Readers Comment: I believe if you want to solve the recession then look at footballers. they earn millions and for what/kicking a ball around!! I think their wages should be cut down to say 75k a year and the remaining money should be used wisely. This recession illustrates that economic policy often involves making decisions …
Readers Question: What effect does expansionary fiscal policy have on the fishing sector? If successful, expansionary fiscal policy will increase Aggregate demand and increase the rate of economic growth. In a recession, expansionary fiscal policy could play a significant role in increasing level of living standards and levels of consumption. Expansionary fiscal policy involves changes …
Champagne is a very good example of a luxury good. (a change in income causes a bigger % change in demand) Furthermore, supply of Champagne is limited to certain regions of France. With this monopoly power over supply, French wine producers have been able to set very high prices. Champagne can easily go for over …
Readers Question: What is the difference between depression economy and underdeveloped economy? A depression economy suggests the economy is experiencing a deep recession, characterised by falling output and rising unemployment. An economy experiencing a recession could have a high GDP per Capita or a low GDP per capita. E.g. UK and the US have both …
Readers Question: What did Keynes mean by ‘In the Long Run we are all dead’ – From ‘In the Long Run we are all dead’ For Keynes, the short run was important and due to the instability of the macro economy, government intervention may be necessary to kickstart the economy. Classical economists tend to be …
The River Cam in Cambridge. Recently, we looked at why water can be more expensive than beer, even though water doesn’t attract excise duty Water is the most important commodity in the world, it is indispensable for life, yet, it is also one of the cheapest. In many circumstances we can say water is a …
Readers Question: What is the economic answer to why do fast food stores offer free refills on sodas? Firstly, the marginal cost of refilling soft drinks like coca-cola is very low. The stores will buy drinks in bulk. The cost of filling up a drink is merely a few cents. So they don’t have significant …
Why Is Water More Expensive than Beer when Alcohol is taxed? If you go into a pub. You can buy a pint of beer for £2.20. Less than half a pint of mineral water or lemonade can costs £1.30. So per litre, water is more expensive than beer. Yet, beer has a significant tax placed …