Tips on Writing a UCAS Personal Statement

Many students agonise over writing a UCAS personal statement. As a general rule, I suggest keeping it relatively simple – be honest, and give the impression you would be a suitable student for the course. Don’t worry if you haven’t got a huge list of extra curricular activities. At the same time, you don’t want …

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Does the UK Need More Supermarkets?

The Future? Tesco’s is the UK’s leading supermarket, with an estimated market share of 31.5% Yesterday, the competition commission suggested that the Supermarket’s dominance was not due to unfair trading practices. After a long investigation of the  British supermarket industry, the Competition Commission have concluded: Supermarkets are not competing unfairly The dominance of big supermarkets …

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Guide To Mortgages

In the UK, there is a strong desire for people to own their own house. This deep seated desire is one of the factors behind the extraordinary rise in UK house prices. However, the cost of houses means that it is becoming increasingly difficult for people to get on the property ladder. To be able …

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Ask Economics Question

You are welcome to ask questions on Economics. I will post the answer on this blog, for everyone to benefit from. I shall try to answer the economics question and / or point to other resources but please bear in mind. The replies will be guidance and not for duplication. Your essays should always be …

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Does China Pose a Threat to the World Economy?

China recently became the second largest economy in the world. According to the IMF, in 2010, the Chinese economy was $5,878,257 million – second only to the US economy. If we use GDP at purchasing power parity, the size of the Chinese economy is estimated to be even larger, at around $10,119,896 million. However, it …

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Is Investment a Zero Sum Game?


Readers Question: Can you explain what happens to wealth when e.g share price, property prices fall?

Do they just vanish into thin air, or is money just being transferred from one person to another? In other words, are all investment a zero-sum game? What happens when prices rise?

Is there a simple example that can illustrate this concept?

A zero-sum game means that if one person gains, then it has to be matched by an equivalent loss from someone else. No extra output is created, it is merely a question of how the cake is split up.

For example, suppose I buy Euros in exchange Pounds from someone else (and let’s assume zero transaction costs).

  • I have an increase in quantity of Euros, the other person see an increase in quantity of Pound sterling.
  • If the value of the Euro increases, then I am better off. However, the person who sold Euros will see a decline in the value of their currency holdings.
  • If I  buy Euros, there is unlikely to be any change in output or welfare for society.
  • By correctly predicting an appreciation in the Euro – I have gained at the other persons expense.
  • Therefore, foreign currency speculation could be seen as a zero sum game.

Often investing in the stock market may feel like a zero sum game. Suppose, we take the top 100 companies (FTSE-100). One investment fund may pick the best performing companies. These investors will see an increase in their wealth. Another investment fund may pick poorly performing companies, therefore they see a fall in their wealth.

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