Most western economies are facing the prospect of record peace time government debt levels. The EU Maastrict Criteria stated that the maximum budget deficit member countries could run is a budget deficit of 3% of GDP. (By the way, I am glad this target for government borrowing has not been enforced. That would have been …
This graph illustrates the difference between actual GDP and potential GDP. It also indicates how much Real GDP growth has lagged behind potential growth. This means the US economy currently has substantial spare capacity. This is reflected by a rise in unemployment and factories operating below full capacity. The Real potential GDP illustrates the long …
Readers Question: I trying to find appropriate policies that the Icelandic government could adopt to deal with the country`s substantial current account deficit. Do you know what policies they are using for the moment, and more importantly which policies they should adopt? Related Problems with Iceland Economy Solving UK Current account deficit At the height …
Readers Question: i am 16 and i have been working in Mcdonalds in my local area for about a year now do you think I should ask for higher wages? Danielle (from Min Wage 16-17 year) Well according to another commentator, Christopher, he is 17 and earns £4.35 an hour and ‘if i work well …
Readers Question: What is the difference between a debit and a debt? A debit item refers to a system of accounting which places a negative amount on the left-hand side of an accounting column. A debit is associated with the purchase of assets or expense transaction. e.g. money leaving your account to purchase a factory. …
Readers Question: Are books inferior goods or normal goods? An inferior good is a good where a rise in income leads to lower demand. It is a good with a negative income elasticity of demand. “When I get a little money, I buy books. And if there is any left over, I buy food.” Desiderius …
You are welcome to ask questions on Economics. I am looking to explain economic principles / ideas/ recent developments in economics. Due to the volume of questions, I can no longer promise to answer. But, I will try if it meets below criteria. I will post the answer on this blog, for everyone to benefit …
One of the great challenges of Monetary and Fiscal Policy is knowing exactly where the economy is. If output is falling, then this justifies an easing of monetary policy (lower interest rates, or in the UK’s current situation more quantitative easing). Recently GDP statistics showed an unexpected 0.4% fall in GDP. This was a key …