Economics help blog – Page 232

Drastic Economic Measures for Greece, 2010

23 January 20203 February 2010 by Tejvan Pettinger

Whilst the UK is slowly struggling out of recession – spare a thought for Greece, who are experiencing a real economic crisis – partly of their own making – and exacerbated by the straitjacket that EURO membership entails. The Greek economy has several significant problems Current account deficit of 14% of GDP – their exports …

Reasons to be hopeful for economy 2010

23 January 20202 February 2010 by Tejvan Pettinger

I was looking at the scale of previous recessions. The current recession, which technically ended last quarter with a 0.1% rise in GDP, is the second worst on record. I was surprised to find that in the Great Depression, UK GDP only fell 10%. However, it is somewhat misleading. The UK economy struggled in the …

Which is best? Waterstones vs Amazon

17 January 202024 January 2010 by Tejvan Pettinger

Recently, for the first time, Amazon sold as many books as Waterstones. Amazon has been operating for the past 13 years and has succeeded in becoming the countries biggest seller of books. The Managing Director of Waterstones has responded with vigour arguing that Waterstones offers much more than their online rival. He says that those …

Interest Rate Swaps Explained

10 March 202017 January 2010 by Tejvan Pettinger

Interest rates swaps are a way for financial bodies to exchange risk on the movement of interest rates. They were originally designed as a way for firms to avoid exchange rate controls because interest rate swaps can be done in different currencies. Interest rate swaps are one of the most common type of derivatives and …

Should Government Legalise and tax Cannabis?

26 January 202014 January 2010 by Tejvan Pettinger

The arguments for and against the legalization of cannabis and the taxation of the good by the government.

Legalising cannabis and placing a tax on the good has several advantages

Advantages of legalising cannabis

1. The Government can raise revenue from the tax. Because demand is likely to be inelastic, the tax revenue could be quite high. The tax revenues could be used to help finance health care and treat lung cancer. (things associated with dope-smoking)

2. It would reduce size of black economy. If cannabis was legalised it would reduce criminal activity. It would also free up police time to investigate more serious crimes and drug use.

Question: What is the Impact of a Recession in China on UK economy?

23 January 202014 January 2010 by Tejvan Pettinger

Readers Question: What would be the impact of a recession in China on UK and global economy? China’s economy continues to break records with its break neck records. Depending which measure you use, China is likely to be the world’s biggest economy very soon. Yet, there is no guarantee that this impressive growth will always …

Saving, Capital Stock, and Levels of Investment

23 January 202014 January 2010 by Tejvan Pettinger

“Maintaining and expanding a nation’s stock of capital requires saving.” Evaluate and explain. Is the assumption of full employment of any relevance?

Capital Stock is the level of productive capacity in the economy.

Saving and Investment

There is an important economic idea that Savings = Investment. The logic is that without bank deposits, banks are not in a position to lend money for investment.
An economy with a low savings ratio has little funds to finance investment because it is all being used to finance current consumer spending.

However, higher levels of saving do not necessarily lead to more investment. The extra saving may not encourage people to invest more. E.g. In the great depression, individual savings did not encourage investment. Keynes called this the paradox of thrift

Question: What is the Economic significance of the construction industry to the UK economy?

17 January 202013 January 2010 by Tejvan Pettinger

Readers Question: What is the Economic significance of the construction industry to the UK economy, how it impacts, with respect to trend in economy. According to BIS The UK construction industry contributed 9.2% of the nations GVA (Gross Value Added) in 2007. The UK construction industry consists of over 250 000 firms employing 2.1 million …