Economics help blog – Page 230

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 …

What To Do With China’s currency manipulation 2010

23 January 202025 March 2010 by Tejvan Pettinger

A crucial issue at the moment is the state of the Chinese currency. Many feel that the Chinese government are manipulating the Currency to keep it undervalued. To keep the Renminbi undervalued the Chinese are selling their currency and buying dollar assets. The weaker Renminbi is good for Chinese exporters. It makes Chinese exports more …

Different Types of Business

17 January 202024 March 2010 by Tejvan Pettinger

There are quite a few different types of business and companies. From a single, self-employed sole-trader to a multi-national public limited company (plc) such as Shell. Main Types of Business Sole Trader Partnership Limited Company Public Limited Company Sole Trader As the name implies, a sole trader is a business owned by a single person. …

What reforms to the banking sector are needed?

23 January 202012 March 2010 by Tejvan Pettinger

Readers Question: Creating a post recession; what steps should the EU take to reform the banking sector? I have looked at this important issue in this essay: – Steps to Avoid Financial Crisis Reforms To The Banking Sector Could Include Regulation of Mortgage Products Unconventional Mortgages like 100% mortgages, self-certification, interest only, mortgages several times …

How To Increase the Supply of Money

18 November 201711 March 2010 by Tejvan Pettinger

Readers Question: how will central bank may increase the supply of money in economy? The money supply is the total amount of money available in the economy at a particular point in time. A narrow definition of money involves notes and coins. A broader definition includes cash plus bank and building society deposits. Policies to …

Revising economic growth statistics

23 January 20208 March 2010 by Tejvan Pettinger

Readers Question: Does growth forecast always corresponds to the mesured growth? If a bias exist, is it always on the same side? Recently, growth statistics published on February 26th showed that the GDP figures for the fourth quarter of 2009 were a higher than first recorded. GDP grew by 0.3%, rather than the initial estimate …