates on Industry

31 January 202029 April 2010 by Tejvan Pettinger

For manufacturing investment, the real interest rate is important for determining the viability of investment. Lower interest rates make it cheaper to borrow. Therefore lower interest rates tend to encourage business investment. High real interest rates discourage investment. How interest rates affect the efficiency of investment At lower interest rates, the marginal efficiency of capital …

Delay due to Volcano

17 January 202019 April 2010 by Tejvan Pettinger

Like quite a few teachers I am currently stuck on the wrong side of the Atlantic – waiting for a chance to fly back to Britain. I’m not sure when I will return to England, but, after an Easter break the blog will resume from today. Apparantely, there is one volcano, the memorably named, Eyjafjallajoekull …

SWOT Analysis Definition

18 November 20178 April 2010 by Tejvan Pettinger

SWOT analysis is a method to analyse the existing position of a firm and how it is likely to perform in the future S- Strengths of firm W- Weakness of firms O – Opportunities T – Threats Example, Waterstones booksellers Strengths Established as premier book retailer in UK Good distribution network Prime retail location in …

Benefits of Economic Recovery

18 November 20177 April 2010 by Tejvan Pettinger

A recent OECD report suggested that the UK economy could grow by 3.1% in 2010 (link) If this forecast proved correct, it would be a real boost for many aspects of the UK economy. Firstly, it would lead to improved tax revenues. After suffering from the slump in tax receipts during the financial crisis, the …

Question: why should nominal GDP be corrected for inflation?

10 March 20202 April 2010 by Tejvan Pettinger

Readers Question: why should nominal GDP be corrected for the effects of inflation?

Suppose your annual salary went from £20,000 a year to £40,000 a year. Does that mean you are better off? Can you buy twice as many goods?

If there is zero inflation, if prices stay the same, then the answer is yes. With a doubling of income you can buy twice as many goods.

However, suppose the inflation rate was 40%. That means goods and services would be rising in price by 40%. Therefore, even though your nominal income has increased by 100%, it doesn’t mean you can buy 100% more goods. Your effective purchasing power has increased by 100 – 40 = You are effectively 60% better off.

If prices doubled and your income doubled. Your real income (effective purchasing power) would be exactly the same.

Question: What are the advantages of Nuclear Power?

17 January 20202 April 2010 by Tejvan Pettinger

Readers Question: What are the advantages of Nuclear Power? Nuclear power currently provides 15% of the world’s electricity supply. Once built nuclear power is relatively cheap and safe to produce. However, concerns over radioactivity and safety have led to calls for nuclear power to be phased away. Do the advantages outweigh the disadvantages Environmental Benefits …